House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon J. B. Hockey MP)

Chapter 6 - Improving the efficiency of Government remuneration processes

Outline of chapter

6.1 Part 1, items 3 to 8 and Part 2, item 9 of Schedule 2 to this Bill amends the Australian Securities and Investments Commission Act 2001 (ASIC Act) to extend the Remuneration Tribunal's remuneration setting responsibility to include certain Corporations Act bodies.

6.2 All references in this Chapter are to the ASIC Act unless otherwise specified.

Context of amendments

6.3 The ASIC Act currently provides that the responsible Treasury portfolio Minister (Minister) determines the terms and conditions (including remuneration) of the Chairs and members of the Financial Reporting Council (FRC), the Chair of the Australian Accounting Standards Board (AASB) and the Chair of the Auditing and Assurance Standards Board (AUASB).

6.4 The ASIC Act also provides that the FRC is responsible for determining the terms and conditions (including remuneration) of the offices held by the members of the AASB and the AUASB.

6.5 The Remuneration Tribunal is an independent, specialist body responsible for the remuneration setting of public offices within its determinative jurisdiction.

6.6 This Bill brings responsibility for determining the remuneration and full-time member recreation leave entitlements of the Chair and member positions of the FRC, the AASB and the AUASB within the Remuneration Tribunal's jurisdiction.

6.7 This improves administrative efficiency, as the Remuneration Tribunal has specialist skills in reviewing and determining remuneration and is therefore better placed to determine the remuneration of these offices. Moreover, it will ensure consistency in the remuneration setting arrangements between the three bodies and other statutory office holders.

Summary of new law

6.8 The Remuneration Tribunal is responsible for setting the remuneration for members of the FRC, the AASB and the AUASB, including the Chairs of the FRC, the AASB and the AUASB.

Comparison of key features of new law and current law

Detailed explanation of new law

6.9 The responsibilities of the Minister and the FRC for setting the terms and conditions (including remuneration) for the FRC, AASB and AUASB Chairs and members are set out in subsections 235A(2), 236B(6), 236F(8) and 236F(9). These subsections are repealed. [Schedule 2, Part 1, items 3, 5, and 7, subsections 235A(2), 236B(6) and 236F(8) and (9)]

6.10 Section 235AA is inserted into the ASIC Act to allow the Remuneration Tribunal to determine the remuneration for members of the FRC, including the Chair. Where the Remuneration Tribunal makes no determination on the remuneration of these office holders, remuneration is as determined in writing by the Minister. The Remuneration Tribunal is also granted jurisdiction to determine the recreation leave entitlements of full-time members of the FRC, including the Chair. [Schedule 2, Part 1, item 4, section 235AA]

6.11 Section 236BA is inserted into the ASIC Act to allow the Remuneration Tribunal to determine the remuneration for members of the AASB, including the Chair. Where the Remuneration Tribunal makes no determination on the remuneration of these office holders, remuneration is as determined in writing by the Minister. The Remuneration Tribunal is also granted jurisdiction to determine the recreation leave entitlements of full-time members of the AASB, including the Chair. [Schedule 2, Part 1, item 6, section 236BA]

6.12 Section 236FA is inserted into the ASIC Act to allow the Remuneration Tribunal to determine the remuneration for members of the AUASB, including the Chair. Where the Remuneration Tribunal makes no determination on the remuneration of these office holders, remuneration is as determined in writing by the Minister. The Remuneration Tribunal is also granted jurisdiction to determine the recreation leave entitlements of full-time members of the AUASB, including the Chair. [Schedule 2, Part 1, item 8, section 236FA]

6.13 The Minister may determine allowances (such as travel allowances) of FRC, AASB and AUASB members, including the Chairs, and may grant leave of absence other than recreation leave where members, including the Chairs, work full-time. The Minister determines the terms and conditions of the leave of absence, including terms or conditions that pertain to remuneration. [Schedule 2, Part 1, items 4, 6 and 8, sections 235AA, 236BA and 236FA]

6.14 Where the Remuneration Tribunal or the Minister makes a determination on remuneration or the Minister makes a determination on an allowance in writing, such determinations have effect subject to the Remuneration Tribunal Act 1973. [Schedule 2, Part 1, items 4, 6 and 8, sections 235AA, 236BA and 236FA]

6.15 Members of the FRC, AASB and AUASB, including the Chairs, hold office on the terms and conditions in relation to matters not covered by the ASIC Act as determined by the Minister in writing. [Schedule 2, Part 1, items 4, 6 and 8, sections 235AA, 236BA and 236FA]

6.16 Diagram 6.2 summarises the responsibility for setting the remuneration and other terms and conditions for the FRC, AASB and AUASB members, including the Chairs.

Application and transitional provisions

6.17 After commencement of this Bill, members of the FRC, including the Chair, will continue to have the terms and conditions of their appointment determined by the Minister in writing until the Remuneration Tribunal makes a determination in relation to their appointment. Likewise, any person appointed to the FRC between commencement of the Bill and the time at which the Remuneration Tribunal makes a determination under subsection 235AA(1) will have the terms and conditions of their appointment determined by the Minister in writing until the Remuneration Tribunal makes a determination. [Schedule 2, Part 2, item 9, sections 297 and 298]

6.18 After commencement of this Bill, the Chair of the AASB will continue to have the terms and conditions of their appointment determined by the Minister until the Remuneration Tribunal makes a determination in relation to their appointment. Members of the AASB will continue to have the terms and conditions of their appointment determined by the FRC until the Remuneration Tribunal makes a determination in relation to their appointment. [Schedule 2, Part 2, item 9, sections 297 and 299]

6.19 Likewise, a person appointed to the AASB as Chair between commencement of the Bill and the time at which the Remuneration Tribunal makes a determination under subsection 236BA(1) will have the terms and conditions of their appointment determined by the Minister in writing until the Remuneration Tribunal makes a determination. Members appointed to the AASB during that period will have the terms and conditions of their appointment for that period determined by the FRC. [Schedule 2, Part 2, item 9, sections 297 and 299]

6.20 After commencement of this Bill, the Chair of the AUASB will continue to have the terms and conditions of their appointment determined by the Minister until the Remuneration Tribunal makes a determination in relation to their appointment. Members of the AUASB will continue to have the terms and conditions of their appointment determined by the FRC until the Remuneration Tribunal makes a determination in relation to their appointment. [Schedule 2, Part 2, item 9, sections 297 and 300]

6.21 Likewise, a person appointed to the AUASB as Chair between commencement of the Bill and the time at which the Remuneration Tribunal makes a determination under subsection 236FA(1) will have the terms and conditions of their appointment determined by the Minister in writing until the Remuneration Tribunal makes a determination. Members appointed to the AUASB during that period will have the terms and conditions of their appointment for that period determined by the FRC. [Schedule 2, Part 2, item 9, sections 297 and 300]