Taxpayers could be on the hook for up to $10m in payouts to members of the administrative appeals tribunal as the Albanese government moves to scrap the existing body.
On Friday the attorney general, Mark Dreyfus, announced the tribunal will be abolished and replaced by a new merits-review body because it had been “irreversibly damaged” by political appointments.
The move was widely applauded by advocates for those seeking merits review of government decisions, including on welfare, disability insurance and migration.
But Dreyfus sidestepped a question about whether members who are not reappointed will have their contracts paid out, telling reporters that “the logistics of that, that’s a matter that we will deal with in the design of the new tribunal”.
Guardian Australia understands that part-time members will not be eligible for compensation but full-time members may be, unless transitional legislation abolishes their right to a payout.
The remuneration tribunal’s 2018 compensation for loss of office determination – which applies to AAT members – outlines that workers are entitled to compensation equal to one-third of their salary for their remaining term, with “a minimum payment of four months’” salary and a maximum payment of a year.
AAT members earn up to $510,000 a year at the deputy president level, $402,700 for a senior member and $256,280 for a member.
Labor claims the Coalition appointed 85 AAT members from the ranks of its former MPs, failed candidates, staffers and other “close associates”.
According to a Guardian Australia analysis, about 60 of these would be eligible for compensation if not reappointed, after culling part-time members, those who have resigned and those whose terms would expire before the new body was up and running in late 2023.
Based on their level of seniority and duration of their remaining terms, compensation would amount to $9.5m if all 60 applied and were not reappointed.
Among the most expensive potential payouts are those appointed in April ahead of the 2022 election, which included the former WA state minister Michael Mischin to deputy president, and the former NSW minister Pru Goward and Anne Duffield, a former chief of staff to Scott Morrison, as senior members.
Guardian Australia does not suggest that appointees from political backgrounds would fail the new merit selection process, and Dreyfus has said membership of a political party should not disqualify people from service.
The shadow attorney general, Julian Leeser, said scrapping the AAT would “cost millions and not deliver access to justice for a single additional Australian”.
“This is simply about Mark Dreyfus purging a vital legal institution and settling scores with his political enemies.”
On Tuesday Anthony Albanese defended the AAT abolition, which he said was done because the body was “dysfunctional”, causing “anguish” to those waiting for reviews of government decisions.
Albanese told reporters in Canberra that political appointments to the body were “absurd” with candidates for local council or vice presidents of the Liberal branches appointed.
Jason Donnelly, an administrative law barrister, told Guardian Australia “yes, they would have to be paid out … unless the legislation retrospectively abolished their compensation”.
“That’s because they’re statutory contractual appointments.”
Donnelly, who appears frequently before the AAT, said he was “happy to see it abolished” because it had become “disappointing” and “unfair” to litigants seeking review of government decisions.
Terry Carney, a former long-serving member of the AAT who blew the whistle on the illegality of the robodebt scheme, said abolishing the body was “unavoidable, unfortunately”.
“I could see no other way in which the catastrophic loss of public faith and confidence in the independence of the tribunal due to the skewed nature of appointments could be addressed,” he told Guardian Australia.
Many appointees “didn’t have the skillset” and weren’t subjected to merit-based processes such as applications and interviews, he said.
“Many were appointed to five- and seven-year terms, so the alternative to wait this out [was unacceptable] – you can’t wait five to seven years to begin to restore faith in the independence of appointment processes and AAT judgments.”
Bill Browne, the director of democracy and accountability at the Australia Institute, described compensation as a “modest one-off cost to reform the AAT [which] is an investment in good government and the long-term health of the administrative review process”.
“The AAT reviews life-changing decisions about deportations, workers’ compensation, NDIS payments, veterans’ entitlements and many other issues, and people affected by those decisions will welcome the news that concerns about the AAT are being addressed,” he said, adding: “These reforms are an opportunity to create an administrative review system that is beyond reproach, independent and robust.”
The government has already pledged $63.4m over two years to appoint 75 extra members to deal with a case backlog, and a further $11.7m for a new case management system.
