Remuneration Tribunal confirms remuneration bands for local government CEOs

The Remuneration Tribunal of South Australia (the Tribunal) handed down its determination following its inaugural review of minimum and maximum remuneration for local government chief executive officers (CEOs) on 16 June 2023.

Following recent amendments to the Local Government Act 1999 (SA) (LG Act), the Tribunal was conferred jurisdiction in September 2021 to determine the minimum and maximum remuneration to be paid to CEOs of councils constituted under the LG Act. The intention of this conferral is to assure the community that local government CEOs are paid appropriately for the work they do.

The Tribunal’s determination which sets out the minimum and maximum remuneration bands for all local government CEOs in South Australia (excluding the CEO of the Municipal Council of Roxby Downs) can be found here. The determination comes into operation on 1 July 2023.

Methodology

Section 99A of the LG Act provides that a determination of the Tribunal ‘may differ based on any factor including, for example, the geographical location of a council or group of councils.’

The Tribunal invited submissions from interested parties including CEOs, councils and the Premier (as Minister for Local Government). In inviting submissions, the Tribunal provided a list of factors it would take into consideration in making its determination, including geographical location, council revenue, regional issues, the impact of council staff numbers and factors demonstrating effective service delivery.

The Tribunal also took into account CEO remuneration in other Australian jurisdictions, although this information was of little value due to inconsistency in how remuneration is determined.

Through its review, the Tribunal identified that each council has ‘quite disparate approaches to different components of remuneration’ which made it difficult to ascertain the appropriate remuneration bands.

Accordingly, the Tribunal calculated an ‘adjusted total remuneration package’ for each council. This consisted of monetary remuneration, superannuation, annual leave loading, additional leave entitlements, bonuses and performance incentives, the private benefit value of motor vehicles and or/equipment (excluding mobile phones or portable computers), school or childcare fees, subscriptions, personal travel taken in lieu of salary by the CEO and immediate family, health insurance, allowances, and other form of payment and any fringe benefits tax paid by the council in respect of any of the above.

Determination

The Tribunal noted that its preference was to ‘progress towards establishing minimum and maximum remuneration levels founded on an assessment of skill and competence levels’ to allow councils flexibility to set remuneration consistent with their unique challenges.

However, the nature of the information provided to the Tribunal in conducting its review did not support this approach at this time.

The Tribunal has specifically not taken into account the variety of factors it said it would take into consideration in making its determination. Rather, the Tribunal split the councils into eight bands based on the ‘adjusted total remuneration package’ it calculated for each CEO covered by the review, as set out in the Determination linked above.

The Tribunal advises that wage movements and the current rate of inflation were also factored into the minimum and maximum amounts of remuneration.

Next steps

The impact of the determination for each council will depend on the terms of the CEO’s employment contract. Broadly, however, the next steps will be at each council’s discretion.

The Tribunal’s report advises that if the current remuneration level for a CEO is below the minimum level for the applicable band, the CEO’s remuneration may be increased to within the band limits ‘at the discretion of the council.’ Conversely, if the CEO’s remuneration is above the applicable band, the Tribunal expects there would be no further increase in remuneration during the term of appointment.

The option to increase a CEO’s remuneration within the bands set by the Tribunal remains a matter for each council to determine pursuant to section 99A(1) of the LG Act.

For new appointments post 1 July 2023, councils will be required to ensure the CEO’s remuneration falls within the band for their respective council.

Norman Waterhouse is happy to assist if any councils require assistance ascertaining how the determination will impact upon its CEO’s remuneration. Please contact Sathish Dasan on +61 8 8210 1253 or sdasan@normans.com.au or Lincoln Smith on +61 8 8210 1203 or lsmith@normans.com.au if you would like any further information.