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Recommendation Report - 27 June 2008

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WESTERN AUSTRALIAN SALARIES AND ALLOWANCES ACT 1975

SALARIES AND ALLOWANCES TRIBUNAL REPORT UNDER SECTION 7A OF THE SALARIES AND ALLOWANCES ACT 1975, LOCAL GOVERNMENT CHIEF EXECUTIVE OFFICERS.

Section 7A of the Salaries and Allowances Act 1975 provides that the Tribunal shall, from time to time, enquire into and make a report containing recommendations as to the remuneration to be paid or provided to Chief Executive Officers (CEOs) of local governments.

BACKGROUND

The Tribunal last issued its report on the remuneration of local government CEOs on 27June 2007.

This is the Tribunal’s third recommendation report since section 7A of the Salaries and Allowances Act brought local government CEOs under the Tribunal’s jurisdiction.  It has been completed in accordance with the requirement that future reports are to be made at intervals of not more than twelve months.  The Tribunal’s first report published on 27 June 2006, described the methods used by the Tribunal.  (It is available on the Tribunal’s website at www.sat.wa.gov.au or in the Government Gazette.)

The recommendations are made for the purpose specified in section 5.39(7) of the Local Government Act 1995, that is, “to be taken into account by the local government before entering into, or renewing, a contract of employment with a CEO”.

There are 140 local governments in mainland Western Australia, two less than at the time of last year’s recommendation report due to the amalgamations of the Town of Northam and the Shire of Northam, and the City of Geraldton and the Shire of Greenough.  The number of local government regional councils has increased over the same period from 11 to 12.  The local governments vary significantly in size from 1.5 square kilometres to 378,555 square kilometres.  Their populations range from less than 150 to more than 180,000 and are subject to change over time.

Total Reward Packages for CEOs in local government currently include a diversity of reward strategies.  The reward package adopted by individual local governments is specific to its business needs, financial constraints and organisational culture.  As well, specific attraction and retention issues are taken into account.  Local governments also exercise discretion in remunerating individual CEOs based on the level of experience and expertise the incumbent brings to the role; the growth in his/her capability over a period of time and specific characteristics of the local government.  It is not the Tribunal’s mandate or intent to restrict this flexibility, but to provide a framework for guidance to local governments by way of recommended Total Reward Packages.

CURRENT ENQUIRY

In discharging the responsibilities given to it by the Parliament, the Tribunal has in the context of its current enquiry adopted the following approach.  The Tribunal has:

  • advertised for public submissions;
  • written to local governments and regional councils inviting submissions about their CEO positions;
  • considered relevant labour market and economic data, and
  • sought advice from its Statutory Adviser (the Director General, Department of Local Government and Regional Development).

Public Submissions

The Tribunal placed an advertisement in The West Australian newspaper on Friday, 9 May 2008 and on its official website calling for submissions from interested persons and organisations.  In addition, the Western Australian Local Government Association and the Local Government Managers’ Association were contacted to apprise them of the Tribunal’s call for submissions.

Invitations to Local Governments and Regional Councils

All Mayors, Presidents and Chairmen were emailed on Monday, 26 May 2008 extending to them the opportunity to bring such matters to the Tribunal’s attention that might be pertinent to their local government or regional council areas.

Labour Market and Economic Data

Relevant labour market and economic data were sought from a variety of sources.  These included the Wage Price Index, Average Weekly Earnings, the Consumer Price Index and Total Employment Growth.  Economic forecasts at a national and state level were also considered.

Advice from Statutory Advisor

The Tribunal sought advice from its statutory advisor on a range of matters including any changes to local government areas or positions, data relating to local government populations, operating and capital budgets and the number of staff employed.

CONSIDERATIONS

In the context of its current enquiry, the Tribunal considered all CEO positions in local governments and regional councils, all submissions, data on the labour market and the Australian economy, as well as remuneration structures for other classes of senior public sector offices.

When determining appropriate bands and levels for CEOs’ positions, the model applied by the Tribunal has taken into account a variety of factors including the following:

  • Expenditure (Operating and Capital) where the capital expenditure is based on a three year rolling average;
  • Population of the community served;
  • Staff employed;
  • Services delivered;
  • Focus of the CEO role and Council profile; and
  • Distinguishing features for inclusion in a higher level or band (e.g. major growth and development, significant social, environmental and economic management issues, and demand for services to non-residents).

It also had regard to whether positions had been reviewed during the preceding year and whether they had been affected by structural change.

Submissions

Ten written submissions were received from local governments and regional councils.  Five of the submissions requested consideration of increasing the allocated band or level of the relevant office holders.  Other issues raised included the following:

  • The cost of living in regional communities;
  • Lower staff numbers reflected in some local governments due to out-sourcing of services;
  • The changing role from Shire Clerk to CEO; and
  • The need to make provision for more than one local government sharing a CEO.

Submissions from those local governments and regional councils seeking an increase in their CEO’s allocated band or level, generally claimed increased work value for their position or that there was some inequity in the allocation relative to other local governments.

The Tribunal considered all the submissions and the issues they raised.

Local Government Remuneration Data

Local government data considered by the Tribunal included a survey of existing Total Reward Packages provided to CEOs.

The Tribunal has been apprised of the proposed amalgamation of the Shires of Broomehill and Tambellup from 1 July 2008.  It proposes to make a recommendation on remuneration as soon as possible following notification of the amalgamation and relevant data in respect of the new local government.

Advice has also been received that the Rivers Regional Council was established on 6 June 2008.  This resulted from the existing members of the South East Metropolitan Regional Council being joined by the City of Mandurah, Shire of Murray and Shire of Serpentine-Jarrahdale.  The Tribunal is expecting a submission at a later date providing relevant data and requesting a review of the existing band allocation for the CEO position.

Labour Market and Economic Data

The table below shows relevant economic and labour market statistics including the most recent quarterly and annual average increases, both nationally and for Western Australia, as well as public sector and private sector comparisons.

 

Indicator Quarterly % Increase Annual Average % Increase
Perth – Consumer Price Index – Jan 08 Qtr to Mar 08 Qtr 1.4% 4.3%
National – Consumer Price Index – Jan 2008 Qtr to Mar 2008 Qtr 1.3% 4.2%
WA – Wage Price Index – Mar Qtr 2008 1.0% 5.9%
National – Wage Price Index – Mar Qtr 2008 0.9% 4.1%
WA – Wage Price Index – Mar Qtr 2008 – Private Sector 1.0% 6.2%
National – Wage Price Index – Mar Qtr 2008 – Private Sector 0.9% 4.2%
WA – Wage Price Index – Mar Qtr 2008 – Public Sector 0.8% 4.7%
National – Wage Price Index – Mar Qtr 2008 – Public Sector 0.8% 3.9%
WA – Average Weekly Earnings – Feb Qtr 2008 2.3%

9.4%

National - Average Weekly Earnings – Feb Qtr 2008 0.6% 3.2%
WA – Average Weekly Earnings (Full-time Adult Ordinary Time Earnings) – Feb 2008 Qtr 3.7% 9.1%
National – Average Weekly Earnings (Full-time Adult Ordinary Time Earnings) – Feb 2008 Qtr 1.1% 4.8%
WA Total Employment Growth – Apr 2008 -0.1% 3.5%
National Total Employment Growth – Apr 2008 0.2% 2.9%

Source: CPI: ABS Cat. 6401.0; WPI ABS Cat. 6345.0; AWE ABS Cat. 6302.0; EG ABS Cat. 6202.0

Growth in major areas of the Western Australian economy has placed pressure on Government services at all levels, including services provided by local governments.  The annual average growth in the Western Australian public sector Wage Price Index to March 2008 was 4.7 per cent, whereas the comparative figure for the Western Australian private sector was 6.2 per cent.  The Average Weekly Earnings statistics demonstrate significant upward movement in remuneration in Western Australia compared with national averages.  The labour market at both state and national level is characterised by historically low rates of unemployment; Western Australia recording in April 2008, the lowest unemployment in Australia at 3.3 per cent seasonally adjusted.  Advice from the Department of Treasury and Finance is that high labour demand combined with low labour supply is expected to result in wage pressures continuing across most industries for the remainder of 2007/08.

Given the current economic conditions, the Tribunal took into account a range of economic forecasts.  These included the Wage Price Index and Consumer Price Index forecasts published in the Government’s Mid-Year Financial Projections Statement (December 2007).  According to these projections, the annual average growth in the Wage Price Index in 2008/09 is expected to be 4.75 per cent, down from 5.5 per cent in 2007/08 while the growth in the Perth Consumer Price Index for 2008/09 is expected to be 2.75 per cent, down from 3.0 per cent in 2007/08.

RECOMMENDATIONS

In the light of economic indices and conditions, the Tribunal recommends an increase of 3.9 per cent in the remuneration ranges for local government bands and regional council levels of CEOs.

After consideration of the relevant information and application of its band allocation model, the Tribunal recommends that there should be movement of some local governments within the band framework.  These recommendations have been determined on the basis of changes in populations, budgets, staffing levels and factors particular to the local governments identified.

The following changes in band allocations have been reflected in the recommendations:

  • Claremont – Band 3 to Band 4
  • Port Hedland – Band 5 to Band 6
  • Ravensthorpe – Band 2 to Band 3

Local governments considering implementing these changes are referred to section 5.39(7) of the Local Government Act 1995.

The Tribunal recommends that with effect from 1 July 2008 the Total Reward Package paid or provided to local government and local government regional council CEOs be as set out in the attached Schedule.

Signed at Perth this 27th day of June 2008.

Professor M C Wood W S Coleman AM
CHAIRMAN MEMBER

SALARIES AND ALLOWANCES TRIBUNAL

SCHEDULE

PART 1 – LOCAL GOVERNMENT TOTAL REWARD PACKAGE

BAND TOTAL REWARD PACKAGE NUMBER OF LOCAL GOVERNMENTS
Band 1 $103,048 - $139,386 30
Band 2 $114,980 - $156,199 42
Band 3 $126,912 - $171,927 20
Band 4 $136,674 - $185,486 3
Band 5 $149,691 - $202,300 10
Band 6 $165,962 - $224,536 12
Band 7 $184,402 - $249,485 10
Band 8 $201,215 - $271,721 11
Band 9 $218,570 - $296,127 2

PART 2 – LOCAL GOVERNMENT CLASSIFICATIONS

LOCAL GOVERNMENT * BAND TOTAL REWARD PACKAGE
 Albany 7 $184,402 - $249,485
 Armadale 7 $184,402 - $249,485
 Ashburton 5 $149,691 - $202,300
 Augusta-Margaret River 5 $149,691 - $202,300
 Bassendean 5 $149,691 - $202,300
 Bayswater 8 $201,215 - $271,721
 Belmont 7 $184,402 - $249,485
 Beverley 2 $114,980 - $156,199
 Boddington 1 $103,048 - $139,386
 Boyup Brook 2 $114,980 - $156,199
 Bridgetown-Greenbushes 3 $126,912 - $171,927
 Brookton 2 $114,980 - $156,199
 Broome 6 $165,962 - $224,536
 Broomehill 1 $103,048 - $139,386
 Bruce Rock 2 $114,980 - $156,199
 Bunbury 7 $184,402 - $249,485
 Busselton 7 $184,402 - $249,485
 Cambridge 7 $184,402 - $249,485
 Canning 8 $201,215 - $271,721
 Capel 3 $126,912 - $171,927
 Carnamah 2 $114,980 - $156,199
 Carnarvon 5 $149,691 - $202,300
 Chapman Valley 2 $114,980 - $156,199
 Chittering 2 $114,980 - $156,199
 Claremont 4 $136,674 - $185,486
 Cockburn 8 $201,215 - $271,721
 Collie 3 $126,912 - $171,927
 Coolgardie 3 $126,912 - $171,927
 Coorow 2 $114,980 - $156,199
 Corrigin 2 $114,980 - $156,199
 Cottesloe 3 $126,912 - $171,927
 Cranbrook 2 $114,980 - $156,199
 Cuballing 1 $103,048 - $139,386
 Cue 1 $103,048 - $139,386
 Cunderdin 2 $114,980 - $156,199
 Dalwallinu 2 $114,980 - $156,199
 Dandaragan 3 $126,912 - $171,927
 Dardanup 3 $126,912 - $171,927
 Denmark 3 $126,912 - $171,927
 Derby-West Kimberley 6 $165,962 - $224,536
 Donnybrook-Balingup 3 $126,912 - $171,927
 Dowerin 1 $103,048 - $139,386
 Dumbleyung 1 $103,048 - $139,386
 Dundas 1 $103,048 - $139,386
 East Fremantle 3 $126,912 - $171,927
 East Pilbara 6 $165,962 - $224,536
 Esperance 6 $165,962 - $224,536
 Exmouth 2 $114,980 - $156,199
 Fremantle 8 $201,215 - $271,721
 Geraldton - Greenough 7 $184,402 - $249,485
 Gingin 3 $126,912 - $171,927
 Gnowangerup 1 $103,048 - $139,386
 Goomalling 2 $114,980 - $156,199
 Gosnells 8 $201,215 - $271,721
 Halls Creek 4 $136,674 - $185,486
 Harvey 5 $149,691 - $202,300
 Irwin 2 $114,980 - $156,199
 Jerramungup 2 $114,980 - $156,199
 Joondalup 8 $201,215 - $271,721
 Kalamunda 6 $165,962 - $224,536
 Kalgoorlie-Boulder 7 $184,402 - $249,485
 Katanning 2 $114,980 - $156,199
 Kellerberrin 2 $114,980 - $156,199
 Kent 2 $114,980 - $156,199
 Kojonup 3 $126,912 - $171,927
 Kondinin 2 $114,980 - $156,199
 Koorda 2 $114,980 - $156,199
 Kulin 2 $114,980 - $156,199
 Kwinana 6 $165,962 - $224,536
 Lake Grace 2 $114,980 - $156,199
 Laverton 3 $126,912 - $171,927
 Leonora 3 $126,912 - $171,927
 Mandurah 8 $201,215 - $271,721
 Manjimup 5 $149,691 - $202,300
 Meekatharra 2 $114,980 - $156,199
 Melville 8 $201,215 - $271,721
 Menzies 1 $103,048 - $139,386
 Merredin 3 $126,912 - $171,927
 Mingenew 1 $103,048 - $139,386
 Moora 3 $126,912 - $171,927
 Morawa 2 $114,980 - $156,199
 Mosman Park 3 $126,912 - $171,927
 Mount Magnet 2 $114,980 - $156,199
 Mount Marshall 2 $114,980 - $156,199
 Mukinbudin 1 $103,048 - $139,386
 Mullewa 2 $114,980 - $156,199
 Mundaring 6 $165,962 - $224,536
 Murchison 1 $103,048 - $139,386
 Murray 5 $149,691 - $202,300
 Nannup 2 $114,980 - $156,199
 Narembeen 2 $114,980 - $156,199
 Narrogin Shire of 1 $103,048 - $139,386
 Narrogin Town of 2 $114,980 - $156,199
 Nedlands 6 $165,962 - $224,536
 Ngaanyatjarraku 2 $114,980 - $156,199
 Northam 5 $149,691 - $202,300
 Northampton 2 $114,980 - $156,199
 Nungarin 1 $103,048 - $139,386
 Peppermint Grove 1 $103,048 - $139,386
 Perenjori 2 $114,980 - $156,199
 Perth 9 $218,570 - $296,127
 Pingelly 1 $103,048 - $139,386
 Plantagenet 4 $136,674 - $185,486
 Port Hedland 6 $165,962 - $224,536
 Quairading 2 $114,980 - $156,199
 Ravensthorpe 3 $126,912 - $171,927
 Rockingham 8 $201,215 - $271,721
 Roebourne 6 $165,962 - $224,536
 Sandstone 1 $103,048 - $139,386
 Serpentine-Jarrahdale 5 $149,691 - $202,300
 Shark Bay 2 $114,980 - $156,199
 South Perth 7 $184,402 - $249,485
 Stirling 9 $218,570 - $296,127
 Subiaco 7 $184,402 - $249,485
 Swan 8 $201,215 - $271,721
 Tambellup 1 $103,048 - $139,386
 Tammin 1 $103,048 - $139,386
 Three Springs 1 $103,048 - $139,386
 Toodyay 2 $114,980 - $156,199
 Trayning 1 $103,048 - $139,386
 Upper Gascoyne 1 $103,048 - $139,386
 Victoria Park 6 $165,962 - $224,536
 Victoria Plains 2 $114,980 - $156,199
 Vincent 6 $165,962 - $224,536
 Wagin 2 $114,980 - $156,199
 Wandering 1 $103,048 - $139,386
 Wanneroo 8 $201,215 - $271,721
 Waroona 2 $114,980 - $156,199
 West Arthur 1 $103,048 - $139,386
 Westonia 1 $103,048 - $139,386
 Wickepin 1 $103,048 - $139,386
 Williams 1 $103,048 - $139,386
 Wiluna 2 $114,980 - $156,199
 Wongan-Ballidu 2 $114,980 - $156,199
 Woodanilling 1 $103,048 - $139,386
 Wyalkatchem 1 $103,048 - $139,386
 Wyndham-East Kimberley 5 $149,691 - $202,300
 Yalgoo 1 $103,048 - $139,386
 Yilgarn 3 $126,912 - $171,927
 York 3 $126,912 - $171,927

* Christmas Island and Cocos Keeling Islands are not included as they are Commonwealth Territories.

PART 3 – LOCAL GOVERNMENT REGIONAL COUNCILS TOTAL REWARD PACKAGE

LEVEL TOTAL REWARD PACKAGE NUMBER OF LOCAL GOVERNMENT REGIONAL COUNCILS
Level 1 $68,120 - $92,093 2
Level 2 $86,669 - $117,257 2
Level 3 $103,048 - $139,386 0
Level 4 $114,980 - $156,199 1
Level 5 $126,912 - $171,927 0
Level 6 $136,674 - $185,486 0
Level 7 $149,691 - $202,300 1
Level 8 $165,962 - $224,536 1
Level 9 $184,402 - $249,485 1
Level 10 $201,215 - $271,721 0
Level 11 $218,570 - $296,127 0

 

PART 4 – LOCAL GOVERNMENT REGIONAL COUNCIL CLASSIFICATIONS

LOCAL GOVERNMENT REGIONAL COUNCIL ** LEVEL TOTAL REWARD PACKAGE
 Bunbury-Harvey 1   $68,120 - $92,093
 Eastern Metropolitan 8   $165,962 - $224,536
 Mid West 2   $86,669 - $117,257
 Mindarie 7   $149,691 - $202,300
 Murchison 1   $68,120 - $92,093
 Rivers 2   $86,669 - $117,257
 Southern Metropolitan 9   $184,402 - $249,485
 Tamala Park 4   $114,980 - $156,199

**The Pilbara Regional Council and the Western Metropolitan Regional Council are not included as their CEOs are not in receipt of remuneration

PART 5 – TOTAL REWARD PACKAGE INCLUSIONS

Each of the following is considered an appropriate component of a CEO’s Total Reward Package.

  • Base salary
  • Annual leave loading
  • Associated FBT accrued
  • Association membership fees
  • Attraction/retention allowance
  • Benefit value of provision of motor vehicle for private use
  • Cash bonus and performance incentives
  • Cash in lieu of vehicle
  • Fitness club fees
  • Grooming/clothing allowance
  • Health insurance subsidy
  • Private phone
  • Recognition programme benefits
  • School fees and child’s uniforms (ongoing)
  • Superannuation
  • Travel or any other benefit taken in lieu of salary
  • Unrestricted entertainment allowance

PART 6 – TOTAL REWARD PACKAGE EXCLUSIONS

Each of the following components is considered an appropriate exclusion from the CEO’s Total Reward Package.

  • Airfare to home base
  • Appointment/relocation expenses
  • Computer provision
  • Entertainment allowance (business restricted)
  • Expense of office (business restricted)
  • Isolation/location allowance
  • Mobile phone
  • Professional development and library allowance
  • Rental subsidy *
  • Travel on business
  • Water/power subsidies *

*  The payment of these subsidies maybe appropriate in some cases such as in remote locations in the state.

The above are considered either a tool of trade benefit (eg mobile phone, computer, library allowance) or a reimbursement for genuine work related expenses (eg expense of office) or compensation for specific disadvantages (eg isolation/location allowances, rental subsidy, water/power subsidy, travel benefits).  The Tribunal has been advised that these benefits are typically not included in Total Reward Packages in other companies and organisations.  The payment of these benefits, where such payment is judged to be fair, not excessive and transparent, may be considered appropriate, but such payments should not be used to artificially inflate the employee’s Total Reward Package.

Signed at Perth this 27th day of June 2008.

Professor M C Wood W S Coleman AM
CHAIRMAN MEMBER

SALARIES AND ALLOWANCES TRIBUNAL

Acknowledgement of Country

The Government of Western Australia acknowledges the traditional custodians throughout Western Australia and their continuing connection to the land, waters and community. We pay our respects to all members of the Aboriginal communities and their cultures; and to Elders both past and present.