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Recommendation Report - 26 June 2009

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SALARIES AND ALLOWANCES TRIBUNAL

REPORT UNDER SECTION 7A OF THE SALARIES AND ALLOWANCES ACT 1975

LOCAL GOVERNMENT CHIEF EXECUTIVE OFFICERS

In accordance with Section 7A of the Salaries and Allowances Act 1975 (“the Act”), the Salaries and Allowances Tribunal is required to “inquire into and make a report containing recommendations as to the remuneration to be paid or provided to Chief Executive Officers (CEOs) of local governments.”

For the Tribunal to meet its obligation under Section 7A of the Act, it must ensure that not more than one year elapses between one report and the next.

BACKGROUND

The Tribunal last issued its report on the remuneration of local government CEOs on 27 June 2008.

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”.

The present determination is being made at a time when the Western Australian Government is implementing a local government reform agenda that includes voluntary amalgamations and resource sharing arrangements between local governments.  Advice received by the Tribunal indicates that that any new amalgamations and resource sharing arrangements will become evident in the latter part of 2010 and beyond.  Consequently, the outcomes of the local government reform process will be taken into account in future reports of the Tribunal.

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;
  • surveyed local government CEOs in respect of current remuneration packages;
  • collected population, expenditure and staff employment data on local governments;
  • considered work value assessments of regional local government CEOs;
  • considered relevant labour market and economic data, and
  • sought advice from its Statutory Adviser.

Public Submissions

An advertisement calling for public submissions to the Tribunal’s enquiry was placed in The West Australian newspaper on Monday, 6 May 2009 with a closing date of 22 May 2009.  The advertisement was also placed on the Tribunal’s official website.

One submission was received from a member of the public who advocated a freeze on the salaries of local government CEOs.

Invitations to Local Governments and Regional Councils

On 15 May 2009, the Tribunal wrote by email to all Mayors, Presidents and Chairpersons of local governments and regional councils inviting submissions related to particular issues and characteristics relevant to the remuneration paid to their chief executive officers.  The closing date for submissions was Friday, 29 May 2009.

In making submissions, local governments were provided with a template submission format to ensure that the Tribunal was able to capture data on a broad range of significant issues including:

  • Major growth and development;
  • Significant social and economic issues;
  • Significant demand to service and support non-resident needs;
  • High impact environmental management issues and responsibilities;
  • Greater diversity of services delivered than normally provided by similar sized local governments; and
  • Recruitment issues.

Eight submissions were received from local governments, namely the:

  • Shire of Boddington;
  • Shire of Busselton;
  • Shire of Capel;
  • Shire of Jerramungup;
  • City of Joondalup;
  • Shire of Mundaring;
  • Shire of Toodyay; and
  • City of Wanneroo.

Remuneration Survey

To assist the Tribunal, the Department of Local Government and Regional Development (DLGRD) conducted a survey of current remuneration or “total reward packages” provided to local government CEOs.  The 2009 survey included the remuneration paid to regional local government CEOs.

Local Government Population, Expenditure and Staff Levels

The Tribunal has requested and received the following data from the DLGRD:

  • Population as at 31 March 2009 (ABS Catalogue 3218.0);
  • Total FTEs 2007/08;
  • Operating Expenditure 2007/08;
  • 3 year averaged capital expenditure (2005/06 to 2007/08); and
  • Annual average population growth 1998 to 2008.

Regional Local Government Work Value Assessments

The Tribunal considered data on the work value of the CEOs of regional local governments.  The following seven regional local governments were assessed by consultants from Mercer (Australia) Pty Ltd (‘Mercer’):

  • Bunbury-Harvey Regional Council;
  • Eastern Metropolitan Regional Council;
  • Mid West Regional Council;
  • Mindarie Regional Council;
  • Rivers Regional Council;
  • Southern Metropolitan Regional Council; and
  • Tamala Park Regional Council.

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 State level were also considered.

Advice from Statutory Advisor

The Tribunal sought advice from its statutory advisor, Ms Jennifer Mathews, Director General, DLGRD, who has been appointed by the Premier in accordance with section 10(4)(c) of the Act to assist the Tribunal in its enquiries as they relate to the remuneration of local government CEOs.  Ms Mathews provided advice on a range of matters including current issues affecting local governments, changes to local government areas or positions and other relevant data.

CONSIDERATIONS

In the context of its current enquiry, the Tribunal considered all CEO positions in local governments and regional councils, all submissions, work value assessments on the roles of regional local government CEOs, advice from the Tribunal’s Statutory Adviser, data on the labour market and the Australian economy, and remuneration structures for other classes of senior public sector offices.

Band Allocation Model

The model applied by the Tribunal in recommending remuneration bands was renewed with fresh data related to the key parameters of population, expenditure and numbers of staff employed.  In the case of regional local government CEOs, the Tribunal’s new work value assessments on CEO positions and analysis of the CEO roles and responsibilities, assisted the Tribunal in refining its band allocation model.

Previously, the Tribunal has used an 11 level remuneration structure for regional local governments and a 9 band remuneration structure for other local governments.  The Tribunal has now merged the two structures into one 9 band framework.

Submissions

Of the 8 written submissions received from local governments, 6 sought increases in their CEOs’ remuneration band allocation while the remaining 2 sought no change.

An issue that emerged from one submission was that expenditure data used by the Tribunal was not consistent with that used by a particular local government.  The Tribunal has used a consistent set of expenditure data sourced from the DLGRD to ensure that its remuneration recommendations from year to year are based on comparable data.

Local Governments

On the basis of the data collected by the Tribunal and information provided in submissions, the Tribunal identified those local governments with the potential to be allocated to a different remuneration band than their existing band allocation.  Further analysis was undertaken and advice was considered in respect of these local governments.

The Tribunal determined that adjustments would be made to the recommended remuneration bands for two local governments characterised by rapidly increasing populations and housing development.

Regional Local Governments

There are currently 11 regional local governments constituted under the Local Government Act:

  • Bunbury- Harvey Regional Council;
  • Eastern Metropolitan Regional Council;
  • Mid West Regional Council (formerly Wildflower Country Regional Council);
  • Mindarie Regional Council;
  • Murchison Regional Vermin Council;
  • Pilbara Regional Council;
  • Rivers Regional Council (formerly South East Metropolitan Regional Council);
  • South Metropolitan Regional Council;
  • Tamala Park Regional Council;
  • Western Metropolitan Regional Council; and
  • Yarra Yarra Catchment Regional Council.

The Tribunal has been informed that the CEOs of the Murchison Regional Vermin Council, Pilbara Regional Council and the Western Metropolitan Regional Council are not in receipt of remuneration.  Accordingly, the Tribunal has not recommended remuneration bands for these positions.

The Yarra Yarra Catchment Regional Council appointed a CEO in April 2008 after the Tribunal’s 2008 remuneration survey had been undertaken.  Consequently, this is the first report of the Tribunal in recommending a remuneration band for that CEO.  It was not considered necessary to seek a work value assessment for the CEO position at the Yarra Yarra Catchment Regional Council as the position was part-time with a single water management focus.  The Tribunal’s recommended remuneration band for the position is based on a full-time role and it is expected that the CEO would receive a proportion of the remuneration reflected in the recommended band.

After consideration of the work value assessments undertaken by Mercer and a range of other data relating to the scope of the CEO positions, the Tribunal determined that an adjustment would be made to the recommended remuneration band of four regional local government CEOs.

Labour Market and Economic Considerations

At this time the overriding consideration in determining salaries for office holders coming within the Tribunal’s jurisdiction is the state of the economy.  In this respect Western Australia’s future is inextricably linked to international and national conditions.  While there are tentative signs of recovery with increases in commodity prices, consumer spending and business confidence, until these movements are manifested in investment and employment growth, the economy will continue to languish.  Forecasts reflect the widely held view that the global economy has entered a period of prolonged recession.

Notwithstanding significant boosts in public spending through the Commonwealth Government’s stimulus packages and State Government infrastructure investments, a contraction in Western Australia’s Gross State Product (GSP) of 1.25% is forecast by the Department of Treasury and Finance for 2009-10.  A further contraction of 0.5% in GSP is predicted for 2010-11 before a return to growth of 3.75% in 2011-12. (2009-10 Budget Paper No.3 – Economic and Fiscal Outlook p.152)

It is within the context of this contraction in the economy that local government CEOs’ salaries, the cost of which bear directly on the community in the first instance, must be considered.  In the Tribunal’s view, restraint that can be exercised now in salaries generally and in executive salaries in particular, will contribute to economic recovery.

RECOMMENDATIONS

In view of these considerations, the Tribunal recommends that there be no general increase in salary rates applicable under the recommended band allocations applying to CEOs in local governments.  The Tribunal is mindful of the contribution that these officers make to the community and the demands that are being placed on local governments at this time.  The Tribunal will again address this recommendation when it is prudent to do so.

After consideration of the relevant information and application of its band allocation model, the Tribunal recommends that there should be movement of two 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:

  • Capel – Band 3 to Band 4
  • Toodyay – Band 2 to Band 3

Using the same 9 band framework applicable to local governments, the recommendation for the following regional local governments have been changed:

  • Bunbury Harvey – Below Band 1 (formerly Level 1) to Band 1
  • Mid Wes – Below Band 1 (formerly Level 2) to Band 1
  • Rivers – Below Band 1 (formerly Level 2) to Band 1
  • Tamala Park – Band 2 (formerly Level 4) to Band 4.

In considering these recommendations, local governments are referred to section 5.39(7) of the Local Government Act 1995.

The Tribunal recommends that with effect from 1 July 2009 the Total Reward Package paid or provided to local government and regional local government CEOs be as set out in the attached Schedule.

Signed at Perth this 26th day of June 2009.

W S Coleman AM C A Broadbent B J Moore
CHAIRMAN MEMBER 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 41
Band 3 $126,912 - $171,927 20
Band 4 $136,674 - $185,486 4
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 4 $136,674 - $185,486
 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 3 $126,912 - $171,927
 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 – REGIONAL LOCAL GOVERNMENT TOTAL REWARD PACKAGE

BAND TOTAL REWARD PACKAGE NUMBER OF REGIONAL LOCAL GOVERNMENTS
Band 1 $103,048 - $139,386 4
Band 2 $114,980 - $156,199 0
Band 3 $126,912 - $171,927 0
Band 4 $136,674 - $185,486 1
Band 5 $149,691 - $202,300 1
Band 6 $165,962 - $224,536 1
Band 7 $184,402 - $249,485 1
Band 8 $201,215 - $271,721 0
Band 9 $218,570 - $296,127 0

PART 4 – REGIONAL LOCAL GOVERNMENT CLASSIFICATIONS

REGIONAL LOCAL GOVERNMENT ** BAND TOTAL REWARD PACKAGE
 Bunbury-Harvey 1   $103,048 - $139,386
 Eastern Metropolitan 6   $165,962 - $224,536
 Mid West 1   $103,048 - $139,386
 Mindarie 5   $149,691 - $202,300
 Rivers 1   $103,048 - $139,386
 Southern Metropolitan 7   $184,402 - $249,485
 Tamala Park 4   $136,674 - $185,486
 Yarra Yarra 1   $103,048 - $139,386

**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 may be 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 26th day of June 2009.

W S Coleman AM C A Broadbent B J Moore
CHAIRMAN MEMBER 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.