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Review of operations

Review of operations and work undertaken by the Victorian Independent Remuneration Tribunal.

Tribunal meetings

The Tribunal held 22 standard meetings and three special meetings, during the period 1 July 2019 to 30 June 2020. Meetings were held at 1 Treasury Place, East Melbourne until 25 March 2020. Meetings were held online via Skype or Microsoft Teams from 26 March 2020 due to coronavirus (COVID-19) impacts.

Minutes were kept for each meeting in accordance with the VIRTIPS Act.

There were two disclosures of an interest recorded in the minutes of a meeting of the Tribunal under section 14(4) of the VIRTIPS Act:

  1. Chair, Warren McCann disclosed an interest in relation to the Determination of remuneration bands for executives employed in public service bodies. Procedures were implemented in accordance with section 14 of the VIRTIPS Act to manage the interest, and actions recorded in the minutes of a subsequent meeting.
  2. Member, The Honourable Jennifer Acton, disclosed an interest in relation to the Determination of remuneration bands for executives employed in prescribed public entities. Procedures were implemented in accordance with section 14 of the VIRTIPS Act to manage the interest and actions recorded in the minutes of a subsequent meeting.

Work undertaken

In 2019-20, the Tribunal inquired into and determined remuneration arrangements for:

  • MPs
  • Victorian public service (VPS) executives employed in public service bodies, namely departments, Administrative Offices (AOs) and the Victorian Public Sector Commission (VPSC)
  • executives employed in prescribed public entities

The Tribunal was also given responsibility in March 2020 through the Local Government Act 2020 (Vic) for making determinations setting the value of allowances payable to elected local government officials.

Snapshot of work undertaken by the Tribunal in 2019-20

  • Members of Parliament - 2 Determinations and 2 guidelines
  • Victorian Public Service - 1 Determination and 1 guidelines
  • Public Entities - 36 Individual CEO TRP Determinations

Members of Parliament

The Tribunal’s work in relation to MPs comprised:

  • the first Determination of the values of MP salaries and allowances, and a subsequent Determination of an annual adjustment to these values
  • the making of guidelines governing the use of work-related parliamentary allowances and the EO&C Budget, the amendment of those guidelines and the commencement of a comprehensive review of the guidelines
  • commencement of a report and review of superannuation arrangements for MPs

Determinations of MP salaries and allowances

Section 17 of the VIRTIPS Act requires the Tribunal to comprehensively review and make determinations setting the value of the following salaries and allowances for MPs:

  • the basic salary
  • additional salaries — the supplementary salary provided to specified parliamentary office holders as defined in the VIRTIPS Act (e.g. the Premier)
  • work-related parliamentary allowances, including the electorate allowance, expense allowance, travel allowance, parliamentary accommodation sitting allowance, commercial transport allowance, international travel allowance and motor vehicle allowance
  • the EO&C Budget

The VIRTIPS Act also requires that the Tribunal’s first Determination of MP salaries and allowances set the value of the ‘basic salary portion’, which determines the superannuation contributions and benefits of existing and former MPs in the defined benefit schemes provided under Part 3 of the Parliamentary Salaries, Allowances and Superannuation Act 1968 (Vic) (PSAS Act).

The Tribunal must make a new Determination within 6 months after the first sitting day of each subsequent Parliament.

Section 24 of the VIRTIPS Act applies to the making of a Determination for MP salaries and allowances. The Tribunal must publish notice of its intention to make a Determination, containing relevant information about the Determination, and give any affected person or a class of affected persons a reasonable opportunity to make submissions.

The Tribunal must also include a statement of reasons in a Determination and consider the following:

  • any statement or policy issued by the Government of Victoria which is in force with respect to its wages policy (or equivalent) and the remuneration and allowances of any specified occupational group
  • the financial position and fiscal strategy of the State of Victoria
  • current and projected economic conditions and trends
  • submissions received in relation to the proposed Determination
  • any other prescribed matter

The Tribunal published a notice of its intention to make a Determination on its website in July 2019. The Tribunal also consulted via:

  • a call for submissions from interested parties and affected persons
  • a questionnaire distributed to current MPs
  • an anonymous questionnaire for all interested parties made available through Engage Victoria, the Victorian Government’s online consultation platform
  • an MP consultative committee, that was broadly representative of the parties and views across the Victorian Parliament, to discuss the roles and responsibilities of MPs and to better understand the remuneration framework applicable to MPs

In total, the Tribunal received:

  • 154 responses to the public questionnaire
  • 61 responses to the MP questionnaire, representing around half of current MPs
  • 12 individual written submissions (including one confidential submission)
  • 391 submissions that were either identical or contained very similar content
  • several oral submissions

On 16 September 2019 the Tribunal made its first Determination of MP salaries and allowances, the Members of Parliament (Victoria) Determination 01/2019, which took effect the same day.

Annual adjustment

Section 18 of the VIRTIPS Act requires the Tribunal to make a Determination providing for an annual adjustment to the values set in the current Determination under section 17. The Tribunal made the Members of Parliament (Victoria) Annual Adjustment Determination 2020, which took effect on 1 July 2020.

In the Statement of Reasons accompanying the Determination, the Tribunal noted that the coronavirus (COVID-19) pandemic had significantly impacted current and expected Australian and Victorian financial and economic conditions. The Tribunal determined to leave the value of the basic salary and allowances for MPs unchanged from the rates set in the Members of Parliament (Victoria) Determination 01/2019.

Making of guidelines

Section 36 of the VIRTIPS Act provides that the Tribunal may make guidelines for or with respect to the use of work-related parliamentary allowances and the EO&C Budget.

The Tribunal made the Members of Parliament (Victoria) Guidelines No. 01/2019 (01/2019 guidelines) on 16 September 2019 (alongside the first Determination) for the:

  • EO&C Budget
  • parliamentary accommodation sitting allowance
  • travel allowance
  • commercial transport allowance
  • international travel allowance

In October 2019, the Tribunal received letters from the Special Minister of State and the Clerks of the Parliament requesting clarifications to the Guidelines. In November 2019, the Tribunal published a Discussion Paper that set out:

  • changes the Tribunal was considering making to the 01/2019 Guidelines in relation to the matters on which clarification was sought
  • the matters where the Tribunal required further information in order to decide whether and how to amend the existing guidelines

The Tribunal invited all persons and bodies to provide feedback and additional information relating to the Discussion Paper and to suggest additional changes for the Tribunal’s consideration.

Taking into account the broader regulatory framework within which the Guidelines operated and the matters raised in submissions, the Tribunal updated the Guidelines in December 2019.

The Members of Parliament (Victoria) Guidelines No. 02/2019 (02/2019 Guidelines) replaced the 01/2019 Guidelines.

Review of guidelines

In June 2020, the Tribunal commenced a comprehensive review of its
02/2019 Guidelines, publishing an Issues Paper to guide a call for submissions on matters for consideration.

The Tribunal had indicated its intention to conduct a broad review of the Guidelines in its Statement accompanying the publication of the current 02/2019 Guidelines.

The review is intended to be holistic to ensure the Guidelines are modernised and designed to support the broader compliance framework within which they operate. The Tribunal’s intention is to complete the review and make new Guidelines during the 2020-21 financial year.

Review and report on MP superannuation arrangements

Section 39(1) of the VIRTIPS Act requires the Tribunal to review and report on the superannuation arrangements for MPs under Parts 3 and 4 of the PSAS Act, including potential inequalities and irregularities between the arrangements. The Tribunal is required to complete its review and report on its findings by 20 September 2020.

In May 2020, the Tribunal published an Issues Paper. The paper set out the Tribunal’s proposed analytical framework for conducting the review, provided an overview of the existing superannuation arrangements (including differences between the superannuation schemes) and sought submissions by 10 July 2020.

VPS executives

The Tribunal’s work in relation to VPS executives comprised:

  • its first Determination of remuneration bands for executives employed in public service bodies
  • making of guidelines about the placement of executives within the bands
  • advice on proposals to pay above the bands

Determination of remuneration bands for VPS executives

Section 21 of the VIRTIPS Act requires the Tribunal to make determinations setting the values of the remuneration bands for executives employed by departments, AOs and the VPSC. The Tribunal is required to publish notice of intention to make a Determination, and to take into account matters including the Victorian Government’s wages policy and financial and economic conditions (s24 of the VIRTIPS Act).

In July 2019, the Tribunal published notice of its intention to make a Determination under section 21 and called for submissions. Executives employed in public service bodies were also invited to complete an anonymous questionnaire online. The Tribunal received two written submissions and around 250 responses to the online questionnaire (approximately 25 per cent of all public service executives).

The Tribunal made the Remuneration bands for executives employed in public service bodies (Victoria) Determination 01/2020, on 14 May 2020. The Determination set the parameters for an executive's remuneration based on their relevant remuneration band. Employers retain the power to set an individual executive's remuneration within the relevant band. However, employers proposing to pay an executive above the maximum rate of the relevant band must apply for and consider advice from the Tribunal (s37 of the VIRTIPS Act).

The Tribunal comprehensively reviewed the roles of executives and their existing remuneration framework, as well as relevant policies and financial, fiscal and economic factors. In addition to its legislative requirements, the Tribunal considered:

  • the nature of the labour market for VPS executives
  • the competitiveness of the existing executive remuneration bands, informed by an independent analysis commissioned by the Tribunal
  • the need for the executive remuneration framework to support fair remuneration outcomes and to attract and retain talent in the VPS executive workforce

The Determination set a new executive remuneration framework consisting of:

  • three distinct and contiguous bands for subordinate executives
  • three distinct and contiguous bands for AO Heads aligned to the subordinate executive bands
  • a single band for the remuneration of Secretaries and the VPSC Commissioner

The Determination provided for two implementation stages. From 20 September 2019 until 30 June 2020, the values of the remuneration bands for VPS executives were based on the values of the bands and remuneration for these roles as at 1 July 2019 or at the time of the Determination, whichever was the lower. The adjusted remuneration bands took effect from 1 July 2020.

VPS Executive Remuneration Guidelines

In line with section 36(6) of the VIRTIPS Act, the Tribunal issued Guidelines to assist employers in placing public service body heads and other public service executives within the remuneration bands set by the Tribunal’s Remuneration bands for executives employed in public service bodies (Victoria) Determination 01/2020.

The Guidelines apply to new executive appointments in public service bodies and existing executives in public service bodies where there is a change in the employment contract.

The Guidelines assist public service body employers by identifying three guiding principles which were drawn from matters considered by the Tribunal in making the Determination:

  • executive remuneration should be fair and reasonable
  • executive remuneration should be competitive
  • executive remuneration arrangements should be robust.

The Guidelines also identify specific factors that public service body employers should consider when setting the remuneration of executives within the relevant band, including:

  • the work value assessment score for the role under the Victorian Public Sector Commission’s Victorian Public Service Classification Framework
  • the experience, knowledge and capability of the individual
  • the remuneration relativities of other executives within the organisation
  • intra-band reporting
  • the current remuneration of the individual
  • labour market pressures on the position

Advice on proposals to pay above the bands

In line with section 37 of the VIRTIPS Act, the Tribunal is required to provide advice to employers on proposals to pay an executive above the maximum of the relevant remuneration band set by a Determination.

After the Tribunal made its Determination for public service bodies in May 2020, the Tribunal wrote to relevant employers to advise them of the obligation to request advice for executives paid above the band, and the process for seeking this advice from the Tribunal.

Five out of the 26 public service body employers responded, seeking the Tribunal’s advice for a total of 57 executives who were paid above the maximum of the relevant remuneration band as at 22 May 2020.

The Tribunal has also developed and published a formal process going forward for public service body employers to seek its advice for proposals to pay above the relevant remuneration band. As part of this process, the Tribunal has committed to publishing its advice to employers on its website, to support greater transparency in relation to remuneration arrangements.

Public entity executives

The Tribunal’s work in relation to public entity executives comprised:

  • determinations under section 23 of the VIRTIPS Act in relation to the Victorian Government’s Public Entity Executive Remuneration Policy (PEER policy)
  • commencement of the process for making a Determination of remuneration bands for executives employed in prescribed public entities

Determinations under section 23 in relation to the PEER policy

In July 2019, at the request of the Minister under section 23 of the VIRTIPS Act, the Tribunal assumed responsibility for determining the remuneration packages for CEOs in specified public entities in accordance with the PEER policy.

The PEER policy details the Victorian Government’s approach to executive remuneration in specified public entities, which among other matters, provides:

  • a framework of five guiding principles for setting public entity executive remuneration
  • the procedure for public entities to make submissions to the Tribunal to determine remuneration arrangements for CEOs

In the 2019-20 financial year, the Tribunal determined the total remuneration package for 36 CEOs (or equivalent positions) of specified public entities. Of those determinations:

  • 20 were for new appointments
  • 11 were for reappointments
  • 5 were for mid-contract increases

The largest share of submissions came from public entities in the Department of Environment, Land, Water and Planning (DELWP) portfolio, which has the largest number of entities subject to the PEER policy. Other than the Department of Treasury and Finance (DTF) portfolio which made no submissions, the Department of Justice and Community Safety (DJCS) and Department of Transport (DoT) portfolios had the fewest submissions.

Determination of remuneration bands for executives employed in prescribed public entities

Section 19(1) of the VIRTIPS Act requires the Tribunal to make determinations setting the values of the remuneration bands for executives employed in prescribed public entities. The consultation and other requirements of section 24 of the VIRTIPS Act also apply to these types of determinations.

The Victorian Independent Remuneration Tribunal and Improving Parliamentary Standards (Prescribed Public Entities) Regulations 2019 (Vic) prescribe approximately 140 entities, such as water corporations and TAFEs, employing around 800 executives.

In January 2020, the Tribunal published notice of intention to make a Determination and called for written and oral submissions. Executives were also invited to respond to an anonymous questionnaire through Engage Victoria. Around 40 written and oral submissions were received by the Tribunal and around 170 executives completed the questionnaire. In addition, in June 2020 the Tribunal invited nominated CEOs and Board chairs of public entities to participate in a series of virtual round tables to seek early feedback from entities about remuneration framework options.

This Determination is expected to be made by the end of 2020.

Local government allowances

On 24 March 2020, the Local Government Act 2020 (Vic) received Royal Assent. That Act amended the VIRTIPS Act to give the Tribunal responsibility for making determinations setting the value of the allowance payable to Mayors, Deputy Mayors and Councillors. The Tribunal’s determinations must also provide for Council allowance categories, which can be specified for a single Council or a group of Councils.

The first Determination will come into effect six months after the Tribunal receives a request from the Minister for Local Government to make the Determination. This request was not received during the 2019-20 financial year.

Freedom of Information requests

The Tribunal received one Freedom of Information request during the period 1 July 2019 to 30 June 2020. 

The Tribunal identified 13 documents, and of these 11 de-identified documents were released and 2 were denied in full.

The request was finalised within the statutory timeframe.

Finance

Section 45 of the Financial Management Act 1994 (Vic) requires the Tribunal to prepare a report of operations and financial statements for each financial year.

In accordance with a determination made by the Assistant Treasurer under section 53(1)(b) of the Financial Management Act 1994 (Vic) the Tribunal’s report of operations and financial statements is consolidated with the report of the Department of Premier and Cabinet for the 2019-20 financial year.

Reviewed 27 January 2021

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