Message from the Chair

Victorian Independent Remuneration Tribunal Annual Report 2021-22 - message from the Chair.

Message from the Chair

Dear Minister

There were two pieces of work in 2021–22 that saw the Tribunal depart from its standard fare of the past two years.

The first involved, in response to requests for advice from you, reviews of factors affecting executive remuneration in the finance and transport infrastructure segments of the public sector. A final report on the finance sector was submitted on 2 June 2022, while work on the transport infrastructure sector is continuing. These two reviews provided an opportunity to undertake a detailed analysis of market conditions in these important segments to a degree that, as far as is known, has not been attempted previously.

Apart from their intended support for the payment above the band process, it is hoped that these products will be a useful contribution to the body of knowledge supporting remuneration setting in the public sector in Victoria. I would like to thank Victorian Funds Management Corporation, Treasury Corporation of Victoria, the Department of Transport, the Major Transport Infrastructure Authority, the Suburban Rail Loop Authority and the Victorian Public Sector Commission for their cooperation and support throughout the conduct of these reviews.

The second piece of work involved the determination of allowances for Local Government Mayors, Deputy Mayors and Councillors – the first time the Tribunal has made a determination for this group. The Tribunal decided that a substantial increase in the value of the allowance compared to existing equivalent allowances was warranted and determined to phase in the new values over several years considering relevant economic, financial and wages policy matters.

In making the Determination, the Tribunal took into account the substantial change in the roles, responsibilities and workload of Council members since allowances were last reviewed and considered the purpose of Council member allowances and the impact of altering their value, including on diversity of representation in local government.

This financial year was the first full year of the operation of the payment above the band process. As you know, if an employer proposes to pay an executive above the maximum of the remuneration band relevant to the position’s work value classification, the employer must first seek and consider the advice of the Tribunal. The employer is not bound to accept the advice. In providing advice, the Tribunal strives to protect the integrity of the overall remuneration structure and at the same time recognise that there may be circumstances where prevailing market conditions justify a departure from the remuneration structure.

Over the course of the year, the Tribunal provided advice in response to 55 requests from public sector employers; 32 were from Victorian Public Service employers and related to 62 individual executives and 23 were from public entity employers and related to 26 individual executives. Stated in another way, there are around 2,900 executives employed in the Victorian public sector (based on the latest available data), and payment above the band requests were made for approximately 3 per cent of these in 2021–22. Thus, it is pleasing to be able to report that the remuneration bands determined by the Tribunal appear to be appropriate for the vast majority of executives.

The Tribunal will continue to monitor trends in payment above the band requests over the coming year and will report upon any significant developments. It will also continue to refine the Tribunal’s methodology and processes including in relation to the timing of its advice but also, importantly, the range and kind of information provided to employers as part of the advice – with the aim of ensuring that there is a clear understanding of the data and reasoning relied upon in the process of formulating its advice.

Other work undertaken by the Tribunal during the course of the year included annual adjustments to the value of salaries and work related allowances for Members of Parliament and to the remuneration bands for Victorian Public Service and public entity executives. As with its previous work, the Tribunal sought to strike the right balance between fair and reasonable recompense for the performance of public duties and the prevailing and projected economic conditions and trends and the financial position and economic strategy of the State including current wages policy.

During the year one of the Tribunal’s three inaugural members – Barbara Belcher AM – resigned. Barbara made an extremely valued contribution to the work of the Tribunal and I wish her well in her future endeavours.

Finally, I would like to acknowledge the exemplary work of the Tribunal’s Secretariat in every aspect of its work.

On behalf of the Tribunal’s members, it is my pleasure to submit this report to you.

Yours sincerely

Warren McCann

Victorian Independent Remuneration Tribunal