Victorian Independent Remuneration Tribunal Annual Report 2021-22

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

Chair
Victorian Independent Remuneration Tribunal

Abbreviations and glossary

1. About the Tribunal

The Victorian Independent Remuneration Tribunal (Tribunal) provides transparent, accountable and evidence-based decision-making in relation to the remuneration of Members of the Parliament of Victoria (MPs), Victorian public sector executives and elected local government officials.

The Tribunal is established under the Victorian Independent Remuneration Tribunal and Improving Parliamentary Standards Act 2019 (Vic) (VIRTIPS Act).

The Minister responsible for the Tribunal is the Minister for Government Services. In performing its functions, the Tribunal must act independently and impartially and is not subject to the control or direction of any person, including the Minister.

1.1 Functions of the Tribunal

The VIRTIPS Act requires the Tribunal to inquire into and make determinations in relation to [reference - VIRTIPS Act, s. 6(1)]:

• salaries and work-related parliamentary allowances for MPs
• remuneration bands for executives employed in public service bodies
• remuneration bands for executives employed in prescribed public entities
• allowances for elected local government officials — Mayors, Deputy Mayors and Councillors.

Amongst other functions, the VIRTIPS Act also provides the Tribunal with powers to:

• make guidelines with respect to the use of work-related parliamentary allowances and the Electorate Office and Communications Budget (EO&C Budget) for MPs [reference - VIRTIPS Act, s. 36(1)]
• issue guidelines with respect to the placement of public sector executives within the remuneration bands determined by the Tribunal [reference - VIRTIPS Act, ss. 6(1)(e) and 6(1)(h)]
• provide advice for proposals to pay executives above the relevant remuneration band set by a Determination [reference - VIRTIPS Act, s. 6(1)(i)]
• provide advice to the Minister on any matter relating to the remuneration of any specified occupational group [reference - VIRTIPS Act, s. 6(1)(l)].

1.2 Tribunal Members

The Tribunal consists of up to three Tribunal members. A Secretariat, that sits within the Department of Premier and Cabinet, supports the work of the Tribunal.

Warren McCann — Chair of the Tribunal

Mr McCann has an extensive public service career, with senior appointments in Victoria, South Australia and at the Commonwealth level, including as Chief Executive Officer of the South Australian Department of Premier and Cabinet and Commissioner for Public Sector Employment in South Australia. Mr McCann is a Fellow of the Australian Institute of Public Administration. Prior to his commencement as inaugural Chair of the Tribunal in 2019, Mr McCann served as Special Adviser to the Victorian Department of Premier and Cabinet’s Office of Public Sector Executive Remuneration.

The Honourable Jennifer Acton — Tribunal Member

Ms Acton has significant workplace relations experience, including as a former Presidential Member of Australia's national workplace relations tribunal.

She is currently the Chair of the Victorian State Trustees Ltd and the Port of Hastings Development Authority. In addition to being a lawyer and economist, Ms Acton is a graduate of the Australian Institute of Company Directors.

Ms Acton has been a Member of the Tribunal since its inception.

Barbara Belcher — Tribunal Member until February 2022

Ms Belcher is a former senior Commonwealth public servant, having held various roles in the Department of Prime Minister and Cabinet, including Head of the Government Division responsible for matters related to parliament and public administration. Ms Belcher chaired the Australian Government’s Committee for the Review of Parliamentary Entitlements, and conducted an independent review of whole-of-government internal regulation (the Belcher Red Tape Review). Ms Belcher is a former member of the Victorian Public Sector Commission Advisory Board and is a Fellow of the Institute of Public Administration.

Ms Belcher was a Member of the Tribunal from its inception until February 2022.

The Tribunal thanks Barbara for her many contributions as a Tribunal Member and wishes her all the best in her future endeavours.

1.3 Annual report requirements

The VIRTIPS Act specifies that the Tribunal is to prepare, as soon as practicable after the end of each financial year (and no later than 31 October), an annual report to the Minister about the following activities in the previous 12 months [reference - VIRTIPS Act, s. 40]:

• information about the number of Determinations made by the Tribunal
• details of any disclosure of an interest recorded in the minutes of a meeting of the Tribunal under section 14(4) of the VIRTIPS Act
• a review of the operations of the Tribunal, including the work undertaken by the Tribunal
• the number of MPs who have not complied with requests for further information by the Compliance Officer in the preceding year in relation to Determinations about separation payments
• the number of appeals heard by the Compliance Officer in the preceding year in relation to separation payments and the outcome of the appeals
• the number of MPs who have not complied with requests for further information by the Compliance Officer in the preceding year in relation to appeals relating to work-related parliamentary allowances and the EO&C Budget
• the number of appeals heard by the Compliance Officer in the preceding year in relation to appeals relating to work-related parliamentary allowances and the EO&C Budget and the outcome of the appeals
• a report on the performance of the function of the Compliance Officer in the preceding year
• any other prescribed matter.

These matters are addressed in this report.

2. Review of operations

In 2021-22, the Tribunal undertook work in relation to remuneration arrangements for the following occupational groups:

• Members of the Parliament of Victoria (MPs)
• executives employed in Victorian Public Service (VPS) bodies and prescribed public entities (PEs)
• Mayors, Deputy Mayors and Councillors in local governments in Victoria.

2.1 Members of Parliament

The Tribunal is responsible for inquiring into and setting the value of salaries and work-related parliamentary allowances for MPs [reference - VIRTIPS Act, ss. 6(1)(a)-(b)]. It may also make guidelines with respect to the use of some work-related parliamentary allowances (MP Guidelines) [reference - VIRTIPS Act, s. 36(1)].

Following the Tribunal’s first Determination of MP salaries and work-related parliamentary allowances (made in 2019), the Tribunal is required to make a new Determination within six months after the first sitting day of each subsequent Parliament [reference - VIRTIPS Act, s. 17(7)].

The Tribunal is also required to make a Determination providing for an annual adjustment to the values set in the current MP Determination [reference - Members of Parliament (Victoria) Determination No. 01/2019 (MP Determination) and VIRTIPS Act, s. 18]. The Tribunal is required to consider a range of economic and financial factors, as well as submissions received, when making a Determination [reference - VIRTIPS Act, s. 24(2)].

On 22 June 2022, the Tribunal made the Members of Parliament (Victoria) Annual Adjustment Determination 2022 (2022 MP Annual Adjustment Determination). The 2022 MP Annual Adjustment Determination adjusted the values of MP salaries and work-related parliamentary allowances set in the Tribunal’s MP Determination with effect from 1 July 2022.

The 2022 MP Annual Adjustment Determination increased by 2.75 per cent the values of the:

• basic salary
• additional salaries for specified parliamentary office holders
• expense allowance paid to certain specified parliamentary office holders.

It also made adjustments to the:

• electorate allowance: 3.6 per cent
• EO&C Budget: 3.6 per cent
• motor vehicle allowance: 11.8 per cent.

The Tribunal determined to make no adjustment to the following work-related parliamentary allowances provided to MPs:

• international travel allowance
• commercial transport allowance
• parliamentary accommodation sitting allowance.

The Tribunal also updated Schedule B of the MP Determination to reflect changes to State electorates and electoral boundaries.

The Determination and accompanying Statement of Reasons is available on the Tribunal’s website.

2.2 Executives

The Tribunal is responsible for inquiring into and determining the remuneration bands for executives employed in public service bodies and PEs [reference - VIRTIPS Act ss. 6(d) and 6(g)].

The Tribunal also has the functions of [reference - VIRTIPS Act, s. 6]:

• issuing guidelines with respect to the placement of executives within the remuneration bands
• providing advice to employers proposing to pay an executive above the relevant remuneration band
• providing advice to the Minister about the remuneration of executives.

During 2021-22, the Tribunal’s work in relation to executives comprised:

• Determinations providing for an annual adjustment to the values of the remuneration bands for executives employed in public service bodies and prescribed public entities
• advice to public sector employers proposing to pay an executive above the relevant remuneration band
• completing a review of base remuneration for specialist investment executive roles at the Victorian Funds Management Corporation (VFMC) and the Treasury Corporation of Victoria (TCV)
• progressing a review of remuneration arrangements for executives in the transport infrastructure sector.

Annual adjustment Determinations

The Tribunal made annual adjustments to the following Determinations:

• Remuneration bands for executives employed in prescribed public entities (Victoria) Determination No. 01/2020 (PE Comprehensive Determination)
• Remuneration bands for executives employed in public service bodies (Victoria) Determination No. 01/2020 (VPS Comprehensive Determination).

Uniquely, in 2021-22, the Tribunal was required to make two annual adjustments to the PE Comprehensive Determination, one for the 2021-22 financial year and one for the 2022-23 financial year.

The Tribunal made the Remuneration bands for executives employed in prescribed public entities (Victoria) Annual Adjustment Determination 2021 (2021 PE Annual Adjustment Determination) on 18 November 2021. This Determination adjusted the values of the remuneration bands set in the PE Comprehensive Determination with effect from 1 July 2021 [reference - Under the VIRTIPS Act (section 20), the Tribunal cannot make an annual adjustment to remuneration bands for executives employed in prescribed public entities within nine months of making a PE Comprehensive Determination. The PE Comprehensive Determination was made on 18 December 2020, which meant that the 2021 PE Annual Adjustment Determination was unable to be made before 18 September 2021].

Taking into account the factors the Tribunal is required to consider under the VIRTIPS Act, the 2021 PE Annual Adjustment Determination provided for:

• a ‘standard rate’ adjustment of 2.5 per cent to the notional salary component of the remuneration bands
• a further adjustment of between $925 and $1,874 to the remuneration bands to reflect increases to executives’ statutory superannuation entitlements which took effect on 1 July 2021.

On 22 June 2022, the Tribunal made the Remuneration bands for executives employed in prescribed public entities (Victoria) Annual Adjustment Determination 2022 (2022 PE Annual Adjustment Determination) and the Remuneration bands for executives employed in public service bodies (Victoria) Annual Adjustment Determination 2022 (2022 VPS Annual Adjustment Determination).

Those Determinations adjusted the values of the remuneration bands set by the Tribunal with effect from 1 July 2022.

The 2022 PE Annual Adjustment Determination and 2022 VPS Annual Adjustment Determination both provided for:

• a ‘standard rate’ adjustment of 3.6 per cent to the notional salary component of the remuneration bands
• a further adjustment of between $1,110 and $1,919 to the remuneration bands to reflect increases to executives’ statutory superannuation entitlements which took effect on 1 July 2022.

The Determinations and accompanying Statement of Reasons are available on the Tribunal’s website.

Payment above the band advice

The Tribunal is required to provide advice to public sector employers proposing to pay an executive above the maximum of the relevant remuneration band set by a Determination [reference - VIRTIPS Act, s. 37(1)].

The Tribunal provided advice in response to 55 requests from public sector employers to pay an executive above the maximum of the relevant remuneration band.

32 requests were from VPS employers and related to 62 individual executives. Approximately 74 per cent (46) of those executives were in the transport infrastructure sector (i.e. the Major Transport Infrastructure Authority or the Suburban Rail Loop Authority) [reference - At the start of the 2021-22 financial year, the Suburban Rail Loop Authority was a public service body (an Administrative Office). However, the Suburban Rail Loop Authority became a public entity on 1 December 2021. For the purposes of this Annual Report, the Suburban Rail Loop Authority has been treated as a public service body for the 2021-22 financial year].

23 requests were from PE employers and related to 26 individual executives, of which approximately 46 per cent (12) of those executives were in the finance sector (i.e. VFMC or TCV).

Requests for advice from the Minister

The Minister may request the Tribunal provide advice about remuneration and funding in relation to any specified occupational group and remuneration in relation to prescribed public sector bodies [reference - VIRTIPS Act, s. 37(3)].

In this regard, the Tribunal:

• provided a report to the Minister for Government Services, in response to his request that the Tribunal benchmark the base remuneration for specialist investment executive roles at VFMC and TCV
• progressed a review of remuneration arrangements for executives in the transport infrastructure sector, in response to a request received from the Minister in June 2021.

2.3 Mayors, Deputy Mayors and Councillors

The Tribunal is responsible for making Determinations setting the values of the allowance payable to Mayors, Deputy Mayors and Councillors (Council Members) in all 79 local governments in Victoria [reference - VIRTIPS Act, s. 23A].

On 17 June 2021, the Minister for Local Government wrote to the Tribunal Chair requesting that the Tribunal make its first such Determination [reference - The Minister for Local Government’s letter detailed several matters, including a review of the existing allowance categories, allowances for Mayors, Deputy Mayors and Councillors and annual indexation of allowances, for possible consideration by the Tribunal, in addition to the factors it is required to consider under section 24 of the VIRTIPS Act].

On 5 July 2021, the Tribunal published a notice of its intention to make a Determination and a consultation paper to support parties in making a submission. The Tribunal received 48 submissions.

The Tribunal also:

• distributed a questionnaire to each currently-serving Council member and received 258 responses
• received oral submissions from representatives of eight different organisations.

The Tribunal made the Allowance payable to Mayors, Deputy Mayors and Councillors (Victoria) Determination No. 01/2022 on 7 March 2022 (Local Government Determination), which took effect retrospectively on 18 December 2021.

The Local Government Determination set the value of the base allowance for each Council member, which varies depending on the Council member’s role and the allowance category to which each Council has been assigned.

The Determination provided for further scheduled annual increases to allowance values through to 2025.

The Local Government Determination also set a remote area travel allowance and eligibility criteria for claiming it.

The Determination and accompanying Statement of Reasons is available on the Tribunal’s website.

3. Other Tribunal matters

3.1 Tribunal meetings

The Tribunal held 27 regular meetings and two special meetings in 2021-22.

Minutes were kept for each meeting. There were no disclosures of an interest by a Tribunal Member recorded in the minutes of a Tribunal meeting [reference - VIRTIPS Act ss. 12 and 14(4)].

3.2 Finance

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

However, in accordance with a determination made by the Assistant Treasurer under section 53(1)(b) of the FMA, the Tribunal’s report of operations and financial statements is consolidated with the annual report of the Department of Premier and Cabinet.

Under section 8(3)(d) of the FMA, and Standing Direction 1.5, the Assistant Treasurer has also exempted the Tribunal from the requirements of the Standing Directions.

While the exemption has been provided on an ongoing basis, it is subject to the Tribunal confirming with the Executive Director, Budget Strategy, Department of Treasury and Finance, prior to the end of May each year, that:

• the Tribunal has established and maintained alternative arrangements to ensure that no aspect of financial governance is compromised
• there has not been any significant change to the Tribunal’s risk profile and functions
• there has not been any key audit finding that might suggest deficiencies in the Tribunal’s financial management and internal control systems.

The Tribunal Chair, as the Accountable Officer for the Tribunal, provided this confirmation for the 2021-22 financial year.

3.3 Freedom of information requests

The Tribunal did not receive any freedom of information requests in 2021-22.

4. Office of the Compliance Officer

The VIRTIPS Act establishes an Office of the Compliance Officer, which is ‘attached’ to the Tribunal, but does not formally constitute a part of the Tribunal.

The VIRTIPS Act and the Parliamentary Salaries, Allowances and Superannuation Act 1968 (Vic) specify the Compliance Officer’s functions and powers.

The Compliance Officer is responsible for independently hearing and determining appeals from current and former MPs in relation to the use of work-related parliamentary allowances, the EO&C Budget and the separation payment.

MPs may appeal a decision made by a Clerk of the Parliament, or by the Secretary of the Department of Parliamentary Services, to reject a claim for a work-related parliamentary allowance or regarding their entitlement to receive the separation payment.

The Compliance Officer [reference - These functions are performed by the primary Compliance Officer or, if not available or otherwise unable to hear an appeal, by the secondary Compliance Officer (VIRTIPS Act, Part 4)]:

• is not subject to the direction or control of any person
• is not bound by the rules of evidence
• may conduct proceedings with as little formality as considered appropriate
• may publish a statement of findings, and any required actions, on the Tribunal’s website, which is absolutely privileged.

4.1 Compliance Officers

Peter Lewinsky

Mr Lewinsky is the primary Compliance Officer, appointed to the role on 16 March 2022 for a period of five years.

Mr Lewinsky is an experienced Board and Audit Committee chair and member with a broad portfolio over 25 years covering private and ASX listed companies and the Government sector in a wide range of business areas and professional disciplines. He has extensive experience in financial management, internal and external audit, risk and compliance, governance, strategic decision making and the provision of advice to Board Chairs, Department Secretaries and leaders of a range of organisations.

Mr Lewinsky is a Fellow of the Institute of Chartered Accountants in Australia and New Zealand and a Fellow of the Australian Institute of Company Directors. He has a Bachelor of Economics (Monash University) with an accounting major and a Master of Business Administration degree (University of Melbourne) with a major in finance.

Jane Brockington

Ms Brockington is the secondary Compliance Officer, appointed to the role on 10 June 2020 for a period of five years.

Ms Brockington is an adviser and independent reviewer with a focus on regulation, integrity and governance. She is Principal of the consultancy Bridging Policy and Practice, and was previously a senior executive in the public sector. Ms Brockington holds several non-executive director positions and is a fellow of the Institute of Public Administration Australia (Victoria).

4.2 Report on the function of the Compliance Officer

In 2021-22, the Compliance Officer heard and determined two appeals (as shown in Table 1):

• Appeal 2021/01 – Appeal of a decision to reject a claim under the EO&C Budget
• Appeal 2022/01 – Appeal of a decision to reject a claim under the EO&C Budget.

Table 1: Summary information — appeals heard by the Compliance Officer, 2021-22

Appeal 2021/01

This appeal concerned a claim under the EO&C Budget for the following items:

• a marquee
• calico bags
• smart wallets
• t-shirts.

The claims were rejected by the Secretary of the Department of Parliamentary Services on the basis that a logo and wording proposed to be included on the items did not comply with the prohibitions ‘on party political activity’ in the MP Guidelines.

The appeal was upheld by the Compliance Officer with respect to the marquee, calico bags and smart wallets. The appeal was rejected by the Compliance Officer with respect to the t-shirts as the claim did not comply with the authorship requirement in the MP Guidelines.

Appeal 2022/01

This appeal concerned a claim under the EO&C Budget for a mobile phone car mount, which was rejected by the Secretary of the Department of Parliamentary Services on the basis that this was not a claimable item under the MP Guidelines. The Compliance Officer upheld the appeal, finding that it is reasonable that the purchase of a mobile phone car mount is within the scope of the relevant provisions of the MP Guidelines.

For both appeals, a Statement of Findings has been published and is available on the Compliance Officer’s website.