This memorandum is not part of the determination, but is intended to indicate its general effect.
This determination, which is deemed to have come into force on 1 July 2009, sets the remuneration, allowances, and expenses of elected local government representatives in the Auckland region.
The Local Government Act 2002 requires the Remuneration Authority (the Authority), in setting remuneration, to have regard to the need to—
minimise the potential for types of remuneration to distort the behaviour of the elected members:
achieve and maintain fair relativity with levels of remuneration received elsewhere:
be fair both to the elected members and ratepayers:
attract and retain competent persons.
In order to meet its statutory obligations, and in particular to achieve transparency, fairness, and consistency in remuneration-setting across diverse local and regional authorities, the Authority established a model to assist in determining the cost of governance and representation for each local and regional authority. The model incorporates 4 criteria that are transparent and readily verifiable from published data, namely—
This provides the Authority with a ranking order of the relative size of the governance and representation responsibility of each local and regional authority.
The model also allows for the incorporation of a general movement in remuneration to help ensure that adjustments to the salaries of elected representatives reflect not only the size of their roles, but also any market movement in remuneration that the Authority considers should be applied to their salaries.
The application of these factors results in a sum of money (the indicative pool) notionally attributable to each local and regional authority, and from which the remuneration of each elected member will be met.
This determination uses indicative pool totals derived from audited annual accounts for the year ended 30 June 2008 and population figures as at the same date.
The Authority calculated the indicative pool in late 2008, at which stage the economy was slowing, but the seriousness and impact of the external financial crisis was not as apparent as it is currently. The Authority applied a general remuneration movement of 3%, slightly less than the movement in remuneration from 2007 to 2008 that survey and other data were showing.
The incorporation of this general adjustment and the other 4 factors into the Authority's model generated changes in the indicative remuneration pools for Auckland local and regional authorities ranging between 2.2% and 5.5%.
Councils were then invited to recommend the distribution of the pool for the 2009/10 financial year.
Subsequent to this notification to councils, the Treasury released its post-election financial update. The Government's response to the update emphasised the need for a sustained period of strict control over government expenditure. Part of that response was a call for restraint on movement in remuneration generally, and for senior state sector employees and office-holders. Parliament itself resolved unanimously not to seek any increase in MPs' remuneration in 2009/10.
In this context, some councils expressed concerns about increasing the salaries of elected representatives when they also were facing difficult funding choices. The Authority therefore advised all councils in late January that, where there was valid reason and unanimous agreement within a council not to increase salaries of elected members, the Authority would consider a recommendation to defer any increases that would otherwise have applied from 1 July 2009.
Auckland councils took a variety of approaches to recommending the allocation of this year's pool. Recommendations ranged from full distribution of the pool to rejection of any increase over 2008/09. Some councils recommended distribution of only part of the increase. Some councils also recommended a different basis of allocation among positions from 2008/09. Support for the recommendations ranged from unanimous to substantial splits.
Given the legislative programme for the establishment of a replacement local government authority in the Auckland region from October 2010, the Authority initially sought to gain support for a common approach across the affected councils. The majority expressed unwillingness to adopt such an approach and consequently the Authority decided to deal with the particular circumstances of each council.
Across the remainder of New Zealand, the Authority’s approach has been to accept recommendations that were unanimous or near unanimous. In Auckland the level of dissent was in many cases significant, but given the finite nature of the arrangements under consideration, the Authority accepted majority recommendations in most cases. It determined an alternative approach altogether in one circumstance to avoid a reduction of remuneration for one group of representatives.
It has been the long-held position of the Authority that neither mayors nor councils can influence the level of mayoral remuneration. However, given the approach taken in responding to councils’ recommendations, the Authority has also accepted recommendations from individual mayors to defer increases in their remuneration this year.
It is fair to say that in some districts debate on these issues within a council has been openly political and fraught, and has involved considerable time and resource. The local delays, and the Authority’s attempt to develop a single model of distribution, have also led to delays in releasing this determination.
The Authority has made no change to the level set for the vehicle mileage allowance.