This memorandum is not part of the determination, but is intended to indicate its general effect.
This determination, which comes into force on 1 July 2010, sets the remuneration, allowances, and expenses of elected local government representatives. The determination applies—
to the members of the local authorities and community boards that will be incorporated into the new Auckland Council on 1 November 2010, for the period up to 31 October 2010; and
to the members of all other local authorities and community boards, for the period up to the declaration of the results of the 2010 local body elections.
The determination provides for no general increase in the remuneration of the elected members of 68 local authorities, holding their remuneration at the level established from 1 July 2009. For the remaining 16 local authorities, all of which requested and received no adjustment to elected members’ remuneration last year, remuneration has been increased to bring them into line with the former group. This restores fair remuneration relativities across local authorities and provides a fair and consistent basis for consideration by the Remuneration Authority (the Authority) of the remuneration of local government elected members following the 2010 elections.
To meet its statutory obligations, and achieve transparency, fairness, and consistency in remuneration-setting across diverse local 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) that is notionally attributable to each local and regional authority and from which the remuneration of each elected member will be met.
The Authority calculated the indicative pools for the 2009 determination 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 later became. The Authority applied a general remuneration movement of 3%.
The incorporation of this general adjustment and the other 4 factors into the Authority's model generated changes in the indicative remuneration pools for each local and regional authority ranging from an increase of over 8% (atypically for a high-growth council) to negative adjustments in some cases. Where there was a negative movement, the pool was held at the 2008 level.
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 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 2009 that, where there was 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.
Councils took a variety of approaches to recommending the allocation of the pool. The overwhelming majority accepted the increase, while 16 councils requested to decline the increase. The 2009 determination of the Authority reflected those decisions and requests.
2009/10 saw public sector remuneration held or adjusted only marginally, and a strong focus on the restraint of both rate and remuneration increases in local government.
Although economic indicators have improved since the Authority’s 2009 decisions on local government remuneration, long-term restraint is still signalled for both local and central government expenditure.
In these circumstances, the Authority does not consider a general increase to the 2009 levels of local government elected members’ remuneration is warranted, at least prior to the 2010 local government elections.
This determination therefore incorporates indicative pool totals derived from audited annual accounts for the year ended 30 June 2008 and population figures as at the same date.
Where councils applied the full indicative pool in 2009, those remuneration levels have been carried forward (subject to any minor adjustments made in the past 12 months to reflect structural changes within councils).
The remuneration of elected representatives in those councils where the Authority agreed to their requests that the full indicative pool not be applied has been revisited, and councils have been required to apply the full 2009 indicative pool. This adjusts their remuneration substantively for the first time since 1 July 2008, re-establishes fair remuneration relativities across councils, and reflects the Authority’s long-held view that the acceptance, or otherwise, of remuneration adjustments should not become a political issue, particularly in an election period.
Vehicle mileage allowance
The Authority has made no change to the level set for this allowance.