Note: The following explanatory memorandum should be read in conjunction with the explanatory memorandum(s) appended to the:
This memorandum is not part of the determination, but is intended to indicate its general effect.
This determination sets the remuneration of the mayors of district and city councils, the chairs of regional councils, and councillors and community board members for the period from the declaration of the results of the 2010 local authority elections until the establishment of the committee structures of the newly elected councils.
This determination does not include the Auckland Council or the local boards established under the Local Government (Auckland Council) Act 2009. The remuneration of the elected representatives of the new local government structure for Auckland was established in the Local Government Elected Members (2010/11) (Auckland Council and Local Boards) Determination 2010.
The remuneration of mayors and regional council chairs will remain as set out in this determination until 30 June 2011. The remuneration of councillors and community board members, for the same period, will be no less than the amounts specified in this determination. Therefore, those standing for elected office in this year’s local authority elections can do so with certainty about the minimum remuneration they will receive if elected.
The remuneration of councillors and community board members is set at around 80% of the pre-election remuneration for the same positions. This is the practice adopted by the Remuneration Authority (the Authority) in previous election years, for 2 main reasons.
First, it would be problematic to reduce the remuneration of councillors or community board members once the organisational structure of a local authority had been decided after the election. An elected member so affected could reasonably claim to have been unfairly treated, having stood for election on the basis of one rate of remuneration and, after the election, being faced with a 3-year term on a lower rate.
Secondly, in some councils, elected members are paid in part through fixed remuneration, and in part through meeting fees. Setting the fixed component of elected members’ remuneration at a low initial rate provides councils with the opportunity to recommend a meeting fee regime to the Authority, without the consequence of reducing the fixed component of their remuneration.
For these reasons a conservative initial level of remuneration has been set by the Authority in this determination.
Another advantage of this approach is that it provides an incentive for councils to address and finalise their structures soon after the election. Prior to that process, the Authority will notify each local authority of the sum of money available (the governance pool) to fund the remuneration of the appointees to the new structures. After receiving and considering recommendations from each local authority on the allocation of this pool, the Authority will issue an amending determination for 2010/2011. This will set the remuneration for each position in the new structure.
That amending determination will also provide an increase in the remuneration for those in basic councillor and community board positions, in most cases close to the pre-election levels, provided that there are neither radical changes in councils’ structures, nor changes in the mix of fixed remuneration and meeting fees.
This determination attempts to strike a balance between recognising the increasing demands on, and expectations of, the mayors and regional council chairs over the last 5 or more years, and being fair to the ratepayers who meet the cost of their elected members’ pay.
In 2009 and 2010, the Authority conducted an in-depth review of the setting of mayors’ and regional council chairs’ remuneration. This included independent assessment of the job sizes for selected mayor and chair positions, as well as of the time involved in carrying out the responsibilities of their offices. The review confirmed that the responsibilities and time commitment of mayors and regional council chairs have grown disproportionately to those of other local government elected members, particularly since the Local Government Act 2002 came into effect. The results of this review are reflected in the levels of mayors' and chairs' remuneration contained in this determination.
At the same time, many local authorities are struggling to hold rates increases to a manageable size, and many of those paying the rates are themselves under financial pressure.
Furthermore, an amendment made to the Remuneration Authority Act 1977 in 2009 requires the Authority to take account of countervailing economic conditions, and also provides that, in taking account of those conditions, it may set remuneration at a rate lower than it might otherwise have done.
For these reasons, the level of remuneration for mayors and regional council chairs has been set lower than the Authority might otherwise have determined. It is also unlikely that the governance pools for the remuneration of local government elected members, from the establishment of the new structures following the election until 30 June 2011, will provide for any increase in the remuneration of elected representatives over 2009/10, other than for mayors and regional council chairs.
Note: The preceding explanatory memorandum should be read in conjunction with the explanatory memorandum(s) appended to the: