Last week (March 10 2022) homeowners across Victoria vented furiously in media forums against a generous 14% pay rise dished out to Councillors across Victoria by the Victorian Independent Remuneration Tribunal (VIRT).
As the dust was settling, some media and Councillors queried my calculations of 14% payrises for Councillors – saying the rise was really only 4%. (This is still nearly double the average Victorian wage rise but apparently nowhere near as outrage-inducing.)
So here is the explanation: the difference is 10% superannuation.
Because Councillors are not employees they are legally not entitled to superannuation.
In fact, VIRT's own Consultation paper for this Determination clearly stated that because Councillors are not employees, they are not entitled to superannuation:
The SG Act excludes Mayors and Councillors across Australia from the deﬁnition of ‘employee’. This means that Councils would not ordinarily be required to pay the SG contribution to Council members. Section 12(9A) of the SG Act states that: a person who holds ofﬁce as a member of a local Government council is not an employee of the council.
However, the Australian Taxation Ofﬁce does allow Council members to re-direct their allowances to superannuation on a pre-tax basis if they wish to do so. In addition, each Council has the option to resolve to become an Eligible Local Governing Body (ELGB) under the Taxation Administration Act 1953 (Cth). Where a Council has made such a resolution, Council members are considered to be employees for a variety of taxation purposes and for the purposes of the SG Act.
Since 2008, an amount equivalent to the SG contribution is paid to Council members in those Councils that have not resolved to become ELGBs. This followed a recommendation of the 2008 Allowances Review which noted that: For those who forgo income and/or employment to participate in local government the loss of superannuation has been identiﬁed as a signiﬁcant issue. This can become a barrier to participation for both existing and potential Councillors.
As a result of the factors above, the Tribunal understands that all Council members receive either an SG contribution or an amount equivalent to the SG contribution in addition to their allowance.
Following the rationale above, Councillors were not legally entitled to superannuation, but they wanted it, so Councils found a way to pay it and over the years it has become ‘custom and practice’ and has now been entrenched by VIRT, by way of the Local Government Act changes, voted for by all but a few astute MPs. (Every ALP and Liberal Party MP supported the Local Government Act which handed Councillor pay to VIRT, and voila now superannuation for Councillors is now legalised.)
Councillors will say that they’ve been paid the superannuation since 2008 so it’s no big deal that it’s now officially legal.
The big deal is that it’s been secret.
And since the Know Your Council website and VIRT’s own published base pay figures exclude the 10% superannuation, I retain the right to be outraged that Councillors are now being given a 14% per cent pay rise, courtesy of State MPs and VIRT.
Any Councillor that wants to stand up publicly and announce they’ve been accepting wangled superannuation payments on top of these ‘official’ base pay rates is welcome to speak up.
RPV Committee member