2024 Determination of remuneration bands for executives employed in prescribed public entities

In accordance with section 24(1) of the Victorian Independent Remuneration Tribunal and Improving Parliamentary Standards Act 2019 (Vic) (VIRTIPS Act), the Tribunal hereby publishes notice of its intention to make a new Determination setting the values of the remuneration bands for executives employed in prescribed public entities.

The Tribunal invites submissions from interested persons or bodies in relation to the proposed Determination.

Details about the proposed Determination and how to make a submission are set out below.

Who is covered by the Determination?

The proposed Determination will apply to executives employed in prescribed public entities, which are defined in the Victorian Independent Remuneration Tribunal and Improving Parliamentary Standards (Prescribed Public Entities) Regulations 2021 (Vic). The Victorian Public Sector Commission publishes a list of public sector employers(opens in a new window), which includes details on the relevant Determination for each employer.

The Public Entity Executive Remuneration (PEER) Policy details the Victorian Government’s approach to executive employment, classification and remuneration in prescribed public entities. Under the PEER Policy, employers must ensure that the remuneration of each executive is within the relevant band set in a Determination, or seek and consider the Tribunal’s advice to pay above the band.

What will the Determination cover?

The Determination will set the values of the remuneration bands which apply to executives employed in prescribed public entities.

Once in effect, the Determination will supersede the Tribunal’s Remuneration bands for executives employed in prescribed public entities (Victoria) Determination No. 01/2020 (as amended by annual adjustment Determinations made in 2021, 2022 and 2023). The current values of the remuneration bands are available online.

The Tribunal’s Prescribed Public Entity Executive Remuneration Guidelines (PE Guidelines) support employers in setting remuneration for executives within the remuneration bands. As part of the Determination, the Tribunal will consider updating the PE Guidelines.

How can I make a submission?

The Tribunal invites submissions from any person or body, including any affected person or class of affected persons, in relation to the proposed Determination and PE Guidelines.

The Tribunal will also invite public entity executives to make a submission via an online questionnaire, seeking views on their role and existing remuneration arrangements, among other matters.

The Tribunal may publish further documents or information to support the making of submissions.

Consultation questions

Without limiting the matters interested parties may wish to address in a submission, the Tribunal is particularly interested in receiving views on the following questions:

1. How has the role of public entities, and the role of executives employed in public entities, evolved since the Tribunal’s 2020 Determination?
2. Are the values of the existing remuneration bands competitive in terms of attracting and retaining executive talent, noting that an employer must seek and consider the Tribunal's advice if they propose to pay an executive above the band?
3. In benchmarking the remuneration of public entity executives against the broader market, what is an appropriate market positioning (e.g. low, middle or high), and why?
4. How are market conditions or pressures affecting the ability of public entities to attract and retain executives? Please provide specific data or information to support your response, noting that submitters may request this data or information be treated as confidential (i.e. not published on the Tribunal’s website).
5. Are the values of the existing remuneration bands fair and equitable for employers and executives?
6. Are the relativities in remuneration between executives and non-executives in prescribed public entities appropriate?
7. How should the Tribunal consider the non-financial aspects of working as an executive in a public entity, that is, the ‘employee value proposition’?
8. The existing remuneration bands each correspond to a single classification level set by the relevant executive classification framework. Are the classification levels a suitable basis for setting the remuneration bands? Should the Tribunal consider other options, such as a different number of remuneration bands?
9. What changes, if any, could be made to the PE Guidelines to better support employers in setting remuneration for executives within the remuneration bands?
10. Are there any other matters the Tribunal should consider as part of its deliberations?

How to make a submission

Submissions (and requests for assistance with making a submission) should be emailed to the Tribunal Secretariat at enquiries@remunerationtribunal.vic.gov.au.

Written submissions must be received by 5pm on Friday 13 September 2024.

Those wishing to make an oral submission must advise the Tribunal Secretariat via email by 5pm on Friday 16 August 2024.

Publication and use of submissions

To promote transparency, submissions will be published on the Tribunal’s website in full or in summary form as appropriate. If the submitter seeks confidentiality or the submission contains information that is identified as commercially sensitive, the Tribunal will work with the submitter to publish the submission in a form which protects the confidentiality or commercial sensitivity.

Submissions that contain offensive or defamatory material, or that are outside the scope of the Determination, will not be published.

The Tribunal may use information provided in submissions in its Determination.

The Tribunal may receive a request under the Freedom of Information Act 1982 (Vic). Any such request will be determined in accordance with that Act, which contains provisions designed to protect personal information and information given in confidence. Further information can be found on the website of the Office of the Victorian Information Commissioner.

When will the Tribunal make its Determination?

Under the VIRTIPS Act, the earliest that the Determination can be made is 18 December 2024. The Tribunal intends to publish its Determination by the end of 2024.

The Determination process may include consideration of an annual adjustment to the values of the remuneration bands, which would usually take effect from 1 July 2024.

How will the Tribunal make its Determination?

In setting the values of the remuneration bands, the Tribunal aims to provide a remuneration framework that is fair and reasonable and enables public entities to attract and retain talented executives to deliver the agenda of the government of the day.

The Determination is required to include a comprehensive review of the roles of executives employed in prescribed public entities and the existing remuneration provided to them, and must also provide for any other matter that the Tribunal considers relevant.

In addition, the Tribunal is legislatively required to consider the following factors in making a Determination:

• current and projected economic conditions and trends
• the financial position and fiscal strategy of the State of Victoria
• any statement or policy issued by the Victorian Government which is in force with respect to its wages policy (or equivalent) and the remuneration and allowances of any specified occupational group
• submissions received in relation to the proposed Determination.

Current and projected economic conditions and trends

The Tribunal’s understanding of current and projected economic conditions and trends will be informed by the Victorian and federal budgets, statements by the Reserve Bank of Australia, the outcome of the Fair Work Commission’s (FWC) Annual Wage Review 2023‑24 and other relevant information.

The Tribunal will also consider the latest data on key economic indicators published by the Australian Bureau of Statistics, including data on economic growth, labour market conditions and movements in prices and wages.

The below table summarises key data about the Victorian and Australian economies at the time of issuing this notice (July 2024).

_{Notes: All growth rates are annual.}

Financial position and fiscal strategy of the State of Victoria

The Tribunal’s understanding of the financial position and fiscal strategy of the State of Victoria will be informed by the Victorian Budget and other relevant information.

The Victorian Budget 2024-25 (May 2024) sets out the Victorian Government’s fiscal strategy:

• Step 1 – Creating jobs, reducing unemployment and restoring economic growth
• Step 2 – Returning to an operating cash surplus
• Step 3 – Returning to operating surpluses
• Step 4 – Stabilising debt levels
• Step 5 – Reducing net debt as a proportion of Gross State Product.

At the time of issuing this notice, the Tribunal notes that according to the Victorian Budget 2024-25:

• net debt for the general government sector was $132.3 billion at 31 March 2024
• the operating deficit for 2024-25 is estimated to be $2.2 billion, with an operating surplus of $1.5 billion forecast in 2025‑26.

Relevant Victorian Government policies

The Tribunal is required to have regard to the Victorian Government Wages Policy and the Enterprise Bargaining Framework, which applies to enterprise agreements entered into by departments and agencies in the Victorian public sector.

The Wages Policy provides for increases in wages and conditions to be funded at a rate of growth of 3 per cent per annum over the life of an agreement. In addition to annual wage increases, a separate lump sum, cash payment will be available equivalent to an additional 0.5 per cent of overall agreement costs.

The Tribunal is also required to consider Victorian Government policies in relation to the remuneration of executives employed in prescribed public entities. These include the requirement for employers to bear the cost of any increases to compulsory superannuation contributions for their executives employed under the Standard Executive Employment Contract.