On 22 June 2022, the Tribunal made the Remuneration bands for executives employed in public service bodies (Victoria) Annual Adjustment Determination 2022. The Determination took effect on 1 July 2022.
The Tribunal determined to adjust the remuneration bands as follows:
- a 3.6% increase was applied to the notional salary component of the remuneration bands
- a further increase, ranging from $1,589 to $1,919, was also applied, consistent with changes in superannuation entitlements from 1 July 2022.
The Determination, including the Statement of Reasons, is available here:
As part of making the Determination, the Tribunal issued a notice of intention on 11 April 2022 which outlined the matters being considered by the Tribunal and invited submissions.
The Tribunal received one submission.
The submission and notice of intention are available below.
Submissions received
Notice of Intention
What will the Determination cover?
The Determination will adjust the values of remuneration bands for executives employed in public service bodies.
The Determination will apply to executives employed in:
- departments
- Administrative Offices
- the Victorian Public Sector Commission (VPSC).
The Determination will also apply to public service body Heads who are defined in the Public Administration Act 2004 (Vic) as:
- Secretaries of departments
- Heads of Administrative Offices
- the Victorian Public Sector Commissioner.
As set out in the VPSC’s Victorian Public Service Executive Employment Handbook (Handbook), employers retain the power to set an individual executive’s remuneration within the relevant band.
Submissions
The Tribunal invites submissions from any person or body, including any affected person or class of affected persons, in relation to the proposed Determination.
You may wish to consider the following questions in your submission:
- What level of adjustment to the values of the remuneration bands should the Tribunal consider?
- Which economic and financial indices should the Tribunal consider when adjusting the values of the remuneration bands?
- Are there other matters the Tribunal should consider when making the Determination, in addition to those listed in the VIRTIPS Act?
Please email written submissions to the Tribunal Secretariat at enquiries@remunerationtribunal.vic.gov.au.
If you require assistance to make a submission, please contact the Tribunal Secretariat at enquiries@remunerationtribunal.vic.gov.au.
Submissions have now closed.
Publication of submissions
The Tribunal may use information provided in submissions in its Determination.
All submissions will be published in full or in summary form on the Tribunal’s website, unless the person making the submission seeks confidentiality or the submission contains information that is identified as commercially sensitive. In this instance, the submission will be published in a form which protects confidentiality or commercially sensitive information.
The Tribunal may remove identifying information from submissions if published.
Submissions that contain offensive or defamatory comments, or that are outside the scope of the Determination, will not be published.
The Tribunal may receive a request under the Freedom of Information Act 1982 (Vic). Any such request will be determined in accordance with the Freedom of Information Act 1982 (Vic) which contains provisions designed to protect personal information and information given in confidence. Further information can be found at the Office of the Victorian Information Commissioner.
How will the Tribunal make its Determination
Under section 24(2) of the VIRTIPS Act, the Tribunal is required to consider the following matters when making the 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 Government in respect of its wages policy (or equivalent) and the remuneration and allowances of any specified occupational group as defined in the VIRTIPS Act
- submissions received in relation to the Determination.
Current and projected economic conditions and trends
Data from the Australian Bureau of Statistics (ABS) (March 2022) show that Australia’s Gross Domestic Product (GDP) increased by 3.4 per cent in the December quarter 2021 as Victoria, New South Wales and the Australian Capital Territory came out of extended lockdowns. Over the 12 months to December 2021, GDP increased 4.2 per cent. As at February 2022, national and Victorian unemployment rates were 4.0 per cent and 4.2 per cent, respectively (in seasonally adjusted terms). Participation rates were 66.4 per cent (national) and 67.1 per cent (Victoria) in seasonally adjusted terms.
The Federal Budget 2022-23 (March 2022) highlighted the resilience of the Australian economy, noting that ‘conditions are in place for a sustained economic recovery’. The Federal Budget reported the following outlook for the Australian economy:
- real GDP is forecast to grow 4.25 per cent in 2021-22 and 3.5 per cent in 2022‑23
- unemployment rate is expected to reach 3.75 per cent in the September quarter 2022 — the lowest rate in nearly half a century
- annual growth in the Wage Price Index is expected to be 2.75 per cent over 2021-22 and 3.25 per cent over 2022-23.
In his Statement on 5 April 2022, the Governor of the Reserve Bank of Australia, Dr Philip Lowe, similarly observed that the ‘Australian economy remains resilient’ and that ‘spending is picking up following the Omicron setback’. Dr Lowe acknowledged pressure on household budgets from rising prices, while noting that inflation remains lower in Australia than in many other countries. Dr Lowe also noted that while wages growth has increased, it remains at the relatively low rates seen prior to the COVID-19 pandemic (although larger wage increases are occurring in some areas).
The Tribunal notes the following movements in prices and wages in the Victorian economy:
- Consumer Price Index (All Groups) for Melbourne grew by 2.5 per cent between December 2020 and December 2021 — the lowest growth of all capital cities
- Victorian Wage Price Index grew by 2.5 per cent over the 12 months to September 2021 — the highest growth of all mainland states
- average weekly ordinary time earnings for full-time adults in Victoria increased by 2.4 per cent over the 12 months to November 2021.
The 2021/22 Victorian Budget Update (Budget Update), released in December 2021, reported the following economic outlook for Victoria:
- real Gross State Product (GSP) forecast to grow by 2.25 per cent in 2021-22 and by 4.5 per cent in 2022-23
- unemployment rate expected to average 4.5 per cent in 2021-22 and 2022-23
- annual growth in the Victorian Wage Price Index is expected to gradually increase to 3 per cent in 2024-25 and expected to exceed growth in the Melbourne Consumer Price Index over the next few years.
Financial position and fiscal strategy of the State of Victoria
The most recent Victorian Auditor-General’s Office Report on the Annual Financial Report of the State of Victoria (November 2021) stated that ‘the COVID-19 pandemic continues to affect the financial performance and position of the state, with longer term consequences for its financial sustainability’. The report noted that revenue remained below, and expenditure well above, pre‑pandemic expectations, and highlighted emerging risks including operating expenditure growth in the general government sector.
The 2021-22 Mid-Year Financial Report (March 2022) reported that the Victorian general government sector recorded an operating deficit of $10.0 billion for the six months to December 2021. The Report estimates that the operating deficit for 2021-22 will be $19.5 billion.
As at 31 December 2021, net debt for the general government sector was $89.6 billion (18.1 per cent of GSP). According to the Budget Update, net debt is forecast to increase to $162.7 billion (27.9 per cent of GSP) by 2024‑25.
The Budget Update reiterated the Victorian Government’s commitment to its four-step 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.
Wages Policy and other relevant Victorian Government remuneration policies
The VIRTIPS Act requires the Tribunal to consider any statement or policy issued by the Government of Victoria which is in force with respect to its Wages Policy (or equivalent) and the remuneration and allowances of any specified occupational group.
The Victorian Government Wages Policy and Enterprise Bargaining Framework (Wages Policy) which applies to departments and agencies in the Victorian public sector is reproduced below.
The Victorian Government Wages Policy and Enterprise Bargaining Framework has three pillars:
A ‘Secondary Pathway’ is also available for public sector agencies whose current enterprise agreement reaches its nominal expiry date between 1 January 2022 and 31 December 2022 which permits one annual wage and allowance increase capped at 2 per cent (instead of at 1.5 per cent). Source: Industrial Relations Victoria, Wages Policy 2022 (State Government of Victoria: Melbourne, Victoria, 2021). |
The Premier’s annual remuneration adjustment guideline rate is a salary increase that public sector employers may pass onto executives and senior office holders. In November 2021, the guideline rate for both 2021-22 and 2022-23 was set at 1.5 per cent.
The Victorian Public Service Enterprise Agreement 2020, finalised in October 2020, provides for annual pay increases for non-executive staff averaging two per cent per year over the life of the agreement (which expires in March 2024).
Remuneration policies that apply to Victorian public service executives are set out in the VPSC’s Victorian Public Service Executive Employment Handbook (Executive Employment Handbook) and in the Standard VPS Executive Contract (Standard Contract).
The Executive Employment Handbook and the Standard Contract set out the components of executive remuneration. The Total Remuneration Package of an executive is defined as the sum of:
- base salary
- superannuation contributions
- employment benefits (i.e. non-salary) specified in the executive’s contract of employment
- the annual cost to the employer of providing the non-monetary benefits, including any fringe benefits tax payable.
The Standard Contract requires that each executive’s remuneration be reviewed on an annual basis. The employer may also agree to undertake a remuneration review at any time upon receiving a written request from the executive. A review does not guarantee an increase to any element of an executive’s remuneration.
The superannuation guarantee and maximum superannuation contribution base (MSCB) apply to executives who are members of an accumulation superannuation scheme. The superannuation guarantee is set as a percentage of ‘ordinary time earnings’ and refers to the minimum rate of employer superannuation contributions an employee is entitled to receive. The MSCB acts as a cap on the ‘ordinary time earnings’ used to calculate an employee’s superannuation entitlements — earnings over the MSCB are not included for the purpose of calculating superannuation guarantee entitlements.
The amount of superannuation payable may increase each year as a result of changes to the rate of the superannuation guarantee or as a result of indexation of the MSCB. The Executive Employment Handbook provides that public service employers must bear the cost of any such increases in superannuation liabilities (i.e. there should be no reduction in base salary).
The Executive Employment Handbook further states that employers are not to offset the cost of changes to superannuation guarantee contributions by passing on less of an annual remuneration adjustment (determined following the annual review of the executive’s remuneration required by the Standard Contract, explained above) to an individual executive than they otherwise would have.
The Tribunal’s previous Determination of an annual adjustment to the remuneration bands was consistent with the requirements of the Executive Employment Handbook.
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