Mr Deane Prior President Remuneration Tribunal GPO Box 2343 ADELAIDE SA 5000 Dear Mr Prior Thank you for the opportunity to make a submission regarding the allowances paid to members of the Adelaide City Council as part of the independent review undertaken every four years under Section 24 of the City of Adelaide Act 1998 (Act). Background to the Determination As you are no doubt aware, the Adelaide City Council is constituted pursuant to Section 20 of the Act. This Act Establishes mechanisms to enhance the role of the City of Adelaide as the capital city of South Australia; to make special provision in relation to the local governance of the City of Adelaide and for other purpose. This Act creates a range of very specific and additional roles and responsibilities for members of the Adelaide City Council in its unique role as the State s Capital City Council, which include: To recognise, promote and enhance the special social, commercial, cultural and civic role that the City of Adelaide plays as the capital city and heart of South Australia; and To provide for collaborative arrangements for inter-governmental liaison between the State and the Corporation of the City of Adelaide for the strategic development of the City of Adelaide and the representation of the interests of South Australians not enfranchised to vote in elections for the Corporation; and To revise and enhance local governance arrangements for the City of Adelaide; and To ensure access to the City of Adelaide for all South Australians. Sections 21 and 22 of this Act go on to highlight the roles and responsibilities of the Lord Mayor, Deputy Lord Mayor and Councillors of the City of Adelaide. Section 24 of the Act outlines the provisions by which the Remuneration Tribunal must make a determination in relation to the allowances for members of the Adelaide City Council.
2 This includes the Remuneration Tribunal having regard to: The role of members of the Council as members of the Council s governing body and as representatives of their area (Section 24(3)(a)); The size, population and revenue of the Council, and any relevant economic and social factors in the council area (Section 24(3)(b)); The fact that an allowance under this section is not intended to amount to a salary for a member (Section 24(3)(c); The fact that an allowance under this section should reflect the nature of a member s office (Section 24(3)(d)); The provisions of this Act providing for the reimbursement of expenses of members. Section 24(4) of the Act provides as follows: (4) For the purposes of the proceedings before the Remuneration Tribunal, but without derogating from the operation of subsection (3), the allowances to be determined under this section will be taken to be in the nature of a fee under the definition of remuneration in the Remuneration Act 1990. Section 3 of the Remuneration Act 1990 provides the following definition in relation to remuneration, which is therefore incorporated into the Act: 3 Interpretation In this Act remuneration includes (a) (b) (c) (d) (e) salary; and allowances; and expenses; and fees; and any other benefit of a pecuniary nature; The generally accepted dictionary definition of the word fee, which is not defined in the Remuneration Act 1990, is: money paid or received for services rendered. It submitted that this means and refers to the fees being consummate with the services rendered by office holders of the Adelaide City Council when properly construed, understood and applied in the light of the Section 24(3) (a), (b) and (d) considerations. There appears to be a suggestion or common misconception that the legislative statement in Section 24(3)(c) of the Act, that the allowances of office holders are not intended to amount to a salary, means that the offices are not to be properly remunerated or are in some way to be the subject of low remuneration. This is clearly not the intent or effect of the remuneration provisions when read and considered as a whole.
3 Section 24(3)(c) of the Act when read with the other remuneration provisions is simply (in effect) an acknowledgment in the remuneration provisions that office holders of Adelaide City Council are not employees of the Adelaide City Council, and are not therefore to receive remuneration by way of salary or wages, but are to receive a fee consummate with the nature of the office held and services they render to the Adelaide City Council. As the Adelaide City Council is constituted under the City of Adelaide Act 1998, and Section 24 of this Act outlines the manner in which the determination of allowances is set, the Adelaide City Council is of the view that the Remuneration Tribunal must consider and make a separate determination with respect to allowances paid to members of the Adelaide City Council. Finally, on the question of process, it is submitted that the Tribunal would be misdirecting itself in making a determination under Section 24 of the Act in relation to Adelaide City Council if it were to have regard to allowances paid to office holders of local councils in South Australia in setting the allowances of the State s Capital City Council. Adelaide City Council Submission Fundamentally, Adelaide City Council considers it imperative that allowances are set at an appropriate level. If allowances are not appropriately set this will be a disincentive for a diverse range of candidates to choose to participate in the governance of South Australia s capital city. Adelaide City Council considers the remuneration paid to its office holders to be manifestly inadequate, requiring re-setting at a materially higher level. Since the last independent review by the Remuneration Tribunal the operating environment for the Adelaide City Council has significantly changed. There have been historic levels of infrastructure investment in the City of Adelaide with the redevelopment of Victoria Square; Rundle Mall; the Riverbank Precinct; the South Australian Health and Medical Research Institute and the Adelaide Oval. This investment is good for Adelaide and South Australia more broadly but has significantly increased the complexity of the operating environment; decision-making; stakeholder relationships and community engagement for Council over the past four years. As a Capital City Council, members of the Adelaide City Council are responsible for making decisions across a whole range of issues from planning, service delivery, infrastructure, heritage protection and management and in doing so balance the needs of the community and a diverse stakeholder base. Over the past four years, the availability of members of Adelaide City Council to constituents has dramatically increased with greater use of email and social media, which is a good outcome in terms of member accessibility to the community they represent, but also places additional responsibilities and time commitments on members.
4 There has also been increasing legislative responsibilities and complexities placed upon members of the Adelaide City Council, for example the introduction of a mandated Code of Conduct. Adelaide City Council believes appropriate recognition of these additional responsibilities and complexity of operating environment should be made by the Remuneration Tribunal when making its assessment. This submission will highlight the significant service that members of the Adelaide City Council provide to the City community and the State. The Adelaide City Council is of the view it is imperative this service is appropriately recognised and remunerated. This submission will highlight the inconsistencies of allowances for members of the Adelaide City Council compared to a range of Government Boards and comparable Capital City Councils. This inconsistency creates a unique situation for some members of the Adelaide City Council. Under legislation, Adelaide City Council has several State Government Board placements. There are occasions where a member receives almost the same level of sitting fees for their Board appointment as their allowance as an elected member of Council. Adelaide City Council notes the Remuneration Tribunal s view in 2010 that it considered it difficult to directly compare the work of interstate Capital City Councils given what were said to be differing operating environments, size and roles. Adelaide City Council, however, respectfully disagrees and considers that the interstate Capital City Councils of Sydney, Melbourne and Perth, in particular, to be direct comparators. The Adelaide City Council has a unique and legislated responsibility for recognising, promoting and enhancing the special social, commercial, cultural and civic role the City of Adelaide plays as the capital city and heart of South Australia and therefore considers it in effect a requirement that Adelaide City Council be benchmarked against other Capital City Councils. Adelaide City Council considers this to be mandated by the material requirement in Section 24(3)(d) of the Act that the allowances should reflect the nature of the members office. The nature of the office, in the case of a member of Adelaide City Council, is that of a member of a Capital City Council. It is submitted that there is little, if any, material difference in the nature of the role of an office holder between the Capital City Councils of Sydney, Melbourne, Adelaide and Perth. Information is provided within this submission to support such a comparison. In line with the request of the Remuneration Tribunal Attachment A has been developed to respond to the required format of written submissions. I would be very pleased to speak with the Remuneration Tribunal about this submission at your earliest convenience and I have formally indicated my interest to your office of making an oral submission at an appropriate time.
5 If you have any questions in relation to this submission, please contact my office on 8203 7234. Yours sincerely PETER SMITH Chief Executive Officer 30 / 4 / 2014
6 Attachment A Written Submission ATTACHMENT A WRITTEN SUBMISSION OF THE ADELAIDE CITY COUNCIL 1. Name of Council 1.1 Adelaide City Council 2. Size (number of elected members etc.) 2.1 Adelaide City Council consists of twelve (12) elected officials including the Lord Mayor. 2.2 There are currently three (3) wards with two (2) elected officials per ward and five (5) area wide elected officials. 2.3 As a result of the Council s representation review, at the 2014 General Election this structure will change to three (3) wards with two (2) elected officials each in the north and south wards and three (3) elected officials for the central ward with four (4) area wide elected officials. 2.4 There is a Deputy Lord Mayor appointed by Council. 2.5 There are Chairman of Council s four (4) permanent committees appointed by Council. 2.6 There are Deputy Chairman of Council s four (4) permanent committees appointed by each permanent committee. 3. Population and City Users 3.1 In comparison to other capital cities, the size of the municipal area is in broad terms similar to Sydney, Melbourne and Perth in that they cover the original inner metropolitan areas, including in each case the CBD and adjacent residential areas and facilities. In particular, Brisbane but in substance, Darwin and Hobart, are different to the extent that those councils have responsibility for the metropolitan area of each city. 3.2 The geographical area of Adelaide City Council is 15.57 sq kilometres. The density is very high of commercial residential retail and recreational facilities and city users are very high also. The Adelaide City Council is also responsible for the management of the Adelaide Park Lands (1760 ha.) and a range of community assets for the benefit of all South Australians. 3.3 The daily population of the Adelaide City Council jurisdiction is in excess of 225,000 which includes: 3.3.1 Permanent residents 21,600 3.3.2 Workers/volunteers 125,000 3.3.3 Students 85,000 3.4 The mixed use demographic of the Adelaide City Council municipal area adds an increased level of complexity for Adelaide City Council Members. Contributing to the management of the intense level of interface between business and residents
7 requires a significant commitment and participation by Council Members in community forums, reference and precinct groups. 3.5 The City of Adelaide had the highest residential growth rate of any Local Government Area in 2011/12 at 3.2%. 3.6 The Adelaide City Council area has a significant business population, with total office space in excess of 1.3million square metres, in addition to the considerable retail and services sectors. 3.7 One in ten South Australian businesses is located in the Adelaide City Council area and more than 13% of the State s employment is created by the City economy. Approximately 20% of the workforce of greater metropolitan Adelaide works in the City. 4. Revenue and Expenditure 4.1 In 2012/13, Adelaide City Council s total revenue was $172.3 million, primarily from rates and other user charges. Expenditure was $183.9 million and Council managed over $1.2 billion worth of net assets. Adelaide City Council also operates a significant car parking business (U-Parks) in the City of Adelaide area. 4.2 The Capital City role of Lord Mayor and Adelaide City Council includes within it responsibilities and interaction with State and Federal Government and other Capital City councils within Australia. The Adelaide City Council also has leadership roles within the broader South Australian community and local government that transcend the boundaries of the states capital. 5. Economic Factors 5.1 The City of Adelaide s Gross Regional Product is estimated to have increased to over $15billion and represents more than 17% of South Australia s Gross State Product. Annual employment growth and annual gross regional product are both higher in the City when compared with the remainder of the State. As stated by the Council of Capital City Lord Mayors in 2008, in the report Partners in Prosperity, Australia s continued economic prosperity depends on its capital cities maintaining and enhancing their international standing. We need to build successful and sustainable cities if Australia is to become more competitive innovative and productive. 5.2 The importance and complexity of decision making of a capital city council and the impact this has on the broader South Australian economy should also be considered by the Remuneration Tribunal. 6. Meetings (number of council and committee meetings held in last 12 months, number of councillors attending council and committee meetings) 6.1 Adelaide City Council plays a prominent role at regional, state, national and increasingly international levels. This impacts on the demands placed upon the
8 Lord Mayor, Deputy Lord Mayor and Councillors in terms of time, higher levels of responsibility and a more complex operating environment. 6.2 To provide some context to the level of commitment of an Adelaide City Council member, the following dot points provide a brief overview of the 2013 workload. It should be noted the information below excludes the Adelaide Park Lands Authority, Development Assessment Panel and external board appointments which typically incorporate a sitting or board fee. 6.2.1 There were 87 meetings of Council and its four core committees that met for over 100 hours. Over 800 items were presented to these meetings for consideration. Agendas for these meetings range in size from 60 to more than 300 pages of information that members must consider prior to attending each meeting. The majority of members attended most if not all of these meetings. 6.2.2 There were 8 meetings of the Reconciliation Committee and the Audit Committee that met for over 10 hours. Three elected members are on the Reconciliation Committee and two on the Audit Committee. Participation on these Committees is not remunerated additionally. 6.2.3 There were 4 meetings of the Capital City Committee which met for around 8 hours. Three members are involved in these intergovernmental meetings. Participation on this Committee is not remunerated additionally. 6.2.4 There were 3 meetings of the Council of Capital City Lord Mayors which met for over 20 hours with Federal Members of Parliament and other key strategic stakeholders nation-wide. Participation on this Committee is not remunerated additionally. 6.2.5 There are a number of other CEO working groups, briefings, planning sessions and meetings with Administration staff. While difficult to quantify this is easily more than 60+ hours per year for any given member. 6.2.6 Each day a vast amount of information is distributed to Council Members which they are required to read and understand. 6.2.7 There were 52 civic events and receptions held with a minimum of one hour of participation required. Often four or more members attended these to discharge their civic duties. 6.2.8 Countless other events and activities are attended by Council Members to enable them to successfully undertake their role as a representative of the City of Adelaide. This includes official speaking engagements, attendance at precinct and resident groups and participation in a range of other local, cultural and sporting events. Attendance at these activities ranges from one to many hours on each occasion. 6.3 In addition to the above workload each Council Member puts in significant time and effort in meeting preparation as well as representation on local issues and responses to their constituents and broader city users. Over the past four years, the availability of members of Adelaide City Council to constituents has also dramatically increased with greater use of email and social media. This is a good outcome in terms of member accessibility to the community they represent but also places additional responsibilities and time commitments on members.
9 Members are also required to keep abreast of local government issues at state and national levels, as well as conducting research and professional development in their chosen areas of interest. 6.4 It is imperative that this significant community service is appropriately recognised and remunerated. As previously indicated, Adelaide City Council consider its office holders to be manifestly under-remunerated. 7. Amount of Allowance Deemed Appropriate (Submission may present justification for an adjustment, and may include comment on the appropriate allowance payable to the principal member of council.) 7.1 Since the last independent review by the Remuneration Tribunal the operating environment for the Adelaide City Council has significantly changed. 7.2 There have been historic levels of infrastructure investment in the City of Adelaide with the redevelopment of Victoria Square; Rundle Mall; the Riverbank Precinct; the new Royal Adelaide Hospital; South Australian Health and Medical Research Institute and the Adelaide Oval. This investment is good for Adelaide and South Australia more broadly, but has significantly increased the complexity of the operating environment; decision making; stakeholder relationships and community engagement for Council over the past four years. 7.3 The heritage of the City of Adelaide is also an essential part of our distinctive character and charm. There are currently 436 State Heritage Places and 1,872 Local Heritage Places listed in the City which adds a further significant dimension to the management of the City and the complexity of the issues brought before Council for consideration and decision. 7.4 As a Capital City Council, members of the Adelaide City Council are responsible for making decisions across a whole range of issues from planning, service delivery, infrastructure, heritage protection and management and in doing so balance the needs of the community and a diverse stakeholder base. 7.5 There has also been increasing legislative responsibilities and complexities placed upon members of the Adelaide City Council, for example the introduction of a mandated Code of Conduct. Adelaide City Council believes appropriate recognition of these additional responsibilities and complexity of operating environment should be made by the Remuneration Tribunal when making its assessment. 7.6 There are currently inconsistencies of allowances for members of the Adelaide City Council compared to a range of Government Board fees. This inconsistency creates a unique situation for some members of the Adelaide City Council. Under legislation, Adelaide City Council has several State Government Board placements. There are occasions where a member receives almost the same level of sitting fees for their Board appointment as they do as a member of Council. 7.7 There is no doubt significant work associated with membership of a State Government Board, but it is unlikely to be greater than the role as a local government member, which involves meeting preparation; attendance at Council, Committee and sub-committee meetings, civic responsibilities, representation of local issues and responses to constituents all in a capital city context.
10 7.8 The information in the graph that follows provides a comparison of Government Board fees as compared to the allowance for Adelaide City Council members. $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $- SA Motor Sport Board Development Assessment Commission Economic Development Board Urban Renewal Authority Training and Skills Commission SA Water Adelaide City Council 7.9 In addition to the above comparisons, the Adelaide City Council for example has remunerated the Adelaide Central Market Board at $25K per annum for the Chair and $15K for members. 7.10 As the Adelaide City Council is constituted under the City of Adelaide Act 1998, and Section 24 of this Act outlines the manner in which the determination of allowances is set, the Adelaide City Council is of the view it is imperative that the Remuneration Tribunal considers and makes a separate determination with respect to allowances paid to the Adelaide City Council from other South Australian local government councils. 7.11 Adelaide City Council is of the view that this determination should be made regarding to Section 24 of the City of Adelaide Act. Council also considers that this determination should be informed by comparisons of Councils that are similar in nature of office and responsibilities, i.e. Capital City Councils. 7.12 The information in the table that follows provides support of such a comparison.
Capital City Comparison as at March 2014 * City Area Revenue Resident Population LM DLM Elected Members Comments Brisbane 1,367 km2 $1.7 B 1,110,000 $315K $253K $194K Salary + Superannuation set by Tribunal and reviewed every 5 years. CEO implements annual increases in line with Qld Independent Remuneration Tribunal. Committee Chairs receive $243,287. *Figures current as of July 2013. Sydney 27 km2 $599 M 187,000 $226K $247K (incl 9.25% Super) Melbourne 37 km2 $387 M 100,000 $ 175K $ 192K (incl 9.25% Super) $54K $59K (incl 9.25% Super) $87K $96K (incl 9.25% Super) $34K $38K (incl 9.25% Super) $41K $45K (incl 9.25% Super) Local Government Remuneration Tribunal set and review allowances annually. Allowances are automatically adjusted on an annual basis by the Victorian Government, in line with changes to the Victorian Statutory and Executive Officers payments. This has averaged around 3.5% per annum. Perth 8 km2 $166 M 19,000 $175K $62K $30K No superannuation. The State Administrative Tribunal determination on 19 June 2013 reviewed annually by Tribunal. LM allowance includes a $45,000 Sitting Fee for attending meetings. Darwin 112 km2 $98 M 77,000 $147K $53K $45K No Superannuation. Allowances include travel, training and electoral allowances. NT Government increase allowances annually in line with CPI. Adelaide 16 km2 $172 M 21,000 $130K $27K $18K No superannuation. The Remuneration Tribunal reviews and sets allowances every 4 years with annual increases in line with CPI. Presiding members of core committee chairs receive 25% allowance on top of base. Hobart 78 km2 $107 M 48,000 $113K $53K $32K No superannuation. The State Local Government Office in Dept. Premier and Cabinet review allowances annually and typically increase in line with CPI.
12 $350,000.00 $300,000.00 $250,000.00 $200,000.00 $150,000.00 $100,000.00 Lord Mayor Deputy Lord Mayor Elected Members $50,000.00 $-
8. Any Other Relevant Factors (This may include comment on the current Determination, which groups councils for the purpose of determining the level of allowance, and the council s capacity to pay.) 8.1 Section 24 of the Act understandably and appropriately requires that the remuneration for Adelaide City Council members be considered separately to the remuneration paid to members of other local councils in South Australia. 8.2 The Adelaide City Council seeks an outcome of the Tribunal process, whereby levels of remuneration for Adelaide City Council members are in line with other Capital City Councils and also consistent with the fees paid to Government Board and Committee members in South Australia. 8.3 Council considers that the allowances need to be re-set at a materially higher level consummate with allowances paid to comparable office holders on Sydney City Council, Melbourne City Council and Perth City Council, being office holders who hold substantially identical offices in terms of the nature of the office. 8.4 As previously stated, all of those Capital Cities include responsibility covering the original inner city area and involves responsibility for the CBD and adjacent areas. The nature of the role does not differ even if the precise scale and size of some responsibilities does, for example, there may be more inner city population in the City of Sydney but Sydney City Council does not, on the other hand, manage a world class sized Park Lands belt for the benefit of greater Sydney like Adelaide City Council does. 8.5 The City of Perth is arguably the most direct comparator. Adelaide City Council submits that the allowances should be set at no less than the anticipated allowances applying to office holders of Perth City Council in 2015. 8.6 The Remuneration Tribunal should also note and consider as part of its determination that, no superannuation is paid to members of Adelaide City Council.