The Remuneration Authority Act requires the Authority to consider certain criteria when setting remuneration. It has additional criteria for MPs and local government officials.
It does this by undertaking annual reviews linked to job evaluation.
The Local Government Act 2002, clause 7 of Schedule 7 sets a further requirement on the Authority in setting pay for elected local authority members – the requirement to minimise the potential for certain types of remuneration to distort behaviour.
The Authority sets MPs salaries on a total package approach. It takes into account benefits such as superannuation, and any personal benefit element in work related expenses such as travel.
While the Authority bases remuneration for MPs on job sizing, the remuneration for members with additional responsibilities, such as the Prime Minister, Ministers, Leader of the Opposition, is not linked to job sizing. Margins recognising the additional responsibilities in these positions have developed over time. The remuneration for these positions of additional responsibility does not match either public or private sector remuneration for similarly responsible positions. MPs’ salaries are paid under Permanent Legislative Authority.
For more background see the Explanatory Note to the current determination, Parliamentary Salaries and Allowances Determination 2013 (2013/462).
The Authority reviews the remuneration of all positions every year.
Data collected by the State Services Commission through its annual survey of chief executive remuneration in the public service and wider state sector, and its monitoring of remuneration movements in the private sector.
Trends and developments in remuneration in sectors relevant to those where the Authority sets remuneration. For example, movement in remuneration in the legal profession.
Major changes, including legislative changes, in the role(s) concerned.
The views of the individuals or groups concerned.
The Authority has no mandate to take account of performance in setting remuneration. The expectation is that the individuals appointed to the very senior roles where the Authority sets pay will perform at a high level.