Pay scale for elected members
The local government pay scale for elected councillors, mayors, and regional council chairs is based on council size, the councillor’s time, and a comparison with parliamentary salaries.
In 2018 the Authority completed a comprehensive review of its approach to determining the remuneration and allowances for local government elected members.
There is also provision for elected members to be paid for their involvement in hearings and related meetings for resource consents and district/regional plans under the Resource Management Act.
Elected members are also entitled to a range of allowances that reimburse them for expenditure required in undertaking their duties. All allowances are paid at the discretion of the council.
Community board members and members of Auckland local boards are not included in the pay scale.
Sizing local authorities
The 2018 review resulted in the creation of three new size indices – one each for territorial authorities, regional authorities and unitary authorities – and the consequent construction of a new local government pay scale.
For the Remuneration Authority, the term “size index” means the assessed size of the total governance accountabilities of any council – it has no relationship to the number of councillors on that council.
The previous size index (a single index) that was used to size all types of council was based on the population served by each council and the expenditure of each council. Three new size indices have been implemented as a result of the review.
The size index for territorial authorities is based on:
- Population (source: Stats NZ estimated resident population)
- Total operating expenditure (source: Stats NZ local authority financial statistics)
- Total assets (source: Stats NZ local authority financial statistics)
- Socioeconomic deprivation index (source: University of Otago Socioeconomic Deprivation Indices.)
The size index for regional authorities is based on:
- Total operating expenditure
- Total assets
- Geographic size (source: Stats NZ geographic Areas)
- Public passenger transport boardings (source: Ministry of Transport’s public transport passenger boardings).
The size index for unitary authorities is based on:
- Total operating expenditure
- Total assets
- Socioeconomic deprivation index
- Geographic size
- Public transport boardings.
All factors used are retrospective but measured at “a point in time” as near as possible to the time of our decision. No data sets should be more than three years old, except for the deprivation index.
All councils were placed on the new size index at 30 June 2018 except for the Auckland Council and the Chatham Islands Council which are considered outliers because of their respective sizes.
The new size indices were developed specifically for use by the Authority in assessing remuneration and are not intended to meet the needs of any other users.
Local government pay scale
The Authority considered a local government pay scale that (as required by our legislation) would have regard in particular to the need to achieve and maintain fair relativity with remuneration received elsewhere.
After exploring various occupational groups that might have some relativity with local government elected members, we concluded that the only similar occupation was that of a member of Parliament.
We will therefore in future be using the parliamentary salary scale as a comparator, but based on the position of each council on the size index and the pro rata time required for an average local government member to undertake the role on a council of any particular size.
No local government elected member, regardless of the size of their role, will be able to be paid more than a Cabinet Minister.
As part of its recent research into the roles of councillors, it became evident that in the large “metro” councils (Christchurch, Wellington, Hamilton, Tauranga and Dunedin) a councillor is likely to work up to full time – i.e. one full time equivalent (FTE).
There is a second group of councils where councillor workloads sit between full time and half time, with the workload of members of the remainder of councils generally varying around or below 50% of an FTE. The data collected showed that both between and within councils the average work time differs, even allowing for different roles such as deputy mayor or committee chair. However, the overall pattern was sufficient for the Authority to use it as a basis for decisions.
The pay scale therefore takes into account three factors:
- the size of the governance role of each council
- the average time required by a councillor on a council of a particular size, and
- a general comparison with parliamentary salaries.
Local government elected members’ remuneration will in future reflect this pay scale. As a consequence of this changed approach, relativities between councils have been changed, resulting in differential increases in remuneration which began in the 2018/19 Determination and will continue through till 2010/21 at least.
Christchurch (the largest council excluding Auckland) is used to anchor the top of the pay scale. The bottom of the councillor pay scale is anchored by a proportion of the annual average wage. However, we have concluded that there is a “basic job” for any councillor, no matter how small the council size.
Except for the Chatham Islands, the lowest councillor remuneration is currently now pegged to a half time equivalent of about two thirds of the average wage. In the case of the smallest councils this breaches our governance remuneration pool approach and means that the resultant governance pool needs to reflect the current number of councillors, rather than the ranking of the council on the size index.
Of the 13 councils that are currently impacted, one has 14 councillors, but the average number of members of the remaining 12 councils is between eight and nine.
Introduction of a pool approach
The Authority looked at the issue of the different numbers of elected members on different councils. Excluding Auckland and the Chatham Islands the population per councillor ranges from approximately 23,800 to 530 individuals.
The idiosyncratic differences we see now are a legacy of historical circumstance such as amalgamations and boundary changes, population sparsity or density — and even the presence or absence of activist community groups at particular times.
The more councillors, the higher the governance cost to ratepayers. Councils with larger ratepayer bases can more easily absorb higher governance costs than can smaller ones. In the 21st century, ubiquitous mobile technology, better transport linkages and the mass media have had a homogenising effect. On the other hand, even in cities, local populations pride themselves on the difference between their area and often quite close neighbouring suburbs. Frequently this is accompanied by expectations of having “their” councillor represent them.
This diversity enriches our culture and social fabric. However, if the collective governance role for any council is to be reflected in remuneration and if it is to be fair to ratepayers (as is legally required of the Authority), then such widely varying numbers of councillors beg the question of whether any group of New Zealanders living in a particular area should pay a significantly higher governance cost per head than those living elsewhere.
To resolve this issue the Authority has decided to create a pool for each council as a collective, reflecting the size of the actual total governance roles of councils rather than the number of councillors. This pool approach is being implemented following the 2019 Local Government election.
The Authority has decided the councils themselves should each make recommendations on the allocation of their own pool amongst the various positions that councillors undertake on their council. During our review it became clear that regardless of identical legal responsibilities, local circumstances of councils were all very different and that the ability of the Authority to make numerous decisions reflecting these circumstances was limited.
The Authority has decided that, beginning from the 2019 election, each council will make recommendations about the allocation of its pool, with the only restriction being that the Authority has decided the minimum base salary for a councillor in each case. Once the council has made its decisions it will forward these recommendations to the Authority for a decision on inclusion in the amending determination.
Over the three-year cycle the Remuneration Authority will send detailed instructions to mayors, regional chairs and CEOs to keep them informed at all stages of the process. This will include worksheets to facilitate the council in its decision making a well as the relevant forms to fill in.
The impact of differing numbers of councillors on relative total governance pools will remain an issue for active consideration by the Authority in future years when setting local government remuneration.
Auckland and Chatham Islands councillors
Because of their respective sizes, neither Auckland Council nor the Chatham Islands Council fit within our size index, so each year the Authority will make an informed judgement on the size of the pools for these two councils.