Introduction of a pool approach

In its 2018 review of remuneration and allowances, the Remuneration 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 ranged from approximately 23,800 to 530 individuals.

The idiosyncratic differences were clearly 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 nation’s 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 decided to create a pool for each council as a unit reflecting the size of the total governance roles of any particular council rather than the number of councillors. The quantum of each council’s governance pool is determined by the Authority and is aligned with the ranking of that council on the relevant size index.

The impact of differing numbers of councillors on relative total governance pools remains an issue for active consideration by the Authority when setting local government remuneration.

Determining the remuneration of local government elected members [PDF, 1018 KB]

Exclusions from the pool

Hearings fees

Payment for hearing fees and allowances are not included in the pool.

Councillors undertaking Resource Management Act (RMA) resource consent hearings, Housing Accords and Special Housing Areas Act (HASHA) hearings, and district and regional plan hearings including Regional Policy Statements are entitled to additional fees for that work. These fees for hearings are not drawn from the council’s governance remuneration pool.

Find out about current payments for hearings:

Payments for hearings

District licensing committees

Payment for district licensing committee (DLC) fees are not included in the pool.

An elected member of a territorial authority who serves on a DLC as an external member is entitled to receive the fees as prescribed under the Cabinet fees framework, as section 195 of the Sale and Supply of Alcohol Act 2012 does not distinguish between a member of the DLC who is appointed by the territorial authority from a list of persons approved to be members, and a member who is appointed by the territorial authority by virtue of their being an elected member.

The remuneration of an elected member who is appointed by a territorial authority as a member of a DLC, for their duties as a committee member, is set under section 183 of the Sale and Supply of Alcohol Act. Therefore, the Remuneration Authority is not required under the Local Government Act 2002 to determine the remuneration of an elected member who is appointed by a territorial authority to a DLC by virtue of being an elected member and will decline such a request.

The remuneration for the chair and members of a DLC is determined by the Minister of Justice in accordance with the Cabinet fees framework.

Allowances

The allowances that apply to all elected members are not part of the council’s governance remuneration pool.

Find out about current allowances for elected members:

Allowances for local government elected members

Certain elected members

The governance remuneration pool does not apply to the remuneration for:

  • Mayors
  • Regional council chairs
  • Community board members, or
  • Auckland local board members

Their remuneration is set separately by the Authority. 

Mayors and regional council chairs

Community board members

Auckland local board members

Allocating the pool

During the 2018 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. Therefore, the Authority decided the councils themselves should each make recommendations on the allocation of their own pool amongst the various positions held by councillors on behalf of their council.

Beginning from the 2019 election, each council has been required to make recommendations about the allocation of its pool, with the only restriction being that the Authority decides the minimum base salary for a councillor in each case. This total amount of base payment is fixed by the Authority and the difference between that and the total of the allocated pool is then available for remuneration of elected members undertaking additional positions of responsibility or, in some costs, to increase the base payment for all councillors.

Each council needs to decide how it wants to allocate its pool according to its own priorities and circumstances. Roles to which additional differential remuneration can be attached may include not just internal council roles such as deputy mayor, committee chair or portfolio holder, but also other jobs representing the council on outside groups.

The pool also covers additional remuneration paid to community board members who have been delegated significant additional levels of responsibility by the council. 

Timetable for additional remuneration above the base

Over the three-year local government cycle, the Remuneration Authority sends detailed instructions to mayors, regional chairs and CEOs to keep them informed at all stages of the process.

The Authority reviews the remuneration settings for local government every 3 years. This includes assessment of each council's place on its appropriate size index (i.e. regional, unitary or territorial index) and the issuing of revised indices, plus decisions on each council’s governance remuneration pool and minimum allowable councillor remuneration for each council.

This information will be published to councils by the Authority at the beginning of each election year. The new settings will apply from 1 July that year. This timing allows each council to assess any changes and propose recommendations for remuneration based on the size of the governance remuneration pool it has available.

People considering running for office will have this information prior to the election. In particular, they will have an indication of the minimum remuneration they could expect if elected as a councillor without any additional responsibilities.

 Each council is expected to submit its recommendations to the Authority towards the end of the first quarter of the calendar year in which the election is scheduled. By the middle of that calendar year, the Authority will issue a determination which will have two parts:

  • Part one for the period from July 1 till the day on which the new council assumes office, and
  • Part two for implementation when the new council takes office following the election.

When the new council takes office, all councillors except the mayor will receive the base councillor remuneration set out in Part One of that year’s determination. This will continue until the new council has made a formal decision on roles and remuneration (See Council process for Remuneration Proposals below)

For positions of responsibility, including the subsequently elected chair of a regional council, the final remuneration will apply from the day after the day on which the new council makes its formal decision on roles, and determinations will be backdated till then. If newly elected councils wish to change the proposal, they will have three months following the election to submit the recommended changes to the Authority for incorporation into a determination that will be backdated to the day after the day on which the new council made its formal decision on roles and appointments.

Council process for remuneration proposals

1. Deciding base remuneration

The council decides a base remuneration for councillors who have no additional responsibilities. This could be higher than the minimum allowable remuneration set for that council by the Authority.

2. Deciding additional remuneration for positions of responsibility

 Although the Local Government Act allows Mayors to nominate/decide committee chairs, for any roles that attract additional remuneration above the base rate the council must have a formal vote on the remuneration proposal.

The agenda item on which the formal vote will be made must include in writing:

  • a title and short description of each role  (i.e. what are the requirements for the member who undertakes it)
  • the proposed annual dollar value of remuneration* attached to the role, and
  • the name of the member elected to fill that position.

* Note: If an elected member will hold more than one position of additional responsibility, the titles of the positions must be combined and the proposed additional remuneration must cover the combined positions. For example, councillor A holds the combined positions of chair of the regulatory committee and chair of the services committee and the proposed additional remuneration covering the combined positions is $15,000.  

The Authority has traditionally accepted proposals in respect of additional remuneration that are unanimously supported by council. Where it receives split recommendations, strong supporting documentation concerning the reasoning behind any change in the recognition of positions should be provided.

3. Using the whole pool

In any community there is likely to be some be pressure to keep rates down by paying councillors less and the Authority considers that it is important that councils are protected from such pressure. Consequently, the pool for each council is required to be fully allocated.

Although the governance remuneration pool must be fully allocated, sometimes it might not be fully spent during the term of the current determination (usually 1 July to 30 June). For example, underspends may arise due to a vacancy or a councillor taking a leave of absence. Underspends may also occur following council elections.

4. Not exceeding the pool

The quantum of the pool for each council is decided by the Authority and must not be exceeded.

5. Submitting proposals

Following its formal decision-making, each council forwards the proposal for additional remuneration to the Authority for consideration and inclusion in the determination. The Authority provides forms and worksheets for councils to use.

Information required includes:

  • the name of council
  • the number of elected members
  • the total governance remuneration pool 
  • the councillor minimum remuneration decided by the Authority
  • the council’s proposed base councillor remuneration
  • the name/title of each (proposed) position of responsibility and if necessary a brief description of the additional responsibilities*
  • the number of members per position
  • the (proposed) annual remuneration for the position*
  • confirmation that the pool is fully allocated, and 
  • the date when positions and remuneration were confirmed by council.

* Note:  If an elected member will hold more than one position, the titles of the positions must be combined and the proposed additional remuneration must cover the combined positions.  For example, councillor A holds the combined positions of chair of the regulatory committee and chair of the services committee and the proposed additional remuneration covering the combined positions is $15,000.   

Generally, proposals from councils will be accepted by the Authority and incorporated into an amendment to the principal determination – published as soon as possible in the calendar year following the local government election. 

Approval of new or removed positions in non-election years

During the local government triennium, councils need the Authority’s approval to make remuneration changes arising from the establishment or disestablishment of a position.

If a council proposes to establish a new position, it will need to consequentially review its allocation of its governance remuneration pool. Because the pool will already be fully allocated, the new position, if it is not replacing an existing position, will require a reallocation of the remuneration paid to other positions that were previously approved by the Authority.

If a council proposes to disestablish a position of responsibility, it will need to consequentially review its allocation of its governance remuneration pool. As the pool is required to be fully allocated, the released amount available from the disestablished position will need to be reallocated amongst the other existing positions covered by the pool, including base councillor remuneration.

Requests to increase total governance remuneration pool

A council cannot generally make a request for an increase in the size of its governance remuneration pool if it considers that it is not sufficient to meet needs. However, under extraordinary circumstances (for example following a major natural disaster) the Authority might agree to an increase.

Proposals for changes during council term

The Authority will consider proposals made to it by councils requesting new arrangements that impact on the remuneration of elected members and will either issue an amending determination or consult further with these councils.

All proposals must be submitted to the Authority regardless of the additional level of remuneration proposed. The Authority expects councils to consider their full work programme for the triennium when making proposals following elections.

The Authority considers proposals for changes as they are received. The process of developing and producing a determination generally takes up to three months to complete as the drafting has to be peer reviewed by the Parliamentary Counsel Office and the determination is then published in the New Zealand Gazette.

In all cases where there is a change, councils need to wait till an amendment determination is gazetted by the Authority before they can make the changes to their elected members’ remuneration. However, all amendments (including adjustments to annual remuneration) are generally effective on and from the day after the day on which the council confirmed the position(s) of responsibility and the associated remuneration. Amendments are backdated in the amending determination to the effective date.

The Authority will accept proposals from councils no later than three months (normally 31 March) before the expiry of the principal determination (normally 30 June).

The council will need to forward their proposal(s) for additional remuneration to the Authority for consideration and inclusion in the next amendment determination by completing and returning one of the following worksheets:

Proposed remuneration for councillors calculated using dollar amounts [XLSX, 276 KB]

Proposed remuneration for councillors calculated using ratios [XLSX, 52 KB]

The next amending determination is scheduled to be issued in late November 2021. Proposals for changes from councils to be included in this amending determination will not be accepted after 15 October 2021.

Changes resulting from Representation Reviews

Any change in councillor numbers following a representation review will not affect the council’s governance remuneration pool, which is based on the assessed size of the council governance role rather than the number of councillors. However, a change in councillor numbers will have an impact on individual councillor remuneration.

Additional councillors would mean that the available governance pool would need to be spread among more people. Conversely, a decrease in councillor numbers would see remuneration previously allocated to the disestablished roles put back into the pool for redistribution amongst remaining councillors. 

Consequences of council vacancy or leave of absence

If a councillor’s position becomes vacant or an elected member takes unpaid leave of absence, the council must not reallocate among the remaining councillors the amount not being paid during the period of the vacancy or leave of absence. In these cases, the amount allocated is simply not spent by the council and is available for when the position is filled (often through a by-election) or the councillor returns after their leave of absence.