In accordance with the 1992 Cabinet approved revised system for the remuneration of non-executive directors and part-time members of Corporatised Government trading enterprises, Statutory Authorities, Advisory Councils, Committees, etc., new fee levels have been determined as a result of the annual review. In determining the new fee levels, which have effect on and from 1 January 1994, regard was had to trends in private sector non-executive director remuneration and C.P.I. movements.

The classification of organisations has been expanded to include four categories and these are defined in the attached procedural guidelines. I have reviewed fee levels and approved increases for all category A, B and C organisations by up to 6.5% for Chairpersons and up to 5% for Members. New daily sitting fee upper limits for category D Advisory Councils, Committees, etc. are outlined in the guidelines.

Ministers are requested to classify their existing boards and committees which fall into categories B and C and provide me with recommendations with respect to those organisations in order that initial fee determinations can be made. I would expect that this process would be finalised by 1 July 1994. Fees for councils and committees which clearly are of an advisory nature under category D are to be determined by portfolio Ministers within the upper fee limits on the basis of work value and responsibility.

It would be appreciated if you could bring this Memorandum to the attention of all relevant departments and authorities within your administration. Any request for further advice or clarification should be directed to the Industrial Relations Unit, Premier's Department on 228 45l2 or 228 3457.

John Fahey MP
Premier

Guidelines:

Corporatised Entities, Statutory Authorities, Commissions, Advisory Boards, Consultative Committees and Councils.

Categorisation -

Remuneration of non-executive Directors and Part-time Members

Guidelines for the Categorisation of Corporatised Entities, Statutory Authorities, Commissions, Advisory Boards, Consultative Committees and Councils and the Remuneration of non-executive Directors and part-time Members.

CATEGORISATION.

For the purposes of determining remuneration, organisations will be categorised as either:

Category A - Corporatised Entity:- Directors of these organisations are responsible to the shareholders and are not subject by statute to direction and control by the portfolio Minister.

Category B - Governing Board:- The board should be empowered to govern the management of the enterprise and circumstances in which Ministerial control and direction will be exercised should be specific.

Category C - Advisory Board:- The board provides advice to the Minister on all matters relevant to the management of an authority but the Minister retains unfettered right to control and direct the board and the CEO.

Category D - Advisory Council, Committee, etc:- These bodies generally have little or no policy determination or operational executive functions and are established primarily to provide advice to a portfolio Minister on policy or operational issues.

All requests for review of remuneration levels for category B and C organisations should be made to the Premier and include details of the role and responsibilities of the body concerned. The attached appendix "A" gives guidance to the information required.

Where public servants sit on category B or C boards, differential rates of remuneration may be determined. Each case will have to be assessed on its own merits, and determined by the Premier. In the case of category D advisory committees, generally public servants will not be remunerated.

Traveling and accommodation allowances will apply as determined by the Government in circulars issued from time to time.

Quasi-judicial bodies will continue to have their remuneration set by the Premier, usually on a daily sitting fee basis. Fees are generally equated to full time statutory positions, the salaries of which are determined by the Statutory and Other Offices Remuneration Tribunal.

There are a number of bodies established by Government legislation which do not draw on Consolidated Revenue but instead are funded from practitioner charges, grower levies and the like. Where members are elected, or where there is a mechanism to ensure the committee is directly accountable to those upon whom the charges are levied, the committee should determine the fees for its members rather than the Government.

REMUNERATION

The remuneration levels as determined by Cabinet in 1992 have been reviewed based on recent surveys of fees for non-executive chairmen and directors of major Australian corporations as well as movements in the C.P.I.

The Premier has approved fee increases for all category A, B and C organisations of up to 6.5% for Chairpersons and up to 5% for Members.

Fee levels for each category B and C body will initially be determined by the Premier and following subsequent annual fee reviews, Ministers will have discretion to apply any fee increases if considered appropriate.

New fee levels are available on and from 1 January 1994.

Category A - Corporatised Entities

Remuneration is to be an annual fee determined by the shareholders in consultation with the Board from within Cabinet approved market related ranges. Daily sitting fees will not be payable. The remuneration should have regard to financial criteria such as turnover, assets and profits as well as recognising accountability and responsibility factors. Advice may be sought on appropriate fee levels through the Premier. Public servants sitting on boards of corporatised entities shall receive the same level of remuneration as other directors because they accept the same level of responsibility and personal liability under the corporations law.

Categories B and C - Governing Boards and Advisory Boards

Remuneration of part-time directors is to be an annual fee initially determined by the Premier. Daily sitting fees will not be payable. Similar to category A bodies, the remuneration will be market related and have regard to similar financial criteria but will be discounted for factors such as the absence of corporations law sanctions, ultimate responsibility resting with the portfolio Minister, degree of public service and the lack of financial/market disciplines. There will be some bodies such as the Police Board for example, which cannot be measured by financial criteria and it will be necessary to take into account the special degree of responsibility and work value in determining appropriate levels of remuneration.

The fees for category B Governing Boards are based on 70% of fees for corporations with a comparable financial profile. Similarly, category C Advisory Boards are based on 60% of corporations fees.

Category D - Advisory Committees

Remuneration shall be on a sitting fee basis and the Premier has determined upper limits of remuneration within which Ministers may fix rates having regard to work value and responsibility. The upper limits are:

Chairperson Member

Full day $296 $179

Half day $148 $90

Where daily rates are considered by Ministers to be inappropriate for some committees in this category, Ministers may seek the determination by the Premier of a special annual rate on a case by case basis.

Review of Fees.

Fees for all categories will be reviewed each year having regard to trends in private sector non-executive director remuneration and CPI movement for the previous 12 months.

PAYE and Superannuation Guarantee

In arranging payment of meeting fees to part-time members of boards and committees agencies should be mindful of their obligations to the Australian Taxation Office in terms of PAYE and Superannuation Guarantee. Premier's Department Circular No 93-6, refers.

APPENDIX A

REMUNERATION OF CHAIRPERSONS AND MEMBERS OF BOARDS AND COMMITTEES

The following is a brief guide to the information which will assist the Premier in the determination of appropriate levels of remuneration for chairpersons and members of boards and committees.

• Purpose and justification for board or committee.
• Board/committee funding arrangements.
• Legislative basis for board/committee if applicable.
• Nature of board/committee, including whether it is a board of a corporatised entity, statutory authority etc. or an advisory committee.
• Treasury's classification of the organisation and the extent to which the organisation is subsidised from consolidated revenue or is not required to earn a commercial rate of return on assets.
• Organisation turnover, assets and profits (where applicable).
• Role and functions of chairperson and members, including details of responsibility and work value which cannot readily be measured by financial criteria.
• The person/body who bears ultimate responsibility for the organisation including the extent of Ministerial control, the board's power to determine policy and/or issue directions and who is accountable for decisions.
• Relationship of board/committee to chief executive officer of department/authority.
• The sanctions, if any, which may be imposed on members.
• Composition of board/committee and method of selection of chairperson and members.
• An assessment of the value and degree of "public service".
• Time spent on work for the board/committee, including meeting preparation, sub committees, etc.
• Any other information considered relevant.
• Nomination of contact officer.