LOCAL GOVERNMENT, CEO REMUNERATION

The Hon. S.G. WADE (15:02): I seek leave to make a brief explanation before asking the Minister for State/Local Government Relations a question about the remuneration of local council CEOs.

Leave granted.

The Hon. S.G. WADE: An article published in The Advertiser of 20 September noted that local government CEOS were given an average pay rise of 7 per cent over the past year. The local government sector claims that the increases are driven by market forces in spite of the fact that, on average, wages increased by 4 per cent in the same period.

All of the state's metropolitan CEOs are earning a minimum of $220,000 a year; the top salary of $335,000 is $3,500 more than the salary of the Prime Minister. The council involved, the Adelaide City Council, has a population area of about 20,000, while the Prime Minister runs a country with a population of 22 million.

In light of community concern, the opposition spokesman for state/local government relations (Mark Goldsworthy) has called for an independent review of salaries of council chief executives. The minister has stated in response that she has no power to investigate the salaries of council CEOs. Presumably, she is referring to the Local Government Act; however, she has every right to commission a review as opposed to an investigation. My question is: as the government is legislating to set allowances, will the minister establish an independent review of the salaries of local government CEOs?

The Hon. G.E. GAGO (Minister for State/Local Government Relations, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises, Minister Assisting the Minister for Transport, Infrastructure and Energy) (15:04): Obviously, the size of the remuneration of local government CEOs has been the subject of considerable media attention recently. Under the Local Government Act councils are required to appoint a chief executive officer, and the terms and conditions of those contracts are matters for the individual council and the appointee.

The legislative provisions applicable to the appointment of a chief executive officer of a council are covered in chapter 7 of the Local Government Act 1999. Section 96 of the act provides that every council must have a CEO, and section 98 of the act sets out the appointment procedures. The council—that is, the body of elected members—makes the appointment to the office of chief executive. It is recognised that selecting and appointing the chief executive officer is one of the most important tasks elected members may undertake during their term of office.

Choosing the right person for the job and ensuring it is the appropriate person with the appropriate skills and the appropriate experience is critical to the success and the ongoing activity of that council. It is essential that correct processes are followed so that applicants are given every opportunity to put forward appropriate information so that the council can choose the most suitable person for the job. When elected members appoint a CEO, the council is entering into a contractual relationship with the CEO and, as such, the processes used by the council in this area obviously are extremely important.

To this end, the Office for State/Local Government Relations has recently produced a guidance paper for councils on appointing a chief executive. The purpose of that paper is to provide councils with guidance on the legislative requirements and better practices when selecting and appointing a CEO. Councils, like many other organisations, would seek advice on the appropriate terms and conditions of their CEO, and from time to time review those particular conditions. Like other employers, the council can also decide to apply performance targets, if it so chooses, and also to adjust salaries from time to time, depending on those targets or any other performance objectives that that particular council might set out. However, how it does that is a matter for that particular council and between it, its employees and its CEO.

A council must not make an order to prevent the disclosure of the remuneration or conditions of service of the CEO after a contract has been signed. There are clear requirements around that in the legislation. A register of salaries is also required. The issue of the transparency and openness of CEOs' salaries is provided for within legislation; that is not hidden. CEOs' salaries are on public record and they are published, and people have the right to access that particular register. As I have said, it is a very open process.

In terms of the ministerial powers of investigation, I have outlined those in this place. Clearly, they relate to breaches in legislation, and I have outlined the legislative provisions. That is why I took a little time outlining the particular legislative provisions around CEOs' appointments and salaries. My investigation powers only pertain to when there is a potential breach in legislation. Clearly, as I have outlined, nothing would indicate that there has been a breach in relation to any parts of that legislation. Therefore, I am not able to initiate those investigatory powers. I believe that, ultimately, the decision about the success of a council's performance, the measurement of a council's achievements and whether it has used ratepayers' moneys in the best interests of the council and ratepayer services and amenities is determined at the ballot box, so to speak. Each council is held accountable to its ratepayers for the decisions it makes within the parameters of its legislative powers—which they are currently doing. It is fundamentally evaluated at the polling booth, just as we are as state members of parliament.