Constitution (Governor's Salary) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 24 September 2015.)

The Hon. R.I. LUCAS (17:52): On behalf of Liberal members, I rise to support the second reading of this bill. This bill amends the act to refer the matter of the Governor's remuneration to the Remuneration Tribunal. The government has outlined that the intention of the bill is to allow the Governor, like other significant office holders such as members of the judiciary and the legislature, to have the benefit of establishing appropriate salary arrangements, including superannuation and salary sacrificing. The government argues the current legislative framework and a recent tax ruling limits the ability of the Governor to enter into these arrangements and, therefore, places the Governor at a disadvantage.

I have been provided by the government a copy of the relevant tax ruling which, for those avid readers of tax rulings, is referred to as TR 2001/10. I refer them in particular to paragraphs 55, 56 and 57 under the heading of 'Office holders'. Paragraph 55 states:

An office may be created under the Constitution or a law of the Commonwealth, a State or a Territory. The duties of the office may be set out in the instrument that creates the office or may be determined by the entity to whom the office holder reports.

Paragraph 56 states:

However appointed, terms of remuneration that an office holder is to receive will usually be set out in either the instrument that creates the office or more likely in a written agreement between the office holder and the entity to whom the office holder reports.

Then, the critical paragraph of this tax ruling is paragraph 57, as follows:

If the terms of remuneration for the office holder are set out in the instrument that creates the office, it may not be possible for the office holder to enter into an effective SSA.

SSA refers to a salary sacrifice arrangement. The paragraph continues:

Where the instrument permits the relevant entity to enter into a remuneration agreement with the office holder, the agreement may be amended during the period that the office holder occupies the office to reflect changes made to responsibilities and remuneration arrangements, such as by a SSA.

The government's legal advice, and the government's advice to the opposition, has been that that particular tax ruling currently restricts the Governor from entering into salary sacrifice arrangements such as those that are available to others in the community, and that is the principal purpose for the legislation that we see before us.

I do note that there has been some media publicity that the government, through this legislation, was seeking to give the Governor a significant pay rise of $100,000. I can only refer to statements made by the Premier, who indicated that that was not the intention of the legislation and that he did not believe that would be the end result of the passage of the legislation. However, the opposition accepts that the final decision with this will rest with an independent body, the Remuneration Tribunal; it will be a decision for that tribunal. Nevertheless, in the briefings the government provided to the opposition it indicated that the bill is essentially in response to that particular tax ruling, which has created particular difficulties, and this is the government's attempt to sort that out.

There is one other aspect that should be referred to, and that is that the current legislation and arrangements for the Governor actually provide that where a governor has served four years and six months of a five-year turn the Governor is entitled to furlough leave, entitled to their salary for the final six month period. We are advised that this particular clause, or furlough leave, gave effect to an historical practice where English governors would take six months' furlough to return to England. As the government considered this provision was antiquated and the Governor supported its removal, this particular provision is being removed from the current practice and the antiquated notion of six months' furlough leave for governors will be removed.

As I said, on the basis of the undertakings that have been provided to the opposition from the government and, indirectly through persons representing the Governor (we did not judge it to be appropriate to directly consult the Governor on this particular issue), we were provided with an indication that he had no objection to legislation being passed. On the basis of those undertakings the Liberal Party supports the second reading and the passage of the bill.

Debate adjourned on motion of Hon. J.M. Gazzola.