2003–04 No. 12, 8 September 2003 Governors-General—Salary and Pension Introduction Governor-General Salary ($) This Research Note explains the Rt Hon. Sir John Kerr, AK, GCMG, GCVO, QC 30 000 salary and pension payable to Rt Hon. Sir Zelman Cowen, AK, GCMG, GCVO, QC 37 000 Governors-General. It does not discuss other entitlements of office. Rt Hon. Sir Ninian Stephen, KG, AK, GCMG, GCVO, KBE 70 000 Section 3 of the Constitution Hon. William Hayden, AC 95 000 specifies a salary of £10 000 payable Hon. Sir William Deane, AC 58 000 to the Governor-General until Hon. the Right Reverend Dr Peter Hollingworth, AC, OBE 310 000 'Parliament otherwise provides'. Major General Michael Jeffery, AC, CVO, MC 365 000 Parliament did not legislate on the salary of Governors-General until consolidated so that parliamentarians during a Governor-General's term of the Governor-General Act 1974 (the could more easily grasp proposed office, usually five years. Act). Salaries are now set for each expenditure; and successive incoming Governor-General by an Income and Taxation Commonwealth governments were amendment to the Act. thereafter reluctant to approach the The Income Tax Assessment Act The First Governor-General issue of vice-regal salary. Despite 1997 was amended in 2001 to allow adjustments to establishments costs the taxation of the Governor- The sum of £10 000 first appeared in after 1902, many early Governors- General's salary. This was reflected financial estimates produced at the General still found it necessary to in an increased salary for incoming 1897 Constitutional Convention. meet certain requirements of the Governor-General Peter These estimates were circulated office from their own purse. Hollingworth. Governors-General during consideration of the draft had been exempt from taxation on constitution and a salary of £10 000 Governor-General Act 1974 official salary since at least 1922 and was ultimately included in the With the introduction of the on any overseas income since 1936. Commonwealth of Australia Governor-General Bill 1974, the Constitution Act 1901. This amount There is no legislative requirement Whitlam government acknowledged was paid as salary to Australia's first on Governors-General to reduce that appointment to the office of Governor-General, Lord Hopetoun. their salary to take account of any Governor-General should not depend In Edmund Barton's view, both the other income or allowances. At his on a candidate's 'personal wealth or 1897 Convention and the framers of own instigation, Sir William Deane's the availability of other income'. the Constitution always intended to salary was reduced to take account Whitlam also put forward two provide allowances additional to of the pension he received as a principles that are still applied when salary. In May 1902, Barton former Justice of the High Court. It Parliament considers salary–salary introduced a Bill providing £8000 is reported that Governor-General should be dealt with in a non- per annum 'to assist in defraying the Michael Jeffrey intends to give his partisan way; salary should Governor-General's establishment'.1 military pension to charity.6 recognise the importance and place Lack of support ensured the Bill was 4 of this high office. The 1974 bill Setting the Salary never brought to the vote in its proposed an increase to $30 000 for original form. Instead, Parliament The Governor-General's salary is the incoming Governor-General, Sir enacted an amendment that provided John Kerr. By this time while salary conventionally linked to the salary of Hopetoun with a one-off payment of had not increased, expenditure on the Chief Justice of the High Court. £10 000 to defray personal expenses Although the link was not mentioned the Governor-General's office and incurred during the 1901 royal visit. establishments had increased in debate on the 1974 Bill or 1977 At Parliament's apparent refusal to markedly since the mid 1950s, rising amendments, this convention has grant an ongoing increase in 5 been outlined in Parliament by the to $708 047 in 1972–73. allowances, Hopetoun resigned his responsible Ministers since 1982.7 commission writing 'I have already Salary Prior to 2001, salary was set by strained my private resources calculating the after-tax equivalent Parliament, therefore, has agreed to beyond all justification'.2 There were of the Chief Justice's salary at the the salary arrangements for two consequences of the furore that time of appointment. The average incoming Governors-General since followed—estimates of after-tax salary of the Chief Justice 1974. The Constitution also provides establishments' expenditure3 were over a notional five-year term was that this salary cannot be altered estimated, taking into account future defined as 60 per cent of the current possible increases. The vice-regal salary of the Chief Justice of the 6. Governor-General Amendment Bill salary was then set to 'moderately High Court.15 The annual allowance 1995: explanatory memoranda and exceed' this average.8 The salary is is then calculated at 85 per cent of, B. Toohey, 'G-G can best serve us by now set to moderately exceed the or at a prescribed percentage of, the keeping quiet' Australian Financial estimated average salary of the Chief basic rate, whichever is higher. The Review, 28 June 2003, p. 49. Justice over a notional three year prescribed percentage is calculated 7. House of Representatives, Debates, term of office.9 using a formula comprising the 29 April 1982, p. 2086. surcharge adjustment over time and 8. ibid., 6 June 2001, p. 27339. Pension the basic rate. Currently, the annual 9. ibid., 24 June 2003, p. 17319. A pension scheme for retired salary of a Chief Justice is 10. ibid., 9 April 1974, p. 1248. $336 450.16 Therefore the basic rate, Governors-General was introduced 11. 'Unfunded'–when a pension becomes with the Act in 1974. Earlier being 60 per cent of this amount, is payable, benefits are funded from an governments had sometimes found it $201 870. The annual allowance appropriation within the necessary to provide ex-gratia would then be at least 85 per cent of Commonwealth Budget. 'Defined payments to former Governors- this amount. Benefit'–the entitlement is, generally, General and their widows.10 The a multiple of years of service and a In effect, the amount of annual pension scheme is an unfunded, percentage of salary; this does not allowance is dependent upon a defined benefit scheme11 with the apply to the pension of Governors- Governor-General's surcharge debt Secretary of the Department of General but the amount is at the time of retirement. This is a nonetheless fixed by a formula not Prime Minister and Cabinet as personal taxation and actuarial by market returns on investments. Trustee. matter and not within the scope of 12. Superannuation Legislation The scheme is non-contributory, that this Note. Amendment (Superannuation is, Governors-General do not Contributions Tax) Act 1997 . Upon the death of a retired contribute a percentage of salary to 13. Governor-General Legislation Governor-General, their spouse the scheme that provides their Amendment Act 2001 . receives five-eights of the allowance pension. The pension is paid out of payable, reduced by any other 14. D. Atkins, 'It pays not to be so petty- the Consolidated Revenue Fund as minded', Courier Mail, 28 May pension received. an annual allowance for life. 2003. Indexation of Allowance 15. Governor-General Act 1974, The Annual Allowance subsection 2A(2). Any increase in the salary of the The annual allowance is also subject 16. From 1 July 2003 as determined by Chief Justice of the High Court will to income taxation. the Remuneration Tribunal, but not cause a corresponding increase in the yet tabled. Determinations are The superannuation contributions' annual allowance paid to retired subject to disallowance. See surcharge was implemented for Governors-General. Any increase Determination 2003/12 Table 1 Governors-General in 1997.12 Since flows to the basic rate from which Rates of Remuneration—Judicial 2001, Governors-General or their the annual allowance is calculated. Offices. Rates effective 1 July 2002 widowed spouses have been allowed from Determination 2002/21 may Double-dipping? to convert part of the annual apply at the time of reading. allowance to a lump sum in order to The Act requires that the basic rate pay a surcharge debt.13 The annual be reduced by the amount of any allowance is reduced accordingly. other Commonwealth, State or Leanne Manthorpe Territory government-funded Politics and Public The amount of annual allowance pension received by the retiring Administration Group payable does not depend upon length Governor-General. Information and Research of tenure. A retiring Governor- Services General becomes eligible for the Views expressed in this Research Note same allowance whether they serve are those of the author and do not necessarily reflect those of the one week or five years at 1. A Bill for an Act Relating to the Government House. The manner in Information and Research Services and Governor-General's Establishment, are not to be attributed to the which a Governor-General leaves 1st reading print, 30 April 1902. Department of the Parliamentary office does not affect the allowance 2. Telegraph from Hopetoun to Library. Research Notes provide concise in any way. Chamberlain, Secretary of State for analytical briefings on issues of interest Colonies, 5 May 1902. to Senators and Members. As such they Calculations may not canvass all of the key issues. 3. Expenditure includes upkeep to Advice on legislation or legal policy The likely pension of an outgoing residences, postage, telephone and issues contained in this paper is Governor-General is sometimes electricity and some staff salaries.