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Governors (Salary And Pensions) Bill 2003
GOVERNORS (SALARY AND PENSIONS)
BILL 2003
EXPLANATORY NOTES
Title of the Bill
Governors (Salary and Pensions) Bill 2003
Policy Objectives of the Bill
The objective of the Bill is to adjust the rate of the Governor's pension to
take account of the removal of the income tax exempt status of the
Governor's salary.
The opportunity of amending the law relating to Governor's pension has
been taken to:
· restate and modernise the legislation relating to the salary and
pension entitlements of the office of Governor of Queensland
into one Act; and
· where appropriate, ensure that the provisions relating to the
pensions entitlements of the office of Governor are consistent
with other legislation.
Achieving the Policy Objectives of the Legislation
Adjustment of the Governor's Pension
Until recently, the official salaries of vice-regal officers in Australia were
exempt from income tax by section 51-15 of the Income Tax Assessment
Act 1997. This exemption was repealed in 2001 by the Governor-General
Legislation Amendment Act 2001, to take effect from the appointment of
the next vice-regal representative in each jurisdiction.
In the Governors' Pensions Act 1977, the current rate of pension for the
Governor is set at 60% of salary. The Bill adjusts the rate of pension to
ensure that, after the Governor's salary becomes subject to income tax, the
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Governors (Salary And Pensions) Bill 2003
pension remains in a similar proportion to salary in the Governor's hands.
This could be achieved by expressing the rate of pension as either:
· 60% of after-tax (or net) salary; or
· a smaller percentage (35%) of pre-tax (or gross) salary,
calculated to achieve the same result.
To illustrate, the following calculations have been extrapolated from the
current salary of the Governor of Queensland, which is set at $110 550 by
the Governor's Salary Order 1996. The current Governor's pension
entitlement on his leaving office, being 60% of salary, is $66 330 per
annum. For the Governor's net salary to remain at the current level
following the imposition of income tax, the Governor's gross salary would
be increased to $190 000. A continuing pension entitlement of $66 330 per
annum would be achieved if the Governor's revised pension entitlement is
expressed as:
· 60% of net salary of $110 550; or
· 35% of gross salary of $190 000.
For a number of reasons, it is preferable to set the rate of the Governor's
pension as a percentage of gross salary. Primarily, expressing the rate of
pension as a percentage of a legislatively prescribed salary will ensure that
the rate of the Governor's pension is certain for the duration of his or her
term in office.
If the pension is expressed as a percentage of after-tax salary, it is subject
to the application of Commonwealth income tax legislation to calculate the
amount of income tax payable. Further, the amount of pension will change
if there is an alteration in the income tax rates or the manner in which
income tax in calculated. While such a change occurs infrequently, it
creates sufficient uncertainty in the ultimate rate of a Governor's pension
during his or her term in office.
Restating the Governor's Salary Act 1872 and the Governors' Pensions Act
1977
The existing law dealing with the salary and pension entitlements of the
Governor is contained in the Governor's Salary Act 1872 and the
Governors' Pensions Act 1977. These Acts contain a number of spent
provisions and are otherwise drafted in an antiquated style.
The necessity to legislatively adjust the rate of the Governor's pension to
take account of the removal of vice-regal income tax exemption has been
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Governors (Salary And Pensions) Bill 2003
taken to restate and modernise the legislation relating to the remuneration
of the Governor into the Governors (Salary and Pensions) Bill 2003.
The salary and pension entitlements of the current Governor of
Queensland and the pensions currently being paid to former Governors and
the surviving spouses of former Governors will not be affected in any way
by the passage of the Governors (Salary and Pensions) Bill 2003.
Consistency with Other Legislation
While the pension entitlements pertaining to the Governor of
Queensland are unique to the office, some of the elements of the pension
scheme occur in other public sector superannuation or pension schemes.
To ensure that these elements of the Governor's scheme are consistent to
the greatest extent possible with other schemes, a number of amendments
to the scheme have been made.
In summary, the additional matters that have been amended are:
· providing for the spouses of deceased former Governors to
remain entitled to a pension in the event of remarriage;
· providing for the de facto partner of a deceased former Governor
to be entitled to a pension benefit, provided the de facto
relationship existed for up to two years prior to the Governor's or
former Governor's death or a shorter period if the partners
evidenced a clear intention that the relationship would be long
term and committed;
· ensuring that only one total pension is payable should a deceased
former Governor have more than one surviving spouse (that is, a
married spouse and a de facto partner), with the Minister to
determine the apportionment of the entitlement after consultation
with the Leader of the Opposition;
· ensuring that the provision for the indexation of pension
entitlements is consistent with the corresponding provisions of
the Judges (Pensions and Long Leave) Act 1957 and the
Parliamentary Contributory Superannuation Act 1970.
Administrative Cost
The future administration costs to the Government will be minimal.
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Governors (Salary And Pensions) Bill 2003
Consistency with Fundamental Legislative Principles
The Bill is consistent with the fundamental legislative principles defined
in section 4 of the Legislative Standards Act 1992. Section 4 requires that
legislation has sufficient regard to:
(a) the rights and liberties of individuals; and
(b) the institution of Parliament.
Consultation
The Government Superannuation Office, the State Actuary, the Office of
the Governor and the Department of Justice and Attorney-General were
consulted in the development of the Bill.
NOTES ON CLAUSES
PART 1--PRELIMINARY
Clause 1 of the Bill provides that the short title of the Act is to be the
Governors (Salary and Pensions) Act 2003.
Clause 2 refers to the dictionary in the schedule to the Act for the
definition of particular words used in the Act.
PART 2--SALARY
Clause 3 provides for a salary to be payable to the Governor at the rate
prescribed under a regulation.
Clause 4 provides for a salary to be payable to a person who is an Acting
Governor at the same rate payable to the Governor. Subclause (2) provides
for the amount of salary payable to be reduced by the amount payable to
the person as Lieutenant-Governor, Chief Justice or Supreme Court judge
for the same period.
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Governors (Salary And Pensions) Bill 2003
Section 41 of the Constitution of Queensland 2001 provides that an
Acting Governor to assume the administration of the Government of the
State in certain circumstances when the office of Governor is vacant.
Under section 41(3), the person who must act as Governor is the
Lieutenant-Governor of the State or, if there is no Lieutenant-Governor, the
Chief Justice of Queensland or, if the Chief Justice is not present in the
State and able to act, the next most senior judge of the Supreme Court of
Queensland who is present and able to act.
PART 3--PENSIONS
Division 1--Introductory
Clauses 5 and 6 set out the purposes of this part of the Act and details
how the provisions of the part are organised into divisions and how the
provisions interact with each other.
Division 2--Entitlements and rates of pensions payable
This division sets out the entitlements to a pension, and the rates of
pension, for former Governors and the surviving partners of former
Governors who have died. Each clause in this division deals with a person
who is to become entitled, or who has become entitled, to a pension in each
of the following circumstances:
· clause 7 applies to a person who is appointed Governor after the
commencement of the Act and who is an Australian citizen on
appointment;
· clause 8 applies to the current Governor of Queensland (that is,
the person who holds the office of Governor on the
commencement of the Act);
· clause 9 applies to a former Governor who was in receipt of a
pension when the Act commenced; and
· clause 10 applies to the surviving partner of a deceased
Governor.
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Governors (Salary And Pensions) Bill 2003
Clause 7 sets out the entitlement to a lifetime pension and the rate of
pension for a person who is appointed Governor after the commencement
of the Act.
There are two preconditions to the person's entitlement to the pension.
Firstly, the person must have been an Australian citizen at the time he or
she was appointed Governor. Secondly, he or she must have held the office
for 5 years or more. There is an exception to the second condition. If the
person held the office for less than 5 years, he or she will be entitled to a
pension if the Minister declares under section 11 that the person is entitled
to a pension. Section 11 sets out the ground on which the Minister may
make such a declaration and the process to be followed.
Subclause 7(3) provides that the rate of pension is equal to 35% of the
Governor's salary at the time the Governor ceases to hold office.
This clause establishes the rate of pension from the time at which the
salary of the Governor becomes assessable for income tax; that is, from the
appointment of the next Governor of Queensland. The rate of pension is
adjusted from the 60% of salary that is applicable under the Governors'
Pensions Act 1977 to 35% of salary, to take account of the removal of the
tax-exempt status of the Governor's salary. In the Governor's hands, a
pension of 35% of pre-tax salary will be comparable to 60% of a post-tax
or tax-exempt salary. (See the discussion about the adjustment of the rate
of pension earlier in these notes under the heading "Achieving the Policy
Objectives of the Legislation".)
Subclauses 7(4) and (5) outline the pension entitlement for the surviving
partner of a person who is appointed Governor after the commencement of
this Act, whether the Governor died while in office (irrespective of length
of term of office prior to death) or died at sometime after ceasing to hold
the office. The rate of pension payable to the surviving partner in both
circumstances is the same and is for the surviving partner's lifetime.
Clause 8 sets out the entitlement to a lifetime pension and the rate of
pension for a person who holds the office of Governor immediately before
the commencement of the Act.
Subclause 8(2) provides that the rate of pension is equal to 60% of the
Governor's salary at the time the Governor ceases to hold office.
This clause establishes the rate of pension from the time at which the
vice-regal income tax exemption applied to the salary of the Governor; that
is, the salary of the person holding office immediately before the
commencement of the Act is exempt from income tax by section 51-15 of
the Income Tax Assessment Act 1997. The repeal of this section does not
take effect until the appointment of the next vice-regal representative in
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Governors (Salary And Pensions) Bill 2003
Queensland. (See discussion about the adjustment of the rate of pension
earlier in these notes under the heading "Achieving the Policy Objectives of
the Legislation".)
Subclauses 8(3) and (4) outline the pension entitlement for the surviving
partner of a person who holds the office of Governor immediately before
commencement of the Act, whether the Governor died while in office or
died sometime after ceasing to hold the office. The rate of pension payable
to the surviving partner in both circumstances is the same and is payable
for the surviving partner's lifetime.
Clause 9 provides that the entitlement to a lifetime pension and the
amount of pension payable to a person who is a former Governor
immediately before the commencement of this Act continues to be payable
to that person.
Subclause 9(3) outlines the lifetime pension entitlement for the surviving
partner of a person who was a former Governor upon the former
Governor's death.
Clause 10 provides that the entitlement to a lifetime pension and amount
of pension payable to a person who is the surviving partner of a former
Governor immediately before the commencement of this Act continues to
be payable to that person.
Division 3--Provisions that may affect pension entitlement or amount of
pensions
Clause 11 sets out the entitlement to a lifetime pension for a person who
held the office of Governor for less than five years.
Subclause 11(1) provides that a person who held the office of Governor
for less than five years may apply to the Minister for payment of the
pension under the Act on the ground that the person was incapable of
performing the duties of the office at the time of ceasing to hold the office.
Subclause 11(2) provides that the Minister may declare that the person is
entitled to a pension under the Act if satisfied that the person ceased to hold
office on the ground that the person was incapable of performing the duties
of the office. The Minister may consider matters reasonably relevant to
determining the person's entitlement to a lifetime pension.
Subclause 11(3) provides that the Minister must provide the person with
written reasons if the Minister decides that the person is not entitled to
receive a pension under the Act as the person ceased to hold office for a
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Governors (Salary And Pensions) Bill 2003
reason other than the person was incapable of performing the duties of the
office.
Clause 12 provides that a former Governor, or the surviving partner of a
deceased Governor, can take part of the pension entitlement payable under
this Act as a lump sum to meet the former or deceased Governor's
surcharge liability.
As a lump sum surcharge debt will be applied personally to a former
Governor or deceased Governor who receives a pension entitlement under
this Act, this clause allows a portion of the pension to be taken as a lump
sum to assist the recipient to fund the cost of the surcharge.
Subclause 12(3) restricts the amount of the pension which can be
commuted in respect of a former Governor or deceased Governor to that
required to meet the surcharge liability relating to holding the office of the
Governor.
Subclause 12(4) provides that before a former Governor or surviving
partner of a deceased Governor can commute part of the pension
entitlement to a lump sum for the purposes of extinguishing a Governor's
surcharge liability, a written application must be made to the Minister
accompanied by the surcharge liability notice issued by the Commissioner
of Taxation stating the amount of the former or deceased Governor's
surcharge liability.
Subclauses 12(5) and (6) provide that upon receipt of the written
application accompanied by the notice the Minister can authorise the
commutation of that part of the pension (on a basis determined by the
Queensland Government Actuary) required to extinguish the former or
deceased Governor's surcharge liability.
Subclause 12(7) inserts a number of definitions essential for the
operation of the clause. The definitions derive their meaning from the
Commonwealth Government's Superannuation Contributions Tax
(Members of Constitutionally Protected Superannuation Funds)
Assessment and Collection Act 1997.
Clause 13 provides for a minimum benefit to be paid to a person who
dies while holding office or ceases to hold office under the Act. This
ensures that the Queensland Government meets obligations under the
Superannuation Guarantee Charge Act 1992 (Cwlth).
In practise, this is achieved by an actuary specifying a minimum benefit
formula that complies with the Superannuation Guarantee Charge Act
1992 (Cwlth). Under all circumstances when a Governor leaves office the
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Governors (Salary And Pensions) Bill 2003
minimum benefit is calculated and compared with the benefit derived in
accordance with either clause 7 or 8. Where necessary, the benefit is
increased to the level of the minimum benefit.
Subclause 13(2) provides that the benefit is calculated by an actuary and
is to be at a level sufficient to meet the state's obligations under the
Superannuation Guarantee Charge Act 1992 (Cwlth). The minimum
benefit is paid to an approved deposit fund or superannuation fund in
accordance with the Superannuation Industry (Supervision) Act 1993
(Cwlth).
Subclause 13(3) inserts a number of definitions essential for the
operation of the clause. The definitions derive their meaning from various
Commonwealth Government superannuation acts.
Clause 14 sets out entitlements to a pension if a deceased Governor is
survived by more than one surviving partner.
Subclauses 14(2) and (3) provide that the pension payable is the pension
that would have been paid had only one surviving partner survived the
deceased Governor. This pension amount is to be apportioned between the
surviving partners by the Minister, after consultation with the member who
is recognised in the Legislative Assembly as the Leader of the Opposition,
in the shares that the Minister considers appropriate.
Subclause 14(4) provides that the Minister must consider the needs of
each surviving partner and other matters considered reasonably relevant to
determining the apportionment.
Clause 15 provides that all pension entitlements payable under the Act
are increased in line with the Consumer Price Index (CPI) where there is
any increase in CPI, but for the pensions to remain the same where the CPI
decreases. Where the CPI increases in the year following a decrease, the
increase will be limited to the net increase over the period since it was last
increased.
Clause 16 provides that the receipt of another pension or retiring
allowance equal to or less than the entitlement to a lifetime pension payable
under this Act to a former Governor decreases by the amount of the pension
payable under this Act by the amount of the other pension or retiring
allowance. The reduction, if any, of the entitlement to a pension payable
under this Act is calculated on a yearly basis.
Subclause 16(3) sets out pensions and retiring allowances payable to a
former Governor which decrease the amount of the entitlement to a lifetime
pension payable under this Act.
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Governors (Salary And Pensions) Bill 2003
Division 4--Provisions that may result in end of entitlements to pensions
Clause 17 inserts a number of definitions essential for the operation of
this division.
Clause 18 provides that the pension entitlement of a former Governor
can be removed if the Legislative Assembly accepts the findings of a
tribunal of former judges that on the balance of probabilities the former
Governor misbehaved in a way that justifies ending the pension
entitlement.
Clause 18(3) provides for a tribunal, to consist of at least 3 members, to
be established by an Act to inquire into the misbehaviour of the former
Governor. The tribunal members are to be appointed by resolution of the
Legislative Assembly. The tribunal has the functions, powers, protection
and immunity given by an Act. See, for example, the Parliamentary
(Judges) Commission of Inquiry Act 1988.
Clause 18(4) provides that the tribunal members must be former judges
or justices of Australian State or Federal superior courts. A person cannot
be a member of a tribunal if that person and the former Governor were
judges of the same court at the same time.
Clause 18(5) provides that the tribunal must report to the Legislative
Assembly whether on the balance of probabilities, the former Governor
misbehaved in a way that justifies ending the pension entitlement.
Clause 18(6) provides that the occasion of the former Governor's
appointment to office and the time when the misbehaviour took place are
not relevant to resolutions of the Legislative Assembly. Where a former
Governor dies after a tribunal has been established but before the tribunal
makes a report to the Legislative Assembly, the tribunal may nonetheless
make a report about the former Governor as to whether on the balance of
probabilities there is proved misbehaviour to the Legislative Assembly.
Clause 19 provides that a resolution of the Legislative Assembly may
provide that amounts paid to a former Governor as a pension entitlement or
lump sum are recoverable as a debt due to the State. The recovery of such
amounts would be prescribed by regulation.
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Governors (Salary And Pensions) Bill 2003
PART 4--MISCELLANEOUS MATTERS
Clause 20 provides for a pension to accrue daily and be payable
fortnightly or at other intervals with the approval of the Treasurer.
Clause 21 appropriates the consolidated fund for the payment of
amounts payable as salary, pension or lump sum under the Act.
Clause 22 provides for the Minister to be taken to manage the
Governors' pension scheme for the purposes of the Commonwealth
Government's superannuation surcharge regime.
Clause 23 sets out the power of the Governor in Council to make
regulations under the Act.
PART 5--TRANSITIONAL PROVISIONS
Clause 24 continues the existing salary of the person holding office as
Governor on the commencement of this section. In doing so, this clause
ensures that the salary of the current Governor of Queensland is unaffected
by the repeal of the Governor's Salary Act 1872 and the passage of this
Act.
Clause 25 ensures that a former Governor or the surviving spouse of a
former Governor who was not entitled to a pension under the Governors'
Pensions Act 1977, is not entitled to a pension under this Act.
PART 6--REPEALS
Clause 26 repeals the two Acts that have been restated: the Governors'
Pensions Act 1977 and the Governor's Salary Act 1872.
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Governors (Salary And Pensions) Bill 2003
SCHEDULE--DICTIONARY
The Schedule defines certain terms used in the Bill.
© State of Queensland 2003