Bills Digest no. 149 2008–09
Governor-General Amendment (Salary and Superannuation)
Bill 2008 This Digest replaces an earlier version
dated 23 June 2008,
including some additional reference material.
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Contact officer & copyright details
Governor-General Amendment (Salary
and Superannuation) Bill 2008
introduced: 18 June
House: House of Representatives
Portfolio: Prime Minister
On the day that the Royal
Assent is given.
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
To amend the Governor-General
Act 1974 (the Governor-General Act) to set the salary for the
next Governor-General who is to be sworn-in on 5 September
The office of Governor-General was created by the Commonwealth
Constitution at Federation. The Governor-General is the Queen s
representative in the Commonwealth of Australia. The office of
Governor-General has a range of powers and functions conferred on
it by the Constitution, most notably the executive power of the
Before 1974 the office of the Governor-General was regulated
only by the Constitution. Section 3 of the Constitution states
- the Governor-General is to be paid an annual salary of ten
thousand pounds until the Parliament otherwise provides and
- the salary of the Governor-General is not to be altered during
the period of appointment to the office.
Payments remained unchanged until the
introduction of decimal currency in February 1966 when an
equivalent payment of $20 000 per annum was made.
In enacting the Governor-General Act, the Whitlam
government acknowledged that appointment to the office of
Governor-General should not depend on a candidate s personal wealth
or the availability of other income. The former Prime Minister also
put forward two principles that are still applied when Parliament
- salary should be dealt with in a non-partisan way and
- salary should recognise the importance and place of this high
Under the newly enacted Governor-General Act, the salary was
increased to $30 000 for the incoming Governor-General, Sir John
Kerr. Whilst the actual salary had increased very little, it was
noted that in 1925-26 the appropriations made for the
Governor-General s establishment and office amounted to $38 150
which had increased markedly to $708 047 in 1972-73.
Further background, including information about the salaries of
former Governor s-General, can be found in Research
Note No. 12 2003-04.
By convention, the Governor-General s salary is linked to the
salary of the
Chief Justice of the High Court although the reasons for that
particular choice are unclear. The Chief Justice s salary is
determined annually by the Remuneration Tribunal and so is
determined by a statutory body which is independent of the
Government. This satisfies the requirement that salary be
determined in a non-partisan way. Although the link was not
mentioned in debate on the 1974 Bill or 1977 amendments, this
convention has been outlined in Parliament by the responsible
Ministers since 1982.
Prior to 2001, salary was set by calculating the after-tax
equivalent of the Chief Justice s salary at the time of
appointment. The average after-tax salary of the Chief Justice over
a notional five year term was estimated taking into account future
possible increases. The vice-regal salary was then set to
moderately exceed this average. The salary is now set to moderately exceed the
estimated average before-tax salary of the Chief Justice over the
notional five year term of office.
There is no legislative requirement on Governors-General to
reduce their salary to take account of any other income or
allowances they may be entitled to receive. At his own instigation,
Sir William Deane s salary was reduced to take account of the
pension he received as a former justice of the High Court. It was
reported that the current Governor-General, His Excellency
Major-General Michael Jeffery AC CVO MC would donate his military
pension of more than $50 000 per year to a range of charities
during his term.
According to the Explanatory Memorandum, the salary for the
Governor-General Designate, Ms Bryce, will be reduced to take
account of her entitlement to a Commonwealth-funded pension from
However it should be noted that there is neither a provision of the
Governor-General Act which requires such a reduction nor a
provision setting out the method by which any reduction is
The Income Tax Assessment Act 1997 was amended in 2001
to allow the taxation of the Governor-General s salary.
Governors-General had been exempt from taxation on official
salary since at least 1922 and on any overseas income since
exemption was removed on the grounds that:
- it was introduced at a time when vice-regal appointees
customarily came from the United Kingdom and were treated, for tax
purposes, the same as non-diplomatic representatives of foreign
governments or organisations and
- the Governor-General is the Queen s representative and, since
1993, the Queen has been paying income tax in the United
A pension scheme for retired Governors-General was introduced
with the Governor-General Act in 1974. Earlier governments had
sometimes found it necessary to provide ex-gratia payments to
former Governors-General and their widows. The scheme is non-contributory, that
is, Governors-General do not contribute a percentage of their
salary to the scheme that provides their pension. The pension is
paid out of the Consolidated Revenue Fund as an annual allowance
The annual allowance is also subject to income taxation. The
amount of annual allowance payable does not depend upon length of
tenure. Similarly, the manner in which a Governor-General leaves
office does not affect the allowance in any way.
Ms Bryce s appointment
The Prime Minister, the Hon. Kevin Rudd announced that the Queen
had, on his recommendation, approved the appointment of Ms Quentin
Bryce as the next Governor-General of Australia. Ms Bryce will succeed His
Excellency Major General Michael Jeffery on 5 September 2008. She
will be Australia s 25th Governor-General and its first
Ms Bryce was appointed in July 2003 as the 24th
Governor of Queensland. She will bring to the role of
Governor-General, her previous experience as Director of the
Queensland Women s Information Service, Queensland Director of the
Human Rights and Equal Opportunity Commission, Federal Sex
Discrimination Commissioner, and CEO of the National Child Care
According to the Explanatory Memorandum there will be a
financial cost from increasing the Governor-General s salary.
However, the net financial impact of the new arrangements is
unquantifiable as it is not possible to estimate the exact taxation
liabilities which will depend on the individual financial
circumstances of the Governor-General and State Governors.
Part 1 of Schedule 1 of the
Bill amends existing section 3 of the Governor-General Act to
increase the annual salary payable to the Governor-General from
$365 000 to $394 000.
According to Item 2 of the Bill, the increase
in salary will not apply to the current Governor-General.
Part 2 of Schedule 1 of the Bill is about
superannuation. Items 3-10 amend existing
subsection 2A of the Governor-General Act to repeal eight separate
definitions which relate to the superannuation surcharge
provisions. The rationale for the change is that the Superannuation
Surcharge was discontinued in 2005 in accordance with the
Superannuation Laws Amendment (Abolition of Surcharge) Act
2005. Whilst that Act did make consequential amendments to a
number of Acts to give effect to the abolition of the surcharge,
the Governor-General Act was not among them.
Item 13 deletes existing subsections 4(3) to
4(7) and inserts proposed subsections 4(3) and
4(4). The rate of annual allowance which is payable as a
pension to a former Governor-General is 60% of the rate of the
salary payable to the Chief Justice of the High Court of Australia
at that time: proposed paragraph 4(3)(a). The rate
of annual allowance which is payable to the surviving spouse of a
deceased former Governor-General is five-eights of the amount which
would have been payable to the former Governor-General:
proposed paragraph 4(3)(b).
Under proposed subsection 4(4) the amount of
annual allowance payable to a former Governor-General, or a
deceased former Governor-General s spouse is to be reduced by the
amount of any pension or retiring allowance payable whether under
any law or otherwise.
Existing section 4A is about the amount payable when a
Governor-General dies leaving more than one spouse. Under
subsection 4A(1) the Commissioner must allocate any allowance
payable to a spouse of the deceased person among the spouses.
Item 14 repeals existing paragraph 4A(3)(b) and
inserts proposed paragraph 4A(3)(b) which places a
cap on the amount which can be paid. The proposed paragraph
provides that the aggregate of the allowances payable to the former
spouses cannot exceed 100% of the allowance that would have been
payable to the deceased person, that is, 60% of the rate of the
salary payable to the chief Justice of the High Court of
Item 16 repeals existing section 5A which
relates to the trustee of a scheme under the Superannuation
Contributions Tax (Assessment and Collection) Act 1997. As the
superannuation surcharge has been abolished, this provision is no
Item 17 provides that the repeals and
amendments contained in this Bill do not apply to any person who
held the office of Governor-General after 29 June 2001 and before
the commencement of the Bill. This means that the changes do not
affect those former Governors-General to whom the superannuation
surcharge did apply.
30 June 2008
Bills Digest Service
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