The Governor-General Legislation Amendment Bill 2001 will be introduced in the Parliament shortly.
The Bill will remove the income tax exemption applying to the Governor-General and to State Governors which has existed since at least the 1920s. Her Majesty The Queen has voluntarily paid income and capital gains tax since 1993. I believe it is timely, therefore, to remove the income tax exemption applying to vice regal representatives in Australia.
The exemption dates from a time when vice-regal representatives were not Australian and when the Crown did not pay income tax. It is no longer appropriate to continue to treat vice-regal representatives as though they were foreigners and the exemption will cease to apply to each vice-regal office at the time of the next appointment to that office.
This will affect the salary to be set for the next Governor-General which, under the Constitution, cannot be varied during the Governor-General's term in office.
It has been the practice since 1974 to set the salary of the Governor-General moderately above the expected average salary of the Chief Justice over a notional five-year term. I have decided to continue to apply that practice.
The proposed salary of $310,000 takes into account the removal of the income tax exemption and an estimate of increases in the Chief Justice's salary over the next five years.
The tax free salary calculated for the Governor-General when Sir William Deane was appointed in 1996 was $135,000 (which was reduced to $58,000 to take account of a pension he received as a former High Court Judge). This represented an increase of $40,000 from Mr Hayden's salary of $95,000, set in 1989 on the basis that Mr Hayden's parliamentary pension was suspended during his appointment. When the change in tax treatment is taken into account, the increase now proposed in the Governor-General's salary is of the same order as the increase in 1996.
Finally, the Bill will also clarify some aspects of the operation of the superannuation surcharge on the retirement allowance payable to governors-general to ensure that the surcharge applies to the Governor-General in the same way that it applies to the rest of the community.
5 June 2001