Vice-regal pay rise awaits Sir Anand's seal of approval

Sir Anand Satyanand. Photo / Mark Mitchell

A bill that will double the golden handshake for future Governors-General and raise their salaries is on the point of becoming law, having had its third reading in Parliament last night.

The bill now requires only the royal assent from the Governor-General to become law.

It followed a Law Commission report that recommended that future Governors-General should pay income tax. At present, Governors-General, including Sir Anand Satyanand, are exempt from tax on their annual salary of $191,645.

The bill also doubles the "lump sum" payout on leaving office from three months' salary to six months', or almost $96,000 based on the present salary.

This is because the payout will also no longer be tax-exempt.

The Governor-General's allowances - set at $176,923 in 2008 by order-in-council to pay for official expenses - will continue to be tax free.

John Errington, chairman of the Remuneration Authority, which sets salaries for MPs, ministers, the judiciary and the Governor-General, said it was likely the Governor-General's salary would increase so that paying income tax would not affect current take-home pay.

"It would be fair to say that that is certainly the way we are thinking, but I don't want to pre-empt any determination," he said. "We'll also be reviewing the normal salary."

If the Governor-General paid tax and took home the same after-tax income as now, he would have to be paid about $275,000 a year.

The bill also retains an annual payment to former Governors-General, which since 2008 has been $62,000. When one dies, a surviving spouse is entitled to $31,000.

Free domestic travel and chauffeur-driven cars paid for by the Department of Internal Affairs will also be retained, but the department will reveal the cost for each former Governor-General in its annual report.

The changes are expected to take effect from the appointment of the next Governor-General next year.

The bill allows for a specified benefits upon retirement to be written into the terms of agreement, meaning the costs could be capped.

Last year's Budget allowed $215,000 for travel for former Governors-General and Prime Ministers but the actual cost was $308,000. The May Budget has allowed for $520,000.