Shellharbour councillors have granted CEO Mike Archer an $18,000 pay rise after his first 12 months in the job.
The pay bump, on-top of his $360,000 salary, was proposed by Deputy Mayor Kellie Marsh, in recognition of Mr Archer's work over the past year, including overseeing a restructure of Shellharbour City Council, and the addition of two new directors.
The motion to grant Mr Archer the pay rise split the council, with Mayor Chris Homer using his casting vote to support the independent-backed push, and the four Labor councillors voting against the pay rise.
While councillors were unanimous in support for Mr Archer and the work he was doing at council since taking over as CEO in July 2022, Labor councillors questioned the timing of the appointment.
Councillor Rob Petreski said councillors should wait and see what the results of the restructure were before awarding the bonus.
"We have only just finished hiring the executive staff necessary for the restructure, it is impossible for us to say if the restructure is successful," he said.
"It may be the best thing to happen to council but we can't [yet] say hand on heart that it is."
Ms Marsh said the work Mr Archer had already done justified the pay increase.
"I work quite closely with Mr Archer being the Deputy Mayor and acting Mayor at times as well and I can't fault him," Ms Marsh said.
"I have seen quite a lot of change for the better with council."
Labor MPs also questioned the five per cent pay rise at a time where the rising cost of living was driving a wrecking ball through household budgets.
Councillor Maree Duffy-Moon said she was "struggling" with the idea of paying Mr Archer an additional $18,000 - a figure she called an "enormous amount" - at a time when residents were struggling to pay their mortgage.
Mr Archer's current salary is an increase on his previous salary at the City of Busselton council in WA, where he was paid $354,242.
Shellharbour City Council also supported Mr Archer's move from the west coast of Australia to the east coast, with moving expenses covered by rate payers.
Ms Marsh said the pay increase was in line with other workers who received a pay increase, such as teachers.
"As everyone knows, you need to pay for quality, and that's certainly what we've got with Mike Archer."
Across the economy, in the September quarter wages grew by four per cent year-on-year, the highest in over a decade.
However, October inflation figures saw the cost of living rise by 4.9 per cent, placing further pressure on household budgets.
Labor councillor Moira Hamilton said she was supportive of Mr Archer but questioned whether the pay rise passed the pub test.
"Wait until it goes public with your residents."