MP slams extra leave plan
National MP Nick Smith has slammed a policy that gives wellpaid public sector chief executives an extra week of leave in exchange for giving up performance pay.
However, State Services Commissioner Peter Hughes has defended the policy as excellent value, because some have given up about $80,000 in extra pay and already get paid far less than they would in the private sector.
A Cabinet paper shows the policy could save an average of just over $40,000 per chief executive.
The spat between Smith and Hughes occurred during a tense annual review of the public sector overseer in the governance and administration select committee yesterday.
Smith said it was unfair to the thousands of other public servants who didn’t receive more than the legally required four weeks of annual leave that their well-paid bosses should get an extra week.
However, Hughe said that the end of performance pay bonuses, which could reach 25 per cent of the salary, meant he had to give public sector chief executives something back, and an extra week of leave seemed to be a reasonable bargain – along with 10 per cent of that performance pay rolled into base pay.
‘‘They have all signed contracts that have removed their performance pay. In return for them surrendering performance pay, which in our system would be 25 per cent, I have allowed them an extra five days of leave as they were receiving the statutory minimum,’’ Hughes said.
‘‘Most of them have lost real money. There are chief executives that have lost $80,000 a year. I am hugely proud that they have said they would forgo that.’’
He noted that most public sector chief executives took arned
50-60 per cent less than they would in a comparable private sector job. The extra week of leave only came out in value to about 2 per cent of base salary.
A Cabinet paper released by the State Services Commission showed that without ending performance pay and ‘‘turning down the dials’’ chief executive remuneration would hit $18 million by
2022, while with their new settings it would stay just above $14m, and total remuneration for an ‘‘average’’ public sector chief executive would be down from $544,444 to $503,555.
‘‘I am bringing senior top-end salaries in the public service down because they were getting to be too high,’’ Hughes said. ‘‘We cannot have a situation where a public service CE is paid close to $1m – for a job that is a privilege.’’
Hughes said chief executives needed to be able to say they were doing their job in the spirit of public service, not financial gain, and huge pay packets made that harder.
Smith said he thought MPs took an average of about three weeks of leave and he took very little.
Hughes said that he had not given himself the extra week.