Pay rises for public chiefs to be curbed

Govt gives commissioner greater power to set salaries, conditions

Tpolitics he Government is cracking down on public sector bosses’ pay rises, but their pay rates are not expected to fall.

It follows revelations last year about pay rises for public sector chief executives of up to 24 per cent a year, which the Government described as out of hand.

Prime Minister Jacinda Ardern announced yesterday the Government will introduce new legislation on Thursday to give greater powers to State Services Commissioner Peter Hughes.

It would effectively grant Hughes the power to set pay and conditions for the heads of all Crown entities, including those that had approved pay rises against Hughes’ advice.

In December the Senior Pay Report covering pay rates in the year to June 2017 identified the Guardians of NZ Superannuation, ACC and Telarc as entities where the boards approved pay rises against Hughes’ advice.

The former head of the Super Fund, Adrian Orr, who will become Reserve Bank Governor next month, was given a pay rise from between $950,000 and $959,999 to a reported $1.03 million.

ACC boss Scott Pickering had a pay rise from $810,000-$819,999 to between $830,000 and $839,999.

Telarc boss Philip Cryer had a rise from between $210,000 and $219,999 to between $250,000 and $259,999 — potentially a 24 per cent pay increase.

Ardern, who announced the new legislation alongside State Services Minister Chris Hipkins, said the new legislation will bolster public confidence in Crown entities.

She said public sector pay rates had to be competitive to ensure the sector had the right calibre of personnel, but pay rises had been out of step with expectations.

Hipkins said he didn’t want to predict what would happen with future pay rises, but he didn’t expect current public sector bosses to get pay cuts.

“The Commissioner for State Services certainly has a clear direction from the current Government of a reasonable level of pay increase at the top of the public sector.”

Under the bill, the boards of Crown entities would need the Commissioner’s consent for public sector chief executive pay, effectively enabling him to set the pay and conditions.

The Commissioner would also be able to set a code off conduct for Crown entity boards.

The bill would bring all Crown entities into line with the rules that already apply to DHBs and universities.

It would also make all the public sector boss appointments five-year terms.

The Commissioner would also have powers of inquiry, and would no longer need to seek those powers from ministers.

Last December the Government criticised the “rampant growth” in public sector bosses’ pay following the release of the Senior Pay Report.

The report showed that the average remuneration increase for public service bosses for the year to June 2017 was 2 per cent — up from 1.3 per cent the previous year.

Over the same period, the average pay increase across the public sector was 2.2 per cent.