PM slams pay hike for NZ Super boss
Board members who approved a 36 per cent pay increase for New Zealand’s highest-paid public servant, against official advice, could lose their positions as a result, Prime Minister Bill English has warned.
Documents obtained under the Official Information Act show New Zealand Super Fund chief executive Adrian Orr received the extra money, despite objections by English and the State Services Commission (SSC).
His pay increase for 2015/16 came on the back of a 22 per cent hike two years earlier, putting Orr’s annual pay packet above $1 million.
At his weekly press conference, English said the decision would be taken into account when deciding whether to reappoint the board’s members.
‘‘The Government has a view, the board’s taken a different view. I think any board who takes a different view when it’s 100 per cent a subsidiary takes risks about tenure.’’
English said he would prefer a more stable process for setting salaries, instead of ‘‘an annual haggle’’ with boards who were ‘‘a bit overenthusiastic about what [chief executives] should be paid’’.
In a letter to the SSC, thenGuardians of New Zealand Superannuation board chairman Gavin Walker said it did not believe the public sector pay scale was appropriate for setting Orr’s salary.
‘‘The highly specialist nature of the role and the organisation ... and our anticipated recruitment challenges in replacing the incumbent’s skill set require a directly meaningful and relevant, marketbased benchmark.’’
Walker said the super fund’s ‘‘sustained strong performance’’, with an annual rate of return of 9.67 per cent, also had to be considered.
However, the State Services Commissioner’s office said it could not support the size of the increase, recommending instead a 6 per cent pay rise.
While there had been an increase in the size of Orr’s job, he had already received a 22 per cent increase in 2013.
English – in his previous role as finance minister – told current Guardians chairwoman Catherine Savage that a 35.6 per cent increase was ‘‘too large in the current economic climate’’. He supported a 2.5 per cent increase only.
However, Orr received the increase as originally proposed.
State Services Commissioner Peter Hughes said the pay rise was ‘‘significantly out of step with the rest of the state sector’’ and difficult to justify.
Savage defended Orr’s salary, saying it was ‘‘fair, competitive and appropriate given the nature and complexity of the role’’.
The 35.6 per cent increase related to Orr’s potential salary, with 60 per cent of his remuneration package ‘‘at risk’’ in the form of performance-based bonuses which he did not receive in full.
She said Orr made $1.03m in 2015/16, with a salary of $690,322 and bonus of $334,799 – an actual increase of 23.4 per cent.
Savage said the board relied on external market data when setting Orr’s salary, while his pay was ‘‘not high compared to international peers’’.
His recent pay rises reflected ‘‘a degree of catching up’’, as he had not received any increase between October 2010 and July 2013.