Govt targets ACC and Super Fund ceo pay with public sector pay reform
By Pattrick Smellie
Feb. 12 (BusinessDesk) - The government is to give the State Services Commission more say over the payment to the chief executives of Crown entities, including the heads of the Accident Compensation Corp and NZ Super Fund.
The Guardians of the NZ Super Fund attracted the ire of then-Prime Minister Bill English last year when they awarded Adrian Orr, the chief executive of the investment agency charged with long term investment of government funds to help pay future pensions, a 14.7 percent pay rise that took his salary to $1.1 million a year and after a 22 percent increase two years earlier.
Prime Minister Jacinda Ardern and State Services Minister Chris Hipkins announced the new restrictions after Cabinet today, releasing at the same time the text of reform legislation to effect the change.
Ardern said there was a need to balance the requirement to pay competitive salaries to chief executives with the fact that the public service element of such roles meant they should not be paid as if they were private sector roles.
Hipkins said "there should be more consistency within the state services of remuneration for similarly sized jobs and between jobs."
"There is a high level of public concern that the levels of pay for the highest paid chief executives is excessive, and in some cases Crown entity Boards have not met either the State Service Commissioner’s or Ministers’ guidance," said Hipkins. "These changes will address those cases in particular by giving the remuneration system more teeth. The public expects accountability and transparency, and under these changes Boards of statutory Crown entities will need to obtain the State Services Commissioner’s written consent to the terms and conditions of employment for a chief executive.”
Other organisations caught in the change are ACC, where ceo Scott Pickering's salary rose 2.4 percent to $835,000 last year. The SSC last year singled out the Super Fund, ACC and Telarc, where the ceo is paid $255,000 a year, for unsustainable ceo salary trends, but its recommendations were ignored.
The average pay increase for crown entity ceos was 4.1 percent last year, while average public servant pay rose 2.2 percent in 2016/17.
Hipkins agreed the State Services Commissioner will, in effect, be able to dictate pay rates for Crown entity ceos. The reforms do not cover state-owned enterprise chief executives and government department heads.
The State Sector Act and Crown Entities Reform Bill would also make Crown entity chief executive roles last no more than five years before facing possible renewal, consistent with the rest of the public service, and would set standards of conduct and integrity for Crown entity boards.