Government votes performance bonuses for public sector bosses

The government rid the public service bosses of their performance bonuses, a move that they expect will help save the country $ 4 million.

State Services Minister Chris Hipkins announced the end of the performance pay on Tuesday, a day after Prime Minister Jacinda Ardern announced a year-long freeze on parliamentary salaries.

So far, the compensation packages for the CEO & # 39; s have the potential to receive a discretionary payment of up to 15 percent for "exceptional performance".

"The decision to cancel performance compensation, in addition to reversing remuneration institutions, including the appointment and reappointment of chief executives at lower points in the remuneration range, will inhibit the growth rate of chief executive pay," said Hipkins. .

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The changes were expected to reduce total potential spending on executive remuneration by up to $ 4 million by 2022.

"We want a public service with an international reputation for excellence that is motivated by a spirit of service to the community."

All chief executives of the nuclear agencies, whose remuneration is determined by the Statutory Auditor, have agreed to the changes and have signed new individual employment contracts.

Hipkins said research showed that individualized performance fee was not an effective incentive for higher performance for complex roles.

"The government also believes that performance fee is counterproductive for achieving the collaborative, team-based approach and collective leadership that is crucial to achieve better results for New Zealanders."

The changes also meant a part of & # 39; risk & # 39 ;, which meant that the salaries of bosses could be linked to 10 percent.

There would still be potential for wage increases, but it would not be "significant performance bonuses."

"We want to make sure that chief executives work in a collaborative way, and I think that performance-based pay goes against it."

The government announced for the first time plans for excessive packages of presidential rewards in February when it announced a new approach to give the regulator of the civil service more control over the Crown Entities.

Managing Crown Entities should soon receive written permission from the State Services Commissioner for the salary increases given to chief executives.

It comes after consecutive years of exorbitant wage increases for a handful of Crown Entity bosses, especially former Super Fund chief Adrian Orr.

Orr's $ 1.2 million Super Fund salary was the subject of a number of high-profile spatters between the Guardians of the Super Fund and the previous government. He took a salary cut earlier this year when he became Reserve Bank Governor.

The Super Fund believed that it did not have to comply with the recommendations of the public sector. This was because it was a Crown entity; an organization that is owned by the government and operates at arm's length from the government, in contrast to a government service.

Earlier this year, Ardern said the government was determined to raise low and middle incomes, but there was a "high level of public concern." that the level of executives & # 39; excessive & # 39; used to be.

The proposed legislative changes were presented to the House in February and the limited committee had to report on Monday. Hipkins said he hoped that the legislative changes would be adopted by the end of the year.

Hipkins said he had confidence in the public service to deliver the results that New Zealanders and the government were looking for, but downward pressure had to be exerted at the top of wages.

Hipkins said that the number of measures to bring down the highest earners of the public sector was "symbolic."

"I think that symbolism is important, because what it says is that we recognize that the growth of people with the highest incomes, and the widest possible definition of public services, has grown too quickly compared to the people at the lowest level. work in the public service.

"We want to increase the pay of people at the bottom, but we also want to see downward pressure at the top."

MPS & # 39; PAY FROZEN

The announcement about the remuneration of the chiefs of the board comes on the day after Ardern said that the salaries of parliamentarians would be frozen for a year, awaiting legislative changes to tighten up the parameters in which it was adopted.

The salary packages of parliamentarians are determined by the independent remuneration authority – a process that deliberately keeps the annual payroll statement at a distance from the politicians.

However, the government has the authority to set the criteria applied by the authority and Ardern has announced a revision of the law governing the process.

Ardern said it was not appropriate to pass a planned 3 percent pay rise, and a fairer formula had to be put in place. are being developed.

– Stuff