13 Dec 2017

Crown CEOs paid too much - Commissioner

1:45 pm on 13 December 2017

Crown agencies that pay their chief executives too much have been put on notice by the State Services Commissioner.

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State Services Commissioner Peter Hughes Photo: RNZ / Rebekah Parsons-King

Peter Hughes warned earlier this year that he would name and shame agencies after it was revealed that the head of the Superfund received a 23 percent pay increase.

Today Mr Hughes has named ACC, Telarc and the Superfund as three boards that have paid their chief executives over and above what was recommended by the Commission.

He said the upward trend of chief executive salaries in the state sector, and some Crown entities in particular, was not sustainable.

Mr Hughes said it was time for change.

"While the Board has the right to make these decisions, I do not believe increases of the magnitude given are warranted or justifiable in a public agency, especially where the increase follows previous increases over and above my advice.

"Crown entities who choose not to follow State Services Commission advice with respect to the chief executives' remuneration are now identified in this report.

"This information can inform Ministers' decisions about the tenure of board members."

State Services Minister Chris Hipkins said a law change may be required to curb the high pay levels of some state sector chief executives.

"Crown entities need to be more accountable and transparent when awarding their chief executives pay rises that go against the advice of the Minister and the State Services Commissioner.

"I support the Commissioner's approach to this issue, we do need to tighten the reins."

Mr Hipkins said state sector chief executives deserved to be fairly paid but they were still public servants with an accountability to taxpayers.

"It's appropriate to have a look at what can be done to put the brakes on escalating salaries.

"I have asked the Commissioner for advice and regulatory options, particularly on how we could change the Crown Entities Act."

In a statement, ACC board chair Dame Paula Rebstock said the State Services Commission supported an increase in the chief executive's remuneration of 1 percent.

"The ACC Board considered this advice as well as market movement of more than 4 percent. Because of this - and the Chief Executive's strong performance - the Board approved an increase of 2.8 percent.

"Under the chief executive, ACC has significantly reduced levies to Kiwis; privacy breaches have dropped dramatically; financial performance remains strong, public trust and confidence has been at record levels, more funding is going into injury prevention; and, significantly, the scheme has achieved full funding."

The Superfund board declined to comment, but directed RNZ to a statement contained in the in 2017 Annual Report:

"During the year, there was some political and public comment regarding the CEO's remuneration. The Board's view is that the CEO's remuneration, which is benchmarked against New Zealand companies, is competitive and appropriate.

"In 2016/17, the CEO received a 2.7-percent increase to his base remuneration. The CEO's total remuneration is closely aligned with Fund performance, which continues to be very strong.

"This has resulted in a 14.7-percent increase in the CEO's total remuneration for the year, compared to 2015/16."

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