State Services Commissioner Peter Hughes has today published the State Services Commission's annual senior pay report setting out the remuneration of State Sector Chief Executives.
The Senior Pay Report discloses the total remuneration paid to State Sector chief executives in the 2015/16 financial year, running from 1 July 2015 to 30 June 2016. This is the first report published by Mr Hughes since he became State Services Commissioner on 4 July 2016 and reflects decisions made prior to his starting in the role.
"As the incoming State Services Commissioner I am responsible for setting the salaries of Public Service Chief Executives and for finding the right point of balance with that," said Mr Hughes.
"It is a privilege to work in the Public Service," said Mr Hughes.
"People join the Public Service because they care and want to make a difference, and there are few other places where you can work to make such a big difference for New Zealand and New Zealanders," Mr Hughes said.
"Public Service chief executives have big and challenging roles that are critical to the lives and wellbeing of all New Zealanders," Mr Hughes said.
"How we pay the leaders of our Public Service requires a careful balance to make sure we are being fair to the chief executives themselves, recognising the jobs they do, while we are also being fair to the taxpayers who pay the bill".
"We need to make sure we pay well enough to get highly skilled and qualified people leading our government agencies, but we also need to ensure the salaries paid are defensible."
"The Public Service needs to have the trust and confidence of New Zealanders to be able to operate effectively, and the amount we are paying, and taxpayers' willingness to fund that, is important to retaining that confidence," Mr Hughes said.
"As State Services Commissioner, I will be taking a conservative approach to what we pay chief executives, particularly at the top end," said Mr Hughes.
The average remuneration increase for Public Service chief executives in the 2015/16 year was 1.3% and the average increase for Crown Entity chief executives was 3.4%. The average salary increase for Public Service staff in the 2015/16 year was 2.1%.
The Senior Pay report is available at www.ssc.govt.nz/senior-pay-report
Interpreting the Senior Pay Report
The Chief Executive Remuneration Report is based on total remuneration received over the course of the year including base salary, performance related payments, superannuation contributions and any other benefits received, such as additional leave. It may include entitlements paid at the end of a contract, such as payment of outstanding annual leave balances. It is inaccurate to refer to the figures listed in the report as 'salaries'.
When interpreting the reports, movements in remuneration from year to year for individual chief executives need to be interpreted with caution for a number of reasons. The timing of fortnightly salary payments, performance reviews and payments, remuneration reviews and job size reassessments can all influence year-on-year movements in remuneration.
Setting remuneration for chief executives
Remuneration for Public Service (central government departments and ministries) chief executives is set by the State Services Commissioner, except for three set by the Remuneration Authority (SSC, Crown Law and GCSB).
Remuneration for Crown Entity chief executives is set by their Board (as the employer) following consultation with the State Services Commissioner.
District Health Board and Tertiary Education Institution Boards or Councils must get the State Services Commissioner's agreement to the terms and conditions of employment, including remuneration and any remuneration increases.
The Commissioner provides guidance to Board chairs to achieve remuneration movements that are in line with those in the broader State sector workforce.
The Remuneration Authority sets remuneration for chief executives who are independent statutory officers and chief executives of non-Public Service Departments (Police, NZDF, NZSIS) chief executives.
Remuneration movements for Public Service Chief Executives
The timing effect of a change in when Public Service Chief Executives have their performance reviews has been working its way through the disclosure system for the past two years and has an impact on this year's disclosure as well.
This year Public Service chief executive remuneration levels appear to have risen, after appearing to fall last year and rise the year before. This effect has now worked its way through and levels will stabilise. This effect has been signalled in the public statements made over the past two years.
From 1 January 2014, Public Service chief executives moved to a standard performance review date. They are now on a common assessment year (ending 30 June) rather than on a review year that starts on their appointment date.
The move to a common performance review date meant that chief executives could not access performance related payments to which they would otherwise have been entitled. A transition payment was made, on a pro-rata basis.
Due to the timing of this pro-rated payment, it was able to be reported in the 2013/14 disclosure report, as well as the 2012/13 performance payments. This has resulted in the performance payments in the 2014/15 year being less, because they only covered 6 months of the year. This year's report has a full year's performance related pay included.