The report Remuneration of Public Service and State sector senior staff as at 30 June 2013 is provided here as a PDF file, attached to the right under 'Related resources'.
An overview of the Commissioner's role and his remuneration policy is published below.
Cabinet has agreed that remuneration paid to Public Service and State sector senior staff should be disclosed annually in one location. This provides transparency for the taxpaying public around the level of remuneration received by senior State servants.
The State Services Commissioner (the Commissioner) takes a total remuneration approach to chief executive remuneration packages, which means that all benefits to a chief executive are valued as components of the package. An explanation of what makes up the components of chief executive remuneration packages can be found here. Key points in this report, together with Questions and Answers, can be found here.

The State Services Commissioner's role

The Commissioner's role includes setting and reviewing the remuneration of most Public Service chief executives[1] and advising on or approving the proposed terms and conditions of employment of 111 Crown entity (including tertiary education institutions and district health boards) and subsidiary chief executives. The Commissioner therefore has a direct influence on the remuneration received by about 137 chief executive positions in the State sector.
  • Under the State Sector Act 1988, the Commissioner appoints and employs most Public Service chief executives, and reviews their performance.
  • The State Sector Act 1988 also requires the boards of tertiary education institutions (Universities, Polytechnics and Wananga) to obtain the written concurrence of the Commissioner to the terms and conditions of employment for their chief executives.
  • The Public Health and Disability Act 2000 requires district health boards to obtain the consent of the Commissioner to the terms and conditions of employment for their chief executives.
  • The Crown Entities Act 2004 requires boards of statutory entities to consult the Commissioner about the terms and conditions of employment for their chief executives.
  • There are a small number of other agencies whose enabling legislation requires the Commissioner to be involved in setting the terms and conditions of employment for their chief executives.

Chief executive remuneration policy

The Commissioner's remuneration policy is well established, and is designed to provide an environment where high quality leaders are attracted to and encouraged to perform in key roles. The key features of the policy are to:
  • link chief executive remuneration to chief executive remuneration practice in the public sector[2]
  • provide flexibility and discretion for the Commissioner to set remuneration policy within broad boundaries determined by the Government
  • link chief executives' remuneration to their performance, by including a performance related component in their remuneration packages.
The key principles of the remuneration policy continue to be that it:
  • provides the ability to attract, retain and motivate suitable highly competent chief executives
  • is fair and equitable, flexible and transparent
  • has integrity (is statistically sound)
  • is efficient and manageable
  • is legal
  • is affordable
  • meets the Government's expectations for pay and employment conditions in the State sector
  • supports the business of Government
  • inspires public confidence.
The economy continues to recover from the effects of the global recession, and the Government's expectation is that remuneration changes across the State sector will be met within existing funding levels, reflect high performance, be responsible and demonstrate value for money.

Chief executive remuneration movement

For the year to March 2013, Strategic Pay data measured a 2.6% increase in median fixed remuneration for the top executives of matched organisations. The figure for the public sector was 2.1%, compared with 4.3% for the private sector.
For the same period, Hay Group advise that the average increase to fixed remuneration packages for New Zealand chief executives and group heads in their "public sector" database is 3.3%, down slightly on last year's average increase of 3.4%.
These comparisons indicate that chief executive pay increases in the State sector are staying in line with movements recorded in recent years and remain below increases in the private sector.

The Public Service

Figure 1 shows expenditure on remuneration, training and development, relocation costs and end of term payments for Public Service chief executives. Expenditure increased during the period 2006/07 to 2008/09, reflecting more buoyant labour market conditions and to allow some catch-up of Public Service chief executive remuneration with other parts of the State sector. Decreases in expenditure occurred in 2009/10 and 2010/11, reflecting an environment of continued fiscal restraint and modest remuneration expectations. The increase in expenditure for 2011/12 reflected payments to chief executives with untaken annual leave at the end of their terms, and relocation costs for newly appointed chief executives.
The decrease in expenditure for the 2012/13 year reflects an environment of continued fiscal restraint, a reduction in the number of Public Service departments and reduced relocation costs for newly appointed chief executives.
The Commissioner sets the individual remuneration for most Public Service chief executives but the overall wage bill is capped by the budget allocated by Government.
Figure 1: Expenditure on Public Service Chief Executive remuneration, training and development, relocation costs and end of term payments
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Remuneration movement guidance for 2013/14

The Commissioner continues to take a conservative approach around increases to remuneration. However, there continue to be instances where larger increases to remuneration are supported by the Commissioner, for example, where there has been a significant increase in a chief executive's job size.
Crown entity chief executive remuneration is set by Crown entity board chairs after consultation with the Commissioner. To provide consistency in the Commissioner's guidance around Crown entity chief executive remuneration, the Commissioner provided all board chairs with additional guidance when considering increases to chief executive remuneration. This indicates the Commissioner's expectations for reasonable increases to remuneration, taking into account individual performance, and a chief executive's position in a remuneration range. This guidance is summarised in the table below.
Crown Entity Chief Executives
Position against 2012/13 range midpoint
< 90% - 95%
96% - 100%
101% - 105%
106% - > 110%
Performance Rating
Exceeds expectations:
3.5%
3%
2.5%
2%
Meets expectations
2.5%
2%
2%
1.5%
Developing in the role
2%
1.5%
1%
1%
Doesn't meet expectations
0%
0%
0%
0%
The Commissioner is also using a similar method for determining increases to Public Service chief executive remuneration. The approach used for determining Public Service increases in 2012/13 is summarised in the table below.
This is structured slightly differently to the guidance for Crown entity chief executives, as it recognises that Public Service chief executive remuneration lags behind that of Crown entity chief executives in similar size roles.
Public Service Chief Executives
Position against 2012/13 range midpoint
80% - 89%
90% - 99%
100% and above
Performance Rating
Exceeds expectations
3.5%
3%
2%
Meets expectations
3%
2.5%
1.5%
Developing in the role
2%
1.5%
1%
Doesn't meet expectations
0%
0%
0%
For 2013/14 the Commissioner has made some changes to the consultation process giving Crown entity board chairs the ability to make modest increases within defined parameters. The Commissioner's guidance to Crown entity board chairs, and his practice for Public Service chief executives, continues to be that no increases are given to chief executives who do not meet performance expectations.

Footnotes:
[1] The Commissioner does not set remuneration for the chief executives of three departments: the State Services Commission, the Crown Law Office and the Government Communications Security Bureau. Remuneration for these positions is set by the Remuneration Authority.
[2] The State sector plus the organisations of local government in New Zealand collectively make up the "public sector".

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