State Services Commissioner Iain Rennie today released information relating to the remuneration of State services chief executives for the year ended 30 June 2014, as well as information on the number of staff earning more than $100,000 across a number of State service organisations.
"Chief Executive remuneration requires a careful balance between ensuring we can attract and retain highly qualified and skilled leaders for New Zealand's public institutions while being prudent and restrained when spending public money," Mr Rennie said.
Remuneration for most State services chief executives is set by the relevant Crown entity board, subject to consultation with the State Services Commission. SSC provides boards with guidance on remuneration movements that are appropriate and consistent with the overall approach to State sector employment settings.
Public Service chief executive pay is largely set by the State Services Commission. The total annual amount of chief executive remuneration is capped by parliamentary appropriation.
In 2013/14 the total amount spent on remuneration and related employment costs for Public Service chief executives' was $11.583 million, $0.5 million less than in 2012/13. This is the lowest expenditure on Public Service chief executives since 2007/08. This reflects an ongoing control of chief executive remuneration, a reduction in Public Service chief executive positions over the past few years and, more recently, a long-standing vacancy and lower end-of-term payments in 2013/14.
The average increase in base salary for Public Service chief executives was 2.8% in the 2013/14 year. This compares to an indicative 1.7% as a result of the recently completed 2013/14 performance year. A lower outcome for chief executives remuneration is appropriate given the lower inflation outlook that has become increasingly apparent in recent months.
Recent collective bargaining outcomes (settlements plus progression) in the Public Service have ranged between 2.6% and 3%.
"What we pay our Public Service leaders is generally less than what they would receive in a similar job in the private sector in New Zealand. To put what they earn in perspective - the average base salary of our Public Service chief executives is approximately five times the average pay of the employees in their department. This ratio has been stable over recent years indicating that Public Service chief executive pay is moving in line with the average for their sector", he said.
Total remuneration has a number of components including base salary and any performance pay, as well as benefits such as employer contributions to superannuation. It may include entitlements paid at the end of a contract, such as payment of outstanding annual leave balances.
At the level of individual chief executives, movements in remuneration from year to year need to be interpreted with caution for a number of reasons. Change in the assessment year for Public Service chief executives has influenced the movement between 2012/13 and 2013/14. It will also influence movements between 2014/15 and 2015/16.
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 year that starts on their appointment date. This change to a common assessment year has been made to support common expectations of performance, alignment with the financial year and to allow expectations to be cascaded to other senior leaders.
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 therefore made, on a pro-rata basis. The transition payment was below that which chief executives on average would have received under the previous system. The payment averaged $10,907. All other things being equal, this payment brings some remuneration relating to 2014/15 into 2013/14 report. This timing effect will take a couple of years to work its way through, with remuneration levels, on average, appearing to fall in 2014/15 and rising again in 2015/16.
The disclosure report is available on the SSC website here publicservice.govt.nz/rem-senior-state-sector-staff-to-30june14
Background information is available on the SSC website here.
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