Senior pay starts to level off

14 December 2018

State Services Commissioner Peter Hughes has today published the State Services Commission’s Senior Pay Report for the 2017/18 financial year.

The Senior Pay Report discloses the total remuneration paid to State sector chief executives in the 2017/18 financial year, from 1 July 2017 to 30 June 2018. It is the third report published by Mr Hughes.

The Commissioner’s conservative approach has resulted in pay for public service chief executives increasing 0.9% in 2017/18, down from 2% the previous year. The average increase for chief executives in the broader public and private sectors in the last year, where the Commissioner has no jurisdiction, was 3.1%.

The average pay for Crown entity chief executives increased 2.6%, less than the 3.5% average increase in 2016/17. All Boards followed the Commission’s advice in 2017/18 and did not award remuneration increases above recommended levels.

Last year the Commissioner signalled his intention to moderate pay increases for public service chief executives, including removing performance payments.

In the last 12 months Mr Hughes has pulled a number of levers to address the upward trajectory of public service chief executive salaries. He has:

appointed chief executives at the lower end of the range

removed performance pay for public service chief executives, although the effect of this change will not show until next year’s report

completed conservative mid-term reviews

reviewed job sizes and terms and conditions.

“All of these actions have resulted in a flattening of the rate of growth of pay levels at the top end,” said Mr Hughes.

“I’m pleased we have managed to put the brakes on escalating pay increases for chief executives, including some Crown entities, but the full effect of these changes is yet to be realised.

“We now have a remuneration policy that better reflects the spirit of service public servants bring to their roles and which recognises motivations other than remuneration.

“This is the last year when performance pay will be paid to public service chief executives. While the full impact of this change will not be seen until next year’s disclosure, I’m pleased other steps the Commission has taken have resulted in lower increases in this year’s report.”

Another change this year was the enactment of the State Sector and Crown Entities Reform Act, which came in to effect on 31 October. This gives the Commissioner more oversight over the setting of salaries for Crown entity chief executives.

This year’s Senior Pay Report is the first to use an accrual form of reporting, which removes fluctuations and enables more valid comparisons between years and what CEs are paid.

“This change will make it easier for the public to usefully compare between years and between agencies,” said Mr Hughes.

“In the past variations have often been caused by one-off payments from previous years being included. We have re-published last year’s report using the new reporting method so that appropriate comparisons can be made.”

Ends

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