Public sector CEO pay needs review

There needs to be a review of the salaries paid to public sector chief executives, Green Party MP Dr Kennedy Graham said today.

The call comes in the wake of reports that the highest public sector CEO salary in New Zealand goes to the Ministry of Foreign Affairs and Trade chief, John Allen, at $620,000 to $629,999.

Dr Graham, himself a former NZ diplomat, says the level of public sector chief executive salaries in New Zealand is out of alignment with the values of this country.

"The rationale for such astronomical salaries is invalid," says Dr Graham.

Two arguments are normally advanced in justification of these salaries. First, that high financial remuneration is a precondition of high performance and to attract the best talent. Second, that New Zealand needs to pay internationally-competitive salaries or witness the loss of such people to overseas jobs.

"Both arguments are wrong", Dr Graham said.

"Repeated studies show that financial reward is several ranks below the top motivation for taking a job, below quality of life of a country, the nature of the professional challenge, and intrinsic job satisfaction.

"Public sector chief executives tempted to depart overseas in the event they can find higher pay are more than welcome to go.

"These are not the people we want to be running our public service. Indeed, a lower salary would be a healthy litmus test of their commitment to the public good, which is surely what we are after in the public service.

"I have heard it said of the MFAT chief that, based on performance, he should be receiving nothing - his Ministry is in structural disarray, his staff leaving in droves, and there is deep discontent over the Ministry's change proposals," said Dr Graham

"New Zealand society is out of kilter when we have a $620,000 public sector salary while our youth are offered $10.80 an hour.

"It is time for a review of these grossly inflated salaries."