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Topic # 229208 12-Feb-2018 18:38
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Government moves to rein in chief executives pay rises

 

"Crown Entities have a strong element of public service attached to their work and executives should reasonably expect to earn less than in a private sector company."

 

Should we apply the same logic to other roles in the public service?


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  Reply # 1955966 12-Feb-2018 19:45
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The key statement from this article is from Peter Hughes at the end:

 

"Crown Entities have a strong element of public service attached to their work and executives should reasonably expect to earn less than in a private sector company."

 

This mans that Crown Entity chiefs will always be underpaid compared to their colleagues in private employment.  So what we end up with is people working their way up to CEO of a Crown Entity, then leaving when/if they get poached by the private sector who by design can always offer better remuneration.

 

In the distant past public servants were paid less but had better job security that their private counterparts.  That is long gone - perhaps the current government is signalling its return?


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  Reply # 1956063 12-Feb-2018 23:32
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I suppose it depends what sort of person you are trying to attract to the roles.

 

You will either not attract those who can do better elsewhere, attract those who already did well and can afford to take a pay cut or, as @OldGeek said, attract those who will use it as stepping stone. In between, you might get a smattering of rare folk who are both excellent and happy to work for less than their excellence would command elsewhere because they really like the job.

 

The government has no idea on pay - they think they can just tweak it like the settings on a boiler, it seems.

 

I know self employed contractors working in government departments in Wellington who earn $1500/day on multi-year contracts so paying the man who ran our $35 billion super fund a $1.2 million salary is cheap - any banker in the City who made his employer $5 billion in a year would be looking at enough bonus to buy a Gulfstream jet.






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  Reply # 1956173 13-Feb-2018 09:42
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This is just so strange. How can they expect excellence with the expectation of lesser pay. I am gobsmacked. I thought we were passed this now. 

 

Labour really just don't have a freaking clue. 

 

Perhaps with this new cost cutting method, they can buy one. 

 

 




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  Reply # 1956179 13-Feb-2018 09:57
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It's a populist policy, not rooted in fact or in our long term best interests.

 

We see the same cries for local government pay to be regulated lower than similar private sector roles, ostensibly because the tax payer is footing the bill. 

 

Why not regulate the salaries of others that have " strong element of public service attached to their work" that may be receiving similar salaries to their private sector counterparts?


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  Reply # 1956181 13-Feb-2018 10:01
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I am of two minds on this, one hand I believe the public purse needs to be spent prudently and other I believe you get what you pay for.
This move is not just a Government initiative it has wider support and from in the public sector. Peter Hughes supports better judgement on these salaries which of course will affect his own remuneration.




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  Reply # 1956282 13-Feb-2018 12:05
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Most public sector operations are not competing with anything, unlike the private sector. Compare say Auckland Transport with a large bank.

Auckland Transport doesn't face any competitive pressures at all. So paying the AT CEO the same as a bank CEO is not justified. Even if the asset vales and revenue are the same.

If you instead look at the ports of Auckland CEO. That person does deserve a market level wage. As ports of Auckland is exposed to competition.





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  Reply # 1956324 13-Feb-2018 13:30
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Presumably the PM's salary and ministers salaries will be reduced accordingly.

 

The PM's salary of nearly $500,000 is far to high compared to other countries. The UK PM salary is around $300,000 NZD, the US President gets around $500,000 US and Angela Merkel gets around $250,000 NZD. Accommodation extra  on top of that.

 

There is really no comparison though between say JA's workload/problems and those of Theresa May or Angela Merkel.

 

I suppose you could argue the May and Merkel are underpaid. Obviously not the case for Trump.

 

 




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  Reply # 1956327 13-Feb-2018 13:35
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SJB:

 

Presumably the PM's salary and ministers salaries will be reduced accordingly.

 

The PM's salary of nearly $500,000 is far to high compared to other countries. The UK PM salary is around $300,000 NZD, the US President gets around $500,000 US and Angela Merkel gets around $250,000 NZD. Accommodation extra  on top of that.

 

There is really no comparison though between say JA's workload/problems and those of Theresa May or Angela Merkel.

 

I suppose you could argue the May and Merkel are underpaid. Obviously not the case for Trump.

 

 

 

 

I think given there is a "a strong element of public service attached to their work" that the prime minister " should reasonably expect to earn less than in a private sector company."

 

 

 

All jokes aside, why is it that we are campaigning for equality over pay between men and women, while simultaneously proposing exceptions to equality based on private v public service? Pay should be based (amongst other things) upon the skills brought to and the responsibility of the position, regardless of gender or the type of institution that one is serving in.


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  Reply # 1956330 13-Feb-2018 13:38
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wsnz:

 

All jokes aside, why is it that we are campaigning for equality over pay between men and women, while simultaneously proposing exceptions to equality based on private v public service? Pay should be based (amongst other things) upon the skills brought to and the responsibility of the position, regardless of gender or the type of institution that one is serving in.

 

 

And market rate for the job.


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  Reply # 1956352 13-Feb-2018 14:21
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Aredwood: Most public sector operations are not competing with anything, unlike the private sector. Compare say Auckland Transport with a large bank.

Auckland Transport doesn't face any competitive pressures at all. So paying the AT CEO the same as a bank CEO is not justified. Even if the asset vales and revenue are the same.

If you instead look at the ports of Auckland CEO. That person does deserve a market level wage. As ports of Auckland is exposed to competition.

 

 

 

They are not competing commercially they are however competing for the skill set and experience of the CEO. If public sector organisations want to attract high caliber and skill leaders they need to be competitive with the packages they offer. 





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  Reply # 1956484 13-Feb-2018 17:40
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Agree that public sector organizations need to attract top talent. But another factor in relation to councils, is that they have garunteed income via rates. Which is in turn backed by land. So they don't need to worry about a competitor suddenly bringing out a better product, and taking their revenue. And any politically sensitive decisions can be referred to the mayor and councillors for a decision.

So in most cases being a public sector CEO is still a lot easier than a private sector CEO. Maybe use 70% of the private sector wage as a starting point in setting an appropriate wage?





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  Reply # 1956683 13-Feb-2018 23:41
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SJB:

 

Presumably the PM's salary and ministers salaries will be reduced accordingly.

 

The PM's salary of nearly $500,000 is far to high compared to other countries. The UK PM salary is around $300,000 NZD, the US President gets around $500,000 US and Angela Merkel gets around $250,000 NZD. Accommodation extra  on top of that.

 

There is really no comparison though between say JA's workload/problems and those of Theresa May or Angela Merkel.

 

I suppose you could argue the May and Merkel are underpaid. Obviously not the case for Trump.

 

 

 

 

 

 

Don't forget that MP's/Ministers are the only jobs I have come across in NZ that actually have what I regard as something approaching proper pension arrangements as part of the package.

 

 

 

"The maximum amount that in any year may be paid by way of superannuation subsidy in respect of a member is 16% of an ordinary member’s salary for the part of the year until 31 October 2003, increasing to 20% of an ordinary member’s salary on and after 1 November 2003."

 

 

 

"The ratio of superannuation subsidy to the member’s contribution is 2.5 to 1, so that a member must make a contribution to the retirement scheme of $1 for every $2.50 of superannuation subsidy."






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  Reply # 1956770 14-Feb-2018 09:31
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Geektastic:

 

Don't forget that MP's/Ministers are the only jobs I have come across in NZ that actually have what I regard as something approaching proper pension arrangements as part of the package.

 

 

 

"The maximum amount that in any year may be paid by way of superannuation subsidy in respect of a member is 16% of an ordinary member’s salary for the part of the year until 31 October 2003, increasing to 20% of an ordinary member’s salary on and after 1 November 2003."

 

 

 

"The ratio of superannuation subsidy to the member’s contribution is 2.5 to 1, so that a member must make a contribution to the retirement scheme of $1 for every $2.50 of superannuation subsidy."

 

 

So the PM is getting another $100,000 a year paid into to a pension pot and then they have to contribute $20,000 themselves. Is that how it works out?

 

I imagine the examples I quoted also have pension arrangements. Our PM's remuneration is way out of step when compared with major world leaders. It should be halved.




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  Reply # 1956947 14-Feb-2018 12:03
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Aredwood: Agree that public sector organizations need to attract top talent. But another factor in relation to councils, is that they have garunteed income via rates. Which is in turn backed by land. So they don't need to worry about a competitor suddenly bringing out a better product, and taking their revenue. And any politically sensitive decisions can be referred to the mayor and councillors for a decision.

So in most cases being a public sector CEO is still a lot easier than a private sector CEO. Maybe use 70% of the private sector wage as a starting point in setting an appropriate wage?

 

Working in the public sector brings a new set of bureaucratic challenges that are not present in the private sector. New governments bring wide-ranging policy changes that can have a profound effect on the CEO's strategy and ability to execute change. Public organisations are also far less nimble and require slow but sure changes of course over long periods of time and are bound by much more regulation than the private sector. The level of scrutiny that CEO's in this sector come under is also much higher due to disclosure rules and the focus placed on them by the media and general public.

 

 

 

The roles are equally difficult, just in different ways. Paying market rates for the role is the only way to attract the required talent, while also taking into account any differences between the public and private sector roles.


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  Reply # 1957061 14-Feb-2018 13:53
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SJB:

Geektastic:


Don't forget that MP's/Ministers are the only jobs I have come across in NZ that actually have what I regard as something approaching proper pension arrangements as part of the package.


 


"The maximum amount that in any year may be paid by way of superannuation subsidy in respect of a member is 16% of an ordinary member’s salary for the part of the year until 31 October 2003, increasing to 20% of an ordinary member’s salary on and after 1 November 2003."


 


"The ratio of superannuation subsidy to the member’s contribution is 2.5 to 1, so that a member must make a contribution to the retirement scheme of $1 for every $2.50 of superannuation subsidy."



So the PM is getting another $100,000 a year paid into to a pension pot and then they have to contribute $20,000 themselves. Is that how it works out?


I imagine the examples I quoted also have pension arrangements. Our PM's remuneration is way out of step when compared with major world leaders. It should be halved.



Yes. Plus free air travel forever and a few other perks.





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