Auckland Council chief executive Stephen Town has defended high salaries at the council, but has had the hard word form Mayor Phil Goff to keep a lid on top pay.

Town has responded to concerns by Goff about a sharp rise in the number of salaries above $200,000 and a $405,739 severance payment with a four-page memo on staff costs.

The memo was sparked by revelations one in five council staff earn more than $100,000, a 25 per cent jump in staff earning above $200,000, a $42 million blowout in the wages bill, and executive salaries at one council body blowing out by 89 per cent in two years.

I believe that actuals versus the budget should be a key performance indicator(KPI) for the chief executive to meet

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Town said staff levels at Auckland Council have risen 1 per cent in the past four years and numbers have risen by less than half a per cent compared to staffing levels of the former councils. At the same time, Auckland's population has increased by 174,800 since 2010, he said.

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Town has also defended the salaries being paid to staff, saying they are set using data from the private and public sector and are clearly below the general market median. The council does not lead the market, he said.

When it comes to staff earning above $200,000, Town provided data showing 1.02 per cent of Auckland Council and its council-controlled organisations(CCOs) are in the bracket, ahead of Wellington City Council (0.69 per cent) and Christchurch City Council (0.46 per cent).

The data showed 4.18 per cent of staff at Fletcher Building earn above $200,000, 4.17 per cent at Spark and 3.54 per cent at Fonterra.

Senior staff's annual pay for the 2016-2017 at Auckland Council was 1.4 per cent, compared to 3.54 per cent for senior civil servants, Town said.

At Ateed, the senior management team salary bill blew out by 89 per cent in two years, from $1.096m to $2.07m. Ateed said two new general manager roles largely accounted for the rise. Another reason was "staff at Ateed moving through salary bands over time".

Goff said Town's explanation puts the payments in context.

"However, I have reiterated to the chief executive that the pay rates of top executives in the public sector need to be constrained, and that I want Auckland Council to be a follower not a leader in comparison to the pay rates of other public sector organisations," he said.

Goff cited the reduced salary of $575,000 being paid to new Auckland Transport chief executive Shane Ellison as an example of the restraint needed at council. Outgoing chief executive David Warburton's salary is between $660,000 and $670,000.

Councillor Desley Simpson, deputy chair of the finance committee, said she was concerned with Town's failure to meet the salary budget for three consecutive years. This year's budget blowout was $42m.

"I believe that actuals versus the budget should be a key performance indicator (KPI) for the chief executive to meet," she said.