Bale-out threatens golden goose

By Selwyn Parker

Between the lines

By forcing the resignation of Lotteries Commision's David Bale over his $410,000 salary, the Prime Minister has not just shot the performance economy in the foot. She has permanently maimed it.

At a time when the State Services Commission is introducing performance bonuses for public sector chief executives to try to bridge the gap between private and public service salaries, Mr Bale's departure will scare off aspirants for government jobs requiring private-sector skills.

How many talented managers will want to work for politicians whose constituencies are all direct beneficiaries of the managers' effectiveness but who publicly stab them in the back? The missing element in this tawdry debate has been the fundamental one: is Mr Bale worth his $410,000?

For this, the essential criterion is how much the Lotteries Commission gives each year to the New Zealand Lottery Grants Board for disbursement to the community for sport, recreation, arts and other good causes.

By this yardstick the commission is doing a terrific job. In a couple of years it will have raised nearly $2 billion for the Lottery Board at a rate that is eight times higher than Lotto's tired predecessor, the Golden Kiwi. As for taxes, the Government banked over $328 million from the commission in the last five years.

Ironically, the commission has done a top job by the Crown's own measures. For example, net surplus and Lottery Board payments last financial year were both $3 million higher than Crown-set targets in the commission's three-year statement of intent.

While revenue, taxes and disbursements are climbing, the commission's ratio of expenses to sales is falling. Counting Mr Bale's salary, expenses are the lowest they've been in nine years, surely an indicator of a tightly run ship.

But does Mr Bale's salary makes him too fat a cat? First, this isn't your everyday Government organisation. The New Zealand Lotteries Commission has a commercial brief to retail its own brands - Lotto, Daily Keno, Instant Kiwi and TeleBingo - in a competitive market for the gaming dollar. That's why it was established on the corporate model rather than the classic public service one, and Mr Bale's salary reflects this.

Mr Bale did not set his own pay. The $410,000 was subject to independent assessment outside the board and did not include share options or bonuses. It represents just 0.9 per cent of total operating expenses.

The Government says its real concerns in the Bale affair lie in a lack of accountability by the State Services Commission. But it also signalled it wanted the pay scaled back to nearer civil service rates.

But if you pay bureaucrat rates, you'll get bureaucrat skills. Then the likes of Sky City and TAB will laugh - and taxpayers cry - as Lotto goes the way of the Golden Kiwi.