No more for Orr - freeze Super Fund chief's salary says SSC

Adrian Orr has been awarded a 2.7 per cent pay rise in spite of advice to the contrary from the Government. Photo / Dean Purcell

The salary of New Zealand's highest-paid public servant should be frozen for the coming year, said the State Services Commissioner.

It follows the Super Fund board giving chief executive Adrian Orr a 2.7 per cent pay rise - nearly three times higher than what Finance Minister Steven Joyce and the SSC recommended.

In a letter last month, released publicly today, commissioner Peter Hughes told Super Fund board chair Catherine Savage he believed "there should be no remuneration movement for Mr Orr" in the 2017/18 financial year.

Savage told the Herald today that no decision has been made on that point.

Together with the document release, Hughes said today that he expected pay for public servants to be fair.

"It's a balance between being fair to individual chief executives, recognising the jobs they do, and being fair to the taxpayers who pay the bill. In this particular case, my advice to the board was that an increase of the size proposed was not justified. The board made its own decision and did not follow my advice," Hughes said.

According to the annual report released today Orr received $1.217 million in the year to June 30 - the largest component of which was his base pay, at $700,000.

This is the part of Orr's package which the Super Fund consults the SSC and minister over.

Orr's base pay went up by 2.7 per cent from $682,000 to $700,000 in the year to June 2017.

Savage, in advocating for that increase, said in a letter to the SSC this year that Orr's "ongoing performance remains exceptional".

A copy of this letter was also sent to Joyce, in which Savage also pushed for the 2.7 per cent increase.

In a July reply, released by the SSC today, Joyce recommended that a 1 per cent increase would be appropriate.

"I consider that an increase of 2.7 per cent is too large in the current climate, particularly given the increase in the previous year," Joyce said.

Hughes said today that he didn't accept that crown entities such as the Super Fund "should be able to make decisions free of any public-sector oversight or accountability."

"This is a public agency investing public money for the good of the public. And the chief executive's remuneration is paid by taxpayers. 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," Hughes said.

This is the second year of tension between the Guardians and the Government.

The previous year Orr received a 15.8 per cent increase to his base remuneration. In February Bill English put the Guardians of the Super Fund on notice.

"The Government has a view and the board's taken a different view. I think any board that takes a different view when it is a 100 per cent subsidiary takes risks about tenure and that will be discussed when the appointments come up," he said.

The New Zealand Superannuation Fund is one of the country's biggest taxpayers, representing nearly a tenth of the total corporate tax paid in the 2017 financial year.

Set up in 2001 to help meet the country's future pension needs, the fund has become a significant presence in the New Zealand capital markets and economy.

"In fact, the fund's $1.2 billion tax bill for 2016/17 represented 9 per cent of the total New Zealand corporate tax take," it said in its 2017 annual report. Pre-tax profit in the year was $6.2 billion, including a $5.57b gain on the value of its investment portfolio.

By comparison, New Zealand's largest company, Fonterra Co-operative Group, recognised a tax expense of $20 million on a pre-tax profit of $765m in the year to July 31.

- additional reporting business desk