But Hughes said it was part of a "fair package" for chief executives who had all lost "real money" in the deal, and who could earn 50 to 60 per cent more in the private sector.
"There are chief executives who have lost $80,000 a year. We should be hugely proud they will stand up and do that," Hughes said.
"What really matters most to these individuals is that they're making a difference."
Hughes said he had declined to take extra annual leave and had turned away salary increases in six of the past seven years.
Smith also grilled Hughes over the commission's decline of 22 Official Information Act requests in the past year, compared to declining only six OIA requests in the previous seven years.
Smith said it was an "appalling" record for an agency leading the Government's drive to be the most open and transparent government.
One of the requests that was declined was for the Government's strategy on being an open government, which Smith called a "rich irony".
Hughes said that in general some requests are justifiably declined, but he gave a commitment to go back over the 22 declines to see if they were in order.
"I will do that personally. I will look at reasons why the declines were made.
"If my agency can do better, I will absolutely own that. I will not duck and dive, and I will not spin and I will not run for cover. We will do better if we can."
Hughes said that turnaround times for OIA requests had improved, but there was still "a way to go".
"It's not all carrot. There is some stick ... I write to chief executives that are not in compliance and those letters are quite frank."
Smith quipped: "You might have to write to yourself with your 22 declines."
Hughes replied: "I'm happy to do that, Dr Smith, if I need to."
Hughes also defended the commission's budget for communications, which had more than doubled to $845,000 in the past financial year.
Smith said that the commission had twice the amount of staff "responsible for spin", but Hughes he had been asked to provide stronger leadership of the public service.
"With the greatest of respect, I'm not spinning ... I'm working with the chief executives as a team. We meet four times a year as a team. That group now is more cohesive than it's ever been.
"The oxygen of leadership is communication ... We had no social media presence. We've built that.
"We had few processes for engaging for senior public servants and limited engagement with public service bosses. To make that happen, I need a handful of extra staff."