Public sector bosses' pay raises slowing: State Services Commissioner

State Services Commissioner Peter Hughes has released a report on public sector pay. Photo / Mark Mitchell

Pay rises for the public service's top bosses are getting smaller, according to a report released today.

But their average pay is still more than five times what their employees earn.

The report from State Services Commissioner Peter Hughes shows the total remuneration paid to state sector chief executives in the 2017/18 financial year.

It shows pay for public service chief executives increased 0.9 per cent in 2017/18, down 2 per cent on the previous year.

The average increase for chief executives in the broader public and private sectors, where the commissioner has no jurisdiction, was 3.1 per cent.

The average pay for Crown entity chief executives increased 2.6 per cent, compared with the 3.5 per cent average increase in 2016/17.

The average base salary of public chief executives was 5.3 times higher than that of their employees. That is only a small drop in the ratio over the past five years of 0.5.

The report also showed that the average base salary for public service managers increased by 3.4 per cent over the 1027/18 year, and only 2.9 per cent for other employees.

Hughes has taken a number of measures over the past year to slow the upward trajectory of top executives' pay, including removing performance payments, appointing chief executives at the lower end of the range and reviewing job sizes and terms and conditions.

"All of these actions have resulted in a flattening of the rate of growth of pay levels at the top end," Hughes said today.

"I'm pleased we have managed to put the brakes on escalating pay increases for chief executives, including some Crown entities, but the full effect of these changes is yet to be realised.

"This is the last year when performance pay will be paid to public service chief executives. While the full impact of this change will not be seen until next year's disclosure, I'm pleased other steps the commission has taken have resulted in lower increases in this year's report."

From July this year, public service bosses had performance pay of 15 per cent of base salaries scrapped altogether, and a 10 per cent "at risk" component rolled into their salaries.

But in exchange they have been given an extra five days' annual leave and access to income protection insurance.

The State Sector and Crown Entities Reform Act, which came in to effect on October 31 gives Hughes more oversight over the setting of salaries for Crown entity chief executives.

State Services Chris Hipkins said he expected pay levels to continue to slow over the next 12 months as the decision to remove performance pay kicked in.

"State sector chief executives have big important jobs that carry a lot of responsibility and they deserve to be fairly paid, but they are still public servants with an accountability to taxpayers.

Highest public service chief executive pay range
Naomi Ferguson, Inland Revenue - $670,000-679,999

Highest DHB pay range
Dale Bramley, Waitemata DHB - $650,000-$659,999

Highest tertiary education institution pay range
Stuart McCutcheon, University of Auckland - $760,000-$769,999

Highest Crown entity pay range
Scott Pickering, ACC - $830,000-$839,999

Highest pay range of others under Remuneration Authority jurisdiction
Mike Bush, NZ Police - $700,000-$709,999