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Prime minister John Key has admitted there was a "breakdown in a number of relationships" which led to the departure of education boss Lesley Longstone.
But he defended the $425,000 golden handshake given to former ministry head, who left under a cloud after just 13 months in the job.
Key said there was "wrong on both sides" and the appointment "didn't gel in the way we hoped" but would not give specific details. He did not dismiss the culpability of education minister Hekia Parata, who was known to have a fractious relationship with the senior civil servant.
"It's never one single thing. Even Lesley said there was a breakdown in a number of relationships... sometimes these things don't work well. There's lots of employment matters that are handled by the State Services Commission and they go swimmingly well.
''From time to time the odd appointment doesn't go well. That one didn't...It's hard to put your finger on exactly why the relationship broke down on a number of fronts. It wasn't just with the minister. But it just didn't work."
State Services Commissioner Iain Rennie announced the payout yesterday, which was the subject of much speculation since her departure in December amid problems including the troubled Novopay payroll system and plans to close Christchurch schools.
Longstone received $267,952 before tax in severance pay - the equivalent of six months remuneration. She also got $157, 523 in outstanding holiday pay, and a payment in lieu of notice, taking the amount to $425,475.33
Speaking from Mexico City, Key said "a fair chunk" of the money would have been paid "under any circumstances."
"I think its important to understand that a significant part of that was part of her contract."
He refused to admit it was an expensive breakdown.
"I would have thought, in the overall scheme of things here, you'd be at the pretty bare minimum. A lot of the payment here is a lot of her standard contract...my much bigger concern is the employment didn't work."
Longstone was hired from England. Her departure was announced in December after three months of talks with Rennie. She officially left on February 8.
The fiasco would not prompt a rethink of overseas appointments in the public service, Key indicated.
"We have hired quite a lot of chief executives from overseas and they have, for the most part been successful...There is no point in pointing fingers now...it's just time to move on."
Opposition parties have slammed the payout.
The package would be a a slap in the face for the thousands of school staff waiting to be paid by Novopay, Labour's education spokesman Chris Hipkins said.
Green party co-leader Metiria Turei said: "Ms Longstone was forced to take the blame for Hekia Parata's repeated failures in education."
Former social development ministry boss Peter Hughes is filling in as education secretary and the position will be advertised later this month.