The country's top public servants - some of whom already rake in more than $600,000 a year - should be paid even more, a new report claims.
At least 25 staffers earn more than $500,000 - more than the prime minister - and some pocketed double digit pay rises this year, worth about $50,000.
The union acting for public servants says there's a double standard when it comes to top executives' salaries.
Now a new report on the State Services Commission, which oversees government departments, has found that the relationship between performance and bonus payments for chief executives in the public sector is "not clear".
The review's authors, former ACC boss Garry Wilson and barrister Patsy Reddy, found most chief executives were paid below the "benchmark" against which the roles were set.
As well as recommending an overhaul of bonus payments to properly "incentivise" good performance, they say these benchmarks should be regularly reviewed "so that the state services are able to attract and retain highly qualified and capable leaders".
In the year to June 30, public sector chief executives received an average pay increase of 3.1 per cent. The State Services Commission, whose head Iain Rennie received a $40,000 pay rise last year to take him to $560,000, refused to be interviewed on the report.
Deputy commissioner Sandi Beatie acknowledged the performance improvement framework report's position, but said people were attracted to the public sector "for wider reasons than just remuneration".
The commission did not believe there was a need to increase "the overall budget" for chief executive pay, she said.
Public Service Association national secretary Brenda Pilott said while average public servants' pay was being held back in the public sector, different standards were being used for top executives.
Chief executives and government ministers were receiving cost of living adjustments, backdating of increases, and comparisons with the private sector - "all of those things that are off the table for ordinary public servants," Ms Pilott said.
Jordan Williams, executive director of the Taxpayers' Union, said the report acknowledged the "tenuous" connection between performance and pay in the public sector, but overlooked difference with the private sector.
"Traditionally public sector employees have expected less pay in exchange for having better job security and it's disappointing that the report doesn't acknowledge that," he said.
Organisations in both the public and private sectors were now in a race to pay senior staff the most.
"Instead of asking 'how much do we need to pay to get this person', the question seems to be ‘what's everyone else paying, let's go just above that average', and we have a race skywards."
Aside from plumping for an increase in executive pay, the PIF report found the commission department wanting in a number of key areas.
It criticised a lack of diversity, questioned its information security, and said that stakeholders had noticed it was under constant restructure, with not enough action.
Other departments have also come in for similarly sharp criticism this year.
In June, the financial management of the Department of Prime Minister and Cabinet was described as "weak" and it was claimed it used techniques which "robbed Peter to pay Paul".
A report on the Ministry of Transport found that the number of staff with a deep understanding of aspects of the transport system was "limited".
- Fairfax Media
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