The Government’s decision to remove performance pay for public sector CEOs will lead to higher CEO salaries, remove incentives for good performance and reduce accountability, National’s State Services Spokesperson Nick Smith says.

“The Cabinet paper outlining the details of the decision to remove performance based pay for CEOs in the public sector reveals that CEOs will not have their salaries cut. Instead, the overall pay packets will increase to offset the cut in performance pay.

“Instead of missing out on the performance element of their pay, Public Sector CEOs will simply have the performance based component of their remuneration rolled into their guaranteed salary. This does nothing more than remove the incentive to perform well.

“The Coalition Government  has been completely duplicitous by spinning this announcement like it was reining in state sector pay. But in reality they are simply paying these CEOs the same, and in some cases more, while reducing any incentive for them to perform well.

“The Government will now pay bad CEOs the same as good CEOs. This makes no sense and will lead to a worse performing Public Sector.

“It was also disingenuous of the Minister to hide the fact that all Chief Executives would be given an extra week’s holiday. The taxpayer is effectively being asked to pay more for less.

“The unions believe everyone should be paid the same, regardless of their performance. That attitude is now being embedded in the state sector and it shows the dangerous direction the Government is headed in when it comes to its industrial relations reforms.

“This is another example of the Government reducing accountability. They have already axed the Better Public Services targets, and removed specific performance targets for DHBs and Police which were leading to better results for New Zealanders.

“The Public Sector needs more accountability and better incentives, not less.”

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