February 13, 2012.

Separate authority to set CEO salaries?

Mayor Jenny Rowan has raised the concept of a Remuneration Authority for setting Local Government CE salaries in a letter to Local Government New Zealand head Lawrence Yule.

Mayor Rowan wrote to Mr Yule last Friday, saying the recent furore around pay rates for CEOs in the public sector had raised a number of issues. These included:

• The lack of knowledge surrounding how pay rates in the Local Government sector were fixed;
• Their relativity with the private sector;
• The processes being followed for assessing salaries and performance;
• The relatively small number of CEs in the Local Government sector; and
• The substantial and wide spread responsibilities of Local Government CEOs.

“There is no doubt at all that the current public debate on CE salaries has had a negative impact on my Council.

“The debate has raised a number of issues, however. For instance, what are the processes being followed by the various TAs; how are relativities being established; are they relevant; and what processes are being followed in the assessment of performance?

“We took external professional advice during our pay and performance assessment last year. Though we followed a properly structured process, it is clear that we should have given the impact of public opinion greater consideration.

“We are all aware that the Remuneration Authority sets the pay rates for Members of Parliament and that process is independent of the MPs. The question arises: is there an argument for something similar for Local Government CEs that still reflects the unique communities in which each one of those CEs operates?

“I am not saying we should go down this path. However, given the current high level of debate, such an idea might be worth exploring.”

Mayor Rowan has also raised the issue in a letter to Local Government Minister Nick Smith.

ENDS

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