MORE PAY FOR TOP PUBLIC SERVANTS

Press, Volume CIII, Issue 30442, 16 May 1964, Page 3

MORE PAY FOR TOP PUBLIC SERVANTS

Increases Range From £5OO To £950 (New Zealand Press Association) WELLINGTON, May 15. Increases in salaries ranging from £5OO to £950 a year for heads of Government departments and certain key positions in universities and teaching institutions have been recommended by the Advisory Committee on Higher Salaries in the State Services.

The committee’s report, released today by the Prime Minister (Mr Holyoake), recommends that the increases be paid from April 1 last.

The committee—Mr J. B. Price, managing-director of Shell Oil (N.Z.), Ltd., Mr J. T. Andrews, a banker, Mr E. W. McCallum, president of Federated Farmers, Mr C. U. Plimmer, managing-director of Wright, Stephenson and Company, Ltd., and Mr J. T. Watts, a lawyer and a former Minister of Finance—said in its report that it was apparent in a number of representations to the committee that top executive remuneration in the private sector, including “fringe” benefits, was very substantially higher than in the State services.

“It is true there are some unusually highly paid executives in commerce and industry, but there are also others who are modestly paid for the position they hold,” said the committee.

“Our duty, we believe, has been to disregard both the exceptionally high and the unusually low remuneration, and to determine the general or typical level of executive and professional remuneration in private industry for positions of comparable responsibility, taking into account the various advantages and disadvantages of public and private employment.

“The Royal Commission on State Services accepted this principle of ‘fair relativity’ as the basis for the determination of salaries in Government employment, the report stating: “The consultative committee of 1945-46 contended

that: “In making comparisons outside the service, the State should be a good employer and should accept and maintain the standard set by other good employers.” With this we agree, since we think it would be generally accepted that in determining conditions of service for its staff the State should not be required to take into account the practices of bad employers. But that I is not to say that the State 1 should take the lead —that I it should attempt to set the pattern for what good employers should do.’ “If, therefore, the recommendations in the report are accepted, the State will not be taking the lead, but on the other hand it will meet its obligations as a ‘good employer,’” said the committee. Tax Burden The committee said the tax structure in New Zealand was such that when a person reached a high executive position, the incidence of taxation was extremely heavy. On taxable income in excess of £3600 the rate of tax was 13s 6d in the £, and it was not irrelevant to note that an increase of £5OO a year in salary at this level produced a net tax-paid increase of ap-

proximately £166. Consequently, to do justice to the senior executive carrying heavy responsibility a much higher gross increase was necessary to give him an effective net increase. The committee decided to make recommendations in regard to only one key position in each department, usually the permanent head, leaving it to the appropriate authority to determine the proper salary relationship between the key positions covered by the committee’s recommendations and other positions for which the salary was also subject to appropriation. “At present, permanent heads’ salaries are placed within seven different groups from £2BOO to £4250, each group being separated from that below and above by £2OO or £250. Fewer Groups “The committee feels that with so many groups, too fine a distinction is drawn betwen the responsibilities of men who are executive heads of State departments. At the same time, it is recognised that the differences in levels of responsibility should be reflected -in wider margins of remuneration and, accordingly, we recommend the adoption of three salary groups only. “The salaries we recommend for the present incumbents in each of these three groups are:— Group 1—£4700. Group 2—£4100. Group 3 —£3500.

“We recommend that the increases proposed should be paid in one sum from a fixed date and not in two or more instalments as in 1960-61. “It appears to the committee that some flexibility is essential to permit the Government to recognise outstanding qualifications, unusual ability or some special circumstances. We recommend therefore, that the practice of giving

special gradings or additional payments in such cases could well be continued.” The new rates recommended applied to the present incumbents of the positions, almost all of whom had had some years of experience in the positions concerned or as deputies of the permanent heads, said the committee. “We do not consider that a newly-appointed permanent head in future should necessary receive the maximum figure immediately upon appointment. On the contrary, we recommend that there should be a return to an earlier practice of having a short scale for each of the groups we have proposed. “The desirability of a scale or range is made greater by the larger divisions in salary levels between the three groups now proposed as against the previous seven. “The commencing salary for a permanent head could be set at any point on the scale, depending on personal qualities, qualifications and experience, and his progress to the top of the scale for his group need not be automatic but could be contingent upon his performance.

“This would be consistent with the practice of private industry in making appointments to executive positions and also with that of most local authorities.