Election 2023: Public Service Association hits out at ACT's promise of performance pay for Government department bosses

The Public Service Association is hitting back at ACT's promise to introduce performance pay for the chief executives of Government departments if elected. 

On Sunday, ACT unveiled its plan for "efficient and effective" public services - which included performance-based pay for public executives who currently "have few incentives to cut waste" and a pledge to set specific outputs for each Government department. 

ACT said it would also make ministers issue key performance indicators (KPIs) to chief executives. Those ministers would also undertake performance reviews with Government department bosses, which ACT said would be released to the public.

Party leader David Seymour said this would provide solutions to the current "lack of measurement and accountability for the quality of day-to-day Government services" and insufficient "ministerial power over, and incentives for, public service chief executives to make sure their departments perform and deliver".

As well as introducing performance pay for chief executives, Seymour said ACT would remove the "exceptional performance" cap on salaries - which would be determined by the minister.

But the policy isn't going down well with PSA national secretary Kerry Davies who told AM's Ryan Bridge on Monday the public sector needs adequate resourcing, not performance-based pay. 

"Paying bonus payments to CEs to motivate them to do their jobs is not the solution. What the public service needs is skilled staff and resources to be able to deliver on the substantial challenges we face as a country. 

"These challenges and the issues we now have to deal with are very complex and also growing in magnitude so we need a really competent and well-resourced public service to be able to properly support the government of the day."

When Bridge questioned how much more resource the sector needed given the average CEO salary is $478,000 and core Crown expenditure has increased from $80 billion in 2017 to $137 billion, Davies said public service is a lot more than CEOs. 

"It's teachers, nurses, people delivering much-needed social services to ordinary New Zealanders and the percentage of the public service, the workforce, has remained at 20 percent over the last 20 years."

Davies said the number of public service workers has increased with the population to meet demand and is not out of kilter with the private sector growth. 

She added bonuses for CEOs don't necessarily "flow down to our members" who are actually delivering the services. 

"They already have KPIs and employment measures. There are extensive accountability measures across the public service both from Treasury and the Public Service Commission and the Select Committee."

"I don't agree [services] have gotten worse. I do agree the problems New Zealanders are facing have got incredibly more complex. If we want to deal with those big issues like weather and planning for environmental change, we need a strong public service. If we are wanting to deliver good health services, we need skilled professionals, allied health workers, and care and support workers to be able to give the necessary health services to everyday New Zealanders and as our population increases that's really important those people who provide those services are able to be employed. So we need to be resourcing the workforce and paying bonuses to already high-paid CEs… it's a failed recipe and takes us back to the past." 

Seymour isn't the only politician supporting performance pay for Government departments. Christopher Luxon, the leader of ACT's fellow right-bloc party National, has also called performance pay a way of restoring "fiscal discipline". 

"I won't put up with pouring more money into broken programmes that don't work when we need more funding for frontline services like schools and hospitals," Luxon said earlier this year upon releasing National's policies for fiscal transparency.

"It's taxpayers' money and we all deserve to know what it's being spent on but unless you've worked in the machine in Wellington, or have trained for years in accounting or economics, it's impossible to work out how much money the Government spends and where it all goes.

"That's why a Government I lead will introduce new requirements for clear financial reporting to taxpayers."

However, Labour was not in favour of performance pay. Party leader Chris Hipkins, the incumbent Prime Minister, earlier this year rejected National's fiscal transparency plans.

"There's a very novel idea which is that you could specify performance measures for all of the money that Government spends in each year's Budget then each year you could report back on whether those performance measures have been met through that spending," Hipkins said. "We do that every year, it's called the Budget documentation.