The next Reserve Bank Governor is set to have his or her pay rise potential set differently to the annual “haggling” the Finance Minister has with the Bank’s board of directors.
Prime Minister Bill English has foreshadowed changes to how leaders of the NZ Super Fund, Reserve Bank, ACC Fund and Housing New Zealand would be assessed for pay increases, following outcry over a 36% annual increase to Super Fund CEO Adrian Orr.
English put the Super Fund board members on notice, saying the move was clearly against his recommendation for a much lower increase.
“I think any board that takes a different view [to the government] when it’s a 100% subsidiary takes risks about tenure, and that’ll be discussed when the appointments come up,” English said in relation to the Super Fund board.
Speaking to media at his post-cabinet press conference Monday, English said the government would likely look at different settings for the heads of the four “$20bn-plus” government-owned organisations.
There had been pressure from the Reserve Bank board around the Governor’s pay, he said. Current Governor Wheeler earns between $$640,000 and $649,999.
Boards had shown professional competence and management – there was no question about this – however, they needed to align with government interests, English said. “They’re still public organisations.”
“I think it would be better to find a more stable process for these very significant appointments,” he said.
“With the time that there is available until the Reserve Bank Governor appointment, there will be the opportunity to just try and get a longer-term view than an annual haggle with a board who, rightly, is saying their chief executive’s very competent, but are a bit over-enthusiastic about what they should be paid,” English said.
Recruitment for the four organisations was in theory in competition with the global market, English acknowledged. “They are by global standards, large, sophisticated organisations.” Boards therefore tended to benchmark against a different pay standard than the local one.
“In our experience there’s a long queue of people who want to do those jobs. We’ve just got to find a better balance there,” he said.