Power boss' $1.3m top Govt pay

Doug Heffernan. Photo / Paul Estcourt

Mighty River Power chief executive Doug Heffernan is this country's highest-paid government employee.

His $1.32 million package is more than double that of any of the top bureaucrats whose pay details were released yesterday.

State Services Commissioner Iain Rennie hailed a small - $434,000 - drop in the total salary bill for 29 departmental chief executives in the year to June as evidence the public service was responding to tough economic conditions.

"I think it's important to maintain trust in the public service, particularly at tough times like these. I think people are looking for their leaders to be modelling the behaviour that they are asking from others."

The highest-paid departmental chief executives in the core public service were Ministry of Social Development boss Peter Hughes and Foreign Affairs and Trade's John Allen, both on just under $580,000.

However, among the wider group of leading public servants, including tertiary education bosses, Auckland University vice-chancellor Stuart McCutcheon was the highest-paid on just under $620,000.

But annual reports released in recent weeks show the highest-paid government employees are state-owned enterprise chief executives. Dr Heffernan's $1.32 million at Mighty River was a $70,000 increase on the year before.

Meridian chief executive Tim Lusk, who took home just over $1 million last year, had to make ends meet with $860,000 this year. Tough times extended to Television New Zealand, where chief executive Rick Ellis' pay fell from $840,000 to $760,000.

Meanwhile, commenting on the handful of core public service chief executives whose pay rose, Mr Rennie said that was because they had done well against the performance expectations set by him and ministers.

Commissioner of Inland Revenue Bob Russell enjoyed a $20,000 pay increase, one of the largest.

Mr Rennie said that was in recognition of Mr Russell's work in recovering $2.2 billion in unpaid tax from the banks last year after a dispute dating back more than a decade.

State Services Minister Tony Ryall said it had been made very clear to Mr Rennie and his department the Government expected restraint.

"We're asking a lot of public servants to tighten their belts and it's quite appropriate that we expect that to flow across those people at the top level too ... we're not going to have a lolly scramble at the top end of the public service.

"The State Services Commissioner has done a good job for New Zealand in that the overall bill is down."

But Mr Rennie sounded a warning to employers in the tertiary sector, where he has no control over salaries and the number of managers and academic staff earning more than $100,000 rose more than 20 per cent for the second year running.

He said the sector needed to reflect on whether it was matching the constraint of others.