TVNZ's roast gives message to other state firms

An embarrassing dressing-down for TVNZ's board over newsreader Judy Bailey's huge pay rise will have a "chilling effect" on the directors of all Crown-owned companies and entities, predicts an industry source.

The board almost doubled Bailey's salary to around $800,000 a year.

The Government has a "no surprises" policy under which shareholding ministers expect to be told of specific issues "as appropriate" by Crown companies and entities.

The policy is outlined in the Crown Company Monitoring Advisory Unit's Owner's Expectations Manual.

Under the policy, shareholding ministers expect boards to be "sensitive" to the demands for accountability placed on ministers from Parliament and taxpayers.

A private sector source interested in Crown companies said the Government's handling of the issue sent a signal to competitors of state-owned enterprises about the benefits of playing politics.

"If I was the chairman of an SOE or another Crown entity, I would be thinking 'Good God. What happens at the next issue?' "

The source, who did not want to be named, said the Government had hung TVNZ chairman Craig Boyce out to dry.

"If governments want their Crown-owned entities and SOEs as good as they can, they want to assist in de-politicising, not politicising, them."

National MP Murray McCully said there were grounds for concern about the politicisation of Crown company activities following the Government's handling of the issue.

But Professor Gary Hawke, head of Victoria University's school of government, said a Government-owned company had to be aware that public opinion was going to be influential.

"Management ought to have known and ought to have informed the board that a salary of $800,000 was likely to raise eyebrows.

"The board should have thought about it, but if it decided it was taking a good commercial decision I think they should stick to their decision, and the only thing they can do then is resign if they're asked to by their owners."

Crown Company Monitoring Advisory Unit executive director Murray Wright said the "no surprises" policy was well known to all boards and was reiterated to the TVNZ board yesterday. 

He would not comment on what message he thought the Government's actions sent to other Crown companies.

NO SURPRISES POLICY

Boards of Crown companies are expected to communicate with shareholding ministers, as appropriate, on specific issues. Ministers expect boards to:

* understand wider Government policy issues as part of their decision-making

* be aware the Crown has wider interests than those of ordinary shareholders in private companies

* be aware of the potential implications of company-specific issues on the Crown and/or its balance sheet

* be sensitive to the demand for accountability placed on shareholding ministers by both Parliament and taxpayers