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Heather du Plessis-Allan: I approve of performance pay for the public sector

Author
Newstalk ZB,
Publish Date
Tue, 18 Jun 2024, 6:13pm

Heather du Plessis-Allan: I approve of performance pay for the public sector

Author
Newstalk ZB,
Publish Date
Tue, 18 Jun 2024, 6:13pm

On principle, I like Nicola Willis' idea of performance pay for the chief executives in the public sector.

It's actually not a new idea, we were doing it until Jacinda's lot got in and Chris Hipkins, the then-relevant minister, cancelled it.

And it was pretty generous, up 15 percent on top of base pay. Since some of those guys in the public sector get paid close to $700,00 a year, that's another $100,000 if they strike their targets.

We'll just have to see if it works or not, but a cursory look at performance would say it might have an impact. Because the public sector was running a lot better before Jacinda when they had performance pay, than it was under Jacinda without it.

But generally, it’s a smart idea to try to get the public sector to run a bit more like the private sector. And this is pretty standard for a private sector CEO.

The reason I say that is because the private sector is simply better at what it does than the public sector. Take a business that makes widgets, for example - its job is to make the best widgets at the best price in order to make the most money. That widget business knows that's its job and everything else is just noise.

The public sector though - it gets distracted by everything. Take the Reserve Bank, its primary job is to keep inflation between 1 and 3 percent.

But then what did it do? It started identifying as a tree and hiring diversity advisers and getting itself distracted by any number of fashionable issues, and inflation went up over 7 percent.

The Ministry of Education - its primary job is to teach our kids and get as many of them to achieve as high a grade as possible. And what did they end up doing?

They got distracted by running experiments like barn-style open classrooms and letting children decide how they learn. And what happened? Our kids grades, comparative to others in the world, slipped.

So, how about we focus those public sector bosses back onto what they’re actually employed to do? Because I'll tell you what - nothing focuses the mind like some extra money.

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