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

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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Episode Transcript

Speaker 1 (00:00):
Hey, listen. On principle, I really like Nichola Willis's idea
of performance pay for the chief executives in the public sector.
I don't know if you realize it's actually not a
new idea. I mean, we were actually doing this until
Jasinda's lot gotten and then Chris Hipkins, who was the
relevant minister, canceled it because you know, extra pay for people.
You know, I don't like that idea. And actually the
extra pay was pretty generous. It was about fifteen percent

(00:20):
on top of base pay. Now, some of those guys
in the public sector get paid close to seven hundred
thousand dollars a year, so that's another one hundred thousand
dollars if they strike their targets, which is pretty good. Now.
As to whether it works or not, we'll have to see,
But a cursory look at performance would say it might
have an impact because the public sector was running a
lot better before Jacinder when they had the public the

(00:42):
performance pay than they were running under just Cinder when
they had no performance pay. But generally, I would say
the reason that I like it is because it's a
smart idea. I think, just in general, to try to
get the public sector to run a little bit more
like the public sector. Like the private sector. Sorry, and
this is pretty standard stuff for a private sector CEO.
And the reason I say that is because the private
sector is just simply better at doing what it does
than the public sector is. I mean, take, for example,

(01:04):
a business that makes widgets, right. The business's job is
to make the best widgets at the best price in
order to make the most money. The widget business knows
that's its job in anything else's noise, and they ignore it.
The public sector, though, gets distracted by everything all of
the time because I don't think they really know what
their job is all the time or care enough. I mean,
take the Reserve Bank, right, The primary job of the

(01:25):
Reserve Bank is to keep the inflation rate between one
and three percent. What did they do? They got distracted
by identifying as a tree and hiring diversity advisors. What
has that got to do with the financial systems and
the economics of the country. They were hiring diversity advisors,
just going off on any kind of fashionable issue that
took their fancy inflation above seven percent. Ministry for Education,

(01:48):
the primary job is to teach our kids, right, get
as many of them to achieve as higher grade as possible.
What did they end up doing getting distracted by weirdo
experiments like barn style open classrooms and letting chick children
decide for themselves what they want to learn, And what happened?
Our kids' grades comparative to others in the world completely
fell through the floor. So yeah, how about we focus

(02:09):
those public sector bosses back onto what they're actually employed
to do. And I'll tell you what, nothing focuses the
mind like some extra money. For more from Heather Duplicy
Allen Drive, listen live to news talks 'd B from
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