The recent announcement that Christchurch City Council chief executive Tony Marryatt would receive a pay hike of $68,000, taking his annual salary to $538,529 has angered not only the people of the earthquake devastated city but also all other New Zealanders.
The unfortunate decision however blew over on January 27 when Mr Marryatt declined to accept the rise, following a meeting of the Council with local government minister Nick Smith.
At a time when the country is going through economic recession with rising unemployment, such pay hikes are outrageous and obscene. It is unbecoming and irresponsible to even consider such a huge rise in salary of public servants.
Not to be outdone, the Kapiti Coast District Council rewarded its chief executive Pat Dougherty a rise of $44,000, lifting his annual salary to $285,000.
Former mayoral candidate Chris Turver criticised the increase, saying that it was insensitive to the current economic climate and urged Mr Dougherty to decline the pay rise.
Mayor Jenny Rowan defended the move, saying that Mr Dougherty was paid less than his counterparts at local authorities of a similar size.
“I am acutely aware the increase comes at a time when things are tough for many, but it reflects Mr Dougherty’s performance as a highly effective chief executive,” she told Dominion Post.
Christchurch Mayor Bob Parker called the rise in pay of his chief executive, a “PR disaster and politically inept.”
It is time the central government intervened and stopped city councils from awarding their executives such unwarranted pay hikes. To say that a ‘chief executive was effective and hence deserved a rise’ at a time when the rest of the country is reeling under recession is ugly, to say the least.
Such hikes would eventually witness increases in the council rates, which would be borne by ordinary New Zealanders.
We are reminded of the huge hikes in salaries and perks that chief executives and directors of large companies in the US awarded themselves on the face of deepening financial crisis. Some of them had even approached the US government for a bail out.
Americans were justifiably agitated and demanded action, until President Barack Obama was forced to act – even then, he could not recover the monies paid out, but order stoppage of future payments.
The growth of inequality all over the world is disheartening and recent trends in remuneration such as the ones in Christchurch and Kapiti Coast hard to fathom. In Britain, where the latest bout of politicking about pay has broken out, chief executives can expect to receive average compensation in excess of £4.5 million this year. Pay at the top grew by over 300% between 1998 and 2010.
At the same time, the median British worker’s real wage has been stagnant.
These trends mean the ratio of executive to average pay at FTSE 100 firms jumped from 47 to 120 times in 12 years.
Such insensitive pay hikes are feeding the view that that there is something wrong with capitalism. Our political parties, although deeply divided on most economic policy, should get together and demand action on pay.
British Prime Minister David Cameron thinks there is a “market failure” and his coalition government wants to empower shareholders and staff to constrain pay at the top. Specific options include giving shareholders a binding veto on board pay, changing the make-up of pay committees and making compensation, including pay ratios, more transparent.
The New Zealand government should be focused on curbing such trends in its departments and certainly in local councils. It should place an embargo on the Remuneration Authority on reviewing the salaries of Parliamentarians until such time the economy improves.
