Bureaucrats eye $1m pay despite flat wage growth

The pay of many top public servants has soared by 70 per cent since the GFC, with some approaching earnings of $1m.

Martin Parkinson, who heads the Department of Prime Minister and Cabinet, earns $861,700. Picture: Jono Searle

The pay of many top public servants has soared by 70 per cent since the global financial crisis, with some approaching earnings of $1 million, at a time when growth in average earnings has slowed almost to a standstill.

The cost of running the public service, including the highly ­expensive senior executive layer, has been a candidate for budget savings at both federal and state levels as it does not require legislation for cuts.

However, attempts to close budget deficits have not stopped huge increases in salary for many of those at the top who now earn several hundred thousand dollars a year more than the ministers to whom they report.

Martin Parkinson, who heads the Department of Prime Minister and Cabinet, earns $861,700, which is 71.2 per cent more than his predecessor in the Howard government, Peter Shergold, was getting when he stepped down from the position in early 2008.

Malcolm Turnbull earns $517,504 and, when the last round of pay rises was awarded, received an increase of $195 a week. Dr Parkinson’s increase equated to $1132 a week as it included ­deferred increases from the ­Remuneration Tribunal.

Treasury secretary John Fraser earns only slightly less at $840,810, which is about $240,000 more than Ken Henry was getting when he was dealing with the financial crisis. Although Mr Fraser earned vastly more in his previous private sector job as head of global funds management for investment bank UBS, he is still paid more than double the $373,200 earned by Scott Morrison as Treasurer.

Department secretaries had no increase for a number of years, leading to a review in 2009-10, which led to big one-off increases intended to bring them into line with private sector chief executives with similar responsibilities.

Remuneration Tribunal chief John Conde has repeatedly ­defended the pay levels, arguing they take account of the federal budget outlook and general economic conditions.

“The tribunal considers it ­important that remuneration for offices in its jurisdiction is maintained at appropriate levels over the longer term to attract and ­retain people of the calibre ­required for these important high-level ­offices,” Mr Conde said after the last pay rise.

Other huge increases have been handed out to many of the heads of government operations. Federal police commissioner ­Andrew Colvin gets $678,920, which is 81.5 per cent more than Mick Keelty was paid in the position eight years ago.

Over the past eight years, the pay for the Australian Security Intelligence Organisation director-general, currently Duncan Lewis, has risen 73.4 per cent to $626,690.

The electoral commissioner, Tom Rogers, earns $522,240, which is a 75.9 per cent increase over the past eight years. The highest paid public servant is the governor of the Reserve Bank, with its latest annual report showing Glenn Stevens, whose 10-year term finishes next month, earned just more than $1 million last year. The Reserve Bank started disclosing senior salaries only in 2010.

Unlike ordinary wage earners who rely on the earnings of their superannuation fund, many long-serving senior public servants enjoy defined superannuation benefits, providing them with a guaranteed pension equivalent to about 60 per cent of their final salary.

Former NSW treasurer Michael Costa told Sky News’s Bolt Report that, in his experience, there were significant “back office” gains to be made in the public service. “I cannot believe the explosion in SES positions and SES salaries — they could be addressed pretty quickly, but then productivity is the challenge,” Mr Costa said.

“It means changing work conditions, means getting more sensible and flexible labour arrangements. We’ve seen significant real growth in key areas such as education, but no productivity or output gains."

The increases won by senior public service management below the secretary level have been in line with community standards, averaging about 30 per cent over the past eight years, but their level remains elevated. A deputy secretary’s salary is about $390,000 while the first assistant secretary, which is one layer below that, gets $300,000.

The federal government has tried to halt the growth in the numbers of the public service overall and the senior executive service. Since commonwealth public service numbers peaked at 153,464 in 2012, they have fallen 11.1 per cent, while the number of senior executives has dropped 10.2 per cent.

The performance of states has varied widely. NSW has kept growth in its wages bill to only 30.7 per cent over the past eight years, while its number of senior executives has been in decline since 2009. Victoria, by contrast, has 12.9 per cent increase in total public service numbers and a 30 per cent rise in the number of senior executives, which has been enough to boost its total wages bill by 45.5 per cent.

Western Australia, which has experienced a mining boom and bust over the past eight years, is managing with a public service salary bill that has risen by 63.3 per cent, while the ACT and the Northern Territory have both overseen a blowout in public service numbers of more than 20 per cent, with salaries up by 68 per cent.

Additional reporting: Sarah Elks