Financial watchdog slams executive bonuses

FARRAH TOMAZIN
May 7, 2010

ALMOST all Victoria's senior government executives are getting pay bonuses that have little do with performance, a damning report by state parliament's financial watchdog says.

As Victorians face long hospital waiting lists, overcrowded trains and higher utility bills, government fat cats working in water, health, transport and other agencies are being awarded performance bonuses worth millions of dollars.

Based on a review of selected government agencies, about 96 per cent of executives received bonuses totalling almost $14 million in 2008-09. But according to the public accounts and estimates committee, the bonuses seem to be ''more of a salary supplement'' rather than based on performance, placing Premier John Brumby under renewed pressure to overhaul the public sector pay system.

The Victorian Funds Management Corporation, which manages the public sector super, had the largest average bonuses, despite the value of several funds it managed plummeting at the time. In 2008-09, six executives, including chief officer Justin Pascoe, received average bonuses of $165,900 on top of their salary that were subsequently found to have breached public sector guidelines. Overall, Mr Pascoe was paid more than $1 million, almost half of which was a bonus.

Yarra Valley Water had 122 executives getting bonuses totalling $1.5 million.

The WorkCover Authority awarded bonuses worth a total of $1.3 million to 121 executives.

The all-party public accounts and estimates committee, dominated by Labor MPs, wants a review of executive bonuses by Mr Brumby's department, and possible legislative changes, amid fears money is being wasted. ''The committee is of the firm view that the performance bonus system in virtually all agencies appears to bear little relationship to performance, but seems to be more of a salary supplement,'' said the committee's report, tabled in Parliament yesterday. ''It beggars belief that 95.3 per cent of executives merited bonuses in agencies, while the comparative figure in departments was 80 per cent.''

According to the report, about 837 executives in government agencies were eligible for performance bonuses in 2008-09 and 798 received them. The Victorian Urban Development Corporation awarded a bonus to every eligible executive, as did many other agencies.

Last night, the government refused to say whether a review was needed, with Treasurer John Lenders's spokesman saying that ''just like in the private sector it is appropriate to reward those who exceed their performance targets. Many of these executives have received only a partial bonus showing that we carefully monitor their performance. In general, bonuses for executives vary between 1 and 20 per cent of base pay,'' the spokesman said.

Coalition scrutiny-of-government spokesman David Davis said the government's arrangements for performance bonuses were a shambles.