Guest Post: Commissions are great for commissioners!

My last post ‘One reason for low productivity‘ suggested that New Zealand’s scores of decision-making committees with no skin in the game are expensive and inefficient.

A prime example is the Commerce Commission.

They do make some important decisions, but there are only a handful of decisions each week they have to get through. In the 2014/15 year they had 15 mergers to look at and another 14 market conduct cases. They set two telecommunications prices, set line charges for 15 electricity lines companies and 10 gas distributors, and wrote reports on 3 airports! There were fair trading-type actions taken too but they are not all cleared individually by Commissioners.

There is an awful lot of work that has to be done by staff to get theses decisions researched and written up, but commissioners shouldn’t be spending huge amounts of expensive hours going through these things in immense detail. Yet, you can see by their remuneration, they do just that.  

The highest paid commissioner in the country is the Chairman of the Commerce  Commission  who has no staff responsibilities yet received a whopping $541,000 in 2014/15. The Telecommunications Commissioner, who also has no staff to look after and fewer responsibilities, got $407,000. The remaining four commissioners, who are paid by the day, shared another $1.23 million between them. And these are not exceptional people pulled from some top position in the private sector.

The Chief Executive of the Commission, who has no input into regulatory decisions and looks after the 200 staff, received between $380,00 and $390,000. That would have made him one of the better paid but least responsible managers in the public sector. His three senior managers shared about $800,000 between them.

In total, the six commissioners and four senior managers pulled in nearly $3.4 million and, by the time overheads for office space, travel and admin support were added, you would have to guess that the total would be approaching $5 million. That is a massive chunk of the Commission’s total spending of $36 million. Is paying so much money for so few decisions good value?


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