Public pay lags private sector

The salary package paid to Health Department director general Neale Fong continues to attract a lot of comment because it is substantially higher than any other public sector salary, yet it also highlights the disparity between private sector and public sector incomes.

Dr Fong’s total package is worth up to $570,000, comprising four elements.

He has a base salary of $428,808, an annual attraction payment of $42,880, superannuation, and an annual performance-based bonus of up to 12 per cent of salary.

As well as running the Health Department, Dr Fong’s performance is based on his role implementing the wide-ranging reforms flowing from the Reid report.

His total package meant there were about 35 private sector chief executives who had a higher income last year.

Nonetheless, his package puts him well ahead of the state’s second highest paid public sector executive, Western Power managing director Tony Iannello, who earned a total of $432,886 last financial year.

It is always interesting to compare Mr Iannello’s income with that of Alinta managing director Bob Browning.

Both entities emerged from the old State Energy Commission of WA and, while Alinta has achieved rapid national growth, they are competitors in the WA energy market.

Mr Browning had a total income last year of $1.7 million, four times that of Mr Iannello.

The biggest difference between the two was the large bonuses, totalling just over $1 million, paid to Mr Browning.

The same issues applied at the general manager level.

The base salary paid to senior Alinta executives such as Chris Indermaur and John Cahill was similar to the base salary paid to senior Western Power executives such as Doug Aberle and John Lillywhite.

However, the Alinta executives earned bonuses ranging from $240,000 up to $787,000, whereas the Western Power executives earned bonuses of just $6,850.

This is the market reality facing the state government as it moves to recruit chief executives for the four successor businesses – generation, networks, retail and regional – that will take the place of Western Power next April.

These businesses will battle to compete with the incomes paid by their private sector competitors.

After Mr Iannello, the next highest paid public sector executive was police commissioner Karl O’Callaghan, who earned just over $380,000.

Racing & Wagering WA chief executive Ray Bennett is one of the state’s highest paid public servants, with total income of more than $360,000.

Water Corporation chief executive Jim Gill is in the same league, after getting a 12 per cent pay rise to $361,000.

Fremantle Ports chief executive Kerry Sanderson ranks as one of the top income earners in the public sector, courtesy of substantial (by public sector standards) bonuses.

Ms Sanderson earned a total of $346,000 last year, including a $63,000 bonus. In the previous financial year she earned a total of $308,000, including a $40,000 bonus.

The directors general of most mainstream government departments, such as planning and infrastructure and education, earn between $250,000 and $280,000.

That puts them on a par with Premier Geoff Gallop, whose annual salary is $263,944.

Government ministers, such as Dr Fong’s boss, Health Minister Jim McGinty, have an annual salary of $204,784.

Opposition leader Matt Birney also earns $204,784.