Friday, March 27, 2009

SOE bonuses

You might think that I'd be condemning last night's revelation by TV3 that SOEs had paid out more than $46 million in bonuses last year - but I want more information first. The warning sign is this bit:

Most recently broadcast and telecommunications SOE Kordia paid $1.3 million in bonuses, but they do not enter the top five, headed by the New Zealand Post group, who paid $19.8 million to 10,000 employees.
(Emphasis added).

NZ Post's bonuses seem to be rather broadly distributed. There is a world of difference between rank and file staff getting a small fraction of their salary - say, $500 or $1,000 - extra if the company they work for has a good year, and the sorts of inflated executive bonuses seen in e.g. the banking sector. The former is profit sharing. The latter is theft. And unfortunately, TV3's story didn't give us enough information to tell which is going on here.

And that said, even if NZ Post is rewarding most of its employees, that $20 million won't be distributed evenly, and a large fraction - if not most of it - will be going to the people at the top. And that is something we should be concerned about. Yes, the private sector pays bonuses. But only because their shareholders are too weak and too powerless and too outvoted by large institutional investors with an interest in mutual back-scratching to stop it. But as much as their managers and the SOE Act might want to pretend, SOEs are not in the private sector, their shareholders - you and me - have higher expectations of their behaviour, and we have the power through the government to force them to comply. And we should. Every dollar given out to managers in the "performance pay" scam ("performance pay" in a monopoly; that's brilliant!) is a dollar that could be used instead to pay for schools and hospitals for the rest of us. We should insist that the money is passed on to the government in dividends, rather than stolen by the management team. And we should hold the government politically accountable if it is not.