I had a good chat with Scott Emerson on his 4BC Drive program on Tuesday afternoon about the fat pay packet of Brisbane City Council boss Colin Jensen, who is paid over $700k each year, placing him easily in the top 1% of earners. First I noted that it’s comparable to salaries paid to people with similar levels of responsibility (i.e. heads of department at state or federal levels or university VCs, some of whom are paid $1M) and that even some school principals (e.g. of Brisbane Grammar) are paid $500k. Scott noted Brisbane City Council is almost like a state government given its size.
That said, I did note I’d want to do a benchmarking exercise of salaries of people in similar positions around the world to determine if it was an appropriate salary. Such a comparison may not necessarily be favourable for Mr Jensen. For instance, I was surprised to learn that the head of the New York Port Authority makes under US$300k per year (see Port Authority’s Bloated Payroll Grew $150 Million Last Year: Report).
Finally, I told Scott that with bureaucracies we need to worry about the Principal-Agent Problem. It’s very possible the management of organisations can exert undue influence on the organisation and extract excessive salaries for themselves. This may be more likely to occur in taxpayer-funded institutions (including councils, universities, and, peculiarly in Australia, private schools), which are less subject to market discipline.
You can listen to my conversation with Scott via this link:
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