Allan Hawke, a former federal department head and chief of staff to then prime minister Paul Keating, says the Future Fund Management Agency "should be ashamed" of its performance pay scheme.

The Melbourne-based agency paid the bureaucracy's biggest bonuses last year, including a $633,216 payment to one of its senior executives.

Most of its 90 staff received incentive payments: the average bonus awarded to 56 senior staff was $140,192.

The fund won an international staff-engagement award recently, and said it relied on performance pay to attract "appropriately skilled and experienced employees in a marketplace in which there is a high level of demand for the skills of agency employees".

But Dr Hawke, who has led the Defence, Transport and Veterans' Affairs departments, said bonuses in the public service were unjustifiable.

"It's just absolute crap. The Treasury doesn't pay bonuses, nor should any other public sector workplace," he said on Wednesday.

"If this agency needs to pay that much to attract specialist staff, then it should be paying those amounts as a salary."

Dr Hawke is a long-time critic of performance pay in the public service and abolished it in every agency he led.

He said it was too difficult to measure objectively a government worker's performance, and bonuses could facilitate nepotism and corruption.

"How do you determine one individual's contribution when it's a team game?" he said.

"Those judgements [about performance] are just beauty contests. It encourages toadyism and sucking up to the boss.

"There was never any factual basis to how bonuses were calculated and performance was judged."

Despite the huge bonuses for Future Fund staff, most public service workplaces have been slowly phasing our performance pay, which was introduced by the Howard government to encourage public servants to be more responsive.

The Coalition pledged before last year's election to reintroduce bonuses for departmental secretaries and other senior public servants, and tie officials' pay to their success in cutting red tape.

However, significant legal hurdles may prevent the government from implementing the policy. The independent Remuneration Tribubal controls secretaries' pay, and any attempt to force it to introduce bonuses would require legislative change.

Also, most senior executive public servants are employed on long-term contracts, meaning the bonus policy could take years to come into effect across the bureaucracy.

The Future Fund did not respond to an interview request on Wednesday.

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