The policy has been slammed by Prime Minister John Key as dumb and hypocritical, given most of the increases happened under the last government.
Mr Goff, re-elected unopposed at Tuesday's caucus, got back to Labour basics today focussing on the needs of the worker.
He talked about the tough economic times New Zealand has suffered through and the impact on workers, and criticised pay increases for state sector chiefs when others had their pay frozen or lost their jobs.
"Since 1997, state sector chief executive salaries have increased by an average of 85 percent. That's over 8 percent a year," Mr Goff said.
"Just under $400,000 a year should be enough to attract good people who believe public service means just that.
"I am not going to cut existing salaries but we will introduce a cap on new salaries at the top."
The bosses' salaries were on par with Australian counterparts, despite having much smaller organisations to manage.
There were about 16 state sector bosses paid more than Mr Key - but the prime minister was not bothered.
"There is a high degree of hypocrisy coming from Phil Goff, given the last Labour government spent nine years significantly raising chief executive wages," Mr Key said.
He also disagreed with linking the pay to the prime ministerial salary.
"I think it's a dumb idea. I think people go into politics for very different reasons and motivations, and it's not just money."
He said United States President Barack Obama and British Prime Minister Gordon Brown "earn about the same as I do. The motivation if you go into politics is not money. If it is, you are in the wrong game.
"I think when it comes to public sector chief executives, the government competes head on with the private sector to get good quality people."
They were responsible for spending $62 billion a year.
"It's in the taxpayers of New Zealand's interest that we have the best quality people," Mr Key said.
In his "The Many. Not the Few" speech, Mr Goff said 2010 should be time that those who suffered last year were rewarded.
"It can't be just party on the top floor, while everyone else does it tough."
He slammed yesterday's 25 cent increase in the minimum wage taking it to $12.75 and said Labour would raise it to $15 if elected.
"The Government can't keep rewarding the elites and the privileged at the same time as hundreds of thousands of New Zealanders are suffering a drop in real income," he said.
He criticised companies and directors responsible for the financial crisis who escaped blame and said tax avoidance needed to be clamped down on.
"People who take from New Zealand but don't give back are bludgers, wherever they live and whatever their bank balance." People who got welfare benefits when they didn't need them also needed to be cracked down on.
On tax Mr Goff said Labour would not support changes that saw higher GST while higher income people benefited from personal rate cuts.
Mr Key said any changes to the tax system had to be fiscally neutral.
"That increase needs to be recycled through lower personal taxes and it would make no sense at all not to apply that to the top end as with other taxpayers because top end taxpayers in New Zealand pay the vast overwhelming bulk of personal taxes. It's about fairness - we are putting the right incentives in the economy, we want people to aspire to earn more."
The overall message of the speech was that National cared for the rich while Labour looked after the ordinary New Zealander.
"There's nothing to support that," Mr Key said.
"You've had nine years of a Labour government, the problem after that nine years is not that we have too many wealthy people in New Zealand. It's that we have too many people who earn very low levels of income and the previous government failed to address that."
A big focus of the new Government had been to lift wages, he said.
As Labour develops its social policy this year, Mr Goff said the focus would be on ensuring every child gets a good start and improving education.
"We must upskill our community," he said. The greatest challenge for Maori wasn't issue like the Foreshore and Seabed debate which the Maori Party focussed on, he said.
"The greatest challenge for Maori will be about the future of all of our Maori kids and ensuring they get the best education they can," he said.
