At the request of Cabinet, Te Kawa Mataaho Public Service Commission has publicly reported on chief executive pay since 2010 to provide transparency for the public. This includes the chief executives and acting chief executives for departments, departmental agencies, Crown agents and other statutory Crown entities, Tertiary Education Institutions, Offices of Parliament and Non-Public Service departments.

Accountability for setting chief executive remuneration

The approach to setting chief executive remuneration balances the need to maintain public trust and confidence in the public sector and the need to attract and retain chief executives who are motivated by a spirit of service. There are a range of reasons why public sector remuneration, particularly at the senior executive level, is and needs to be, lower than the private sector.

Te Tumu Whakarae mō Te Kawa Mataaho | Public Service Commissioner (the Commissioner) is the employer of secretaries and chief executives of departments and departmental agencies and determines their remuneration, excluding those whose remuneration is set by the Remuneration Authority.

The Remuneration Authority is responsible for determining the remuneration of some chief executives and Offices of Parliament (including the Commissioner and Te Pou Turuki mō Te Kawa Mataaho | Deputy Public Service Commissioner).

The Commissioner provides guidance to the Boards of Crown agents and autonomous and independent Crown entities, and Tertiary Education Institutions (TEIs) on chief executive remuneration, which is used by Boards who are the employer of chief executives and are therefore responsible for agreeing the terms and conditions with them. These are finalised after the Commissioner gives his consent.

Chief executive remuneration

The chief executive remuneration table below includes the remuneration of the chief executives and acting chief executives for agencies across the public sector.

To be consistent with a determination by the Ombudsman and in accordance with standard accounting practice, the information is presented to the nearest thousand dollars.

This is the third six-monthly update. The data has been updated to include: 

  • remuneration that was earned between a remuneration review completed between 31 December 2019 and 31 December 2020 and the previous review.
  • changes to some figures that were previously estimated to reflect actual decisions that have been made.

Disclosure of pay reductions

In mid-April 2020, the Prime Minister announced that Ministers and Public Service chief executives had volunteered to take 20 percent pay cuts for six months as pay restraint was the right thing to do in these unprecedented times.

In late April, the Commissioner wrote to Crown entities encouraging chief executives to consider taking a similar reduction to their colleagues. Te Kawa Mataaho was advised by many Crown entities that their chief executive voluntarily chose to take a pay reduction. The pay reductions varied in size and how they were implemented. Some chose to make charitable donations.

To be consistent with the accrual remuneration approach, reduced remuneration has been disclosed where the chief executive took a voluntary pay reduction that affected what they earned in the reporting period. To aid transparency a note has been added to each entry to record where that has happened. Some reductions will span two disclosures, and some will not take effect until a future disclosure. Further questions on decisions taken by Crown entity chief executives should be directed to individual Crown entities.

Temporary reductions applying to chief executives or offices whose remuneration is set by the Remuneration Authority are effective from 9 July 2020 and therefore will be disclosed at the appropriate time in future disclosures. Further information about the process for those covered by the Remuneration Authority is here.

In 2018, the annual remuneration review date for the chief executives of departments and departmental agencies was changed from 1 July to 1 January to reflect that the performance expectations are based on a calendar year rather than a financial year. The current update provides the remuneration earned in the period to 31 December 2020 which reflects the voluntary pay reductions of 20% for six months taken by them.

The Detailed Disclosure Notes 2020 provide more information on how the data is compiled.

Pay restraint – further information

The Remuneration Authority (the Authority) sets the remuneration for independent statutory officers which include the Commissioner, the Deputy Public Service Commissioner and the Solicitor General - all of whom lead Public Service departments - as well as the heads of non-Public Service departments and Offices of Parliament, such as the Commissioner of Police and the Parliamentary Commissioner for the Environment. Authority decisions are called determinations. Once a determination has been made by the Authority that amount has to be paid.

For the period from 1 July 2019 to the end of February 2020, the Authority’s determinations generally reflected New Zealand’s economic and public sector labour market conditions before the arrival of the COVID-19 pandemic on our shores.

Determinations issued after February 2020, for newly appointed statutory officers, were restrained by the prevailing adverse economic and fiscal environment caused by the pandemic. Consequently, the remuneration for those statutory officers was set at a lower rate than would otherwise have been determined. 

During late April/early May, the Authority received requests from a number of statutory officers who wanted to join their colleagues in the wider public sector to take a pay reduction or advised that they had chosen to make donations instead. However, the Remuneration Authority Act 1977 (the Act) prevented the remuneration of existing statutory officers to be reduced, and therefore needed to be amended.

The Act was amended in May 2020 to allow the Authority to make temporary reductions, of up to 20 percent, to the determinations of existing statutory officers listed under schedule 4A of the Act for a period of up to 6 months. The temporary reduction determinations had to be issued on or before 30 June 2020. After consultation with those statutory office holders in respect of whom temporary reduction determinations may be made, the Authority issued its temporary reduction determinations during June 2020, to be effective from 9 July 2020.

 

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