At the request of Cabinet, the State Services Commission has publicly reported on State Sector chief executive pay since 2010.

The disclosure provides transparency for the public on the levels of remuneration received by chief executives in the State Sector. These include the chief executives and acting chief executives for public service departments, departmental agencies, District Health Boards, other statutory Crown entities and Crown entity subsidiaries, Tertiary Education Institutions, Offices of Parliament and non-public service departments.

Accountability for setting chief executive remuneration

The approach to setting State Sector chief executive remuneration balances the need to maintain public trust and confidence in the State 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 State Sector remuneration, particularly at the senior executive level is, and needs to be, lower than the private sector.

The State Services Commissioner (the Commissioner) is the employer of public service chief executives 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 Officers of Parliament (including the State Services Commissioner and Deputy State Services Commissioner).

The Commissioner provides guidance to the Boards of statutory Crown entities, District Health Boards (DHBs) and Tertiary Education Institutions (TEIs) on chief executive (CE) remuneration, which is used by Boards who are the employer of CEs and are therefore responsible for agreeing the terms and conditions with their CEs. These are finalised after the Commissioner gives his consent.

TEIs, DHBs and four other Crown agents in the health sector have been required to seek the Commissioner’s agreement to their decisions for some time. From 31 October 2018, the other statutory Crown entities have also been required to seek the consent of the Commissioner – previously, they were required to consult the Commissioner and their Minister but retained the final decision on chief executive remuneration.

State Sector CE remuneration

The State Sector chief executive remuneration table below includes the remuneration of the chief executives and acting chief executives for agencies across the State Sector e.g. public service departments, District Health Boards, Crown entities, universities, wānanga, and Offices of Parliament.

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.

We have moved to six monthly updates, with the next update to be effective 30 June 2020. Our intention is to move to updating the table below quarterly in 2021.

The data in the table below has been updated to include:

  • remuneration that was earned between a remuneration review that was completed between 1 July 2019 and 31 December 2019 and the previous one,
  • changes to some figures that were previously estimated to reflect actual decisions that have been made.

The review date for public service chief executives has changed from 1 July to 1 January to reflect that the performance expectations are based on a calendar year rather than a financial year. For most public service chief executives this change has meant that their remuneration remained the same from 1 July 2018 to 31 December 2019. Given the change in review date, there is no disclosure at 31 December 2019. The next disclosure for most public service chief executives will be effective 31 December 2020 and reported in early 2021.

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

Annual changes in remuneration - year to 30 June 2019

Remuneration for Public Service CEs:

Up to 30 June 2018, Public Service CEs were eligible for a performance payment. The Commissioner re-negotiated employment agreements with all Public Service CEs with effect from 1 July 2018, removing the performance component. Their total remuneration now comprises base salary, an employer contribution to superannuation and the value of any benefits such as a week’s leave above the statutory 20 days.

There has been a reduction in the average total remuneration package. The average remuneration package paid to Public Service chief executives in this year’s report is approximately $478,000, compared with $500,000 in 2018 and $504,000 in 2017.

There are now fewer Public Service chief executives being paid at the top end, i.e. above $650,000.

Average increase by agency type

Many CEs are eligible for a review of remuneration.

The following table sets out the average increase that was implemented.

Type of organisation Average percentage increase
2018/19 from 2017/18
Average percentage increase
2017/18 from 2016/17
Public Service CEs 1.2 0.9
All Crown entities 2.3 2.7
              DHB CEs 2.1 2.0
              TEI CEs 1.9 1.6
              Other Crown entity CEs 2.6 3.3
Market data – across all sectors1 2.9 4.6

1Korn Ferry Hay NZ Market Context Report - Chief Executives / Group Heads - June 2019 and June 2018

The figure for Public Service CEs is made up of mid-term remuneration reviews, three reappointments and one job resize.

Most increases in Crown entity CEs’ remuneration over the 2018/19 year were generally within SSC guidance. However, two agencies’ remuneration increases reflected decisions by the Boards that were different to SSC advice. These are noted in the State Sector chief executive remuneration table.

If the two increases not supported by the Commissioner are excluded, the average increase for all Crown entities changes from 2.3% to 1.9%.

Comparison of levels of remuneration across sector

The graph below plots remuneration against job size for CEs in different sectors.

These trend lines are based on data for the year to 30 June 2019. Remuneration lines are based on data from SSC (for Public Service, DHBs and TEIs, and other Crown entities) and Korn Ferry New Zealand Market Remuneration Report June 2019 (for private sector and state-owned enterprises (SOEs)).

The graph shows a clear relationship between remuneration and job size – the ‘larger’ the job, the higher the pay.

The graph shows the varying degrees of influence the Commissioner has over senior pay. The Commissioner has no influence over private sector and state-owned enterprises. The greater his influence, the lower the levels of pay (for the same size of job). Accordingly, the lowest line is for Public Service CEs whose pay is set by the Commissioner.

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