Government approves pay hikes for Crown board, authority members after fee framework changes

The Herald asked various ministers why they had approved the increases and whether they felt comfortable with them within the context of a tight fiscal environment.

Many defended the pay bumps by highlighting some directors’ salaries haven’t kept up with wage growth in the private sector or been reviewed in years. Several boards oversee assets worth billions of dollars, meaning ministers want top-notch directors.

Finance Minister Nicola Willis, for example, believes it’s “in everyone’s interest for top quality people” to serve as Guardians of NZ Superannuation, the fund with assets of more than $85 billion.

The annual fee for its chair was increased in July from $98,000 to $141,990.

“Prior to the increase in fees approved for Guardians this year, the Guardians had had just one fee increase since 2010,” she told the Herald.

But Labour’s public service spokeswoman Camilla Belich said the scale of these increases sent the wrong message when the Government was telling others to tighten their belts.

“They’re absolutely huge, and I think it shows that the Government is really out of touch with what is most important to New Zealanders, and it shows that their priorities are wrong,” she said.

Belich said it’s fair for directors’ pay to be reviewed, but believes an uplift of about 10% would be more “reasonable”.

The previous Labour Government increased fee ranges by 10% in 2022.

The Herald revealed in July that ministers had quietly signed off changes to the Cabinet Fees Framework, which sets out the ranges of fees Crown board members should be paid.

The Government argued the changes are necessary to make the public service roles attractive and to roughly keep up with private market rates, with a discount for public service.

The changes didn’t result in automatic increases in directors’ fees. There is a process involved in setting fees, including considering whether increases are sustainable and reflect an entity’s performance and priorities.

Modelling by the Public Service Commission (PSC) showed increasing the fees for general governance boards could cost up to $11 million.

There would be an average pay hike of roughly $24,000 per member, should all board fees be increased to the upper limit of the new fee ranges.

Responses to Written Parliamentary Questions (WPQs) filed by Belich show some of the fee increases approved this year, in most cases since the framework changed.

Penny Simmonds, Minister for both the Environment and Vocational Education, approved increases for the EPA and the Tertiary Education Commission (TEC) as she said the previous fees “were well below what is appropriate for boards with this level of responsibility, and the updated Cabinet Fees Framework requires us to bring them into line”.

This includes the 82.5% uplift to the EPA chair fee, effective from December, and increasing the TEC chair’s annual pay from $47,628 to $84,694.50, a 77.8% jump.

She told the Herald “they represent a very small cost in the context of overall budgets” and ensured boards provide the “stability taxpayers expect – particularly in a tight fiscal environment”.

“Both the EPA and TEC boards oversee complex, high-impact work, and attracting the right calibre of people is essential to maintaining strong governance.

“The percentage changes appear large because the original fees were significantly out of step with what these roles demand, not because we are applying a blanket increase.”

The Presiding Member of the Film and Literature Board of Review will now get $1100 per day of work, a 96.4% increase from their previous pay of $560 per day, after approval by Internal Affairs Minister Brooke van Velden. Regular members’ fees were lifted by 84.2% from $380 to $700.

Members of the Lotto New Zealand Board also had their fees increased from $31,950 annually to $53,720, an increase of 68.1%.

The minister told the Herald she was required to review the fees at regular intervals, and she approved the new fees as “there were changes to the Cabinet Fees Framework that put the current remuneration for those members below the recommended bands”.

Social Development Minister Louise Upston approved fee increases from July for the New Zealand Artificial Limb Service (NZALS), with the chair’s annual fee rising 80.2% from $25,200 to $45,400 and board members jumping 77.9% from $9500 to $16,900.

Upston said members’ fees hadn’t increased for more than 18 years and the chair’s fee hadn’t risen for more than 12 years. They’ll now be reviewed every two to three years.

“The NZALS is funded from contracts for service. Last year its total budgeted revenue was approximately $37 million. Board fees are funded from revenue. The new fees increase the total paid to the whole Board each year by approximately $57,200.”

Fees for the Water Services Authority hadn’t been reviewed since it was established in 2021, so Local Government Minister Simon Watts agreed to lift the chair’s pay by 66.7% from $30,000 to $50,000 and doubled members’ fees from $15,000 to $30,000.

“The old fees were well below the current lower bound, making it challenging to attract quality candidates. Fees now sit at the lower bound,” Watts said.

Willis, the Finance Minister, approved several increases following the framework changes.

For example, the chair of the Crown Forestry Rental Trust will now get $1150 per day, up 75.6% from $655. Members of the Guardians of the NZ Superannuation had their fees increased 44.9% from $49,000 a year to $70,995.

The minister highlighted the value of the Super Fund’s assets and therefore the need for top-quality directors.

“The new fees are below those paid to people serving on comparable private sector boards,” she said.

“The same holds true for those serving on other Crown boards. For example, fees paid to the directors of the Crown Forestry Rental Trust and the Nominating Committee for the Guardians of New Zealand Superannuation increased only 10% between 2012 and this year. Over the same period, wages increased by 63%.”

There were various other increases identified through the WPQs:

Their ministers gave similar explanations for why these were necessary.

In the case of Antarctica NZ, Foreign Affairs Minister Winston Peters last November began seeking support to increase the chair’s pay from $22,000 to $48,000 (up 118%) and members’ pay from $10,000 to $22,000 (up 120%).

This was before the fee framework was changed. A paper explained Peters’ rationale as including that the fees had not been reviewed for more than a decade and board members’ work programmes had increased, citing the complexity of the Scott Base Redevelopment project.

Speaking to the Herald, Labour’s Belich said these increases show “where the Government’s priorities are”. She said the public service in general had been “told to tighten its belt” and faced “significant cutbacks”.

“[The directors] should be remunerated, but the stark difference between what the Government has decided is appropriate for people on boards compared with people earning the minimum wage, compared with teachers, nurses, firefighters, is so extreme.”

People on these boards often “won’t be doing it purely for the money”, Belich said. “It will be out of the prestige and the honour of being able to serve on one of these public sector entities.”

She took issue with the argument that significant increases were necessary to attract top talent, saying that suggested those already in the roles weren’t the right people.

“We haven’t had these huge increases in fees [previously], and we’ve had excellent people in our public sector boards doing an exceptional job.”

Normally, any fee increases over 10% are required to be sent to the Cabinet Appointments and Honours Committee for approval.

Due to the Government anticipating many may exceed this, it was agreed that in most instances for the next 12 months, responsible ministers would approve proposals.

A Cabinet paper on the changes said Public Service Minister Judith Collins would receive a quarterly report from the Public Service Commission (PSC) on progress and outcomes from any reviews of directors’ fees.

However, the Herald has learnt through a response to an Official Information Act request lodged with Collins’ office that no such reporting has yet occurred, despite the changes having been in effect since July. She expects to receive an update by the end of the year.

The PSC said the initial focus has been on implementing the new framework and supporting agencies with applying it.

“As a result, the first comprehensive update is scheduled for the end of the year – to ensure it reflects meaningful data and outcomes following the changes," a spokesman said.

Quarterly reporting will then follow once the framework is embedded and there is sufficient information.

Jamie Ensor is a senior political reporter in the NZ Herald press gallery team based at Parliament. He was previously a TV reporter and digital producer in the Newshub press gallery office. He was a finalist this year for Political Journalist of the Year at the Voyager Media Awards.