Delays in Implementing Performance Pay for Public Service Leaders

Performance pay for top public service executives in New Zealand is facing delays due to timing and prioritization issues, according to the Public Service Commission. During a recent appearance before a parliamentary select committee, deputy Public Service Commissioner Heather Baggott explained that while significant work has been completed, it is not the right moment for implementation.

Baggott stated, “We’ve done the thinking, we’ve done the work, a lot of work. It just hasn’t been the right time to implement it.” A year prior, then Public Service Minister Nicola Willis announced that performance pay for public service leaders would be established by the next financial year, with an announcement from the Public Service Commission expected “quite shortly.” This pay structure was designed to align with public service performance targets.

In response to inquiries from National Party member Tom Rutherford regarding the delay, Baggott highlighted that their attention has been diverted to more pressing priorities. “We do have to think about where our resources go, and, in particular, when we do implement it we want to ensure it’s enduring, fair, impactful and fiscally responsible,” she said.

Baggott noted that the Commission consulted on a draft policy with chief executives, emphasizing the challenge of aligning performance pay with government targets. There are reportedly between 600 to 700 different priorities among the chief executives, complicating the task of distilling key priorities for assessment.

The timing of the implementation is also crucial, as Baggott indicated that new expectations are typically set in the following year. “All of those dynamics have shifted over the course of when that commitment was made, so we’re not yet in a position to be able to implement that,” she added.

Performance pay for public service executives was eliminated in 2018 by former State Services Minister Chris Hipkins in an effort to curb the rising salaries of chief executives. The previous system allowed for discretionary payments of up to 15% of baseline salaries.

As deliberations continue, the Public Service Commission remains focused on ensuring that any future performance pay structure is equitable and sustainable while taking fiscal responsibility into account.