Teachers' pay rates should be based on how much progress their students make in their learning, a report says.

The report by the right-wing thinktank NZ Initiative says performance-based systems of evaluating and paying teachers in Britain and the United States "provide lessons worth considering for New Zealand".

But NZ teacher unions have successfully fought off a series of performance-based pay proposals over the past 30 years. Most recently a proposal by Education Minister Hekia Parata to pay more to "expert" and "lead" teachers was watered down into "Communities of Learning" with teachers paid more for guiding other teachers.

The NZ Initiative, in the second of three reports, seeks lessons for New Zealand in school reforms in England, where more than a third of state school students now attend "academies" run by private trusts, and in four parts of the United States.

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It finds that some academies and US charter schools have turned around previously "failing" state schools, but that contracting out schools in general is "no magic wand".

"In fact a 2016 report by the Education Policy Institute found greater variance within local authority schools and academies than between the two groups," the report says.

But it is more enthusiastic about a teacher appraisal system in Washington DC which pays teachers on the basis of five factors including traditional classroom observation of their teaching practice and a new measure of a student's "individual value added" - the progress made by each student in each year.

Report author Martine Udahemuka said NZ schools reported only whether students achieved national standards for their age group, ignoring the big differences in students' starting points.

"I don't think there is enough information being used to really figure out where there is effective teaching," she said.

Her report says Washington teachers improved their teaching when they stood to gain higher pay.

"This turns on its head the rhetoric that monetary incentives are not necessary for teachers to improve," she writes.

NZ Principals Federation president Whetu Cormick said the NZ Education Ministry and Education Review Office were working on developing better measures of students' progress - not just whether they were above, at, below or well below national standards.

"We can't communicate the progress the children may have made within those levels," he said.

But he said it was "a massive challenge" to develop a system to measure students' progress consistently, and he was against tying teachers' pay to any such measures.

"You end up with competition [between teachers]," he said. "Competition can sometimes breed people's unwillingness to collaborate."

School Trustees Association president Lorraine Kerr said she also opposed tying teachers' pay to performance.

"You would need to put a truckload of money in, and we know there isn't a truckload of money," she said.

"We base our view on the premise that it takes a whole village to raise a child. If we are looking at the education sector, that isn't going anywhere near performance pay."

Alwyn Poole of the Villa Education Trust, which runs two charter schools, said he had been "begging" the Education Ministry since 2013 to change the funding system to reward student progress, but without success.

He said charter schools had the power to pay more to good teachers above the standard pay scale.