Costs for the re-established Health New Zealand board far outstrip those of previous years, and appear to constitute the highest pay for governance in the public sector.
All up, fees for the newly constituted board could run as high as $1.712 million over the current fiscal year, including a hefty $487,500 contingency.
By comparison, in fiscal 2023/24, total fees for the Health NZ board totalled $689,000; in 2024/25 the board was replaced by commissioners, including current chair Lester Levy.
The maximum payments for the board reach $450,000 for Levy as chair, $300,000 for deputy chair Dr Andrew Connolly, and $192,500 apiece for the five additional board members.
The contingency represents $125,000 of Levy’s maximum fees; $100,000 of Connolly’s maximum; and $52,500 each for other board members.
The Cabinet signed off on the exceptional fees; Health Minister Simeon Brown said the contingency would be drawn on only in “exceptional circumstances” and approval is at his sole discretion.
The pay levels are extraordinary and far outstrip the Government’s recently increased fees guidance for board work; however, the amount of work on which the Health NZ fees are predicated is also extraordinary.
Health NZ was established in 2022 through the combination of the country’s district health boards (DHBs).
It is the largest Crown-owned entity, its budget tops $27 billion, and it’s responsible for either delivering or funding the vast majority of the country’s healthcare.
It is also struggling with deficit spending and poor financial management, specialist staff shortages, widespread complaints of burnout by clinical staff and long wait times for patients.
Union representatives greeted the news of the extraordinary fees with incredulity.
The New Zealand Nurses Organisation, which represents the single largest chunk of the Health NZ workforce, has highlighted what it calls “cost-cutting” and “staff shortages” in ongoing contract negotiations – a further strike of two days is planned for September.
President Kerri Nuku said the high board fees are in stark contrast to the Government’s attitude toward the nurses, midwives and other healthcare assistants who provide New Zealanders’ healthcare.
“At a time when understaffing at hospitals has actually become the norm, and patients’ safety is a serious concern, these figures defy belief.”
Public Service Association national secretary Fleur Fitzsimons echoed the sentiment. “Health workers are seeing their own wages kept low, as well as the continued and deliberate underfunding of the whole health system. The hypocrisy is palpable – there’s no money for care and support and mental health workers helping our most vulnerable, but there is plenty for those at the top?”
Brown emphasised the new board receives the same daily rates that were set under the previous Labour Government, albeit for a far higher time commitment and total spend.
He said the board has a governance role that is “more extensive than in previous years”, noting the entity’s “significant, ongoing challenges”.
Those difficulties are both substantive and political. The Government has staked considerable credibility on eliminating Health NZ’s deficit spending – estimated at $1.1b in the past financial year – and reaching a series of health performance targets, soon to be embedded in law.
Chair Lester Levy receives a day rate of $2500 for up to 130 days’ work, with a further 50 days’ work provided for in the contingency.
His term covers only the current financial year.
Deputy chair Dr Andrew Connolly receives a day rate of $2000 for up to 80 days’ work, with a further 50 days’ work provided for in the contingency.
And five board members – Roger Jarrold, Dr Frances Hughes, Parekawhia McLean, Peter McCardle and Terry Moore – receive a day rate of $1750 each for up to 80 days’ work, with a further 30 days’ work apiece provided for in the contingency.
The board also includes Crown observer Hamiora Bowkett, who heads the small but important “health assurance unit” – now housed in the Ministry of Health – providing advice directly to Brown.
Bowkett is a public servant and not covered by board fees.
Public sector board pay is typically predicated on 50 days’ work a year for the chair, and 30 days for other board members – extensive reading and preparation is not often included in this total.
Brown said the current fees are fixed for 18 months, to reflect “the additional work required” during the board re-establishment phase, and the arrangement will be reviewed toward the end of 2026.
He claimed the Health NZ problems flow from “a botched merger” of DHBs under the last Government, during the Covid-19 pandemic.
A Deloitte review of the entity’s financial performance, done in October 2024, found myriad problems, including that the agency relied largely on a single, error-prone Excel spreadsheet (in fiscal 2023/24) to track and report on some $28b of expenditure.
Even without the half-million-dollar contingency, the underlying $1.185m board cost appears to rank as the highest in the public sector.
By comparison, board costs at the Reserve Bank of New Zealand and the Financial Markets Authority come in well below the $1m mark – both are reckoned to be among the sector’s best paid.
Board costs for other large Crown entities such as Kāinga Ora (Homes and Communities) and ACC (Accident Compensation Corporation) are closer to half a million dollars.
In June last year, the Government declared a loss of confidence in the Health NZ board, which it dissolved and replaced with Levy as commissioner and two deputy commissioners.
In fiscal 2024/25, Levy earned $320,000 as Health NZ commissioner, with additional expenses of $20,400, including: $10,600 for flights, $4855 for accommodation, and $2599 for taxis (parking and mileage made up the balance).
Levy is Auckland-based and the work entailed frequent travel to Wellington, a Health NZ spokeswoman said.
He worked alongside deputy commissioners Ken Whelan and Roger Jarrold; Health NZ has not yet released their fees and expenses.
Levy is a professor of digital health leadership at the Auckland University of Technology and a medical doctor.
His AUT workload is 15 hours per week, divided between research and teaching four courses (two per semester).
Levy is also chair of the Health Research Council, a commitment of about five hours per week, a Ministry of Health spokesperson said.
Labour’s health spokeswoman, Ayesha Verrall, criticised the new board arrangements as a “licence for Lester Levy to act like he is the executive director of the board, rather than its chair, centralising power to enact cuts and a hiring freeze”.
Verrall also said Levy played politics when, as Health NZ commissioner, he attempted to shift some $130m in financial costs from fiscal 2024/25 into the previous financial year. The move was blocked by the Office of the Auditor-General, she said, but, if allowed, would have made HNZ’s current financial predicament appear less dismal.
There is little doubt that Levy’s tenure to date has been one of highly centralised control.
A May report on Health NZ’s financial performance by the Treasury for Finance Minister Nicola Willis highlighted “the commissioner’s tight top-down financial controls” and his “highly centralised” regime.
The document, released under the provisions of the OIA (Official Information Act), also indicated that Levy has had some success this calendar year in reducing Health NZ’s monthly overspend, but that his managerial controls may be “unsustainably tight” as Health NZ shifts to a new operating model, including devolved budget accountabilities for regions and districts.
Underscoring the political risk Health NZ’s performance poses to the entire Government, the Treasury highlighted a new series of monthly health joint ministers meetings with Willis, aimed at keeping her abreast of “financial performance, capability, and risk at Health New Zealand” over the next year.
The Health NZ board fees eclipse those provided for in the Government’s guidance. The fees framework for board pay was updated at the end of last month, and provided for an 80% pay increase for the boards of the largest and most complex Crown entities.
The maximum fee for board chairs is now $162,200, and the maximum fee for board members is $80,400.
The framework provides only guidance to ministers for setting fees, to provide consistency across Crown-owned bodies and to “contain expenditure of public funds within reasonable limits”.