Andrew McKenzie left the top job at Kāinga Ora last year with both a redundancy payment and a payment in lieu of notice.
Andrew McKenzie left the top job at Kāinga Ora last year with both a redundancy payment and a payment in lieu of notice.
The former head of Kāinga Ora, the Government’s social housing agency, took home a $1.066 million pay packet for the 11 months to August 30 last year, new disclosures show.
Andrew McKenzie’s total pay included salary for October 1, 2023, to August 30, 2024, as well as redundancy pay anda special payment in lieu of notice, despite his continued employment at the agency for four months after his impending departure was announced.
The Public Service Commission (PSC) released the total in its most recent update of public sector remuneration.
Kāinga Ora is a Crown entity, governed by a board. Chairman Simon Moutter acknowledged in June last year that changes at the agency, including a diminishment of the role of the chief executive, triggered McKenzie’s departure, as well as redundancy provisions in his employment contract.
At the time, the agency said McKenzie would remain in the job until the end of October. An additional payment in lieu of notice was not mentioned.
Responding to the Herald’squestions on Thursday, a spokesman for Kāinga Ora declined to provide a breakdown of the $1.066m paid to McKenzie. He also declined to disclose what triggered the payment in lieu of notice.
However, he said that, while McKenzie’s work as the agency’s chief executive ended on August 30, he continued to work from September 2 to October 31 “as a board adviser to assist with the transition to a new chief executive and to provide input into the development of the Kāinga Reset Plan”.
The spokesman said that, despite the dates given in the Public Service Commission disclosure, the total remuneration figure included McKenzie’s work as a board adviser.
In the previous year, ending September 2023, McKenzie’s salary and benefits totalled $731,000.
McKenzie led successive state housing agencies. He was hired to lead Housing NZ in 2016 and remained at the helm when it morphed into Kāinga Ora two years later.
Kāinga Ora chairman Simon Moutter agreed departure payments to former chief executive Andrew McKenzie last year. Photo / Dean Purcell
McKenzie’s remuneration stands out among public sector chief executives, with the exception of those running state-owned enterprises (Crown-owned companies that are expected to be profitable, efficient and comparable to private businesses).
His $731,000 remuneration was the sixth-highest amongst Crown entity and public sector bosses in the PSC’s disclosures for the 2023-24 financial year, behind the likes of Margie Apa, the former boss of Health NZ ($895,000) and Jon Lamonte, former head of the last Government’s Auckland water services entities ($924,000), which also included extraordinary departure payments.
Doubled-up departure payments
Payments in lieu of notice as well as redundancy provisions are uncommon in the public sector. Notably, however, Lamonte also received such a double payment in late 2023, triggered by the change in Government.
Lamonte left his job as chief executive of the Auckland-Northland water services entity in December 2023 with a redundancy payment of $355,000, worth six months’ salary, and $177,500 in lieu of notice.
Lamonte’s termination was triggered when the new Cabinet formally agreed to cancel the previous Government’s water reforms and repeal the underlying legislation.
Cathy Hendry, managing director of remuneration advisers Strategic Pay, told the Herald that notice periods for very senior public sector employees were likely to be in the region of three months or more and would account for the time it could take senior managers such as chief executives to find new employment.
She noted that, at the executive level, redundancy provisions (which often amounted to three to six months’ salary) were similarly designed to cushion employees in the event of job loss, through no fault of their own.
“When we get to the chief executive level, we’re talking about employment contracts that are non-standard. The payouts, it seems, were agreeable to the negotiating parties [the chief executive and the employer], but there is the additional question, when we’re talking about the public sector, of whether such double payouts are agreeable to the public,” she said.
A spokesperson for the Public Service Association said it took no view on the compensation paid to McKenzie.
McKenzie’s departure
McKenzie’s departure from Kāinga Ora came amid considerable change at the agency after the 2023 election.
The Coalition Government hired former Prime Minister and National Party leader Sir Bill English to lead a review of the agency, which found underperformance and runaway spending (many of the review’s elements were contested by outgoing board members, appointed by the previous Labour and Labour-led Governments).
A subsequent “turnaround plan” has included more than $800m in cost-cutting (over three years) and a heavy reduction of the agency’s programme to build new social housing.
Last May, the Government appointed Moutter to chair the agency. Documents released under the Official Information Act show that, in mid-June, Moutter wrote to McKenzie about plans to scale back the role of the chief executive.
