Christopher Luxon defended the Government's decision to boost board pay – by more than 100% in some cases – arguing the public sector needs to attract the best skills and talent. Photo / Mark Mitchell
A huge swathe of public sector board members and chairs are in line for a hefty pay rise after new government guidance, and some have already been awarded considerable increases.
The new guidance covers roughly 600 bodies in the broader public sector, and means board fees can now rise by as much as 80%.
And for 17 Crown-owned entities overseen by the Treasury, including some of the best-known and the biggest – the likes of KiwiRail, Transpower NZ, NZ Post, RNZ and TVNZ – board fees already jumped on January 1 this year, and are set to rise again on January 1 2026.
It’s all part of a major rebalancing that the Government says is necessary to bring public sector directors’ fees more closely into line with those of their private sector counterparts to drive better performance – only a handful of boards are outside ministers’ purview and have fees set by the independent statutory body, the Remuneration Authority.
Work by remuneration advisory Strategic Pay consistently finds a significant gap between the pay of public and private sector chairs, managing director Cathy Hendry told the Herald.
The company’s 2025 survey of directors, which covered 342 organisations across both sectors and 342 chairs, found that private sector chairpersons earn more than double the fees of their public sector counterparts, across an overall median for all entity sizes.
Strategic Pay’s sample puts median pay for private sector non-executive chairs at $132,815, while the public sector median is just $62,000.
Hendry noted that there is “always a public sector discount … it’s a long-term trend”.
She said the lower pay in the public sector is driven by affordability and the source of the funding, which typically comes with much higher public scrutiny.
Indeed, Prime Minister Christopher Luxon felt the heat of that public scrutiny last month, when news broke that new guidance would allow public boards to award hefty pay hikes.
Labour finance spokeswoman Barbara Edmonds emphasised that the National coalition has found “no money to help families with rising costs, but when it comes to … pay rises for Crown board members, then suddenly their pockets are full”.
For his part, Luxon suggested that low board pay might damage the Government’s ability to recruit the right people: “This is just acknowledging that we need to make sure that we can attract good people … [it’s] important that we actually are able to attract really good governance, of the Health NZ board for example.”
The Treasury has its own framework for board fee calculation, the Crown Companies Fees Methodology, and this applies to a limited subset of Crown-owned companies, including the state-owned enterprises.
Last year, it advised ministers, based on benchmarking it commissioned from Strategic Pay, that 83% of all Treasury-managed Crown boards have fees below 70% of comparative market rates (both the Treasury and Strategic Pay declined to release the benchmarking work; Hendry said it is commercially sensitive).
Last August, the Cabinet agreed on a two-step fee increase for these entities (excluding several, such as Southern Response Earthquake Services, which was within the target rate, and NZ Green Investment Finance, whose chair Cecilia Tarrant is on $98,000, which already enjoyed fees above the target rate).
Ministers agreed on a January 1 change that increased board fees for 17 entities to 85% of the level Strategic Pay calculated the Crown rate should be – the Crown rate was set 10% below the market rate. A second increase, to bring fees up to the Crown rate, is scheduled for January 1 2026.
Across both the public and the private sector, a rough rule of thumb holds that board chairs do twice as much work as regular board members. The Treasury’s framework pays board chairs twice the fee of ordinary members; however, shareholding ministers approve a total annual director fee budget, and it’s possible, though uncommon, for boards to allocate the chair fees that are below the figure calculated under the Treasury formula.
The pay hikes are not related to good performance – the likes of Landcorp and NZ Post, where chair fees are rising 41% and 84% respectively, have been laggards – but the related Cabinet Paper makes it clear that the Government hopes the higher fees will help to attract better candidates. Both Landcorp and NZ Post have new chairs, appointed in the past year.
The biggest annual fee increase accrues to Mark Binns, chair of Crown Infrastructure Partners, the remit of which has expanded considerably over his tenure. His pay will more than double. Before the rise, Binns’ fee stood at $63,000. That rose to $109,620 at the beginning of the year, and will reach $128,960 in 2026.
KiwiRail disclosed chair David McLean’s fee was $89,000 in fiscal 23/24. On the Treasury’s figures, that fee rose to $142,260 at the beginning of 2025 and will reach $167,360 at the beginning of next year (an 88% increase). The new chair is Sue Tindall.
Among those with smaller but still significant increases is Jim Mather, chairman of RNZ. His fees rose to $71,280 at the beginning of the year, and are set to increase to $83,860 at the beginning of 2026 -- a total increase of 41%.
In contrast, Alistair Carruthers, the chairman of TVNZ, stands out as an anomaly. Despite the revisions to the fees framework and the Treasury’s calculation that he is underpaid, Carruthers received no fee increase this year.
The state-owned broadcaster has been struggling through cost-cutting efforts, including job losses, though it is not unique in this.
Carruthers and his board opted not to take up the first round of fee increases offered by Media and Communications Minister Paul Goldsmith, who is responsible for signing off on TVNZ board pay.
Lester Levy, chairman of the re-established board of behemoth Crown entity Health NZ, is the major public sector exception.
His headline pay is extraordinary across all sectors, and so is the work required of him.
Levy will earn a maximum of $450,000 a year, which breaks down into an expected maximum of $325,000, with a further $125,000 held in contingency, a Ministry of Health spokeswoman confirmed.
The figures are predicated on a daily fee of $2500, for up to 130 days’ work (the contingency represents an additional 50 days’ work).
By comparison, the recently updated Cabinet Fees Framework sets a maximum chair fee of $162,200 per annum for the largest and most complex public sector entities; this fee level is predicated on a workload of 50 days’ work.
The previous chair of HNZ, Dame Karen Poutasi, drew an annualised fee of $219,000 in fiscal 23/24. The spokeswoman said the daily fee rates for the current HNZ board, including the chair, are unchanged from 23/24.
In fiscal 24/25, the board was replaced by Levy as commissioner and three deputy commissioners.
The spokeswoman said the current HNZ board is in its “establishment phase” and the current arrangement will last for the next 18 months, at which point it will be reviewed and the ministry anticipates a move to a “more business-as-usual way of working”.
HNZ is the country’s single largest health care provider, its largest employer, and the Government’s largest Crown entity. It received $27.2 billion in funding in fiscal 23/24, its last disclosed financial year, which fell $722 million short of spending; it is a notable financial mess.
In July, the Public Service Commission issued new guidance providing for sizable fee increases for the vast majority of public boards, their chairs, and other government appointees such as advisory committee members and commissioners.
For the largest and most complex public bodies, board chair fees can now reach up to $162,000 (the previous cap was $90,000) – an 80% increase over previous guidance.
The matrix of factors that determine which chairs and boards should be best paid includes the operating budget, asset value, and business complexity of the relevant entity.
The framework is not prescriptive, and the new levels set don’t compel Crown entities to review their fees; the ministers responsible can review fees at any time, and by convention, this typically happens every two to three years.
The Minister for the Public Service, Judith Collins, told the Herald that it’s common for monitoring departments to conduct reviews across multiple entities within their portfolio, to ensure consistency.
Kate MacNamara is a South Island-based journalist with a focus on policy, public spending and investigations. She spent a decade at the Canadian Broadcasting Corporation before moving to New Zealand. She joined the Herald in 2020.