The Government is not giving agencies additional money to fund possibly significant increases to Crown board members’ fees, raising concerns pay bumps may come at the expense of services.
Public Service Minister Judith Collins told the Herald agencies should not cut “essential services to accommodate governance costs”.
However, she acknowledged agencies “may need to reprioritise or seek efficiencies”.
“We’ve asked agencies to manage board fee increases within their current budgets to support the Government’s focus on fiscal discipline and responsible public spending,” Collins said.
“Agencies are expected to use their funding efficiently and make decisions about priorities within their existing budgets. The expectation is that changes to board costs don’t come at the expense of broader agency operations.”
But the Greens’ Francisco Hernandez is concerned agencies will now have to decide “between paying the big bosses more and properly supporting our communities”.
“For example, Health NZ could have to choose between paying their board chair more or hiring more nurses.”
Changes made to the range of fees board members can be paid were first revealed by the Herald in July and include an up to 80% increase for those sitting on the boards of most Crown entities.
For example, the top potential annual fee for chairs of these governance boards has risen from about $90,000, as it was set in 2022, to roughly $160,000.
Ministers have defended the increases as necessary to attract high-quality talent and better align with private market rates, but the Opposition has used them to attack the Government amid renewed cost of living concerns.
There have been numerous questions over recent weeks to various ministers, including the Prime Minister, in the House about their justification for the increases while offering much smaller pay rises to the likes of teachers.
The hikes came into effect on July 1 after amendments to the Cabinet Fees Framework, which lays out fee ranges for board members of certain entities, tribunals and authorities.
The increases are not automatic and ministers are expected to consider whether they can be managed within existing baselines.
Collins told the Herald her expectation was agencies “will manage these changes prudently, without compromising core services”.
“Agencies are expected to take a balanced approach. Any fee increases should be considered alongside the agency’s overall performance and priorities.
“Ministers will assess whether increases are justified and sustainable, and agencies should not be cutting essential services to accommodate governance costs. Where necessary, agencies may need to reprioritise or seek efficiencies, but service delivery must remain a priority.”
Hernandez said pay increases for “already well-paid board chairs” was “outrageous” when teachers, nurses and firefighters “are underpaid, under resourced and at high risk of leaving the country”.
“If we are serious about supporting our communities we need serious investment in our public services. Pay rises for the people at the top do not cut it, we need support for services and the people that actually deliver them.”
The current estimated cost per year of increasing the board fee ranges is unclear, with Collins noting in response to a Written Parliamentary Question (WPQ) that changes to the framework do not “automatically result in board fee increases”.
“Responsible Ministers are required to undertake fee reviews for each board and to decide on an appropriate fee, taking into account entity context, performance and complexity. Additional costs will vary entity by entity based on these reviews as they are completed.”
A Cabinet paper released this week also outlined the financial implications.
“Implementation of fee adjustments will need to be considered as part of wider budgetary forecasting to determine whether fee increases are more manageable incrementally over more than one financial year or applied in one uplift,” the paper said.
“Part of this assessment will need to include whether the adjustments can be justified and met within existing agency and entity baselines. No additional funding is being sought to meet fee increases.”
As part of their reviews, ministers are required to ensure “strong evidence exists to justify increases”, “fee increases can be managed within existing baselines”, and “proposed fees are within the new applicable fee range” among other considerations.
The paper also contains the advice Collins gave her ministerial colleagues about why the increases were necessary.
She said the performance of Crown entities was “critical to New Zealand’s economic success and delivering high quality public services” and it was “critical that we attract the best and brightest people”.
Collins said there was a convention remuneration was not set at a level board members would receive for a comparable private sector role. The majority of Crown board members took on the roles “to make a difference to improving outcomes for New Zealanders”, she said.
However, fees “have remained stagnant for over a decade, meaning they are significantly out of step and have become a barrier in attracting and retaining talent”.
“For some Crown boards, the fee levels are 30 to 50 percent of comparable private sector roles”, the paper said.
The proposed fee range adjustments are “long overdue, address the historic lag in fee movements, and are needed to better align with private market rates, while accounting for the Public Sector context”.
A graph was included within the Cabinet paper showing a 2024 comparison between median fees paid to board members of Crown entities and those in the private sector.
In terms of the boards of some Crown entities, it was found that chairs were paid $40,000 annually compared to $70,000 for comparable private sector roles. Board members were paid $20,000 compared to $50,000 in the private sector.
She said the Public Service Commission advised that to narrow the gap increases of 80% were needed for governance boards, while a 30% increase was suggested for statutory boards. This is ultimately what was approved.
Jamie Ensor is a political reporter in the NZ Herald press gallery team based at Parliament. He was previously a TV reporter and digital producer in the Newshub press gallery office. In 2025, he was a finalist for Political Journalist of the Year at the Voyager Media Awards.