Act leader David Seymour says the Government's pay increase veto for top boards is 'image trumping policy'

"If the Government wonders why business confidence is in the tank, it need look no further than these kinds of childish interventions." - Act Leader David Seymour. Photo / Mark Mitchell

Instructions from the Finance Minister to majority Crown-owned companies not to give their directors a pay rise is an example of image trumping policy, according to Act leader David Seymour.

This morning, the Herald revealed Grant Robertson sent a letter to the chairpersons of Air New Zealand, Mercury, Meridian and Genesis Energy telling them not to give their director's a pay rise.

"As you know, this Government is committed to raising pay levels for those on low and middle incomes and we, and the public, expect restraint on director remuneration," the letters – released to the Herald under the official information act – said.

"Given this, I do not support any increase in director remuneration during this term of Parliament," Robertson wrote.

All four companies are listed on New Zealand's stock exchange but are 51 per cent Government-owned – they all confirmed to the Herald there would be no director pay increases, in light of Robertson's letter.

Seymour this morning said that writing to the directors of major companies telling them to consider the Government's image when they make commercial decisions sums up this Government's attitude to business.

"Ultimately wellbeing comes from good policy, but this policy makes us worse off. Now, worrying about whether they're a good look for the Minister of Finance will compete with ensuring their companies are attractive to customers, employees, and shareholders."

He said putting a de facto cap on governance fees will reduce the quality of governance available.

In addition, Seymour said, giving the extra task of making the Government look good, the policy may reduce the level of governance expertise available to the companies.

"This Govt is committed to raising pay levels for those on low and middle incomes and we, and the public, expect restraint on Director remuneration," Grant Robertson. Photo / Mark Mitchell

"No rational company pays its directors excessive fees out of generosity, they pay what's required to ensure they have sufficient governance expertise to achieve their goals."

An Air New Zealand board member is paid $100,000 per year while the chairman receives $270,000.

At Genesis, board members get $90,000 a year and the chair gets $180,000.

Seymour said it had become a hallmark of this Government that image trumps policy that actually works, citing KiwiBuild as a marketing-led policy failure which didn't achieve its intended outcomes.

"If the Government wonders why business confidence is in the tank, it need look no further than these kinds of childish interventions."