Public Service Minister Nicola Willis appeared before a select committee today. Photo / Mark Mitchell
Public Service Minister Nicola Willis appeared before a select committee today. Photo / Mark Mitchell
Public service chief executives won’t see the delivery of National and Act’s policy to offer performance pay bonuses for at least a year, minister Nicola Willis says.
Willis, the Minister for the Public Service, told Parliament’s governance and administration select committee today she hadn’t yet decided how the policy would be implemented and estimated it would be a “couple of months” before Cabinet made a judgment on it.
As the pay boosts would be tied to progress on the Government’s nine public service targets, Willis said any increase would have to be based on at least 12 months of work towards those targets.
“I wouldn’t expect that there would be any performance bonuses paid for at least a year.
“What we want to see is where leaders are able to demonstrate that they have taken specific actions, delivered particular policies that have had a measurable impact on those targets.”
However, the prospect of the policy including some form of punishment if adequate progress was not achieved, such as docking a chief executive’s salary, was not front of mind for Willis, who argued the relevant powers sat with the Public Service Commission to “manage underperformance”.
“I don’t have the ability to change existing contracts.”
Performance pay bonuses of up to 15 per cent were scrapped in 2018 by the then Labour-led Government with then-minister Chris Hipkins wanting a public service motivated by the “spirit of community”. He claimed international research indicated bonuses didn’t incentivise better performance.
It was reported at the time that the move, alongside other measures such as appointing new chief executives on lower salaries, reduced annual spending by up to $4 million.
Both National and Act campaigned on reinstating performance pay for public service chief executives ahead of the 2023 election. National’s proposal also included deputy chief executives while Act’s policy aimed to give ministers discretion to award bonuses based on an agreed set of KPIs (key performance indicators).
National and Act’s coalition agreement didn’t specifically address the policy but did commit to amending the Public Service Act 2020 to “clarify the role of the public service, drive performance, and ensure accountability to deliver on the agenda of the Government of the day”.
Willis today said she was still receiving advice on how performance pay might be delivered. She accepted deputy chief executives could be included but chief executives were the initial focus of the policy.
Labour public service spokeswoman Ayesha Verrall (centre) is waiting to see how the Government's policy goes. Photo / Mark Mitchell
Asked by Labour’s public service spokeswoman Dr Ayesha Verrall whether “ministerial satisfaction” would factor into the regime, Willis said any bonuses would be “directly related” to the Government’s targets.
Willis was unable to detail exactly how levels of progress towards the targets would translate into what level bonus a chief executive received, saying the framework hadn’t yet been developed.
During the select committee hearing, she noted how public service chief executives often received half the salary of their private sector counterparts.
Willis also said she was still considering whether performance pay could apply to Crown agencies as well.
Verrall told journalists it was a “bit tone deaf” for Willis to be considering raising chief executives’ pay just as more than 2000 public service staff had lost their jobs as part of the Government’s exercise to cut public spending.
The targets proposed by the Government included surgery wait times, student achievement, less crime and big reductions in welfare and emergency housing numbers.
Verrall, the former Health Minister, had long warned of the potential of shortcuts being taken to achieve ambitious targets, which was observed when hospital emergency department staff cut corners to meet the target for patients’ maximum time spent waiting in EDs.
However, she did leave the door open for Labour to adopt a pro-performance pay position if the current Government’s efforts proved effective.
“When we looked at it last time, we didn’t see evidence that the performance pay improved performance.
“When we come to set our policy for the next election, we’ll be able to see whether, in fact, there is any evidence of that over this course of Government.”
Adam Pearse is a political reporter in the NZ Herald Press Gallery team, based at Parliament. He has worked for NZME since 2018, covering sport and health for the Northern Advocate in Whangārei before moving to the Herald in Auckland, covering Covid-19 and crime.
