Ministers have temporarily given themselves special powers to hike Crown board members’ fees providing they fall within the fee ranges.
The change in authorisation was revealed in a Cabinet paper that was released this week, which also included details of fee range increases of up to 80%.
In the paper, Public Service Minister Judith Collins justified the change by stating there was too much administration in the previous scheme.
“To manage the administrative burden in the implementation of the fee adjustments, I am seeking Cabinet approval for a temporary change to fee exception requirements for 12 months,” the paper stated.
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“I propose that responsible Ministers approve all fee adjustment proposals during this period but should refer proposals to [Cabinet’s appointments and honours committee] and Cabinet for consideration where there are concerns or issues with the performance of a body, or the fee adjustment is above the new fee ranges.”
The maximum annual fee for board chairs increased from about $90,000 to $162,000. This means a responsible Minister receiving a proposal from a board to hike a board chair’s fees by that amount could approve that adjustment without requiring approval from their Cabinet colleagues.
The appropriations committee that previously approved fee increases was made up of the most powerful ministers, including the Prime Minister Christopher Luxon as chair and ACT Leader David Seymour as deputy chair. NZ First Leader Winston Peters was also on the committee.
Collins’ paper noted that fee adjustments were not automatically approved and that fee setting ministers needed to complete fee reviews with “strong evidence” needed to justify a fee increase.
‘An unnecessary administrative burden’ – Collins
In a statement to 1News, Collins reiterated much of the points in the Cabinet paper. “The new process empowers Ministers to decide on fee increases within the new range without being referred to the Minister for the Public Service or a Cabinet committee, as that would be an unnecessary administrative burden,” she said.
Labour’s public service spokesperson Camilla Belich said the changes were an example of the Government’s lack of transparency.
“There’s an issue definitely, an issue of perception. There’s also an issue of the fact that ministers are appointing people and then deciding their pay rate.”
Belich believed the changes might mean proposals could be adopted that wouldn’t be agreed around the Cabinet table.
“I think the reason that we have these committees scrutinising these decisions is to have some consistency and accountability. With these changes, ministers – singular ministers – could choose to really increase fees in a way that’s not aligned with some of their Cabinet colleagues.”
She also thought there may be potential for conflicts of interest.
“A number of ex-National MPs have been appointed to boards by this Government. Is this just another example of the mates’ club?”
Former National Leader Simon Bridges chaired NZTA, former Deputy Prime Minister Paula Bennett chaired Pharmac, and former National Minister David Bennett was on the boards of Quotable Value and the two statutory entities of the TAB.
However, a number of former Labour ministers also currently sat on boards including Ruth Dyson as the deputy chair of FENZ and the Natural Hazards commission; Fran Wilde was the chair of Te Papa and the Asia Foundation and Steve Maharey was a former chair of Pharmac, ACC and Education New Zealand.
Belich denied there was any hypocrisy in Labour’s position.
“Labour never put in place a policy of having 80% fee increases for people on boards, and getting rid of all accountability around those, and also didn’t give Ministers the absolute power to decide those remunerations.”
‘A made-up problem’ – Rob Campbell
Former Health NZ chair Rob Campbell was shocked to hear of the details in the Cabinet paper when he was contacted by 1News.
“It’s certainly the thinnest cabinet paper I’ve seen. There’s no evidence whatsoever of the issue being really an issue, let alone evidence for why this is particularly difficult administratively and why you would need to give ministers additional power.
“The whole thing seems like a bit of a made-up problem and a made-up solution to me.”
Campbell said he thought it raised questions about the Government’s motives.
“I think it’s a ridiculous overreach and particularly with the way that we’re seeing people being appointed to boards at the moment. The word cronyism is starting to be used in New Zealand about business and government and I think that this is the sort of thing that it feeds and is fed by this.”
He said board fees for Health NZ have increased since he was the chair and he acknowledged they may have been too low.
When asked if he believed the standards of appointments on the Health NZ board had improved from his time, Campbell said: “Well look, they’re doing a different job, we were trying to set up an organisation in difficult circumstances now they’re under pretty tight instructions from the ministers to what they’re able to do. I’m sure they’re working hard on a very challenging job but they didn’t come into this job with those high rates in sight so that again sort of just proves the point.”
