Election 2023: ACT promises performance pay for Government department chief executives

The ACT Party is promising performance pay for the chief executives of Government departments if elected, saying public sector bosses currently "have few incentives to cut waste".

With the election drawing closer, ACT on Sunday unveiled its plan for "efficient and effective" public services - which also included pledges to set specific outputs for each Government department. 

ACT said it would also make ministers issue key performance indicators (KPIs) to chief executives. Those ministers would also undertake performance reviews with Government department bosses, which ACT said would be released to the public.

Party leader David Seymour said this would provide solutions to the current "lack of measurement and accountability for the quality of day-to-day Government services" and insufficient "ministerial power over, and incentives for, public service chief executives to make sure their departments perform and deliver".

As well as introducing performance pay for chief executives, he said ACT would also remove the "exceptional performance" cap on salaries - which would be determined by the minister.

"The Public Service Commissioner would still be responsible for setting base salaries but the discretionary component should be determined in line with the minister's assessment of how the chief executive has performed against their expectations and KPIs," Seymour said in a press release on Sunday.

"This change will give ministers a further lever for driving performance. While the Public Service Commissioner has a role to ensure salaries are in line with labour market rates to ensure recruitment, it is not in the best position to decide which chief executives are delivering on the Government's priorities."

ACT's plan would stop Government departments from getting "away with spending billions of dollars while failing to deliver meaningful outcomes for taxpayers", Seymour said.

"Large, expensive and poorly thought-out pet projects like restructuring the health or polytechnic systems are treated as goals in and of themselves. Ministers can be so focused on their pet projects that they lose sight of whether they will improve New Zealanders' lives.

"ACT will set meaningful performance measures for key Government services based on outputs and outcomes… rather than inputs."

Seymour wasn't the only politician supporting performance pay for Government departments. Christopher Luxon, the leader of ACT's fellow right-bloc party National, has also called performance pay a way of restoring "fiscal discipline". 

"I won't put up with pouring more money into broken programmes that don't work when we need more funding for frontline services like schools and hospitals," Luxon said earlier this year upon releasing National's policies for fiscal transparency.

"It's taxpayers' money and we all deserve to know what it's being spent on but unless you've worked in the machine in Wellington, or have trained for years in accounting or economics, it's impossible to work out how much money the Government spends and where it all goes.

"That's why a Government I lead will introduce new requirements for clear financial reporting to taxpayers."

However, Labour was not in favour of performance pay. Party leader Chris Hipkins, the incumbent Prime Minister, earlier this year rejected National's fiscal transparency plans.

"There's a very novel idea which is that you could specify performance measures for all of the money that Government spends in each year's Budget then each year you could report back on whether those performance measures have been met through that spending," Hipkins said. "We do that every year, it's called the Budget documentation."