The bosses of the public services have been stripped of their performance bonuses, the day after the government announced a freeze on parliamentary pay.
State Services Minister Chris Hipkins has announced that he "wants to put the brakes on the growth of the CEO's salaries" by removing the bonuses – up to 15 percent – for public CEOs for "exceptional performance".
"We want a public service with an international reputation for excellence that is motivated by a spirit of service to the community," said Mr. Hipkins.
The move, along with reversing payment institutions and appointing new CEOs to lower salaries, would reduce forecasted spending to $ 20 million by up to $ 4 million, he said.
State services commissioner Peter Hughes is responsible for determining the remuneration of most management positions in the public sector.
Mr. Hipkins praised Mr. Hughes for his leadership and said that his actions had dulled the growth of the reward levels at the top.
"International research shows that individualized performance fee is not an effective incentive for higher performance for complex roles like this.
"The government also believes that performance fee is counterproductive for achieving the team-based team approach and collective leadership that is essential to achieve better results for New Zealanders," he said.
Mr Hipkins said that the government has committed itself to addressing the level of remuneration everywhere in the public service.
"We have a plan to close the pay gap between women and men, we have introduced a living wage for all low-paid civil servants and we are now removing performance fees for managers."
The Public Service Association applauds the end of the performance bonuses for the bosses in the public sector and hopes that it will continue.
The spokesperson for the association, Glenn Barclay, said he would like performance fees to be dumped for all government officials.
"The remuneration systems that apply to our members in the public service are confusing, they lack transparency, they do not support teamwork, they just have to go."
All chief executives of agencies for which Mr Hughes sets their wages had signed new employment contracts and agreed with the reasons, Mr Hipkins said.
Premier Jacinda Ardern yesterday announced a freeze on all salaries and allowances for members of parliament for a year, while assessing the way their salaries are calculated.
Read more: Public service CEO payment packages in 2017