CO (22) 2 - Revised Fees Framework for members appointed to bodies in which the Crown has an interest

1Cabinet recently agreed to a revised Fees Framework for determining or reassessing the fees paid to members of statutory and other bodies in which the Crown has an interest [APH-22-MIN-0195].

2This circular and the attached Framework replaces Cabinet Office Circular CO (19)1.

3The revised Framework covers all statutory bodies, non-statutory bodies and committees in which the Crown has an interest, that are outside the Remuneration Authority’s or other fee-setting bodies’ jurisdiction. The Framework therefore covers most Crown entities (including Crown Agents, Autonomous Crown Entities (ACEs) and tertiary education institutions), trust boards, advisory bodies and committees, Royal Commissions, Public Inquiries, Government Inquiries and Ministerial Inquiries, statutory tribunals, individuals appointed as statutory bodies that are not covered by the Remuneration Authority and some subsidiary bodies. 

4The Framework provides guidance on the classification and remuneration of statutory and other Crown bodies. Since the Framework covers a varied array of bodies, it is not intended to be prescriptive, and judgement will be required to determine best fit.

5The purpose of the Framework is to provide a basis for judgement in setting fees that will:

6The main changes to the previous Framework are:

7Ministers and chief executives should ensure that all staff involved in appointments to bodies covered by the Framework are familiar with the requirements of this circular.

8For advice on the application and interpretation of the Fees Framework, contact the Public Service Commission, email: [email protected] or phone (04) 495 6600.

9For advice on taxation on fees, contact Denise Birdling, Team Lead, Significant Enterprises, email: [email protected] or phone (04) 890 6295.

1The Cabinet Fees Framework (the Framework) should be used:

2The purpose of the Framework is to provide a basis for judgement in setting fees that will:

3The Framework enables fees to be determined by Ministers and other fee-setting authorities who are most familiar with the work of particular bodies. It provides for:

4The role of the Public Service Commission (the Commission) includes:

5Agencies apply the Framework in making recommendations and/or setting fees for body members.

6Agencies are strongly advised to consult the Commission on any fee matter (such as an exception) that the responsible Minister will need to refer to the Minister for the Public Service, before formally submitting this to the responsible Minister. The Commission can advise on precedents and the information required to support the recommendation.

7Please refer to the summary flow charts in section B for setting or reviewing fees and, if required, in section E for seeking an exception to the Framework.

8The Framework should be read in conjunction with the:

9The Framework is one of three fee setting mechanisms for statutory and other “bodies in which the Crown has an interest”. A broad array of agencies and individual officers come within this scope, as indicated in the table below. The term “bodies in which the Crown has an interest” is used in several Acts to apply the Framework to a body or bodies named in the Act, but the term is not defined. It is understood generally to:

An element of judgement is needed in particular cases to determine whether or not a body fits within the scope of the Framework; 

10The Framework complements the fee-setting role of the Remuneration Authority (under the Remuneration Authority Act 1977) and the Crown Company Fees Methodology administered by the Treasury. The Framework is used to set the fees for government-related bodies and their subsidiaries that are outside the jurisdiction of the Remuneration Authority, the Treasury, or a separate fee mechanism such as applies to School Boards of Trustees (where the Minister sets the fees under the Education (School Boards) Regulations 2020) and local authorities (where the Remuneration Authority sets the fees under the Local Government Act 2002).

11Consultation with the Minister for the Public Service should take place about fees when trans-Tasman bodies have been established, as specific provisions may apply to such bodies that override the general application of the Framework. 

12Establishment by statute is not the only criterion for coverage by the Framework, nor is it a necessary requirement that there be a responsible Minister. It should also be noted that the Framework covers bodies that are self-funded, where a responsible Minister appoints some or all the members. The Minister should apply the Framework in circumstances where the body has the responsibility for setting fees and the Minister approves them.

13The Framework does not cover individual consultancies that would fall outside any of the categories listed in section D of the Framework (paragraph 98). Such individual consultancies involve contractors appointed by a body in which the Crown has an interest under a contract for services for a specific project, usually within a specified timeframe.

14In general, the key distinctions between a consultancy and a body covered by the Framework are that a consultancy has:

15It is possible, however, that in some cases there may be a judgement involved between using a consultancy on the one hand, or using a body referred to under paragraph 98, Group 4 (All Other Committees and Bodies), notably an advisory committee.

16Where agencies are unclear about whether an advisory committee or other Group 4 body would be more appropriate than a consultancy, particularly in cases of high public profile, they are encouraged to contact the Commission for advice in the first instance and then refer the issue to the responsible Minister and Minister for the Public Service. Where a Group 4 body is appointed, its remuneration would be set under the Framework.

17Refer to paragraph 153 regarding payments to body members where it is proposed that they also receive payments as consultants to the same body.

18The Framework is not used for bodies where the fees are set by the Remuneration Authority, for School Boards of Trustees, or for local authorities, where the fees are set using a separate mechanism.

19Fees for directors of Crown entity companies and State-Owned Enterprises are subject to separate guidance from the Crown Company Fees Methodology.

20A summary of bodies covered and not covered by the Framework is outlined below:

21The steps to be taken to set or review fees under the Framework are:

22It is strongly recommended that when existing fees are being reviewed, the above steps be undertaken to re-assess the classification and level of the body;

23Note that fees should be increased no more frequently than once a year; 

24The following flow chart summarises the process to use when setting or reviewing fees. Other sections of the Framework should be read in addition to the summary chart as they provide more detailed advice about the process the fee setting authority should follow when setting or reviewing fees:

25The fee setting authority is the position or organisation that has the authority to establish a body covered by the Framework. This may be set in legislation.

26In many cases, responsible Ministers set fees within the applicable framework range, except for subsidiary bodies of statutory entities and bodies established by agencies. (Refer also to section E regarding Ministers’ roles in setting fees outside the parameters of the Framework and section F regarding reviewing fees.)

27For members of subsidiary bodies of statutory entities, (i.e. of Crown Agents, ACEs, Independent Crown Entities (ICEs)) the board of the parent entity sets the fees within the applicable framework range. Exceptions to the Framework (see section E) for subsidiary bodies require prior consultation with the parent entity’s responsible Minister, and the Minister for the Public Service (with advice from the Commission). It is advisable to discuss proposed exceptional fees with the Commission in the first instance.

28The default process for some Group 4 bodies where there is no responsible Minister or relevant legislation (e.g. bodies established by chief executives or governance boards of agencies) is that the fee-setting authority (e.g. the chief executive or governance board) should apply the Framework in order to determine the fee. If the proposed fee is outside the parameters of the Framework, it must be treated as an exception under the Framework (see section E).

29For those bodies covered by the Fees and Travelling Allowances Act 1951, the Minister for the Public Service has delegated responsibility for setting fees within this Framework to Ministers responsible for the particular appointments and/or setting the remuneration levels. If the proposed fee is outside the parameters of the Framework, the agreement of the Minister for the Public Service is required, and the matter may need to be considered by APH and Cabinet (see section E).

30Ministers, agencies, and other fee setting authorities should refer to section D to classify the body under the Framework and then ensure the actual fees reflect an element of public service and community commitment, the personal contribution and recognition of the intangible benefits to the member, balanced by: 

31Fees will continue to be set on a fair but conservative basis to reflect a discount for the element of public service involved.

32Where the fee is paid as an annual rate, it should also reflect the time involved (see paragraph 38).

33Members occupying identical positions on the same body should be paid the same fee rate. The fee rate is varied only to reflect additional responsibility such as that assumed by chairpersons (and deputies and the chair of a substantial sub-committee where appropriate) who may receive an extra margin for additional responsibilities that go with the role. The exception to this is when fees have been grand-parented (refer paragraph 149).

34In cases where it is necessary to secure people with scarce specialist skills, consideration may be given to paying a fee higher than the applicable range. Please refer to section E.

35It is possible to pay fees below the range, provided they reflect the factors noted in paragraph 30.

36There are two approaches to expressing fee levels - annual rates and daily rates. Any other variations, including annualising daily rates, are regarded as exceptions to the Framework and require prior consultation at Ministerial level (see section E).

37For Group 3 bodies, the fee is usually expressed as an annual rate. This is consistent with the approach taken in the private sector and is most appropriate where the workload is predictable and/or substantial.

38The annual fee is set on the following assumptions:

39Where it is anticipated that a chair or members will have a lesser workload than above, it is expected that this be reflected in the fee level. The workload expectation covers all authorised work undertaken by members including subcommittee work and preparation time.

40For those situations where a greater workload is expected, please seek advice from the Commission. Where significant additional work is required, it may be appropriate to negotiate additional payments.

41Payment for additional work should be agreed by the fee-setting authority before the work is undertaken. The key objectives for the additional work must be clearly specified and evaluated on completion. A higher annual rate for a fixed period, and based on defined goals, may also be appropriate where chairs are required to undertake significant additional work (e.g. where they are required to guide the reorientation or restructuring of a Crown entity, or where the situation of a Crown entity requires the chair to act more in the nature of an executive director). However, such additional work should otherwise relate to the governance role of the board and should not cover activities that are more properly within the role of management.

42The fee-setting authority is required to consult with the Minister for the Public Service before committing to payments for additional work and is responsible for monitoring progress against the negotiated objectives.

43For members of Group 3b subsidiary bodies of statutory entities (e.g. of Crown agents, autonomous Crown entities, and independent Crown entities) who receive an annual fee, there is no assumed annual workload specified for the members. Time is one of the factors to be considered by the parent entity when setting the fees, with reference to paragraph 30.

44Where it is possible to predict the workload of bodies other than governance boards, the annual fee should be calculated by multiplying the daily rate by the number of days that will be worked during the year.

45Proposals for an annual fee for a Group 1, 2 or 4 body should be treated as technical exceptions and referred to the responsible Minister and Minister for the Public Service. In making submissions to Ministers or reporting to the Commission, it will be necessary to specify the annual fee if this has been agreed, and provide the daily rate on which the proposal is based, and the number of days that will be worked per annum.

46For Groups 1, 2 and 4 bodies, fee levels are generally expressed as a daily rate, as this works best for those bodies that have an unpredictable workload. Where a chair or member of a Group 2 body that is administered by the Ministry of Justice, works full time consistently, the daily rate will be multiplied by 220 days. This number will be pro-rated for those who work substantially full time.

47For Group 3 governance boards that pay a daily rate due to an unpredictable workload, the maximum annual rate provided in the range that applies to the classification must not be exceeded unless an exception to the Framework is agreed.

48It is expected that a working day is about 8 hours, and the daily fee is calculated on this basis. Work for longer than 8 hours in one day must not attract an extra payment, unless the combination of travel and work is frequently longer than 8 hours (see para 82).

49Hourly pro-rata rates should be calculated by dividing the daily rate by 8 and multiplying by the number of hours worked.

50The daily fee applies to all work, including that performed outside of meetings (e.g. preparation, representing the board at other forums, or administrative work) that is required for the body to carry out its role. All work that is required to be performed for the body by the member should be paid at the approved daily rate.

51Where a total of 6 hours is worked in one day, a daily fee may be paid. It is accepted that it may not be possible for a member having worked 6 hours in one day on body business to return to other paid work. Where a member spends time, for example one evening, preparing for a meeting the next day, if the preparation and meeting time combined were between 6 and 8 hours, then one daily fee would be paid for the combined preparation and meeting time.

52Work other than preparation for meetings/sittings must be approved and minuted by the body before it is undertaken. Individual members should not be in a position where they could be considered to be setting their own work programmes without the endorsement of the body.

53Other fee payment methods such as a base honorarium and/or a fee for additional services, or Crown bodies setting their own fees from a total pool, are regarded as exceptions to the Framework. If such fee payment methods are proposed, refer to section E. Early discussion with the Commission is recommended.

54Where a member is a self-employed professional, locum fees are not to be paid unless an exception has been approved. The self-employed professional receives payment for body business only and reimbursement of travel expenses where relevant to body business. Additional payments are not provided to pay for the use of a locum or the business overheads since the body is not responsible for funding members’ own business costs. Issues such as the potential loss of income and maintenance of a professional practice (including business overheads) need to be considered by the individual prior to accepting appointment to a body.

55In their private capacity, members of some bodies covered by the Framework provide an essential service which cannot be maintained by other parts of their organisation while they are serving as members. A prime example is that of doctors working in general practice, especially where practices are busy, serve a community with high health needs, and locums are needed to ensure services are maintained. In such cases, the Framework should be used to guide the setting of fees, but flexibility may be allowed to enable the fees to meet the costs of essential cover, such as locums.

56Payment of compensation or any benefit for loss of office must not take place.

57Ex gratia payments and other benefits or rewards, which are in addition to fees, must not be paid to members of statutory boards, subsidiary bodies of statutory entities, statutory tribunals, authorities or other Crown bodies or committees.

58Depending on its enabling legislation, a body may set up a sub-committee or sub-committees to carry out part of the body’s business.

59Members who receive an annual fee for membership do not receive any additional payment for membership of sub-committees.

60Members who receive a daily fee can receive payment for additional days spent on sub-committee work. If the sub-committee has been set up to consider an issue and report to the main body, then a lesser daily fee may be appropriate. Sub-committees must be properly constituted under the authorising legislation or terms of reference for the body before a meeting fee is paid.  

61Independent members of sub-committees are those members who are not members of the parent body. They may be paid up to a maximum of the daily equivalent of the full member fee, depending on the assessment by the main body of the skills required for the independent sub-committee member/s to perform their role. 

62An independent member who chairs a subcommittee shall be paid at the rate applicable to a member of the parent body who chairs a subcommittee.

63The daily fee for bodies whose members are paid an annual fee should be calculated by dividing the annual fee by the appropriate number of days worked, e.g. 30 for a general governance board (refer to paragraph 38 regarding assumption about workload for members paid an annual fee). 

64The total annual fee paid to an independent member of a sub-committee should not exceed 50 percent of the total annual fee paid to a member of the main body. 

65Any proposal to pay higher daily fees or total annual fees outside this guidance should be treated as an exception (see section E). This section does not apply to ex-officio members.

66Rates for chairs are set within the applicable fee range at Section D. If no legislative impediment exists, co-chairs may be appointed. Applicable chair rates will apply to both. When a body is appointed without a chair, all members shall be paid at the same member rate.

67Where the legislation provides for the appointment of a deputy chair and/or where the work of the body is such that the appointment of a deputy chair is required due to the complex nature or size of the responsibilities, then a fee additional to the member rate may be paid to the deputy chair.

68The fee for the responsibilities of a deputy chair is an additional 25 percent of the member rate. (This is consistent with the rates paid to deputy chairs in Crown companies and in the private sector.) If this takes the deputy chair fee above the fee range, it is not an exception.

69Where a deputy is acting as chair they should be paid a daily rate equivalent to that of the chair.

70Where there is no deputy appointed, and a member is required to chair a meeting, then the member should be paid a daily rate equivalent to that of the chair.

71Where an annual fee is paid, it is usual practice for the chair, and the deputy chair, where one is appointed, to have responsibility for chairing one or more sub-committees. No additional fee is payable to the chair and deputy chair for chairing sub-committees. Where there are sub-committees that are not chaired by either the chair or deputy chair, then an additional 10% of the member’s rate may be paid to one other member with responsibility for chairing a sub-committee. Any case for further additional payments for chairing sub-committees must be treated as an exception to the Framework (see section E).

72Where an individual member constitutes a committee and there are decision-making or recommendatory powers, that member should receive the rate applicable to the chair of a body at that level.

73Paragraphs 73 to 79 apply in relation to public sector employees including public servants who may be appointed to a body covered by the Framework. In these paragraphs, the term “public sector employee means employees of Public Service agencies[1] Crown agents and employees of other statutory Crown entities (autonomous Crown entities and independent Crown entities), agencies in the wider public sector as well as other agencies associated with a Ministerial portfolio and any local authority as defined under section 5(1) of the Local Government Act 2002.

74These paragraphs reflect Cabinet’s agreement in 2012 that the Framework provides that any employee of a government agency, appointed in their own right to a body covered by the Framework, must not retain both the fee and their ordinary pay, where the duties of the outside organisation are undertaken during their ordinary working hours.

75Public sector employees may be appointed to a body covered by the Framework either ex officio (someone who has a right because of an office held), or as a representative of their department or agency, or, where there are special circumstances, in their own right.

76All public sector employees appointed to statutory and other public bodies must be able to do their primary job unhindered and without detriment to the public interest. They must not be double paid for their job and their membership of a body covered by the Framework.

77For those it applies to and their employers should be aware of the principles in the Public Servants on Boards Guidance when considering fees. Where there are out of pocket expenses such as airfares or accommodation, these should be reimbursed to the employee on the same basis as for other members of the board.  

78Cabinet has recognised that there may be special circumstances in which employees of Public Service departments may be appointed to statutory and other public bodies: Cabinet Office Circular CO(02)5 applies to public servants of statutory bodies[2]. However, as a general rule, public servants of a monitoring agency should not serve on a Crown entity board that their agency monitors, nor should public servants serve on a board that has the same responsible Minister(s) as their agency.

79Before any public service employee seeks to be appointed to a body in their own right, the employee must first obtain the agreement of their agency chief executive. Such appointments are treated as secondary employment and, in the case of public servants, are subject to the oversight of the Te Tumu Whakarae mō Te Kawa Maataho Public Service Commissioner (the Commissioner).

80Advisory committees - Annual fees paid to Crown entity board members include their work on sub-committees. Advisory committees set up under the board’s establishment legislation are not classed as sub-committees and attract separate fee payments. Board members who have conjoint advisory committee membership may not claim two sets of fees when the board and committee conduct joint meetings, i.e. may not be double paid. If there is doubt about which fee is applicable, this should be resolved between the board and committee chairs ahead of time.

81Affiliated body membership - Board members may be appointed as members of an affiliated public body, eg an establishment board. From time-to-time, these bodies may conduct joint meetings with the member’s parent board. Prior to such meetings, and to avoid members being double-paid, the respective chairs should agree on how fees will be paid to joint members and what workload can reasonably be expected for the meeting(s).

82Members are not paid for time spent in travel to and from meetings or on body business, except in instances where a daily fee is paid, and the member has to travel for more than a total of three hours in the course of a normal business day of approximately 8 hours.

83The purpose of paying for travel time that is greater than three hours is to compensate for lost income during the business day. For example, a member may spend a few hours at a meeting but in doing so spends all day away from normal business activity, due to spending several hours travelling to and from the meeting.

84In circumstances where considerable time is involved in travel, this can be recognised by the chair, with the agreement of the servicing/accountable organisation. In these cases (and particularly where air travel is involved) the preparation and travelling time need to be considered together for payment purposes. Where considerable travel is frequently necessary to meet the requirements of the role, this should be recognised either by reducing the working time or paying for some or all of the travel time (see para 48).

85In considering payments for travelling time, the chair and servicing agency need to consider issues of equity, the government’s intention for geographical representation, and ensure that attendance at meetings does not result in undue personal hardship.

86Under exceptional circumstances a contribution may be made to childcare expenses with the agreement of the chair (or another member if the chair is claiming expenses) and the servicing agency. However, it is generally expected that the daily fee paid is adequate to meet out-of-pocket expenses of individual members as well as reimbursing them for their time spent. An example where a contribution to childcare expenses may be made is where an additional meeting is called at short notice (e.g. less than 48 hours). In determining whether payment is warranted, consideration should be given to issues of equity and ensuring that attendance at meetings does not result in undue personal hardship.

87Where a meeting or other activity of a statutory or other body is cancelled or takes fewer days than planned, in exceptional cases payment of the fee to certain members may be approved.

88Each case would need to be considered on its merits and this should only occur where:

89An affected member would need to make a case to the body on each separate occasion. Payment should not be approved if it is believed the member had not tried to reschedule other work. Partial payment might be appropriate if rescheduled appointment fees do not fully compensate a member for the lost fee from the meeting.

90If appropriate and the body did, on application from a member for a specific instance, resolve to pay the fee for part or all of the time a meeting was cancelled by, that resolution would need to be noted in the minutes.

91Where a meeting is held by teleconference or video conference, the usual fees apply.

92Where a member is unable to attend a meeting in person but joins the meeting by teleconference or videoconference, with the agreement of the chair, the usual fees apply. If the member receives daily fees and participates in less than half of the meeting, an hourly pro-rata rate would apply (see paragraph 49).

93Where an individual receives an annual fee and is absent from body business for a period of greater than two months, then the annualised fee should be pro-rated to take account of this absence (e.g. an absence of 2 months would result in payment of 10/12 of the annual fee). Where there are frequent absences over the period of a year, the annual fee should also be pro-rated to take account of those absences. (This does not apply to members who work full time or substantially full time).

94Where a member fails to attend a significant number of meetings, or otherwise perform their duties as a member, the chair needs to raise the issue of expectations about performance with the member and, if necessary, with the responsible Minister. Consideration should be given at the time of reappointment of members to the issue of continued absences from body business.

95Members travelling to and from meetings, or on the business of the body in which the Crown has an interest (where the members are required to be away from their normal places of residence), are entitled to reimbursement of out of pocket travelling, meal and accommodation expenses actually and reasonably incurred. The expectation is that standards of travel, accommodation, meals and other expenses are modest and appropriate to reflect public sector norms.

96Actual and reasonable travel, meals, accommodation and other expenses incurred by the member in carrying out the business of the body in which the Crown has an interest may be reimbursed provided they are supported by appropriate documentation.

97Where it would not be reasonable to travel by public transport and a member’s private motor vehicle is used for travel to and from meetings, or on the business of the body in which the Crown has an interest, reimbursement will be at the Kilometre rates specified by Inland Revenue.

98The Framework provides for the classification of bodies into one of the following groups:

99Cabinet has agreed to a schedule of fees for all categories that reflects the nature of their business environment and the role requirements.

100Once a decision has been made on which group the organisation best fits into, establish the level within the group (see classification process below for each group), and then find the fee range for that level in the appropriate table. A decision is then required on what amount, within (or below) the ranges provided, is most appropriate. Section C, particularly paragraph 30, provides guidance on how to make these decisions. Further assistance is available from the Commission.

101Refer to section E if the proposed fee is above the ranges provided, or an alternative method of payment is proposed.

102Royal Commissions, public inquiries, government inquiries and Ministerial inquiries are time-limited bodies established to inquire into and report on specific matters. Royal Commissions and public inquiries are generally chaired by a judge or a retired judge.

103The key distinction between a Royal Commission, a public inquiry, government inquiry and a Ministerial inquiry lies in the form of the instrument of appointment and the nature of the authority under which it is established: 

104A Minister must consult the Prime Minister and the Attorney-General when assessing whether to establish a Royal Commission, public inquiry or government inquiry prior to submitting any proposal to Cabinet (Chapter 4 of the Cabinet Manual).

105If a Royal Commission, public inquiry, government inquiry or ministerial inquiry is proposed, the Commission should be contacted for advice about the proposed fee, prior to the appointment being considered by APH and Cabinet. All fees for Royal Commissions, public inquiries, government inquiries and ministerial inquiries must be referred to the Minister for the Public Service for consideration as an exception.

106Statutory tribunals and authorities are a broad and diverse group of adjudicative bodies that decide or resolve some form of question or dispute affecting the rights of parties. They exercise a defined specialist jurisdiction under legislative authority and decide cases by considering facts and evidence and applying settled rules or principles. They are not courts, but equally are independent from the executive (that is, their members are not departmental officers).

107Expertise required

Skills, knowledge and experience may vary between members on a particular tribunal. The score below should reflect the level of skill required by the majority of members and should not be based on any particular individual. This factor has a higher weighting than others, to reflect that it is the application of the skills, knowledge and experience in carrying out their responsibilities that is a major contributor to the successful operation of the tribunal or authority.

108If a member is a sole member, the Chair fee range may be used, but in setting the actual fee level, the factors to be considered in setting or reviewing fees (paragraph 30) should be taken into account.

109Complexity

This dimension measures the problems typically faced by the tribunal and the mental processes required to arrive at the solution.

110Decision-making 

111Impact of decisions

112Public profile

113Group 2 - daily fees

114These boards are primarily responsible for the governance of a Crown body or organisation (most Crown entities fall into this category). In many cases, the body will be established by or under an Act that sets out its statutory purpose or objectives and principal functions.  

115Governance boards have responsibility for the strategic direction of the organisation, the determination of business objectives and formulation of policies to achieve these objectives, and funding policy. A large number will also have the task to recruit, appoint and monitor the chief executive. Where the board is overseeing an interest owned by the Crown, the board is usually the link between the shareholder/owner (the Crown) and management, and its members are appointed either by a Minister/the government or the Governor-General. In some cases, boards have elected members, or members appointed by stakeholders other than the Minister. The organisation the board is overseeing may or may not be a company.

116A number of Trust Boards also fit into this category.

117Size

Select either the appropriate budget/turnover or asset magnitude figure that best represents the size of the organisation. Lower weighting is given for asset management than budget controlled as assets have been accumulated over time, are retained by the organisation and the Board’s responsibility is the safe guardianship and the most effective and sustainable deployment of assets. Budgets on the other hand are expended over a twelve-month period and the Board’s accountability for this spend, or revenue earned, is more direct.

Please note that funding disbursements and purchases on behalf of the Crown are treated in the same manner as operating budgets.

118Business complexity/functionality 

Select the organisation’s primary function, and then consider and assess the complexity of that primary function in accordance with the following tables.

Where the organisation clearly has more than one primary function, as identified in its legislation or its Minister’s expectations, and where neither/none of the primary functions are dependent on other primary roles, each role may be assessed, scored independently, and the scores added together following consultation with the Commission.

119Group 3a – annual fees

120The boards of statutory entities (i.e. the parent boards) set the fees for their subsidiary board members. The statutory entities are Crown Agents, ACEs and ICEs listed in Schedule 1 of the Crown Entities Act 2004.

121Size

The following two size criteria are consistent with the protocol for General Governance Boards (Group 3a) above (see paragraph 117).

Select either the appropriate budget/turnover or asset magnitude figure that best represents the size of the organisation. Lower weighting is given for asset management than budget controlled as assets have been accumulated over time, are retained by the organisation and the body’s responsibility is the safe guardianship and the most effective and sustainable deployment of assets. Budgets on the other hand are expended over a twelve-month period and the body’s accountability for this spend, or revenue earned is more direct.

Please note that funding disbursements and purchases on behalf of the Crown are treated in the same manner as operating budgets.

122Group 3b – annual fees

123This category covers a vast array of bodies from advisory committees to technical review committees to professional regulatory bodies. These bodies may have their functions described in statute, or alternatively have been established by a Minister under a general statutory power to establish advisory committees or by the Cabinet. In other cases, the bodies will have been established by chief executives or governance boards of agencies to provide advice on the agency’s functions and responsibilities on a general basis or on specific areas or issues.

124The level within this category is determined by:

125Skills, knowledge and experience

Skills, knowledge and experience will vary between members on a particular body. The score below should reflect the level of skill required by the majority of members and should not be based on any particular individual. This factor has a higher weighting than others, to reflect that it is the application of the skills, knowledge and experience in carrying out their responsibilities that is a major contributor to the successful operation of the committee or body.

126Function, level and scope of authority

127Complexity of issues

128Public interest and profile

129Group 4 – daily fees

130Most agencies have established audit and risk committees (or their equivalent). All or almost all of the chairs and members of these committees are external to the agency and they are generally not public sector employees. Due to the skill and expertise required of external chairs and members of these committees and the complexity of the matters on which they advise, higher fees for agency audit and risk committees have been approved. (The Office of the Auditor-General provides advice on audit committees).

131Fees for chairs of audit and risk committees can be up to $1,430 per day and fees for members can be up to $1,195 per day (up to a maximum of 30 days per annum in both cases).

132Operating outside the parameters of the Framework includes situations where it is proposed to:

133Where Ministers, agencies or other fee-setting authorities believe there is a case to operate outside the parameters of the Framework (except where proposed fees are below the Framework fee ranges), they must consult with the Minister for the Public Service. Proposals to pay fees outside the parameters of the Framework range should first be discussed with the Commission.

134The following flowchart summarises the process to use when there is a need to operate outside the parameters of the Framework and for fees for all Group 1 bodies.

135The details required to justify an exception to the Framework include the classification of the body, the existing fee levels (if applicable), the fee setting authority, and the reason for seeking an exception.

136A compelling case is required to support the payment of fees above the levels set in the fee scales. Justification should include evidence of an adequate, robust and appropriate selection process and consideration of potential candidates, any difficulties in recruitment or retention, and/or particular skills and expertise that are required for a specific task. Further advice is available from the Commission.

137The Minister for the Public Service may agree to the proposal, or may recommend to the responsible Minister that the fee needs to be referred to APH and Cabinet, where a responsible Minister proposes an exception which is:

or:

or where:

138Where an exception is more substantial, the responsible Minister will refer the proposal for consideration by APH and Cabinet, after consultation with the Minister for the Public Service.

139For exceptions for agency bodies or committees, the agency consults the responsible Minister and the Minister for the Public Service.

140If the fee setting authority is a statutory entity (i.e. Crown Agent, or ACE) then it should consult its monitoring agency, responsible Minister and the Minister for the Public Service (with advice from the Commission). For exceptions for subsidiary bodies, the parent entity consults its monitoring agency, the responsible Minister and the Minister for the Public Service (with advice from the Commission).

141If there is a difference of view between the responsible Minister and the Minister for the Public Service about the appropriate fee levels, the options should be presented to APH.

142A small number of exceptions to the fee ranges in the Framework have been approved by Cabinet where unusual circumstances, particularly the complexities and functions associated with membership, make it appropriate to pay fees outside the Framework range to the members of that body.  

143Standing exceptions are those exceptions where APH has agreed that those exceptional fees can be paid to all new appointments and reappointments to that body without the need to refer to Cabinet for further approval.

144Where an agency considers that a body for which they are responsible should be considered for a standing exception, they should discuss the justification for seeking a standing exception with the Commission in the first instance. The Commission will advise on whether the circumstances are likely to meet the threshold for approval as a standing exception. The responsible Minister, in consultation with the Minister for the Public Service, will then seek the agreement of APH to the standing exception.

145Any proposal to increase the fees once the standing exception has been approved would be subject to additional approval.

146A standing exception can also be sought for technical exceptions (see paragraph 137), e.g. annualising daily fees or pro rating annual fees, and extending an exceptional fee for a defined period.

147Technical exceptions do not generally need to be referred to Cabinet, so the responsible Minister can seek agreement from the Minister for the Public Service.

148The Commission maintains a record of standing exceptions. Agencies should advise the Commission of any standing exceptions which are approved by APH to enable the Commission to maintain accurate records.

149When changes to a body’s responsibilities lead to the body’s reclassification to a lower fee range, approval may be given, on a case-by-case basis, for existing body members to retain their existing fees. Fees approved for an individual body member at a higher level than the fee range of this Framework may remain at the higher level for the duration of the member’s term of appointment provided the basis for justifying the exception is still valid.

150Where possible, a time limit should be set when grandparenting is approved (e.g. a specified period or until the position is vacated). Where the term of a grandparenting arrangement has expired but the basis for justifying the exception is still valid, the responsible Minister and the Minister for the Public Service may approve the extension of grandparenting as a technical exception.

151Grandparenting of fees applies only to the individual member for whom it is approved and not to the position. It is an exception to the principle in paragraph 33 that members of the same body receive the same fee. A new member appointed to the body must not receive the grandparented fee unless this has been specifically approved for the new member.

152Information about any grandparenting arrangements, including changes to or extensions to existing arrangements will be sought through the Commission’s triennial fees survey.

153Members or other appointees should not receive payments as consultants from bodies to which they are appointed. If, however, the responsible Minister agrees that there are overriding reasons for members and other appointees to carry out consulting assignments, any proposal to do so should be submitted to APH and Cabinet for consideration.  

154Where the arrangement results in the risk of a conflict of interest, the Minister should identify the conflict in the submission to APH and propose a suitable regime for managing the conflict. See the Commission’s Model Standards on Conflicts of Interest, and Board Appointment and Induction Guidelines, sections 31 and 62 of the Crown Entities Act 2004, and the appointments section of the CabGuide for further guidance on conflicts of interest.

155If a person or their spouse or partner is a member of a local authority or public body listed in Schedule 1 of the Local Authorities (Members’ Interests) Act 1968, their membership may be affected by entering into a contract with the local authority or public body if the total of all payments under such contracts exceeds the amount specified in that Act. In these cases approval of the Auditor-General must be obtained in addition to the Cabinet approval required by this Framework (see section 3 of the Local Authorities (Members’ Interests) Act 1968).

156Fee-setting authorities should review fees at regular, reasonable intervals, such as after a review of the Framework or when an appointment or reappointment is pending, and not more frequently than once a year. There is no obligation to automatically increase the fee as a result of the review.

157Changes to existing fee levels should be made by the fee-setting authority if it is necessary to address recruitment and retention problems, where the current fee levels do not adequately reflect levels of responsibility, or where fees have not been reviewed for a number of years. Changes also need to reflect the government’s expectation that increases in public sector remuneration will be modest.

158This may mean that increases to reflect levels of responsibility are done incrementally (rather than in one step), but not more often than once a year. Where a proposed increase is up to 3 percent and within the applicable fee range, the chief executive or governance board of the agency may approve the increase for bodies established by the chief executive or governance board.

159Where a proposed increase is up to 5 percent and within the applicable fee range, the responsible Minister may approve the increase. Any increase above 5 percent or outside the applicable fee range is an exception to the Framework and requires consultation with the Minister for the Public Service.

160Where a proposed increase is up to 10 percent and within the applicable fee range, the Minister for the Public Service may approve the increase. Where a proposed increase is greater than 10 percent or the proposed increase takes the fees above the applicable fee range, the proposal must be referred to Cabinet for consideration (see section E). For further advice please contact the Commission.

161When existing fees are being reviewed, the steps required to classify the body (see section D) should be undertaken to confirm the classification and level of the body.

162Backdating of increases should generally be avoided. However, in some cases, such as where there has been undue delay in approving the increase, backdating may be appropriate. Approval for backdating must be sought from the authority approving the fee increase. For guidance on particular cases please consult the Commission.

163The legislation establishing some Crown bodies provides board members with explicit protection from liability in some circumstances. The nature of the protection varies according to the body and reference should be made to the appropriate legislation.

164The Crown Entities Act 2004 contains standard provisions on immunity from liability, indemnity and insurance in relation to board members, employees, office holders, and committee members of statutory entities. Statutory entities are Crown Agents, ACEs and ICEs listed in Schedule 1 of the Crown Entities Act 2004.

165The extent to which a body in which the Crown has an interest may indemnify or purchase insurance for its personnel to meet their legal expenses while working for the body may be dealt with specifically in the body’s enabling Act or document. Where it is not, then the general powers of the body must be checked to determine whether it has the power to indemnify or purchase insurance for its members.

166The Crown Entities Act 2004 requirements for statutory entity indemnities and insurance provide a good yardstick for other bodies, subject to their own particular enabling Acts. The Crown Entities Act 2004 provides that entities may only indemnify their members for acts or omissions in good faith and in performance or intended performance of the entity’s functions. Any such indemnity is limited to liability for conduct, and costs incurred in defending or settling any claim or proceeding relating to that liability. An entity may purchase insurance cover for its members in relation to acts or omissions unless they are in bad faith or not in performance or intended performance of the entity’s functions.

167In the event that insurance is not provided, the body must ensure that the individual is made aware that he or she is not covered, as well as of any relevant statutory protection from liability, so they can consider whether to make their own provision for such insurance.

168Members of boards of statutory bodies, statutory tribunals, authorities or other bodies are generally appointed by the Crown, governance boards or chief executives, or elected by voters. Members of the boards of subsidiary bodies of statutory entities (i.e. of Crown Agents, ACEs, ICEs) are generally appointed by their parent body. Members are not employees of the body or the Crown. The appointment as a member does not alter the individual’s employment status prior to the appointment (e.g. self-employed, employee, not employed).

169How taxation applies to any fees paid to members depends on the personal circumstances of the individual board member and the terms of their contract/appointment. Depending on the circumstances an employer/payer could be required to deduct withholding tax from payments made to board members.

170A discussion (provided by Inland Revenue) of the application of withholding tax and/or GST to fees paid to the board member can be found here.

171If, after considering this discussion, you still have queries about the correct tax treatment of particular fees paid, contact Denise Birdling, Team Leader, Crown, Significant Enterprises, Inland Revenue ([email protected]).

172Any statutory requirements for the disclosure of fees and other benefits must be met. Crown entities, other than Tertiary Education Institutions or schools, must meet the disclosure requirements of section 152 of the Crown Entities Act 2004. Where there are no statutory or other specified requirements, a level of disclosure consistent with public accountability should apply.

173Any proposed fees or payments for bodies covered by the Framework should be met within existing baselines or appropriations unless approval for the additional expenditure has been appropriated or otherwise authorised.

174In general, all but the most minor appointments made by Ministers, or by the Governor- General on the recommendation of Ministers, should first be considered by APH. Even where an appointment is the responsibility of a particular Minister, it is important that it is raised with colleagues to ensure the widest possible input into the appointment process. Please refer to the CabGuide.

175Section E “Operating outside the Parameters of the Framework” refers to the circumstances in which exceptions to this Framework are referred to APH and Cabinet before final decisions are made. In those cases where the responsible Minister proposes fees outside the parameters of the Framework, the submission should note that consultation with the Minister for the Public Service has taken place, and should outline the basis for going outside the parameters of the Framework.

176If there is a difference of view between the responsible Minister and the Minister for the Public Service about the appropriate fee levels, the options should be presented to APH.

177In these cases, appointments should not be made until fee levels have been agreed. Please also refer to the CabGuide.

178For advice on the application and interpretation of the fees framework, contact Te Kawa Mataaho Public Service Commission, email: [email protected] or phone (04) 495 6600.

179For advice on taxation on fees, contact Denise Birdling, Team Lead, Significant Enterprises, Inland Revenue email: [email protected] or phone (04) 890 6295.