Cabinet Office
CO (19) 1
(updated 29 January 2020)
Circular
17 June 2019
Intended for
All Ministers
All Chief Executives
Copies to
All Senior Private Secretaries
All Private Secretaries
Revised Fees Framework for members appointed to bodies in which the
Crown has an interest
This circular has been updated to include minor amendments.
1
Cabinet has recently approved a modified Fees Framework for d termining or reassessing
the fees paid to members of statutory and other bodies in which the Crown has an interest
[APH-18-MIN-0271].
under the
2
This circular and the attached Framework will take ef ect from 1 July 2019, replacing
Cabinet Office Circular CO (12) 6.
3
The modified 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 Agen s, 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.
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4
The 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 presc iptive, and judgement will be required to determine best fit.
5
The purpose of the Framework is to provide a basis for judgement in setting fees that will:
ensure a consistent approach to remuneration across all statutory and other Crown
bodies;
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contain expenditure of public funds within reasonable limits;
provide flexibility within clear criteria.
6
The main changes to the previous Framework are:
a new category for Audit and Risk Committees;
a modest increase to the fee ranges for Groups 2, 3 and 4 bodies;
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for chief executive or governance board established bodies, the chief executive or
governance board of the agency may agree to fee increases of up to 3 per cent,
within the applicable fee range and not more frequently than once a year;
the responsible Minister may agree to fee increases of up to 5 per cent, within the
applicable fee range and not more frequently than once a year, without referral to the
Minister of State Services or the Cabinet Appointments and Honours Committee and
Cabinet;
the Minister of State Services may agree to fee increases of up to 10 per cent within
the applicable fee range and not more frequently than once a year, without referral to
the Cabinet Appointments and Honours Committee and Cabinet;
a new section clarifying that Cabinet may agree standing exceptions to the Cabinet
Fees Framework;
expanding the purpose statement to reflect the importance of diversity of board
members;
updating the sections on taxation, allowances and expenses and public servants
serving on Crown bodies;
adding a new glossary of terms and an additional flow chart.
7
Ministers 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.
under the
Further information
8
For advice on the application and interpretati n of the Fees Framework, contact the State
Services Commission, email: [email address] or phone (04) 495 6600.
9
For advice on taxation on fees, contact Mark Murphy, Team Lead, Significant Enterprises,
email: [email address] or phone (04) 890 3079.
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Michael Webster
Secretary of the Cabinet
Enquiries:
State Se vices Commission, ph 04 495 6600
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APH Secretary, Cabinet Office, ph 04 830 5020
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Table of Contents
Page
Executive summary
5
Section A: Coverage by the Framework
7
Bodies covered by the Framework ........................................................................................... 7
Exclusions ................................................................................................................................ 8
Consultancies ....................................................................................................................... 8
Other exclusions ................................................................................................................... 8
Summary .................................................................................................................................. 9
Section B: Process for setting or reviewing fees
10
Section C: Guidance about fees
12
Who sets the fees........................................................................................ . ... .............. .... 12
Factors to be considered in setting or receiving fees ......................... ...... ............... ........ 12
Payment basis ..................................................................................... .... ......................... .. 13
Annual rate ............................................................................ .......................... ............... 13
Daily rate .................................................................. ....
... .................... ...... .............. 14
Other fee payment methods/other types of payments . ...... ................... ... ... ................... 15
Rates for sub-committees .................................... ..... ............................ .......................... 15
Independent members of sub-committees .... ...... ........................ ...... ............................... 16
under the
Rates for deputy chairs and sub-committee chairs ........... ..... ...... ....................................... 16
One person committees ....................... ..... ................. . .... ............................................. 16
Payments to public sector employ es appointed to bodies covered by the Framework ........ 17
Appointments to bodies covered by the Framework ........................................................... 17
Appointments of public sector employees in their own right ................................................ 17
Payment for time spent in travel to meetings/sittings or on board business (daily fees only) 18
Childcare expenses ... ...................... ....
........................................................................... 18
Payment of a fee for a cancelled meeting/sitting ................................................................... 18
Payment for meetings by teleconference ............................................................................... 19
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Absence .......................
... .................................................................................................. 19
Reimbursing expenses. ... ..................................................................................................... 19
Section D: Classification of bodies and fee scales
20
Group 1: Royal Commissions, Public Inquiries, Government Inquiries and Ministerial
Inquiries ... ..... ...................................................................................................................... 20
Group 2: Statutory Tribunals and Authorities ........................................................................ 21
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Group 3: Governance Boards ................................................................................................. 23
Group 3a: General Governance Boards (including TEIs and DHBs) ................................ 24
Group 3b: Subsidiary Bodies of Statutory Entities ............................................................ 27
Group 4: All Other Committees and Other Bodies ................................................................ 28
Audit and Risk Committees ............................................................................................... 30
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Section E: Operating outside the parameters of the Framework/exceptions to the
Framework
31
Standing exceptions ............................................................................................................... 34
Grandparenting of existing fees ............................................................................................. 34
Payment for consulting .......................................................................................................... 34
Section F: Reviewing existing fee levels
36
Section G: Other
37
Indemnity and insurance ........................................................................................................ 37
Employment status ................................................................................................................. 37
Tax on fees ............................................................................................................................. 37
Disclosure............................................................................................................................... 39
Fiscal implications .....................................................................................
.... ............. .... 39
Cabinet committee submissions .................................................... .. . ...... .............. ....... 39
Further information .............................................................................. ............................ . 39
Glossary of Terms
40
under the
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Executive summary
1
The Cabinet Fees Framework (the Framework) should be used:
before an appointment is submitted to the Cabinet Appointments and Honours
Committee (APH);
when a new body or committee is being established;
if there is a proposed significant change in board duties;
when the classification of the body or the current fees are being reviewed; and
for guidance about the administration of fees and other reimbursement payments for
bodies covered by the Framework.
2
The purpose of the Framework is to provide a basis for judgement in setting fees that will:
ensure a consistent approach to remuneration across all statutory and other Crown
bodies;
support the appointment of appropriately qualified and diverse body members;
contain expenditure of public funds within reasonable limits; and
provide flexibility within clear criteria.
under the
3
The 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:
responsibility for setting fees for statutory and other bodies in which the Crown has
an interest, within clearly defined parameters, to rest with the responsible Ministers
or another fee-set ing authority;
a system for the classif cat on of bodies for fee-setting or reviewing purposes
(section D);
a range of fee levels for each category of body (section D);
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a process for setting and reviewing fees, and for proposing fees outside the
Framework (s ctions B, E and F);
an outlin of administrative principles to be followed in applying the Framework
sections C and G);
4
The role of the State Services Commission (SSC) includes:
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administering the Framework;
conducting surveys of fee levels and other information to inform an annual report to
Cabinet;
conducting regular reviews of the Framework and recommending changes for
consideration by Cabinet;
advising the Minister of State Services about exceptions to the Framework;
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advising agencies about any aspects of the Framework; and
assisting in the interpretation and application of the Framework if required.
5
Agencies apply the Framework in making recommendations and/or setting fees for body
members.
6
Agencies are strongly advised to consult the SSC on any fee matter (such as an exception)
that the responsible Minister will need to refer to the Minister of State Services, before
formally submitting this to the responsible Minister. SSC can advise on precedents and the
information required to support the recommendation.
7
Please 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.
8
The Framework should be read in conjunction with the:
Board Appointments and Induction Guidelines
CabGuide: The appointments process, and
relevant Cabinet circulars:
CO (02) 5: Appointments of Public Servants to Statutory Boards
CO (02) 16: Government Appointments: Increasing Diversity of Board
Membership
under the
CO (11) 7: Role of the Remuneration Authority in Setting Remuneration for
Individuals appointed to Statutory Bodies and Other Positions).
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Section A: Coverage by the Framework
Bodies covered by the Framework
9
The 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:
be broader than ‘government agency’ if that term is synonymous with agencies that
operate within the executive branch of government, or that operate as instruments
under direct or indirect Ministerial control or direction, or where the body or
individual is appointed by a Minister or an agency;
encompass certain bodies and individuals in the judicial branch of government;
include bodies and individuals that carry out some aspect of the business or
responsibilities of central government, or that scrutinise or investigate or assist the
agencies that do so directly;
An element of judgement is needed in particular cases to determine whether or not a body
fits within the scope of the Framework;
10
The Framework complements the fee-setting role of the Remuneration Authority (under
the Remuneration Authority Act 1977) and the Crown Company Fees Methodology
under the
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 set the fees under the Education Act 1989) and local
authorities (where the Remuneration Authority sets the fees under the Local Government
Act 2002).
11
Consultation w th the Minister of State Services 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.
12
Establishment by statute is not the only criterion for coverage by the Framework, nor is it a
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necessary requirem nt 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 of the members. The Minister should apply the Framework in circumstances where
the body has the responsibility for setting fees and the Minister approves them.
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Exclusions
Consultancies
13
The Framework does not cover individual consultancies that would fall outside any of the
categories listed in section D, paragraph 95. 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.
14
In general, the key distinctions between a consultancy and a body covered by the
Framework are that a consultancy has:
defined deliverables for a finite period of time;
no ownership or governance in relation to the implementation and operation of the
deliverables of the project.
15
It is possible, however, that in some cases there may be a judg ment involved between
using a consultancy on the one hand, or using a body referred to under paragraph 95,
Group 4 (All Other Committees and Bodies), notably an advisory committee.
16
Where 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 SSC for advice in the first instance and then refer the
issue to the responsible Minister and Minister of State Services. Where a Group 4 body is
appointed, its remuneration would be set und r the Framework
under the
17
Refer to paragraph 148 regarding payments to body members where it is proposed that
they also receive payments as consultants to the same body.
Other exclusions
18
The 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.
19
Fees for directors of Crown entity companies and State Owned Enterprises are subject to
separat guidance from th Crown Company Fees Methodology.
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Section B: Process for setting or reviewing fees
21
The steps to be taken in order to set or review fees under the Framework are:
Determine whether the body is covered by the Framework (see section A);
Decide or re-assess which group the body fits into (see section D);
Determine which level within the group is most appropriate by “scoring” the body
according to the factors listed (see section D);
Decide on the appropriate fee (see section D) referring particularly to paragraph 30
regarding factors to be considered in setting fees;
If the fee is being set for the first time, the fee setting authority approves the fee
within the applicable Framework fee range (note section F regarding reviewing fees),
and within other guidance contained in the Framework If the fee-setting authority
wishes to set the fee outside the Framework, an exception must be sought, unless a
standing exception has been approved. Please refer to section E for guidance on
setting fees outside the Framework;
If the fee is being reviewed (note section F regarding reviewing fees), the chief
executive or governance board of the agency, may agree to fee increases of up to 3%
per cent, within the applicable fee range and not more frequently than once a year,
for bodies they have established; under the
For all bodies, the responsible Minister may approve increases of up to 5 percent
within the applicable Framework fee range not more frequently than once a year;
The Minister of State Services must be consulted on any increase above 5 percent
and may approve fee increases up to 10 percent, and minor and technical changes to
fees;
Any increase above 10 percent or that takes the fee above the applicable Framework
fee rang must be refer ed to APH and Cabinet for consideration;
For guidance on sett ng f es outside the Framework, please refer to section E;
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22
It 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;
23
Note that fees should be increased no more frequently than once a year;
24
The 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:
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under the
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Section C: Guidance about fees
Who sets the fees
25
The 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.
26
In 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.)
27
For 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 subsid ary
bodies require
prior consultation with the parent entity’s responsible Minister, and the
Minister of State Services (with advice from the SSC). It is advisable to discuss proposed
exceptional fees with the SSC in the first instance.
28
The 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 he 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).
under the
29
For those bodies covered by the Fees and Travelling Allowances Act 1951, the Minister of
State Services 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 of State Se vices is required, and the matter may need to be considered by
APH and Cabinet (see section E).
Factors to be considered in setting or reviewing fees
30
Ministers agencies and other fee setting authorities should refer to section D to classify the
body unde the Framework and then ensure the actual fees reflect an element of public
service and community commitment, the personal contribution and recognition of the
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intangible benefits to the member, balanced by:
the complexity of the functions and the expertise required;
recruitment and retention issues;
the extent to which an individual member needs to insure against personal liability;
the potential risk to reputation;
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the degree to which the role is in the public eye;
affordability; and
period since the fees were last reviewed.
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31
Fees will continue to be set on a fair but conservative basis to reflect a discount for the
element of public service involved.
32
Where the fee is paid as an annual rate, it should also reflect the time involved (see
paragraph 38).
33
Members 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 146).
34
In 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.
35
It is possible to pay fees below the range, provided they reflect the factors noted in
paragraph 30.
Payment basis
36
There are two approaches to expressing fee levels - annu l 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)
Annual rate
37
For Group 3 bodies, the fee is usually expressed as an annual rate. This is consistent with
under the
the approach taken in the private sector and is most appropriate where the workload is
predictable and/or substantial.
38
The annual fee is set on the following assumptions:
the work is such that the chair and members are required on a part-time basis;
for gener l governance boards, the assumed annual workload for meetings and other
responsibilities associated with the role is that:
a member works around 30 days a year, which is in line with the amount
of time spent by board directors in private sector companies;
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chairs have a higher workload than members, with the assumption that a
chair works around 50 days per year. Therefore, the fee for chairs is set at
twice the rate of the members to take account of both the differences in
responsibility and in workload.
39
Where 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
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time. This excludes work for the three District Health Board statutory advisory committees
established under sections 34, 35, and 36 of the New Zealand Public Health and Disability
Act 2000 (see paragraph 116 regarding fees that apply to these three committees).
40
For those situations where a greater workload is expected, please seek advice from the
State Services Commission. Where significant additional work is required, it may be
appropriate to negotiate additional payments.
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41
Payment 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.
42
The fee-setting authority is required to consult with the Minister of State Services before
committing to payments for additional work and is responsible for monitoring progress
against the negotiated objectives.
43
For members of Group 3b subsidiary bodies of statutory entities (i.e of Crown Agents,
ACEs, and ICEs) who receive an annual fee, there is no assumed annual workload
specified for the members. Time is one of the factors to be consid red by the parent entity
when setting the fees, with reference to paragraph 30.
44
Where it is possible to predict the workload of bodies o her than governance boards, the
annual fee should be calculated by multiplying the dai y rate by the number of days that
will be worked during the year.
45
Proposals 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 of State Services. In
making submissions to Ministers or reporting to the SSC it will be necessary to specify the
under the
annual fee if this has been agreed, and provide the dai y ra e on which the proposal is
based, and the number of days that will be worked per annum.
Daily rate
46
For 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 230. This number will be pro-rated for
those who work substantially full time.
47
For Group 3 governance bo rds 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
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exceeded unless an exception to the Framework is agreed.
48
It 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 81).
49
Ho rly pro-rata rates should be calculated by dividing the daily rate by 8 and multiplying
by the number of hours worked.
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50
The 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.
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51
Where 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.
52
Work 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.
Other fee payment methods/other types of payments
53
Other 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 s ction E. Early discussion
with SSC is recommended.
54
Where 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
under the
appointment to a body.
55
Payment of compensation or any benefit for loss of office must not take place.
56
Ex 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.
Rates for sub-committees
57
Depending on its enabling legislation, a body may set up a sub-committee or
sub-committees to carry out part of the body’s business.
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58
Members who receiv an annual fee for membership do not receive any additional
payment for membe ship of sub-committees. The only exception is that members of the
three District Health Board statutory advisory committees established under sections 34,
35, and 36 of the New Zealand Public Health and Disability Act 2000 receive an additional
fee as provided for in section D (see paragraph 116).
59
Members 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
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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.
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Independent members of sub-committees
60
Independent 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.
61
The 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).
62
The 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.
63
Any 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.
Rates for deputy chairs and sub-committee chairs
64
Where 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 depu y 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.
65
The fee for the responsibilities of a deputy chair is an addi ional 25 percent of the member
under the
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.
66
Where 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.
67
Where an annual fee is paid, it is usual practice for the chair, and the deputy chair, where
one is appointed, to have responsibili y for chairing one or more sub-committees. No
additional fee is payable to the chair nd 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
fo cha ring a sub-committee. This does not apply to the three District Health Board
statu ory advisory committees because additional fees are paid to members of those
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committees (refer to paragraphs 39 and 116). Any case for further additional payments for
chairing sub-commi tees must be treated as an exception to the Framework (see section E).
One person committees
68
Where an individual member constitutes a committee and there are decision-making or
rec mmendatory powers, that member should receive the rate applicable to the chair of a
body at that level.
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Payments to public sector employees appointed to bodies covered by the
Framework
69
Paragraphs 69 to 78 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” covers employees in all the agencies in the wider state 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. The term “public servant”
applies to all employees of public service departments. Public servants are a sub group of
public sector employees.
70
These 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 his/her ordinary pay, where the duties of
the outside organisation are undertaken during his/her ordinary working hours.
All public sector employees appointed to bodies covered by the Framework
71
Public 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.
72
All public sector employees appointed to statutory and other public bodies must be able to
do their primary job unhindered and without detriment to the publ c interest. They must
not be double-paid for their job and their membership of a body covered by the
Framework.
under the
73
A public sector employee should not retain both the board fee and their ordinary pay where
the duties of the board are undertaken during their ordinary working hours. Public sector
employees taking annual le ve or leave without pay for board activities may receive a fee.
The arrangements, including the employer’s approval and the justification for any fee
payment i.e. where all board duties are undertaken in the employee’s own time, should be
confirmed in the appointment documentation.
74
Any reimbursement of expenses incurred in relation to participation in a body is the
responsibility of the body and should be paid to the member.
75
Where a public sector employee is appointed to a body covered by the Framework either
ex officio or as a representative of their department or agency, they must not profit
Released
financially from their involvement on a board. The public sector employee will receive
his/her ordinary pay and will not be paid a daily or annualised fee for participating as part
of the board. 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
bo rd.
Special considerations for appointments of public service employees in their own
right
Official Information Act 1982
76
Cabinet 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 bodies1. 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.
1 The SSC maintains an up to date list of all of the organisations of the state sector and their categorisation.
284308v1
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77
Before any public service employee seeks to be appointed to a body in his/her own right,
the employee must first obtain the agreement of his/her agency chief executive. Such
appointments are treated as secondary employment and, in the case of public servants, are
subject to the oversight of the State Services Commissioner.
78
The chief executive must be satisfied that there are no unmanageable conflicts of interest
in relation to a potential appointment to a body and that financial and leave arrangements
will be appropriate. The chief executive must decide whether the public servant will
undertake board activities in their own time (for example, by taking annual leave or leave
without pay) or in the employer’s time.
Payment for time spent in travel to meetings/sittings or on board business (daily
fees only)
79
Members 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
80
The 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.
81
In circumstances where considerable time is involved in travel, th s 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
under the
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).
82
In 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.
Childcare expenses
83
Under 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
Released
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 m eting 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
en uring that attendance at meetings does not result in undue personal hardship.
Payment of a fee for a cancelled meeting/sitting
Official Information Act 1982
84
Where 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.
284308v1
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85
Each case would need to be considered on its merits and this should only occur where:
the cancellation was unforeseeable;
the member was unable to reschedule other work to take advantage of the time made
available; and
the member suffered real loss of income as a result of the cancellation.
86
An 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.
87
If 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 resolu ion
would need to be noted in the minutes.
Payment for meetings by teleconference
88
Where a meeting is held by teleconference or video conference, the usual fees apply.
89
Where a member is unable to attend a meeting in person but joins the meeting by
teleconference or videoconference, with the agr ement 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).
under the
Absence
90
Where 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 a e 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).
91
Where a member fails to attend a significant number of meetings, or otherwise perform
th ir 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.
Released
Consideration should be given at the time of reappointment of members to the issue of
continued absences from body business.
Reimbursing expenses
92
Members 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
Official Information Act 1982
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.
93
Actual 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.
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94
Where 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 mileage rate specified by
Inland Revenue.
Section D: Classification of bodies and fee scales
95
The Framework provides for the classification of bodies into one of the following groups:
Group 1: Royal Commissions, Public Inquiries, Government Inquiries and
Ministerial Inquiries;
Group 2: Statutory Tribunals and Authorities;
Group 3: Governance Boards:
- Group 3a: General Governance Boards (including TEIs and DHBs);
- Group 3b: Subsidiary Bodies of Statutory Entities (i e of Crown Agents ACEs,
ICEs);
Group 4: All Other Committees and Other Bodies;
- Audit and Risk Committees.
96
Cabinet has agreed to a schedule of fees for all categories that reflects the nature of their
under the
business environment and the role requirements.
97
Once a decision has been made on which group the organisation best fits into, establish the
level within the group (see lassification 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 SSC.
98
Refer to section E if the proposed fee is above the ranges provided, or an alternative
method of payment is proposed.
Group 1: Royal Commissions, Public Inquiries, Government Inquiries and
Released
Ministerial Inquiries
99
Royal Commissions, public inquiries, government inquiries and Ministerial inquiries are
time-limit d 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.
100
Th 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
Official Information Act 1982
of the authority under which it is established:
Royal Commissions are appointed by the Governor-General, pursuant to the Letters
Patent Constituting the Office of the Governor-General of New Zealand 1983 and
the Inquiries Act 2013. Royal Commissions are, therefore, generally regarded as
having greater prestige and standing than public inquiries appointed under the
Inquiries Act 2013 alone. A Royal Commission is generally appointed when the
subject matter to be investigated is one of particular public importance. The final
report is presented to the Governor-General and the House of Representatives.
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Public inquiries are established by the Governor-General by order in Council
pursuant to the Inquiries Act 2013. The final report is presented to the Governor-
General and the House of Representatives.
Government inquiries are established by a Minister or Ministers by notice in the
Gazette pursuant to the Inquiries Act 2013. The final report is presented to the
appointing Minister.
Ministerial Inquiries are non-statutory inquiries established by a Minister. The Prime
Minister’s agreement must be sought on all matters to do with the establishment of a
Ministerial Inquiry. (Refer DPMC Guidance on inquiries).
101
A 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)
102
If a Royal Commission, public inquiry, government inquiry or ministerial inquiry is
proposed, the SSC 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 of State Services for consideration as an exception.
Group 2: Statutory Tribunals and Authorities
103
Statutory 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
under the
exercise a defined specialist jurisdiction under legisla ive 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).
Factors – choose one score from each of the following categories
104
Expertise 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
Released
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.
If 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.
Experti e required
Score
Official Information Act 1982
Expert and highly regarded in a particular field or discipline.
9
Senior professional providing expertise in a particular field or discipline.
7
Broad general or professional experience. May include community leadership.
5
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105
Complexity
This dimension measures the problems typically faced by the tribunal and the mental
processes required to arrive at the solution.
Complexity
Score
Very complex issues with no past decisions for guidance. Each situation will be significantly 5
different to others and the solution required is often unique. Decisions may affect the
application of multiple statutes.
Some issues will be very complex with few previous decisions for guidance. Decisions will 4
usually be limited to a single statute but may involve the application of international
conventions and covenants.
Complex issues requiring analysis and consideration of potential alternative solutions. While 3
each case will be treated on its merits there will often be previous decisions for guidance.
Some issues will be complex requiring analysis and careful judgement but other issues will 2
be straightforward and may be resolved quickly through consistent appli ation of
established decisions.
Situations require consideration and judgement, but usually under one statute and 1
established guidelines.
106
Decision-making
Decision-making
Score
Prime function is as an appellate body. Decisions will usually be published. May have the 5
power to fine, award costs etc.
under the
Prime function is as a determining body. De isions will be usually be published. No penalty 4
provisions. Judicial review of decisions m y exist.
Power to make decisions – appeal proce ses available. Has power to fine, award costs etc.
3
Power to make decisions – appeal pr cesses available No penalty or fining authority.
2
Recommendatory powers only
1
107
Impact of decisions
Impact of d cis ons
Score
An imm diate impact on groups of people or sector/s of society.
5
Released
An immediate, critical impac on an individual or small number of people.
4
Decisions have an immediate, but not critical effect on a small number of individuals or a
3
single Corporate entity
Decisions have a longer term impact on groups of people or sector/s of society.
2
Decisions affect internal policies within a Department/Ministry.
1
Official Information Act 1982
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108
Public profile
Public profile
Score
High profile; broad public interest and scrutiny likely. May involve challenging status of 5
legislation. Potential impact on New Zealand’s international reputation.
Moderate profile; strong interest likely from large sectors of the public. Decisions of the
4
Tribunal may have a major effect on the supervising Government Department.
Medium profile; public interest likely to be localised to area, sector or discipline.
3
Limited profile; usually non- controversial determinations but of interest to small pressure
2
groups.
Low profile; generally non-controversial findings or recommendations.
1
Add the scores for each factor together to give a total score. Then refer to the table
below for the ranges of fees payable for Group 2 bodies.
109
Group 2 - daily fees
Total score
Level
Fees range – chair
Fees range – members
26-29
1
$695 - $1,085
$445 - $690
22-25
2
$630 - $925
$410 - $570
17-21
3
$575 - $780
$365 - $510
13-16
4
$485 - $605
$315 - $390
under the
12 or less
5
$365 - $540
$290 - $350
Group 3: Governance Boards
110
These are boards that are primarily responsible for the governance of a Crown body or
organisation (most C own 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.
111
Governance boards have responsibility for the strategic direction of the organisation, the
determination of business objectives and formulation of policies to achieve these, and
Released
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 cas s, 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.
112
A number of Trust Boards also fit into this category.
Official Information Act 1982
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Group 3a: General Governance Boards (including TEIs and DHBs)
Factors - choose one score from each of the following categories (noting paragraph 111).
113
Size
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.
Budget/turnover
Assets
Score
$0-$10m
$0-$100m
2
$10m-$50m
$100m-$500m
4
$50m-$100m
$500m-$1.0b
6
$100m-$300m
$1.0b-$3b
8
$300m-$600m
$3b-$6b
10
$600m-$1.2b
$6b-$12b
12
$1.2b+
$12b+
14
under the
114
Business
complexity/functionality
Select the prime function and then consider and assess the complexity of the prime function
in accordance with the following tables. Where the organisation clearly has
more than one
prime function and the board is actively involved in decisions relating to both functions,
the scores of the two functions may be added, but consultation with the SSC is required.
Option
Prime function
Developed
An entity that specialises in making purchase decisions on behalf of the Crown. There
Purchaser
will almost certainly be a contractual relationship between the entity and the provider
of services
Released
Funding
An en ity established to distribute grants or funding.
Disbursement
Investment
and An entity involved in the investment and management of funds on behalf of the Crown
Management
of or for beneficiaries.
Funds
Advisory to Crown
An entity advisory to the Crown at a significant level.
Regulato y
An entity exercising regulatory and/or quasi-judicial power in an independent and
objective manner
Official Information Act 1982
Provider of Services
An entity established to provide services. The level of competition for the services will
and Environment
vary, and there may be limits on competition prescribed by statute or otherwise.
Holder of
The holder of the Crown’s ownership interest.
Ownership Interest
Social Influence
An entity established to improve a social outcome or outcomes through encouraging
behaviour change (e.g. healthy lifestyle choices) by promotion of activities and
increasing public awareness.
284308v1
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Devolved purchaser
Prime function
Score
Devolved purchaser of goods and services ($10b+)
5
Devolved purchaser ($1b-$10b)
4
Devolved purchaser ($100m-$1b)
3
Devolved purchaser ($20m-$100m)
2
Devolved purchaser (under $20m)
1
OR
Funding disbursement
Prime function
Score
Funding disbursement ($10b+)
5
Funding disbursement ($1b-$10b)
4
Funding disbursement ($100m-$1b)
3
Funding disbursement ($20m-$100m)
2
Funding disbursement (under $20m)
1
OR
Investment and management of funds
Prime function
Score
Investment management of funds (over $5b)
5
under the
Investment management of funds (over $1b)
4
Investment management of funds (over $500m)
3
Investment management of funds (over $100m)
2
Investment management of funds (under $100m)
1
OR
Advisory to Crown
Prime fun tion
Score
Critical level with a comprehensive effect on most/all aspects of government activity,
5
strategy and New Zealand society
Released
Significant level with a widespread impact across many aspects of government activity,
4
planning and strat gy
Important level with generalised impact across major sectors
3
Generalised impact across several sectors
2
Local or single s ctor impact
1
OR Official Information Act 1982
Regulatory
Prime function
Score
National safety regulatory function for a commercial trading environment where
5
significant international dimensions can impact on operating capability
National safety regulatory function for a commercial trading environment
4
National safety regulatory function for a non-commercial trading environment
3
Regulatory
2
Minor regulations required
1
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OR
Provider of services and environment
Prime function
Score
The lead provider of services in a commercial trading environment, where market
5
leadership is important
A provider of services in a commercial trading environment
4
The major provider of services where there is limited competition
3
A provider of services where there is limited competition
2
Provider of services (not in a competitive environment or protected by statute)
1
OR
Holder of ownership interest
Prime function
Score
The holder of the Crown’s ownership interest
1
OR
Social influence
Prime function
Score
Promote behaviour change and increase public awarene s for ll or most of the
5
population,
and have a measurable, beneficial, influen e on a substantial segment of the
population
Promote behaviour change and increase public aw reness for all or most of he
4
under the
population,
or have a significant influence on a more limited but stil substantial segment
of the population
Promote behaviour change and increas public awareness in a substantial segment of the
3
population,
and have a significant in luence on a limited s gment of the population
Promote behaviour change and increase public awareness in a substantial segment of the
2
population
Promote behaviour change and increase public awa eness in a limited segment of the
1
population
A
dd the scores for “size” and o e “business complexity/ functionality” together to give a total
score. (Consult with SSC about having more than one prime function.) Refer to the guidance
in section C and the table below for the ranges of fees payable for Group 3a bodies.
Released
115
Group 3a – annual fees
Total score
Level
Fees range – chair
Fees range – board
21-24
1
$36,905 - $81,930
$18,450 - $40,595
15-20
2
$31,475 - $66,865
$15,735 - $33,430
11-14
3
$28,220 - $48,845
$14,110 - $24,390
7-10
4
$26,050 - $36,470
$13,025 - $18,410
Official Information Act 1982
6 or less
5
$13,025 - $27,350
$6,510 - $14,195
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District Health Boards Statutory Committees
116
Under sections 34 to 36 of the NZ Public Health and Disability Act 2000, each DHB is
required to establish permanent advisory committees on community and public health,
disability support, and hospitals. An additional $2,500 a year is paid to each DHB member
who is a member of an advisory committee. If a member attends less than 10 meetings per
annum, the fee is pro-rated. The fee for the chair of each of these committees is $3,125 per
annum. These fees are paid to DHB members who are also on DHB audit, risk and finance
committees.
Group 3b: Subsidiary Bodies of Statutory Entities
117
The 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.
118
Size
The following two size criteria are consistent with the protocol for General Governance
Boards (Group 3a) above (see paragraph 113).
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.
under the
Please note that funding disbursements and purchases on b half of the Crown are treated in
the same manner as operating budgets
Budget/turnover
Ass ts
Score
$0-$10m
$0-$100m
2
$10m-$50m
$100m-$500m
4
$50m-$100m
$500m-$1.0b
6
$100m-$300m
$1.0b-$3b
8
$300m-$600m
$3b $6b
10
$600m-$1.2b
$6b-$12b
12
$1.2b+
$12b+
14
Released
Refer to the guidelines in section C and the table below for the ranges of fees payable for
Group 3b bodies.
119
Group 3b – annual fees
Total Score
Level
Fees range – Chair
Fees range - Members
10 – 1
1
$24,965 - $39,855
$12,480 - $19,925
6 – 9
2
$23,335 - $37,365
$11,665 - $18,680
Official Information Act 1982
5 or less
3
$20,080 - $33,490
$10,040 - $16,745
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Group 4: All Other Committees and Other Bodies
120
This 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.
121
The level within this category are determined by:
skills, knowledge and experience required for members;
function, level and scope of authority;
complexity of issues;
public interest and profile.
Factors – choose one score from each of the following categories
122
Skills, knowledge and experience
Skills, knowledge and experience will vary b tween 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
under the
reflect that it is the application of the skills, knowledg and experience in carrying out their
responsibilities that is a major contributor to the successful operation of the committee or
body.
Skills, knowledge and Definition
Score
experience
Pre–eminent
Outstanding and authorita ive knowledge, recognised nationally and 12
internationally for expertise in a particular field.
Distinguished
Deep and broad knowledge in a specific area or as a leader. Widely 10
respected as a subject matter expert or authority in their field.
Substantive
Subst ntial range of knowledge and experience in a field or 8
professi nal discipline sometimes associated with senior level
Released
functional or technical leadership, executive management or
governance roles. May include widely respected people with broad
community support.
Technical
A number of years’ experience in a technical, professional field or in a 6
leadership role is a pre-requisite.
Speciali ed experience
No specific experience is required but members would have broad 4
general knowledge and may represent a body of opinion.
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284308v1
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123
Function, level and scope of authority
Function, level and scope of authority
Score
Sets policy or work programme for a major area of economic activity or policy area of 6
importance to the Government’s strategic priorities.
Sets policy or work programme and/or exercises regulatory/disciplinary powers at an industry 5
level.
Provides expert counsel and advice direct to Ministers, agency governance boards or CEOs 4
and/or multi-agency task forces on technical or major policy issues, where issues are of
strategic importance. At this level the body would be expected to be proactive in identifying
emerging issues and contributing to policy direction and to inform the Government’s agenda
Exercises regulatory/disciplinary powers at the individual/professional level. This will include 3
the power to impose fines and suspend or prohibit professional practice by the individual.
(NB: This would include an individual corporate member.)
Provides a broad range of advice on technical and/or policy issues (multi outputs) to an 2
agency governance board/CEO or Minister where issues affect Government policy.
Provides ad hoc advice to an agency governance board/CEO or Minister on minor matters. 1
Generally a limited focus at a single output level.
124
Complexity of issues
Complexity of issues
Definition
Score
Innovative
The developmen of new concepts is r quired to find 5
innovative and pathfinding solutions. There will be little
under the
or no external guidance (NZ or in ernationally) to aid
resolu ion of these issues.
Constructive
The development of new policy or advice is required 4
where the issues are complex, multi- dimensional and
involve substantial research, consideration of possible
alternatives and heir consequences. The body may
commission research or utilise the findings to inform their
policy devel pment or advice.
Evaluative
Issues will include circumstances, facts and concepts 3
differ nt to those that have been experienced in the past.
Analytical thinking and evaluative judgement will be
required
to
identify
realistic
alternatives
and
apply/recommend a solution.
Released
Judgement
Solutions will be found from application of professional 2
or personal judgement and generally guided by previous
decisions. Circumstances may be different from those
previously experienced but there will be a sufficient frame
of
reference
to
make
a
considered
decision/recommendation.
Operational
Issues to be resolved are generally within existing policy 1
and prior decisions. Decisions can generally be made
quickly and with reasonable certainty.
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125
Public interest and profile
Public interest and profile
Score
Widespread public interest in outcomes would be expected. Member/s will attract strong 5
media interest. Potential risk to personal and/or the body’s reputation is high.
Strong public and stakeholder interest and importance would be associated with these issues. 4
Media interest would also be expected, but potential risk to personal or the body’s reputation
is unlikely.
Moderate but widespread public interest is likely. Reputational risk is minimal.
3
Public interest is likely to be limited, but the issues would be of interest to other members of 2
the particular profession or sector.
There is likely to be little or no wider public interest in the decisions.
1
Add the scores for each factor together to give a total score. Then refer to the guidance in
section C and the table below for the ranges of fees payable for Group 4 bodies.
126
Group 4 – daily fees
Total Score
Level
Fees range – chair
Fees range - members
24-28
1
$540 - $1,150
$ 05 - $865
under the
20-23
2
$390 - $885
$290 - $560
15-19
3
$280 - $575
$205 - $395
10-14
4
$250 - $365
$190 - $270
9 or less
5
$205 - $265
$150 - $205
Audit and Risk Committees - Government Departments
127
Most 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 memb rs of these committees and the complexity of the matters on
which they advise, higher fees for agency audit and risk committees have been approved.
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(The Office of the Auditor-General provides advice on audit committees.)
128
Fees for chairs of audit and risk committees can be up to $1,300 per day and fees for
members can be up to $1,085 per day (up to a maximum of 30 days per annum in both
cases).
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Section E: Operating outside the parameters of the Framework/
exceptions to the Framework
129
Operating outside the parameters of the Framework includes situations where it is
proposed to:
pay fees above the levels set in the fee scales;
increase existing fees by more than 5% (even within the applicable fee range);
use alternative methods for paying or setting fees (for example, payment of a base
honorarium plus a fee for additional services, Crown bodies setting their own fees
from a total pool, a full time fee);
make additional payments for work in excess of the ordinary demands on
body members;
make additional payments to chairs of sub-committees (see paragraphs 64 to 67).
130
Where Ministers, agencies or other fee-setting authoriti s 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 of State Services. Proposals to
pay fees outside the parameters of the Framework range should f rst be discussed with the
SSC.
131
The following flowchart summarises the process to use when there is a need to operate
under the
outside the parameters of the Framework and for fees for all Group 1 bodies.
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under the
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132
The 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.
133
A 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 SSC.
134
The Minister of State Services 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 is:
minor (including but not limited to):
where an additional payment is indicated for specifi d additional work; or
where the additional cost involved in an exception is small; or
where the exception is of modest scope;
or:
technical (including but not limited to):
where a change from a daily payment to an annual fee is proposed because of
under the
predictability of workload, or where a change from an annual fee to a daily
payment is proposed;
or where:
the proposed daily fees for Group 1, 2 and 4 bodies are above the Framework range
but the rationale for the proposed fee is strong and does not exceed the daily fee
payable to a High Court Judge; or
an ncrease up to 10 percent (see section F) is within the applicable fee range and
supported by strong rationale.
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135
Where an exception is more substantial, the responsible Minister will refer the proposal for
consideration by APH and Cabinet, after consultation with the Minister of State Services.
136
For exceptions for agency bodies or committees, the agency consults the responsible
Minister and the Minister of State Services.
137
If 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 of State Services
(with advice from the SSC). For exceptions for subsidiary bodies, the parent entity
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consults its monitoring agency, the responsible Minister and the Minister of State Services
(with advice from the SSC).
138
If there is a difference of view between the responsible Minister and the Minister of State
Services about the appropriate fee levels, the options should be presented to APH.
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Standing exceptions
139
A 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.
140
Standing exceptions are those exceptions where APH has agreed that those exceptional
fees can be paid to all new appointments and re-appointments to that body without the
need to refer to Cabinet for further approval.
141
Where 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 SSC in the first instance. The SSC 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 of State Services, will then seek the
agreement of APH to the standing exception.
142
The SSC maintains a record of standing exceptions.
143
Any proposal to increase the fees once the standing exception has been approved would be
subject to additional approval.
Grandparenting of existing fees
144
When changes to a body’s responsibilities lead to the body’s reclassification to a lower fee
under the
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.
145
Where 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 of State Services may approve the extension of
grandparenting s a technical exception.
146
Grandparenting of fees pplies 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
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same body receive th 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.
147
Information about any grandparenting arrangements, including changes to or extensions to
existing arrangements will be sought through the SSC annual fees survey.
Payment for consulting
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148
Members 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.
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149
Where 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 SSC Model Standards on Conflicts of Interest, 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.
150
If 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).
under the
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Section F: Reviewing existing fee levels
151
Fee-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.
152
Changes 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 State sector remuneration will be modest.
153
This 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 incr ase 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 exec tive
or governance board.
154
Where 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 Fr mework and requires consultation with
the Minister of State Services.
155
Where a proposed increase is up to 10 percent and within the applicable fee range, the
Minister of State Services may approve the increase. Wher a proposed increase is greater
under the
than 10 percent or the proposed increase takes the fee above the applicable fee range, the
proposal must be referred to Cabinet for consideration (see section E). For further advice
please contact the SSC.
156
When 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.
157
Backdating of increases should generally be avoided. However in some cases, such as
where there h s been undue delay in approving the increases, backdating may be
appropriate. Approval for backdating must be sought from the authority approving the fee
increas . For guidance on particular cases please consult the SSC.
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Section G: Other
Indemnity and insurance
158
The 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.
159
The 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.
160
The 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 th
general powers of the body must be checked to determine whether it has the power to
indemnify or purchase insurance for its members.
161
The Crown Entities Act 2004 requirements for statutory entity indemniti s 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 p rformance 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
under the
bad faith or not in performance or intended performance of the entity’s functions.
162
In 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.
Employment status
163
Members of boards of statutory bodies, statutory tribunals, authorities or other bodies are
generally ppointed 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
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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).
Tax on fees
164
Taxation matters depend on the personal circumstances of the individual board member
(member) and the terms of their contract/appointment.
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165
Members should be advised by the agency or parent entity to clarify their taxation status by
reference to professional advice or Inland Revenue.
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166
A payment of fees is generally made to and derived by the member and is in most cases
classified as ‘payments of company directors’ fees, examiners’ fees, honoraria, and other
payments’ which is a form of schedular payment. The tax rate for these payments is 33
cents in the dollar unless Inland Revenue has issued an exemption certificate or a special
tax rate certificate to the recipient, or the recipient has chosen their own rate (a minimum
of 10 cents in the dollar). The member must complete a Tax Rate Notification for
Contractors (IR330C) form and select the appropriate rate, otherwise withholding tax must
be deducted at the non-notification rate of 45 cents in the dollar.
167
If and only if, the member is performing the service (to which the payment of fees relates)
as an agent or representative of another entity which has agreed to perform the services,
then the payment of fees is derived by that entity and not by the member. A payment of
fees to a company is not subject to withholding tax. A payment of fees to a Trust or
Partnership is subject to withholding tax, unless they hold an exemption certificate.
168
If a member is paid a fee or another amount in relation to their engagement in
circumstances in which they are required to account for the payment to their employer the
payment is treated as consideration for the services provided by the employer and in most
cases is not subject to withholding tax.
169
A payment of fees to a member who is also an employee, with a contractual arrangement
with the contracting Board to provide directorship duties as part of his or her employment
contract is not a schedular payment subject to withholding tax. Such a payment is salary or
wages or an extra pay. Payment must be taxed using the PAYE calculator.
170
A payment of fees to a member, in respect of their capacity as a board member, is not
under the
subject to GST. However, if a person is carrying on a taxable activity and accepts office as
part of their taxable activity, any service supplied by that person as holder of that office is
deemed to be supplied in the course or furtherance of that taxable activity. Accordingly,
the member must return GST on fees they charge for services as a director.
171
If the member accepts office in their capacity as an employee of a third party or as a
partner in a partnership, the director s not required to return GST on their fees. However,
the employer o partnership may be required to return GST.
172
Reimbursement for expenditure incurred in relation to work or services performed by a
board member is not subject to withholding tax.
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173
The f e should include any income tax payable. Agencies or parent entities should ensure
that total payment to the member (before deduction of any tax) does not exceed the
maximum of the fee range that applies to the body’s classification under the Framework,
unless an exception has been approved. Where the application of GST to a fee for a
member of a non- statutory body puts the fee above the applicable Framework range, an
exception is not required to be sought.
174
Not that:
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A board member cannot simply divert a payment to a company to avoid having
withholding tax deducted. If the member wishes for no withholding tax to be
deducted from payments received for directorship services they provide the board in
their individual capacity, they must have applied for, and been granted, an exemption
certificate;
The fact that the board member has a fiduciary or contractual duty to account for the
fees to a third party (e.g. their employer) does not affect how the payer should apply
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the schedular payment rules. The fact that a member has a fiduciary duty to account
to a third party is irrelevant to the payer’s withholding and payment obligations;
Whether or not there is a withholding obligation will depend on who has been
contracted to provide the service to the board, and in what capacity they have been
contracted. It will not depend on who the member wishes the payments be made to.
Even if a payment is directed to a third party at the request of the person providing
director services, the payer should still treat the payment as being to the person who
provided the services.
Disclosure
175
Any 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 con istent with public
accountability should apply.
Fiscal implications
176
Any 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.
Cabinet committee submissions
under the
177
In 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.
178
Section 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 deci ions are made. n those cases where the responsible Minister proposes
fees outside the parameters of the Framework, the submission should note that consultation
with the Minister of State Services has taken place, and should outline the basis for going
outside the parameters of the Framework.
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179
If there is a difference of view between the responsible Minister and the Minister of State
Services about the appropriate fee levels, the options should be presented to APH.
180
In these cases, appointments should not be made until fee levels have been agreed. Please
also r fer to the CabGuide.
Further information
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181
For advice on the application and interpretation of the fees framework, contact the State
Services Commission, email: [email address] or phone (04) 495 6600.
182
For advice on taxation on fees, contact Neil Owen, Team Lead, Significant Enterprises,
email: [email address] or phone (04) 890 3061.
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Glossary of Terms
Agency – a Public Service department, Crown agent, Autonomous Crown entity or Tertiary
Education Institution that may support Ministers to establish bodies and / or establish bodies
itself, and therefore is responsible for applying the Framework.
Autonomous Crown Entity – one of the three types of statutory entities defined in the
Crown Entities Act 2004, Autonomous Crown entities must have regard to government
policy that relates to their functions and objectives when directed by the responsible
Minister. Autonomous Crown entities are listed in Part 2 of Schedule 1 of the Crown
Entities Act 2004 and are covered by the Framework.
Bodies in which the Crown has an interest – this term is used in several Acts to apply the Cabinet
Fees Framework to a body or bodies named in the Act, but the term is not defined It is
generally understood to:
•
be broader than ‘government agency’ if that term is synonymous with agencies that
operate within the executive branch of government or that operate as instruments
under direct or indirect Ministerial control or direction, or where the body or
individual is appointed by a Minister or department
•
encompass certain bodies and individuals in the judicial branch of government
•
include bodies and individuals that carry out some aspect of the business or
responsibilities of central government, or that scrutinise or investigate or assist the
agencies that do so directly.
under the
Crown Agent – one of the 3 types of statutory entities defined in the Crown Entities Act 2004,
Crown agents must give effect to government policy that relates to their functions and
objectives when directed by the responsible Minister. Crown agents are listed in Part 1 of
Schedule 1 of the Crown Entities Act 2004 and are covered by the Framework.
Crown entity – includes any entity within he 5 categories specified in the Crown Entities Act
2004, i.e. statutory entities, Crown entity companies, Crown entity subsidiaries, school
boards of trustees and tertiary education institutions. Only some Crown entities are covered
by the Framework (see paragraph 20).
Crown entity companies – companies incorporated under the Companies Act 1993 that are wholly
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owned by the Crown and named in Schedule 2 of the Crown Entities Act 2004. Crown
entity companies are not covered by the Framework.
Department – in the Framework the term “department” is used for Public Service departments
including departmental agencies as specified in Section 27A of the State Sector Act 1988.
The te m “agency” has been used in the generic sense. The term “monitoring agency” is
used to refer to the entity responsible for ministerial support and administration.
District Health Board – a Crown entity established under section 19 of the New Zealand Public
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Health and Disability Act 2000 to provide, or fund the provision of, health services and
disability support services in a specified geographic area. District Health Boards are Crown
Agents and covered by the Framework.
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Exception – an exception applies when approval is given to vary the Framework fee-setting
parameters for a particular body. Section E of the Framework sets out the circumstances that
might give rise to an exception. In some circumstances, the responsible Minister and the
Minister of State Services can approve the exception but other exceptions require approval
by APH or Cabinet.
Minor exception – where an additional payment is appropriate for specified additional
work, where the additional cost is small or the exception is of modest scope it may be
approved by the responsible Minister and the Minister of State Services
Standing exception – an exception approved by APH for all members of an individual body
without requiring further approval for each appointment or reappointment.
Technical exception – where an exception is cost neutral and supported by a sound
rationale (e.g. the conversion from annual to daily fees or vice-versa due to a change in the
meeting regime for a body) it may be approved by the responsible Minister and the Ministe
of State Services. Proposals for annual fees for Group 1, 2 and 4 bodies and extensions to
grandparenting arrangements are also technical exceptions.
Expenses – provision for reimbursement of out-of-pocket expenses incurred on body business,
including travelling, meal and accommodation expenses
Fee-setting authority – the position(s) or organisation that has the authority to set fees for a body
covered by the Framework. In most cases for Group 1, 2 and 3a bodies, the fee-setting
authority is the responsible Minister, in consultation with the Minister of State Services or
APH. In the case of subsidiaries and sub-committees it is the parent entity. In the case of
under the
Group 4 bodies, the fee setting authority may be the governance board or chief executive of
an agency.
Fee range – the minimum and maximum fees applicable to the chair and members of a body within
the particular category.
Governance board – the board that is responsible for the governance of a body that comes under
the Framework.
Government inquiry – a time-limited body established to inquire into and report on specific
matters whose members are appointed by a Minister or Ministers pursuant to the Inquiries
Act 2013.
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Grandparenting – refers to payments where approval has been given, on a case-by-case basis and
for a specified time period, for an existing body member(s) to retain their existing fees when
changes to a body’s responsibilities lead to the body’s reclassification to a lower fee range.
Honorarium a financial payment made to acknowledge a service provided which is considerably
less than the value of that service.
Independent Crown Entity – one of the three types of statutory entities defined in the Crown
Official Information Act 1982
Entities Act 2004, Independent Crown entities are generally independent of government
policy directions. Independent Crown entities are listed in Part 3 of Schedule 1 of the Crown
Entities Act 2004 and are not covered by the Framework (apart from reimbursement for
expenses), although their subsidiaries are covered by the Framework.
Monitoring agency – assists the responsible Minister in making appointments and applying the
Framework, and monitoring the performance of the body. It may also provide administrative
services to the body. The monitoring agency is usually a government department but may
also be a Crown entity or the parent body of a subsidiary.
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Non-statutory body – means a body that is subject to the Framework but is not established in
legislation.
Parent entity – these are bodies to which a subsidiary or sub-committee is responsible.
Public inquiry – a time-limited body established to inquire into and report on specific matters
whose members are appointed by the Governor-General, pursuant to the Inquiries Act 2013.
Public sector employee - covers employees in all the agencies in the wider state 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.
Public servant - applies to all employees of public service departments. Public servants are a sub
group of public sector employees.
Remuneration – means the fees that members of bodies under coverage of the framework receive
for their contribution to the body.
Responsible Minister – the Minister of the Crown with portfolio responsibility for the body – see
the Cabinet Office Directory of Ministerial portfolios.
Royal Commission – a time-limited body established to inquire into and report on specific matters
whose members are appointed by the Governor General, pursuant to the Letters Patent and
the Inquiries Act 2013.
Statutory body – means a body that is subject to the Framework and is established in legislation.
under the
Statutory entity – one of the 5 categories of Crown entities under the Crown Entities Act 2004, it
refers to Crown agents, Autonomous Crown entities and Independent Crown entities. Crown
agents and Autonomous Crown entities are covered by the Framework, but Independent
Crown entities are not (apart f om reimbursement for expenses).
Statutory tribunal and authority – a diverse group of bodies independent of the executive whose
predominant purpose is to exercise a defined specialist jurisdiction under legislative
authority.
Sub-committee – in the Framework the term “sub-committee” is used to refer to any committee or
sub-committee establish d by a parent body that is subject to the Framework.
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Tertiary Education Institution – one of the 5 categories of Crown entities under the
Crown Entities Act 2004. It includes colleges of education, polytechnics, specialist colleges,
universities and wānanga which are bodies corporate established under Part 14 of the
Education Act 1989. They are covered by the Framework.
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