Performance-based pay is on the horizon for Chief Executives of public sector agencies. 

Departments are moving to another phase of cost-savings after the Budget confirmed spending reductions. 

Finance and Public Service Minister Nicola Willis has confirmed pay boosts will be tied to progress but she's not expecting any bonuses to be paid out for at least a year. 

Infometrics Principal Economist Brad Olsen told Mike Hosking that this has the potential to incentivise change. 

He says it's reflective of the directive to give results that stack up. 

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