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 says this has the potential to incentivise change.

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