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The change was announced today by Prime Minister John Key in a state of the nation-style speech in Auckland this morning.
The Government will spend an extra $359 million over the next four years to support teachers and principals, which will create four new management roles in schools - executive principals, expert teachers, lead teachers and change principals.
"These new roles will recognise and use talent where it's needed most and will be implemented from next year," Mr Key said.
The four positions will not be put in place at every school.
Executive principals will provide leadership across a community of schools, and be paid an additional allowance of $40,000 a year. Each will work with an average of 10 schools.
Change principals will be employed to lift achievement in schools that are struggling. About 20 of these positions will be needed a year, and principals in this role will be given an additional $50,000 a year.
Lead teachers will be "highly capable" school teachers who will act as role models for those in their own school and those in their area. The Government anticipates around 5000 will be needed.
Expert teachers will work with executive principals and include experts in areas like maths and science.
The role will be on a two-year fixed-term basis, and their own school will receive funding to backfill their role for the two days a week they will be working with other schools.
Mr Key told the West Auckland business audience that New Zealand's education system needed to be improved, and the new changes outlined by the National Government were designed to lift student achievement.
"We want the best teachers and principals to lead a step change in achievement and we are going to pay them more to get it," he said.
Mr Key said details of the new roles still needed to be worked out, and that would be done in consultation with the education profession, including unions.
"Our intent is clear. We want to recognise excellent teachers and principals, keep good teachers in the classroom, and share expertise across schools and amongst teachers."
It is intended all roles will be fully in place by 2017.
His address comes after New Zealand's poor performance in OECD league tables published in December, which led to Labour's education spokesman Chris Hipkins saying New Zealand's scores were in "absolute freefall" and widespread debate about the direction of the education system.
It was New Zealand's first big drop in the rankings - from 7th to 13th in reading, 13th to 22nd equal in maths and 7th to 18th in science.
The Programme for International Study Assessment (Pisa) report also showed that the gap between 15-year-old students who are excelling and those who are failing has widened.
Some of today's changes are similar to those used overseas.
Last year Education Minister Hekia Parata hosted the OECD's Andreas Schleicher, who designed the Pisa system, and was told that top-performing countries ensured the most talented school leaders and staff went to the most needy schools.
In Shanghai, which topped the most recent results, vice-principals at successful schools can only become principals if they show they can turn around one of the lowest-performing schools.
Mr Schleicher told the Herald at the time that some New Zealand schools in disadvantaged areas did much better on the Pisa test, and the reasons for that needed to be shared across schools.
Estimates of new positions at schools:
• 250 executive principals
• 1000 expert teachers
• 5000 lead teachers
• 20 change principals (appointed each year)
• Executive principal - paid additional allowance of $40,000 a year
• Expert teacher - paid additional allowance of $20,000 a year
• Lead teacher - paid additional allowance of $10,000 a year
• Change principal - paid additional allowance of $50,000 a year