Local Government Minister Rodney Hide says the mayor of Christchurch has shown good leadership by pledging his pay rise to charity.
However, he says there also needs to be a change to the way pay increases are calculated for public servants.
He describes the system whereby elected officials are given a pay rise every year is archaic.
Christchurch mayor Bob Parker says he decided to give his $5032 pay rise away in light of Prime Minister John Key's call for restraint on MPs' salaries.
Mr Parker, who's paid $158,000 a year, says he doesn't feel comfortable taking the money in the current tough economic climate, and he'll give it to a charity or community project instead.
He acknowledges that as mayor of one of the larger cities he can afford to waive the increase but says he doesn't expect mayors of smaller towns to follow his lead.
Wellington mayor Kerry Prendergast, who is also vice-president of Local Government New Zealand, says many mayors think they don't get paid enough.