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PM’s pay pickle: MPs’ pay rises loom amid public sector cuts

Author
Jason Walls,
Publish Date
Mon, 8 Apr 2024, 7:30am
Prime Minister Christopher Luxon won’t say if he thinks MPs should receive a pay rise: “Those are decisions for the independent Remuneration Authority, and it would be inappropriate for the Prime Minister to comment”. Photo / Mark Mitchell
Prime Minister Christopher Luxon won鈥檛 say if he thinks MPs should receive a pay rise: 鈥淭hose are decisions for the independent Remuneration Authority, and it would be inappropriate for the Prime Minister to comment鈥. Photo / Mark Mitchell

PM’s pay pickle: MPs’ pay rises loom amid public sector cuts

Author
Jason Walls,
Publish Date
Mon, 8 Apr 2024, 7:30am

The independent body tasked with setting MPs鈥 pay is just weeks away from deciding if politicians will get a pay raise for the first time in more than half a decade.

The decision comes as the听ministerial mandates to cut most government departments听by at least 6.5 per cent has already resulted in proposals to disestablish听hundreds of government jobs.

The Prime Minister won鈥檛 say if he thinks MPs should receive a pay rise: 鈥淭hose are decisions for the independent Remuneration Authority, and it would be inappropriate for the Prime Minister to comment鈥.

Labour leader Chris Hipkins issued a similar statement, saying it鈥檚 important the authority maintains its independence, so it can complete the work required of it by law.

But while noting the authority鈥檚 independence, the Greens co-leadership said the prospect of MPs receiving a pay rise at a time so many households are enduring financial strain will be a 鈥渂itter pill to swallow for many鈥.

Political commentator Bryce Edwards agrees.

鈥淎t a time of a cost-of-living crisis, [an increase to MPs pay] would be deeply unpopular and will lead to a backlash.鈥

He doubts whether Parliamentarians would even want a pay rise at a time like this.

Despite this, it鈥檚 understood some MPs are not unsympathetic to the idea of a pay rise.

That鈥檚 because it鈥檚 been six and a half years since they last received a bump in their pay packet.

Prime Minister Christopher Luxon and labour leader Chris Hipkins both say the matter of MP pay increases is up to the independent Remuneration Authority. Photo / Mark Mitchell

Prime Minister Christopher Luxon and labour leader Chris Hipkins both say the matter of MP pay increases is up to the independent Remuneration Authority. Photo / Mark Mitchell

According to New Zealand law, MPs鈥 pay is set by the politically independent Remuneration Authority and reassessed after every election.

In 2018, then-Prime Minister听Jacinda Ardern instituted a pay freeze for all MPs听after the authority recommended a 3 per cent pay raise.

The recommendation came at time of widespread teacher and nurses strikes across the country.

鈥淚t does not sit well with me or this Government that ... we have increases that are out of kilter with what the average New Zealander is seeing,鈥 Ardern said at the time.

A spokesman for the Remuneration Authority said it implemented a zero increase from July 1, 2019 until after the election in October 2020.

But when it did that review after the 2020 election,听Covid听was in full flight, so it put out a three-year determination for MPs鈥 pay with zero increases again.

Now it鈥檚 back on the agenda.

However, it appears a decision on MPs鈥 pay will not have a retrospective element.

鈥淲e are doing a 鈥榞reen-fields鈥 review; that is we are not looking backwards six and a half years and trying to recoup what was lost through the various pay freezes,鈥 a Remuneration spokesman said.

鈥淲e are starting again and investigating what fair relativity is at this time for MPs pay 鈥 that is effectively what the law requires us to do.鈥

There鈥檚 a sliding pay scale for MPs. The Prime Minister receives $471,049 a year (plus perks), Cabinet Ministers and the Leader of the Opposition get $296,007 and non-executive MPs 鈥 those without leadership positions within their party or on select committees 鈥 get $163,961 a year.

The average annual wage in New Zealand is closer to $70,000 a year.

Bryce Edwards said the MP pay question brings into focus the issue of politicians鈥 pay in general.

鈥淚n the past, the average backbench MP received a pay that was roughly in line with a senior secondary school teacher; these days it鈥檚 roughly double that.鈥

He said this is a bit of a democratic problem.

鈥淚f the way our representatives live and the incomes they鈥檙e used to are so out of sync with wider society, it will make people wonder whether they are representatives or part of a distanced elite.鈥

The Green co-leaders agree.

鈥淲e鈥檝e seen a massive divergence in the last 40 years as teachers have been forced to negotiate their pay every other year as the power of unions has been intentionally and systematically undercut, while MPs salaries are set by an independent authority. This tells us all we need to know about the need to change the system to a far fairer one,鈥 they say.

The Remuneration Authority says it will make its decision on MPs pay, and recommend it to the Prime Minister in late April.

The article was originally published on NZ Herald,

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