Prime Minister Jacinda Ardern says the Government will be freezing all MP salaries and allowances for a year while a “fairer formula” for pay increases is found.
The Government will introduce legislation next month under urgency to amend the Remuneration Authority Act. This is the only way MPs pay can be changed.
Ardern has taken the issue up with Labour’s Coalition partners, as well as the leader of National and ACT – Ardern says all parties appeared supportive of the moves.
The Remuneration Authority – an independent body that sets MPs salaries – advised that it was planning to increase MPs pay by 3%.
But Ardern says that was “not acceptable to this Government.”
“Cabinet agreed while the Government is focused on improving incomes for ordinary working Kiwis, it’s just not appropriate for MPs to be the subject of such an increase.”
The Government will now be developing what Ardern believes to be a fairer formula for future pay increases.
She would not, however, be drawn on what that formula could look like as it is too early in the process.
But she did hint that the new formula might not be based on a percentage increase.
“When you look at percentage increases, as a formula for salary increases, that only continues to extend the gap between MPs and others in the middle or the bottom end.”
The move, she says, does not save a lot of money but it will send a “signal about the Government’s values.”
Ardern says there has been an increasing gap in income between some of the richest and poorest New Zealanders.
“It’s just not right for us to have an increase like that currently, so we want to change the way our salary increases are calculated in the future.”
She says the move is not at all connected to National Leader Simon Bridges spending, which hit headlines last week.
The conversation about MPs pay started a couple of weeks ago, Ardern says – “it is completely unrelated.”
She also says it has nothing to do with the industrial action which has been happening across the country over the last month or so.
In 2015, Parliament made an alteration to the way MPs salary increases were calculated.
Ardern says it was done with “good intent, but what I think we have seen, as the outcome of the formula change, I don’t think sits with our expectations.”
83 Comments
Think you will find he did not donate ALL of his salary, and it was chump change to him, he also said he didn't want a pay rise, but could do nothing about it https://www.newshub.co.nz/nznews/john-key-i-dont-want-a-pay-rise-201502…
That's what I thought, too.
However, it turns out that like most other people, he simply donated some of his salary to charity. The idea he donated all of his salary to charity and did the job for free was an example of successful PR via the rumour mill.
NOT fact.
There is a reason why the independent Remuneration Authority was set up and a formula developed for them to follow, and that was precisely so that Governments couldn't just make stuff up on the spot for short-term political gains. It's a really bad precedent for Government to sweep all that aside on the basis of no apparent actual analysis or evidence, just the subjective feeling that something is "out of whack".
By all means have a review of the formula and the Authority's work, but why not wait for the results of that before deciding on its outcome? If you really feel bad in the meantime about getting a pay increase, you could always give the extra money straight back, or to a charity, or to the Inland Revenue, or the de Meanour holiday fund
No, sorry. MP pay and conditions have been out of whack with society for years and need serious fixing.
Helen Clark defended them by saying they had comparable responsibilities to a small company CEO. Well frankly if you believe that then I've got a car, horse and some bottom land to sell you at a really good price!
As to the Higher Salaries Commission - they've linked MP pay to that of CEOs and how out of whack they've been has been the subject of many a discussion too.
Personally I think their salary is on the low side. Prime minister is probably the hardest job in the country in terms of hours and stress yet there are plenty in the private sector earning more.
However there are a lot of perks after they leave office that seriously boost their income. I’d rather they got rid of the perks and instead had a salary that we could easily compare.
I tend to agree. If we want the best and brightest to sacrifice their career, their family, personal privacy etc for a job with a fixed tenure of 3 years I think good remuneration is important. I think that there could be a greater differential btwn list and electorate MPs pay.
Low side?
Our PM is the 6th highest paid leader in the world http://ceoworld.biz/2018/04/24/these-are-the-20-highest-paid-political-…
You really think running NZ is as tough as the UK, France, Canada, Germany, ...
Our PM almost earns as much as the President of the USA.
Disagree. Actually i am not concerned with the PMs pay. It is the additional perks and retirement benefits that bother me, as well as the pay for back bench MPs. $160k is way too high a starting salary for someone who is expected to do as they are told.
If they want to compare their job with that of a CEO, then they should go out and get a job as a CEO. As we have seen all too many MPs are essentially unemployable outside of Government
MdM is wrong, as usual.
This is our elected Government, they're what we put there to 'make stuff up'. I'm long enough in the tooth to have been in agreement and in disagreement with various govts and various decisions - but that's what a democracy is.
Every now and then, an ideology gets hold, of course. The flawed ones don't last (flaws always show up) and the flawed one (neo-liberal money-trumps-finite-planet, rentiers deserve more than everyone else) than hit us in 1984, is now fading. Those astute enough to see the writing on the wall, jumped.
Don't worry, this lot will have to change their narrative substantially, probably during their tenure - but it won't be in the neo-lib direction.....
You need to tighten up your definitions.
But they are the law-makers - ask the ex-Canty Regional Council. As for constitutional - you'd expect a referendum, wouldn't you? But I don't think MP pay rates rate that. Established process? Roger Douglas set a precedent there, didn't he? Too late to complain about blindsiding
:)
What is of more concern than the PM and MPs salaries is that the salaries of CEOs of SOE and Ministries far exceed that of the PM.
The CEOs of the four energy SOEs earn over $1m each - why do each earn more than twice that of the PM?
Even Ministers and MPs are poorly paid compared to many in the Public Service; 194 employees in Auckland City council earn more than $200K compared to MPs $170K.
CEOs of private companies - well that is even more obscene.
They have bought into a flawed premise that you have to attract outside talent to get the best for the company. Jim Collins book "Good to Great" demonstrates that often the best solution is tapping someone internally. As someone else identifies here Fonterra is a good example of just how great external talent can be for a company!
This is purer populism at its worse. We have the independent remuneration authority for a reason so that PM's on a whim can decide these things. This is why there is no confidence in the economy - who knows what she will decide next week and then figure out the policy later.
ridiculous comment... They aren't increasing them.. Jacinda is taking control of the marriage having realised that the 'Rock Star' economy that she thought she'd married was actually Keith Richards, stumbling around drunk on his last legs and either about to fall out of the coconut tree or possibly about to croak it!
I sharply disagree. This decision is another style over substance decision from an economic illiterate person - I am truly grateful that Robertson is there to keep her in check. There already is a policy in place to decide the salaries of MPs. If she wants to change that then that's fine but the actually come up with a policy, then implement it. This is populism pure and simple; maybe there wasn't a baby bump in the polls for her so that's why she is doing it. There is more the being PM than smug condescending nods of concern. She is the PM now; take an idea and turn into policy – it requires hard work which seems more and more an anathema to Labour these days.
.ummmmm. she believes the current policy is not delivering.. would you rather she just keep snorting, took the increase and said we will get to it soon (ie kick the can like Key did for 9 years)?
Let me guess, you backed the wrong team.
"We do not believe, given that we are at the upper end of the scale, that we should be receiving that sort of increase.
"The current formula isn't meeting our expectations.
"What we have seen in this determination I believe is out of kilt with those expectations.
"This is about us acknowledging that we are at the top end ... and this only extends that gap."
Mp's salaries are a bit like house prices, they need to freeze and stay there for 30-40 years and let inflation catch up. Why are our PM's getting almost twice what Canada and Britian's PM are, much larger countries. Maybe try their fomulars for working out your salary or look at some of our pacific Island neighbours??
Although I think Taxinda is inept I don’t have an issue with paying the position well. What I am livid about are the career pollies of all leanings who stay on the gravy train well past their use by date. There should be a maximum of three elections then out and never able to enter parliament again.
I’m understand that she means well enough and some people like her, however I unable to watch her on TV let alone acknowledge that the most powerful political position in my country is occupied by her, our accidental PM. It is what it is until something changes, but I can’t think what that change would be except for maybe to see her lead as opposed to play at the job. Sacking a few muppets like twatford would be a good start, then give Winstone a good death stare. I don’t think she has it in her.
Some people like her? Lots of people like her, actually. At least she is prepared to do more than your precious John Key, as he just shrugged his shoulders, as he did with most things, and absolved himself of any responsibility where that went.
Her job is probably harder than Key's as she is prepared to do the work, where he just kicked cans down the road, leaving the hard yards to a different govt.
That would be Sir John Key you are mentioning. He led. Taxinda is a ‘pleaser’. She will be a footnote in NZ history as the most ineffectual PM NZ has had. I don’t blame her, I blame Winstone. She said she didn’t want the job, because she knew she couldn’t do it. She has been tested and found wanting. The fact that none of her cabinet have been sacked is proof of that. She just puts them in the quiet corner and hopes they will shut up. Like a primary school teacher.
There are few people who bear the title "Sir" or "Dame" who have truly earned the honour as far as I am concerned, and I pretty much never use the term for any of them, Val Adams is still Val Adams to me, so John Key is fine by me as Taxinda is fine by you!
Hmm I wonder if you refer to Val Adams as "Dame"?
You can't be serious. John Key was the worst (performing) PM I can remember (as a Gen X). He was popular but had the spine of a jellyfish (and that might be too kind to him). He was nothing but a populist and was no where to be found when the hard questions were asked. Good riddance when he jumped ship like the rat he is.
Expat - you need to put your ideological blinkers down and start paying attention. Listen to the substance of what she is saying. Stop shooting the messenger just because you don't like the person. This Labour Government are genuinely trying to correct many of the messes that exist in this society. Messes caused by the Fee Market economic policies, successive government neglect of housing, infrastructure, law and order, health, declining living standards while the top end get wealthier. More to the point they are trying to address the issue pragmatically. they are not dishing out more dole, they are working to find ways to increase jobs and pay and so on. They are not driving an ideological programme. Yes the money won't and cannot stretch to do it all in the near future, but we have to start somewhere. And truthfully what i am seeing and hearing is a damn good start of making democracy work and Governments actually representing their constituents!
There are a few participants on this site who are still in shock and grief that National lost the election. They come on here to release their emotions, slam the Labour government, use old and tired monickers and talk smack about the Labour voters “sheeple” because if they didn’t they’d struggle to function throughout the day.
Another example of my comments in the weekend about diversion ... the circa Million $$ saving is neither here or there - She is just scoring some political points for Labour naive supporters to cheer about.
A textbook case of emotional ( and useless) stunt in an attempt for adding a brownie point to Labour's account that is nearing its receivership and bankruptcy announcement days.
Why not donate the million dollars salary savings to help housing some homeless people they have been crying about since August last year ?? -- or Top up Mr Jones's regional budget in case he runs short of spending his first Billion this year?
It is not the principle that is in play here, nor it is about a pay rise being " appropriate" or Not -- it is show business, plain and simple -- A diversion of last week's blunders of the 3 musketeers about Infa plans, and today's PT Gov Agencies' borrowings, and tomorrow's budget $$B holes, there is more poo to hit the fan in the coming days and weeks and they know it !!
She is working hard on bleaching this CoL's ugly slimy face, wonder how long that will last before totally going down the slippery slope ?
It is an interesting contrast. The strong suggestion from the ban of increases for MP salaries, is that other entities should also not expect salary increases. I wonder whether the teachers will receive this message. It was a bit late in terms of delivering the same message to the nurses.
Correct me if I'm wrong, I've been lead to believe teachers use to earn roughly as much as a 'Backbench MP' minus the entitlements - the aforementioned MP's income is now roughly $165,000 per annum.
PROBABLY A BIT HARSH:
I can see how a members pay increase would make for poor optics and an expanding of this pay gap which once wasn't there. Saying that, just because teachers once enjoyed pay parity with MP's doesn't mean they always should!
Many teachers are rubbish, IT noobs, teach irrelevant subject matter, are poor communicators, impose outdated conventions, promote social propaganda and just plain fail to pass along any value to students. In China I'm told there is a saying; "there are NO bad students, just bad teachers" - pause and think about that!
Though teachers could say, "if you want monkeys, pay peanuts". Still, it doesn't change the FACT that state imposed/forced primary and especially secondary education in New Zealand is more of a prison system than a market place students can use to gain employment or become entrepreneurs.
There's a lot of padding in the education system, poor quality padding at that. I refuse to give platitudes to these teachers, unlike our PM whom placates very well - though I've noticed sight condescension in her voice recently.
Their salaries were similar, although MPs did have a few perks that lasted on through their lives, such as free travel.
The interesting comparison is that of teachers and police, who should probably be on similar earnings, but it seems police are paid from the day they enter the academy and enter the force without debt whereas teachers have to fund themselves through their training. Mind you, on re-consideration of MP and teachers' salaries, back then teachers would not have first faced a classroom with debt, and quite a lot of it. Once you get your head around those things, it is clear they have fallen behind by more than how their pay stacks up against MPs and police.
Of course teachers are going to be lured overseas for decent money. I have friends, both teachers who have been teaching overseas now for the best part of 15 years, they won't be back before their kids have received a world class education at the institutes they themselves teach at.
A few perks that is the part that gets me rather than MPs pay, after nine years..full pension..and what a pension it is..keep the average MPs in there for a decade with a huge incentive.
There are bad employees in every walk of life..including MPs. Many teachers have a full on job all day long..no breaks...many in office jobs do 3-4 productive/intense hours a day..that what happens where I work...and we collect the six figure salaries...my wife is a teacher and basically is smashed each weekend trying to catch up.
In increasing order:
1) MPs are supposed to be representatives. So pay them a salary representative of New Zealanders (average wage).
2) MPs have a role similar in scope and hours worked to a senior manager in a private company. Pay them a salary comparable to a manager in the private sector.
3) We want the people leading us to be the best and the brightest. Pay them above market wages to lure the best into public service.
MPs at the moment are somewhere between options 1 and 2. Backbenchers are well paid but cabinet ministers are underpaid compared to people with similar responsibilities in the private sector. I personally wouldn't have a problem with option 3 if it improved the quality of representation.
MPs are paid more than many New Zealanders but less than what some of them could be earning outside Parliament. Some MPs are worth the money and others are not. So we have a muddled compromise. That is democracy. I'm OK with that too.
Use the Tax System.
Bring in an interim hike and then await the Tax Working Group recommendations, giving them some reason to be more adventurous.
A new step at say 45% above $150000 starting 1 Oct
It would have the advantage of more revenue than just the MPs, a lot more.
The problem with the current arrangement is the basic underlying mathematics in equality. If everyone received a 10% increase in income, all it does is magnify inequality even further, it is also the fundamental flaw in the neoliberal economic paradigm. The CPI and every other measure needs to be relative to each part of the economic distribution, including the income distribution. For example, while there are more people earning less than $100k p.a., those on $100k + p.a. shouldn't have their remuneration reviews calculated in the same way. A more fairer system would be to tie increases to the tax bands. Again, for example, an MP on $160k p.a. would receive a 2.5% increase on up to $48k, then a relative percentage increase on the higher bands relative to the number of the population within those tax bands. The actual percentage amount should be tied to what the overall populations has had as an increase in those bands, rather than some sort of arbitrary number derived from some group of socioeconomically disconnected analysts working for socioeconomically disconnected departments. I suspect that this is what the Government is hinting at doing, and I think it is the intelligent and morally correct thing to do, not just for MP's, but all public sector employees. The idea that you need to pay more to attract the best is not true, whether you pay someone $500k p.a. or $5m p.a. isn't going to change much in terms of that persons productivity because if they need more than that then there are underlying personality traits that more than likely mean they aren't invested in the outcome of their work.
Here is a novel idea... why not pay them the same as what they were earning before they entered parliament
Oh wait, that wont work for most of Labour who have never had a real job.
Jacinda - there is no need to tell us you are not worth that much... it has become painfully obvious
#NotmyPM
What did Sir John Key actually earn?
I'm not talking about currency-trading or operating in the 'financial sector' - that's parasitic. I mean doing something useful to society.
The problem is that most of society doesn't understand the difference, but someone cottoned-on:
https://truthfront.com/2017/10/13/churchill-on-landlords/
lotta rentiers out there............... :)
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