(Photo by Laura Walters for Newsroom)
Laura Walters and Fox Meyer
Newsroom, Wellington, May 17, 2025
Soon after the government delivers its Budget on May 22, 2025, Ministers and MPs will take a pay rise determined by an independent body, to the total tune of $669,100.
Next year, politicians’ salaries will rise by a further $1.24 million.
On Wednesday (May 14, 2025), 33 pay equity claims will be wiped from the books and claimants will need to reapply under a new regime. The decision to make it harder to bring a successful pay equity claim comes just over a month before Cabinet ministers are due to receive multi-thousand-dollar pay rises.
Despite the current economic environment and the high-profile pay equity announcement, which the government believes will save it billions of dollars due to fewer successful claims, Prime Minister Christopher Luxon says he will not be putting ministerial pay on ice.
The Equal Pay Amendment
Last week, the government announced its pay equity law reforms, which change the thresholds that need to be met to bring a claim.
The legislation, which was introduced last Tuesday (May 13, 2025), was rushed through all stages under urgency, with the government circumventing the usual public consultation process. The Equal Pay Amendment Act passed its third reading on Wednesday night, and a week later all 33 current claims will be wiped and forced to reapply under the new regime.
The changes to a law that was supposed to help level the playing field on gender-based pay discrimination mean some professions dominated by women will now be less likely to get a pay correction. It does not stop them from gaining normal annual pay rises determined by their collective agreements or employers.
Pay rise for Ministers, MPs
At the same time, MPs and government ministers are in line for pay increases come July 1, 2025.
The independent Remuneration Authority has decided that the Prime Minister, Deputy Prime Minister, Cabinet ministers and MPs will all receive a 2% to 2.4% pay rise this year.
That will take the Prime Minister’s annual salary from $498,300 to $510,300 – a 2.41% increase, or $12,000. Last September Luxon told media he was “wealthy, you know, sorted.”
Earlier that year, the Prime Minister’s salary nearly received a $52,000 boost after he initially claimed a monthly accommodation payment for living in Premier House. He returned the sum after Newsroom revealed he was claiming the entitlement to live in his freehold Wellington apartment while Premier House was being refurbished.
Meanwhile, the Deputy Prime Minister’s pay will rise by $8500 (2.4% ) to $362,600.
Their Cabinet colleagues, who also signed off on the pay equity reforms, will move from $313,100 to $320,600, a $7500 or 2.4% rise. Annual inflation for the March quarter was 2.5% and the household cost-of-living rate was 3%.
Freeze under Ardern
The government does not set the pay rates (or rises) of its ministers or MPs. That is done by the independent body. However, during the Covid-19 era, then-Prime Minister Jacinda Ardern circumvented the independent process and declared ministers and public sector Chief Executives were to take a pay cut. In 2020, Ardern, her ministers, and public service chief executives took a pay cut of 20% for six months.
Following that announcement, Ardern and her Finance Minister Grant Robertson brought in a pay freeze for top earners in the public service.
Luxon said he would not be intervening in any decisions made by the Remuneration Authority, but implied he would give away his $12,000 pay rise.
“I will be giving away increments of my salary as I have talked about in the past.”
While Cabinet ministers all earn more than $300,000 a year, the 33 claims that have been scrapped by the passing of the new pay equity law represent professions with lower average pay.
The plight of workers
Among those 33 claims, which will now need to reapply under the new, stricter regime, are teachers, care and support workers, social workers, midwives and librarians.
The teachers’ claim represented 95,000 people, covering secondary, primary and early childhood.
The average annual pay of an early childhood teacher is $71,500, but the average teacher earns $63,500, according to the government-run careers website.
The average base salary – without any additional incentives – for primary teachers is $79,643 based on their collective agreement. The average salary for a secondary teacher is the same since primary teachers achieved pay parity.
However, PPTA says the average secondary teacher earns $95,800 a year.
The primary and secondary collective agreements show there is a lot of variation in teacher pay, depending on years of experience and additional responsibilities. The first step or base starting rate for a new teacher, according to the collective agreements, is $61,329. By step 10, the base rate is $103,086.
Under the new rules, secondary teachers (which is not a 70-plus% female workforce) may not be able to successfully re-lodge their claim. But primary and early childhood teachers are predominantly women, and any pay gains won by primary teachers in a future pay equity claim are expected to be passed onto secondary teachers due to pay parity commitments.
Meanwhile, about 65,000 care and support workers – split across three pay equity claims – earn an average salary of $54,000, across a typical band of $50,000 to $58,000. According to careers. govt.nz, care and support professionals working in areas like aged residential care, in-home care and support and disability support typically earn $24 to $28 an hour.
Midwives under shock
Community midwives working in primary birthing units also had a claim lodged under the old pay equity regime. The rates for midwives working in different parts of the sector vary, but the graduate rate for a midwife is now $82,642 following an earlier pay equity settlement with Te Whatu Ora.
Caroline Conroy, Co-Leader of Midwifery Employee Representation & Advisory Service, was shocked by the announcement.
But because Health New Zealand had settled several claims already, and because it employs a dominant share of health professionals, Conroy said it “determines the market rates” for the health sector. Corrections staff also have active pay equity claims under the previous regime. They will be wiped when the Equal Pay Amendment Act comes into force on Wednesday (May 14, 2025).
They can reapply immediately under the new regime, but Corrections probation officers and senior practitioners may not meet the new threshold of 70% female workforce (the workforce was 68% women in 2020).
Those Corrections workers are typically paid between $64,359 and $81,909 a year.
In 2023, during bargaining, the Public Service Association said the community Corrections workforce was predominately female and up until now, had been subject to a performance pay system, where union members must prove their “competence” to their managers, to receive minimal pay increases.
“For years, these staff have also been the lowest-paid public servants across the front line of government services,” the association said at the time.
Meanwhile, Corrections psychologists, who have their own claims, are paid between $79,751 and $133,370.
On Monday (May 12, 2025), Luxon would not say exactly how much his government projected it would save based on the pay equity changes. Both he and Finance Minister Nicola Willis have said “billions” or “several billion dollars” will be saved as a result, but both refuse to expand on that figure, citing Budget sensitivity.
Laura Walters and Fox Meyer work for Newsroom in Wellington. Ms Walters is the Political Editor and Leader of the Parliamentary Team specialising in Education, Justice and Crown-Maori Relations, while Mr Meyer is a Political Reporter.
