Venkat Raman
Auckland, May 1, 2024
The decision of the Wellington-based Remuneration Authority to increase the pay of Ministers and Members of Parliament (MPs) has been slammed as untimely and that increases in based salaries proposed at various levels are ‘misleading.’
The Authority has recommended to the government to raise the salary of ‘an Ordinary MP’ (meaning backbencher) from $163,961 to $168,600, accounting for a rise of 2.8%. This will be in retrospective from October 2023. They will be followed by another increase of 2.9% in July 2024, another hike of 2.4% in 2025 and 2% in 2026.
The salary of the Prime Minister will go up from $471,000 to $484,000 and $520,000 in 2026. Christopher Luxon, the incumbent, has said that he will donate all increases to charity and take home only the current income after taxes.
The salary of the Deputy Prime Minister (currently Winston Peters) will rise to $344,100. ACT Leader David Seymour, who will take on the role of the Deputy Prime Minister in May 2025, will be eligible for this amount.
Ministers inside the Cabinet will earn $304,300 and Ministers outside the Cabinet $256,800.
MPs chairing a Select Committee will receive $184,700 this year (up from $179,713), rising to $198,600 by the end of their term.
Leader of the Opposition Chris Hipkins will receive an additional amount of $13,000, rising from $296,000 to $309,000.
MPs nod to changes
So far, no Minister has MP has objected to the pay rise, trying to hide behind the theory that the decision is taken by an independent body.
Mr Seymour said that MPs would accept the law and abide by it, and discussions over whether they deserved it or not were no-win.
“Politicians’ pay has been flat for six years, somebody has a legal obligation to set it for politicians and judges and so on. And from the point of view of someone like me, you are kind of damned if you do and damned if you don’t, it is just a process and law that you have to follow,” he said but admitted that it was not particularly great timing when the public was doing it tough.
Although the Remuneration Authority sets the pay for these roles, Parliament can pass legislation to overrule it.
But there are few doubts as to if there will be any objection.
Taxpayers Union Spokesperson Jordan Williams has urged the government to ignore the recommendations of the Remuneration Authority.
Slamming the determination of the Authority, he said that backbench MPs will be receiving an additional $17,239 in base salaries by the end of the Parliamentary term. This comes alongside a $2320 increase to their annual tax-free expense allowances by the end of the Parliamentary term.
Base Salary misleading
“While the average income of households is going backwards, MPs are locking in annual increases that do not reflect the real world. The decision demonstrates that the Remuneration Authority is out of touch with the rest of New Zealand,” he said.
Mr Williams also said that the base salary is highly misleading.
“Once the enormous Superannuation Subsidy, Tax-Free Allowances, Taxpayer-Funded Meals and Accommodation Allowances are factored in, even the lowest-paid MP is already paid more than $200,000,” he said.
In her column in The Post, Kelly Dennett said that while the decision to lift the salaries is one independent of the government, it will be a tough swallow for the public who are struggling with the cost of living and for public service, who are being laid off in the thousands.
An awkward move
“The increases come at an awkward time for the government, which is attempting to make cost savings of 7.5% so it can bolster its frontline services. It also comes after a period of pay austerity, implemented by the Jacinda Arden government, when pay was frozen, and MPs took cuts in solidarity with workers not earning through Covid-19 lockdowns,” she said.
The article also quoted Political Commentator (and former National Party Press Secretary) Ben Thomas as saying, “New Zealanders will hate it, as they always do. You can sort of understand it. For most people that is huge money, and a lot of what we see from MPs really does not foreground the hard work they are doing.”
What Jacinda Ardern did
When the Remuneration Authority suggested pay rises in 2018, then Prime Minister Jacinda Ardern chose to freeze it with urgent legislation.
She called for a reassessment of the funding formula to ensure that it is fair in keeping with her government’s expectations and values.
She held discussions with then National Party Leader Simon Bridges and ACT Leader David Seymour on her decision to freeze salary increases for MPs.
She said that she ‘sensed a complete understanding among them.’
“We are focused on lifting the incomes of low and middle-income earners and we also acknowledge that there has been an increasing gap between those income-earners and those at the other end,” she had said.
Mr Williams said that while the average income of households is going backwards, MPs are locking in annual increases that do not reflect the real world.
“The decision demonstrates that the Wellington-based Remuneration Authority is out of touch with the rest of New Zealand. The economy is going backwards. Household incomes continue to decline. The government is adding $75 million a day to the national debt. Now is not the time to hike MPs’ pay,” he said.
“At the Taxpayers’ Union, we are democrats. We value and promote democratic accountability. Those who are responsible for public services, levy taxes, or spend/allocate public money, should ultimately be accountable at the ballot box,” he said.
Judges’ perks hike opposed
Earlier today (May 1) the Remuneration Authority revealed the special allowances granted to Judges. These included free air travel and hotels for spouses, generous sabbaticals, and access to limousines.
Union Spokesperson Alex Murphy asked, ‘In which world does your employer cover personal airfares for both you and your family, even when the purpose of the travel is completely unrelated to your work?’
“No wonder the judiciary has been fighting tooth and nail to keep these special privileges under wraps. It is a complete embarrassment. Judges are already paid upwards of $300,000 a year and receive one of the most generous pension packages in the public sector. To then gift them a whole swathe of special perks on top of their already hefty salary is simply taking the mickey,” he said.
Mr Murphy said that the Chief Justice should be fronting up and justifying why any of these special allowances are appropriate, especially at a time when the courts are backed up the wazoo, and the average New Zealander is only getting poorer and poorer.
