9 Apr 2024

MPs pay not a decision for politicians - National, Labour

4:57 pm on 9 April 2024
Chrises Hipkins and Luxon.

Chrises Hipkins and Luxon. Photo: Samuel Rillstone / RNZ

National and Labour leaders are united on MPs' pay rises, each saying it is - and should be - decided independently.

The Remuneration Authority, a politically independent body set up specifically for this purpose, sets MPs' pay rates - but this was frozen for three years during the Covid-19 pandemic response.

It followed a 3 percent pay rise in 2018, amid teacher and nurse strikes across the country demanding pay increases.

In April 2020, then-Prime Minister Jacinda Ardern, Ministers and public service chief executives also took a 20 percent pay cut as a show of solidarity during the Covid-19 pandemic, with pay returning to normal levels from January the following year.

Newstalk ZB's Jason Walls this week reported that with the Authority's report due back this month, they were not looking to make up for lost ground. They would instead investigate "what fair relativity is" for MPs, in line with their legal requirements.

Prime Minister Christopher Luxon on Monday said the decision should be independent and politicians should stay away from making decisions about it.

"It's not for a prime minister or an MP to comment on their pay. We've set up an independent remuneration authority for that very reason, we need to let them run through their process and see what they get to," he said.

"There is a process that has been set up under successive governments to have an independent review authority to look at MP pay and I am not involved with that I don't want to be involved with that - that should be a decision for the independent remuneration authority.

"You do not want MPs making decisions about their own pay and that's why it was set up in an independent way, let's let them do their work and let's see what they come up with."

Labour leader Chris Hipkins a day later said it was a difficult time for the authority to be potentially recommending pay rises for MPs given the economic conditions.

"We're seeing higher unemployment and a lot of people feeling the squeeze, a lot of public sector workers being laid off."

"We've seen over the past couple of decades politicians meddling in that process regularly, I'm not sure that's the right approach but I do think the remuneration authority making those decisions will need to weigh up the broader environment as they do that.

"Previously under the Key govt they made it so the remuneration authority had to give a particular kind of pay rise based on formula. They had no discretion not to do that, we put the discretion back in."

He was not keen to intervene, however.

"Over time we have tried to say the remuneration authority should be independent, and then if they come up with a recommendation that we found inconvenient, political parties of all colours including Labour, Green and National have decided to interfere in that process.

"I think we actually do need an independent process for setting MPs' salaries."

He said while the prime minister could provide feedback, the authority would make the final decision on MPs' pay.

"I think you've got to make sure that people can do their jobs effectively and that low pay doesn't become a disincentive to doing this job, but I think we need to be mindful of the fact that our pay relative to a lot of the people we represent is quite good."

National's Finance Minister Nicola Willis told RNZ's First Up she did not want a substantial pay bump.

"It's a decision for the independent remuneration authority ... I am not asking for a substantial increase in my pay, I don't want that at all," she said.

"But ultimately the independent remuneration authority makes its decisions about what it determines that MPs' pay will be, that's an independent process, so it's not up to me."

Hipkins also said he did not particularly want or need a pay rise, and he was "always very mindful of the fact that my pay puts me in a very fortunate position".

Currently, the prime minister's salary is $471,049, with Cabinet ministers and the leader of the opposition paid $296,007, while backbench MPs receive an annual salary of $163,961. Select committee chairs receive $179,713.

Former Cabinet minister Chris Finlayson told RNZ the rates were "way behind" what they should be, and politicians should stop refusing pay increases - saying that was virtue signalling.