Economic conditions to influence salary decisions

The Remuneration Authority will be required to take economic conditions into account when setting salaries for MPs and other professions for which it is responsible.

Minister of Labour Kate Wilkinson said:

This year MPs from all political parties and others including the Governor-General were willing to forgo a pay increase but the Remuneration Authority could not take account of the recession in its decision.

“This Bill will allow the Authority to balance wage rises against the economic conditions of the day,” Ms Wilkinson says.

“It seems sensible to allow the Authority to act with greater flexibility when it’s required.”

The Remuneration Authority is independent and should remain so but this legislation will enable it to factor economic conditions in to its calculations.

The Bill is designed to allow the Authority to respond  with restraint to tough times. I hope there is no danger it will also be able to respond more generously than it would have to boom times.

Setting salaries for MPs is fraught with difficulty. Good MPs are underpaid, a few will be overpaid.

We’ll never know who is put off a political career because the pay is too low or who is attracted to it because of the salary;  we’re also unlikely to know which MPs get a pay rise and which take a cut when they enter parliament.

The Authority has to determine a rate which doesn’t discourage able people who would lose too much if they entered parliament when there is no private sector equivalent with which direct comparisons can be made. It must also take into account that there is a large element of public service in the position.

Adding the requirement to consider economic conditions won’t make their task any easier but it might make the result of their deliberations more palatable to the public.

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