MPs can change Act

One man I approached to see if he’d be interested in seeking selection as a candidate for National last year said he couldn’t afford to.

He was at a stage in his life where the drop in pay would be too big a hit for him and his family .

That could well be the reason some people don’t stand but many who do enter parliament get a pay rise and few leave to go on to higher paying careers.

That is one of the reasons the news of MPs’ pay rises are met with such outrage although pay should be for what they are actually doing rather than what they did before, or might do after they leave, parliament.

On that basis some are underpaid.

My MP Jacqui Dean, for example serves and services well the country’s third largest general electorate, Waitaki. She is a select committee chair (for which she is paid a little more) and a parliamentary private secretary (which attracts no extra pay) and she’s also co-chair of the Rules Reduction Taskforce.

There is no question that she works hard and substantial increased majorities in successive elections indicate her constituents recognise this.

That can’t be said for all MPs.

Can anyone name more than one or two of the sycophants who are in parliament on New Zealand First’s list let alone provide evidence they do much to earn their salary?

Remuneration Authority members aren’t tasked with what individual MPs do. Salaries are set not on individual performance but the positions they hold so a hard working and effective MP gets the same as a slacker.

In announcing increased pay rates for MPs the Authority said:

The Authority continues to use a total remuneration approach in setting the base salary for members, as it does for other groups for whom it sets pay. The Authority takes as its starting point its payline for public servants undertaking jobs with broadly similar complexity and responsibility. That enables it to identify a total remuneration package, based on market rates, for ordinary members. The Authority then deducts from that total package the value of the employer superannuation subsidy to members (20% of an ordinary member’s salary) and the personal benefit of entitlements to members and their families (as assessed by the Authority). The figure remaining after these deductions from the total package becomes the base salary. If an individual member chooses not to take advantage of one or both of the entitlement and superannuation payments, his or her base salary is not increased.

1.5 The same approach is not taken with senior positions in Parliament, including the Prime Minister, Ministers, the Speaker, the Leader of the Opposition, Party Leaders, and so on.

1.6 In recognition of the significant element of public service given by those serving in the Executive and in senior roles in Parliament, democracies like our own have traditionally significantly discounted the rate at which their leaders have been materially rewarded, and those aspiring to those positions have accepted such a discount. The rates for these positions are not set based on market rates or the Authority’s general payline, but maintain previous relativities established over many years and reinforced when parliamentary remuneration was fully reviewed in 2001/02. . .

In 2014, the Authority’s payline at the level for ordinary members increased by 3.3%. For this year, the personal benefit of the travel entitlement to members and their families has been assessed at $3,200 per member, a reduction in the amount assessed in previous years, which takes into account tightened provisions around the personal use of travel by family members. Taking into account the change in value of the travel entitlement, this produces a package increase of 3.56% and a salary increase for ordinary members of 5.5%. . .

Which market rates the Authority took account of to get a package increase of 3.5%, and a salary increase for ordinary members of 5.5%, which takes into account the decrease in travel allowances, when inflation is so low isn’t clear, especially when the PM wrote requesting no increase at all:

. . . He told reporters this morning that he wrote to the Remuneration Authority early this year urging it not to give MPs a pay rise at all this year, but the authority had given them a pay rise anyway.  . .

He wants the Authority to review its system:

“What I think the Remuneration Authority should do, if they are going to give a pay increase to MPs, is I think they should point to the law and tell us what in the law is driving the sort of increases that they want to give MPs, and then we should go away and consider whether we think that law is appropriately set,” he said.

“In my view it’s quite clear that inflation is low, that MPs are by any measure well recompensed, and against that the Remuneration Authority has had the view that ministers are a long way away from chief executives and to other senior people in the private sector.

“But you don’t go into politics and become either a minister or a prime minister, or even a backbencher, because you are there for the money. If you do you are there for completely the wrong motivation, so I just don’t think that’s a relevant comparison in my view.” . . .

An Act of Parliament governs how MPs’ remuneration is set and therefore it is in MPs’ power to change it.

David Farrar has been suggesting sensible change for some time:

. . .On multiple occasions I have submitted that the law should be changed so that the sets salaries for an entire parliamentary term, rather than annually. There is no need for annual adjustments in a low inflation environment. They should be set three months before each election and apply for the whole term. . .

That wouldn’t change the howls of outrage every time there is a pay increase.

But it would set a good example when inflation is low and provide an incentive for keeping it low.

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