Fairer system to determine pay hikes for MPs

Fairer system to determine pay hikes for MPs

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Wellington, August 27, 2019

Ian Lees-Galloway (File Picture)

The government is ensuring that excessive MPs’ pay increases are stopped and a fairer system is used in future, Workplace Relations and Safety Minister Iain Lees-Galloway has said.

“Last year, Parliament froze MPs’ salaries and allowances after finding that the proposed pay increase was unacceptably high. We have now completed a review of the way MPs’ pay increases are calculated and have agreed on a system that is fairer,” he said.

Mr Lees-Galloway said that in 2015, MPs took control of the way that their pay increases were calculated by replacing the Remuneration Authority’s independence with their own preferred formula.

The changes were a failure, with this formula generating higher pay increases than the system used prior to 2015, he said.

Restoring independence of Authority

“We will repeal this formula and restore the independence of the Remuneration Authority to calculate increases in a fair and transparent manner. This means MPs’ pay will be calculated using the same process for reviewing the remuneration of other key public office holders,” Mr Lees-Galloway said.

He said that the Remuneration Authority will base their decision on criteria outlined in the Remuneration Authority Act (a) the need to achieve and maintain fair relativity with the levels of remuneration received elsewhere (b) the need to be fair both to the people whose remuneration is being determined and taxpayers or ratepayers (c) the need to recruit and retain competent persons (d) the requirements of the position concerned (e) the conditions of service enjoyed by people in comparable situations; and (f) any countervailing economic conditions (eg an economic recession).

Value of personal benefit

The Remuneration Authority will also take into account the value of personal benefit for MPs that arise out of entitlements.

Future reviews of MPs’ pay will occur once every three years, following an election, and will set MPs’ pay on a year-by-year basis over the parliamentary term.

A bill repealing the 2015 amendments to the Remuneration Authority Act and the Members of Parliament (Remuneration and Services) Act will be introduced tomorrow (August 28, 2019). It proposes that the Authority makes their determination on 2019 MP’s pay under this amended system.

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