Parliament approves ‘fairer alternative’ to MPs’ pay hike

Parliament approves ‘fairer alternative’ to MPs’ pay hike

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Wellington, December 17, 2019

Workplace Relations & Safety and Immigration Minister Iain Lees-Galloway

A bill that restores independence to how MPs’ pay is calculated has passed through Parliament today, Workplace Safety and Relations Minister Iain Lees-Galloway has said.

“Last year, we took action to freeze MPs’ pay increases, after another unacceptably large pay increase was proposed. This year we have repealed the failed formula behind that proposal,” says Iain Lees-Galloway.

2015 Formula repealed

“The changes passed by Parliament today (Tuesday, December 17, 2019) restore the independence of the Remuneration Authority to calculate increases in a fair and transparent manner. They repeal the formula introduced in 2015 that resulted in higher-than-expected pay increases,” he said.

Mr Lees-Galloway said that since the 2015 changes, MPs’ salary increases have ranged from 2.46% to 4.06% per year, compared to average increases of 1.7% in the four years prior to the 2015 changes.

In 2016 and 2017 Ministers were given pay rises of, on average, $7000 while ordinary workers gained $1000. Backbench pay went up by nearly $4000 in the same time.

“In fact, the current formula has delivered pay rises that have been consistently higher than other basic measure of pay increases, so we canvas fairer alternatives when we revisit the legislation. The change made today means MPs’ pay will be calculated using the same process for reviewing the remuneration of other key public office holders,” Mr Lees-Galloway said.

Criteria for increase

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).

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

The Authority will make a determination on 2019-2020 MPs’ pay under this amended system. It will be the first decision on MP’s pay since July 2017, following the Government’s MP pay freeze last year.

Source: Ministry of Work Relations & Safety

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