MPs’ pay freeze saves $750,000
MBIE report says officials considered donation option
The Government’s decision to freeze MPs’ pay is saving taxpayers $750,000. A regulatory impact assessment of the decision, written by the Ministry of Business, Innovation and Employment (MBIE), also revealed officials tossed up the idea of giving MPs the option of donating their would-be pay rise to a charity of their choice.
Last August Prime Minister Jacinda Ardern said MPs would not receive a pay rise as she didn’t believe it was fair.
The Remuneration Authority — an independent body that sets MPs’ salaries — had advised it planned to increase MPs pay by 3 per cent.
For a person who earned $70,000, a 3 per cent pay rise would amount to $2100. But for an MP earning a base salary of $163,961, a 3 per cent increase would be just under $5000.
Ardern said such a pay increase was “not acceptable to this Government”.
“Cabinet agreed while the Government is focused on improving incomes for ordinary
There could be a lack of transparency around whether MPs provide their pay increases to charity. MBIE report
working Kiwis, it’s just not appropriate for MPs to be the subject of such an increase.”
Ardern’s decision was made just a month after nurses went on strike and as teachers were considering industrial action.
The MBIE assessment, written last year, revealed about $750,000 would be saved by not raising MPs’ salaries, superannuation subsidies and expense allowances.
Speaking to RNZ after making the announcement in August, Ardern said the money involved wasn’t significant in the “grand scheme of the Government’s budget”.
She said the move was about not increasing the gap between those on the highest incomes and other Kiwis.
The impact assessment also showed several options were available to address what it called the “growing imbalance in pay between those on highly remunerated salaries and the rest of New Zealand”.
One of these options was MPs resolving to pass on any pay increases to charity until the next determination was due this year.
“MPs could pass a unanimous resolution to voluntarily give the increase in salaries and expense allowances to a nominated charity. This option would not require amending the act.”
But this was not recommended by MBIE.
“As this option is voluntary, there could be a lack of transparency around whether MPs provide their pay increases to charity and no ability to require MPs to comply,” the assessment said.
It also said this option would be too complicated. Instead, MBIE recommended a freeze on salaries and expense allowances at 2017 levels until the next determination was due in 2019 while conducting a review of the settings for how MPs’ salaries and allowances were determined.