MPs’ salaries — how they stack up against most Kiwis’ pay

The Government has drafted legislation it hopes will reduce the size of annual pay increases for our already well-paid politicians. The Green Party says it doesn’t go far enough.

But have MPs been getting increases bigger than the rest of us?

Inflation

Some people pointing to the increases in MPs’ pay have compared them with inflation.

The most usual measure for this is the Consumer Price Index, or CPI, an estimate of how much the cost of things we regularly pay for increases each year.

Since 2007, salary increases for backbenchers have been well above CPI growth. Roughly speaking, that tells us MPs have been getting richer over the past decade.

But how does that compare to everyone else?

We might be better off to compare MP pay rises with median pay increases across the country.

But taking 2007 as a starting point, if we compare how much individual New Zealanders’ incomes have grown in percentage terms — according to figures from Statistics NZ — MPs’ salaries haven’t actually kept up.

Between 2007 and 2017 there’s only one year — 2008 — where MPs would have earned less under such a policy.

In fact, if the median income rule had been introduced in 2007, a backbencher would have received $172,000 in 2018, compared with the $164,000 or so that they made.

We can also compare politicians’ raises with those of households to get a similar result.

Apart from in 2011, MPs would have still earned more every year since 2007 if their raises had been linked to household income data from Stats NZ.

For added measure, we can also compare salary rises for politicians with the actual growth of wages, according to the Reserve Bank.

That shows us that since 2007, MPs’ pay increases have tracked slightly below, but close to wage rises across the country.

Actual wage rises

But politicians earn a lot more than the average worker. The median income in 2018 was about $36,500.

That means a similar percentage increase in their wage means a lot more extra money than for most.

The Green Party says it wants MPs’ pay hikes to rise only as much as the average worker’s, dollar-for-dollar.

If that was the case going back to 2007, backbenchers would today be earning about $16,500 — or 11 per cent — less than they are now. So, would pegging MPs’ pay rises to everyone else’s pay actually reduce their pay?

MPs would have actually got bigger pay rises if their income had lifted at the same rate as everyone else’s.

But if the increases were dollar-todollar what the average worker has received in raises, politicians would be making a lot less than they are.