Why so long for pay cut?
Two months after PM’s pay cut promise MPs all still on full incomes
Two months after Prime Minister Jacinda Ardern promised MPs would take a pandemic-related pay cut to save millions of dollars they all continue to receive full salaries.
Ardern declared in mid-April that she and her Government ministers would surrender parts of their salaries to show solidarity with Kiwi workers who were asked to make the sacrifice and help the economy.
At the time, Ardern said the cuts for ministers and top civil servants would save roughly $2.4 million and were designed to “show leadership”.
But the Herald can reveal the pay cuts won’t start until July 9.
Ardern announced the pay cuts, which were to last for six months, on April 15. She said then that while the fiscal impact was minimal, the move would show solidarity while other workers were facing pay cuts to get through the Covid-19 hit. “We feel acutely the struggle that many New Zealanders are facing, and so do the people I work with on a daily basis.
“It stands alongside many actions taken by many people, private sector, citizens, to tackle the health and economic challenges of Covid-19.”
Employees in many companies nationwide were asked to take a pay cut — and for the vast majority of them that happened almost instantly.
But the promised MPs’ cut will take nearly three months to enact due to the bureaucratic process involved in actioning the salary changes.
Ardern’s pay will drop for six months from the equivalent of $471,049 a year to $376,840, according to the amended rules around MPs’ pay. That represents a 20 per cent hit to her salary.
The Deputy Prime Minister’s pay also drops by 20 per cent: Winston Peters goes from the equivalent of $334,734 a year to $267,788.
All ministers go from the equivalent of $296,007 a year to $236,806 — also a 20 per cent reduction.
Members of Parliament who are not ministers, party leaders or chairs of select committees have taken a 10 per cent, $16,000 pay cut — down to the equivalent of $147,565 a year.
Act leader David Seymour is critical of how long it took for the pay cuts to come into effect.
He said it showed that the Government didn’t have a plan to put the idea into practice. “If we were talking about increasing MPs’ pay, it would have happened by now.”
Dame Fran Wilde, the chairwoman of the Remuneration Authority, which sets MPs’ pay and decides on any increases, said the process around pay cuts was complicated and lengthy.
The authority was unable to start work on the pay decreases until the bill giving the authority the power to make the required changes went through the House.
Because of the way MPs’ pay works, the Remuneration Authority has the final say on pay levels. The bill made changes to the law governing MPs’ pay to make the temporary cut of up to 20 per cent for six months.
That bill was passed unanimously in Parliament last month.
Last month in an email to MPs — obtained by the Herald — Wilde said the authority was considering looking at a sliding scale for MPs’ salary levels. ut the final decision appears to be that MPs take a 10 per cent cut for six months.
Asked about the delay, Wilde, a former Labour MP, said putting the pay cuts into effect has been a significant amount of work. The bill related to not just MPs, but also to public sector bosses, mayors and councillors.
She said that amounted to “many hundreds of people” receiving the pay cut and many members of the Remuneration Authority only worked part-time.
Seymour said New Zealanders had made extraordinary sacrifices and were feeling the serious economic pain of Covid-19.
“It’s crucial that MPs show solidarity and share in those sacrifices.”
If we were talking about increasing MPs’ pay, it would have happened by now. David Seymour, Act leader
Ardern said the cuts for ministers and top civil servants would save roughly $2.4 million.