MPs’ pay to be pegged to state sector

The 5.4 per cent increase awarded by the Remuneration Authority to backbenchers will not go ahead.

The Government has bowed to public pressure and will peg back the pay rise for MPs to match that of public servants – an increase of between 1 per cent and 2 per cent.

There was an outcry last week when the Remuneration Authority hoisted the pay of a backbench MP by $8200 – a raise of 5.4 per cent – to $156,000 a year. On average, the base salary movement for MPs increased by about 3.5 per cent.

‘‘That increase was neither necessary nor justified at a time when inflation is at 0.8 per cent,’’ Prime Minister John Key said yesterday in announcing proposed changes to the law governing pay increases for MPs.

Key, who has expressed disappointment in the authority’s decisions for the past five years, said Cabinet had approved a proposal for changes and Parliament would sit under urgency next week, with new legislation introduced backdated to July 1 last year.

The pay increase announced last week will not be awarded.

Total remuneration would be indexed to the average wage growth in the public sector, meaning rises of between 1 per cent and 2 per cent, he said.

MPs should not get pay increases ‘‘which are disproportionate to the wider public sector’’, he said. Any MPs who did receive their raise would be expected to pay it back, he said.

Labour leader Andrew Little was positive toward the change for MPs, but did not want to see public servants stymied in gaining fair wage rises from a considerably lower base than MPs.

‘‘In principle we would support it, but we want to see the detail of it, and obviously it is right that it gets fixed now – we don’t wait another year.’’ He had concerns for public servants. ‘‘Of course you don’t want to constrain their legitimate claims; you’ve got some big settlements coming up this year – the nurses, the police, teachers – and actually there may well be a case in all those cases for a reasonable pay increase.’’

The Maori Party and the Green

John Key says MPs should not get pay increases disproportionate to the wider public sector and any MPs who did receive their increase would have to repay it. Party supported a law change, but the Greens said linking MPs’ pay to movements in the median wage would be more appropriate.

Public Service Association national secretary Richard Wagstaff said the law changes could not be used to justify withholding decent pay movement for public servants. The Remuneration Authority was ‘‘merely reflecting what’s going on in New Zealand’’.

‘‘That people on $400,000 a year are getting 5 per cent pay rises, while people on minimum wage are getting 50 cents. That’s the reality.

‘‘The Government should be thinking about policies that change that rather than policies they believe will give them the moral authority to tell everyone else they can’t expect much.’’

Remuneration Authority chairman John Errington said the authority had always worked according to the legislation set.

Key said the change would take away the authority’s discretion when setting MPs’ pay.

The sole criteria would now now be the average public sector pay increase for the previous year.

The authority decision last week was released the day after the Government announced a 50 cent increase to the minimum wage.