The ‘baubles’ of office — median wage looks small change

Now that Christopher Luxon is set to be sworn in as Prime Minister, his weekly pay packet will jump to $9058.63 before tax.

That’s a healthy bump from the pre-tax $5692.44 he picked up as Leader of the Opposition.

Either pay packet is a substantial hike from the New Zealand median wage of $1186.40 before tax.

That works out annually to $471,049, plus $22,606 for expenses, for Luxon. For the median wage earner, it’s a more humble $61,692.80 (and good luck with those expenses).

Luxon’s weekly wage is a long way from the $4.2m annual salary he received as chief executive of Air NZ.

But he and all other parliamentarians also stand to get a pay rise within three months.

It’s a hike frozen since 2018 when then-incoming Prime Minister Jacinda Ardern blocked it, saying it was “the right thing to do”.

Ardern intervened again in 2020 to bring in a temporary pay cut of 10 per cent for MPs and 20 per cent for ministers as the Covid-19 pinch arrived.

Barrister Graeme Edgeler — a keen political watcher and expert in electoral law — said the Remuneration Body was an independent body that followed a set of guidelines to set pay rises — without politicians casting a vote.

In that sense, it meant they were insulated from claims they set their own wages.

However, for some sectors of society, the difference between their own income and that earned by their representatives would seem striking.

“I can imagine it would be bad for social cohesion for even a small minority of people to be so divorced from people they are asked to elect.”

The rates for Cabinet ministers — they earn $296,007 — amount to $5,920,140 a year for the 20 people sitting around the most influential table in New Zealand.

Ministers outside Cabinet get $249,839 — there are eight of those — while the two Parliamentary UnderSecretaries will be paid $194,374.

Edgeler said it was conceivable people would ask whether MPs had more in common with each other than the people they were elected to represent.

“Are the MPs in the 1 per cent? Ministers are certainly very much the 1 per cent.”

It was new Deputy Prime Minister Winston Peters who brought the idea of the “baubles of office” into the political lexicon. He said he was immune to those when contemplating a coalition partner in 2005.

This time around, Peters is in for a cool $502,101 over the next 18 months of his tenure in the deputy role, based on an annual salary of $334,734.

But there are also perks, for Peters and many others in Parliament. Some of these are set by the Remuneration

Authority while others are ruled on by Parliament’s Speaker — the freshlyappointed Gerry Brownlee.

Luxon, Peters and others around the Cabinet table have ministerial limousines on which they can call — or a car should they wish to drive themselves. The limo service is also available to the Leader of the Opposition (Labour leader Chris Hipkins), Speaker (Brownlee) and deputy speakers.

Like all MPs, they get a phone and laptop allowance and a security system if wanted. Other allowances include a superannuation scheme into which the taxpayer banks almost $33,000 a year for each MP.

For even the vanilla backbench MP, there are few barriers to getting around the country to do their jobs with air travel, car rental, food and accommodation expenses — as long as it is work-related. The taxpayer paid $2.1m for all MPs in the three months to the end of June this year.

To gauge how generous the expenses might be, consider that the Speaker and Leader of the Opposition are entitled to “the actual and reasonable costs of an evening meal” — up to $80. Unlike many workplaces, that total includes alcohol.

Across the House, Hipkins will likely not be crying poverty as Leader of the Opposition with a pay packet of $296,007 (the same as a Cabinet minister).

The basic MP’s wage — for those other than the 30 people selected for higher paying jobs — remains well above the median national wage at $163,961 plus $16,980 expenses.

Edgeler said the broad thrust of argument around politicians’ pay was that they kept clear of an income level where they might be susceptible to influence around gifts or payments.

However, “you want some professionals. You want people to not have to sacrifice a massive amount to work in Parliament,” Edgeler said.

Are the MPs in the 1 per cent? Ministers are certainly very much the 1 per cent.

Barrister Graeme Edgeler