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Govt backs down on MP pay Bill riddled with basic errors

13 March 2014

CORRECTION

Minor corrections made to tables provided by the Parliamentary Library below. The updated tables confirm that if the Government’s proposed new system for setting MPs’ pay had been in place since 2008, the total base salary increase since 2008 would have been greater in dollar terms than under the current system.

Govt backs down on MP pay Bill riddled with basic errors

The Government’s attempt to change the formula for setting MPs’ salaries could be riddled with embarrassing errors, the Green Party said today.

“It looks like John Key’s failed attempt to give MPs smaller pay rises could have actually resulted in larger pay rises, so the Government has had to buy some time for its mistakes to be fixed,” Green Party Co-leader Metiria Turei said.

Parliament had been due to debate the Remuneration Authority Amendment Bill on Wednesday night, but the debate did not occur.

“We have serious concerns about the basic maths that underlie what the Government is trying to do,” said Mrs Turei.

“John Key said he was legislating to make MPs’ pay rises smaller, but it looks like his Bill could actually make them bigger.

“The Government either stuffed up or misled New Zealand about how it was trying to change MPs’ salaries.

“We can’t guarantee support for the Bill until we’ve seen if the final version will be effective and checked that the numbers add up.

“This is one reason why legislating under urgency is a risk. Good laws take time to develop so we know that they’ll work properly.

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“The Green Party has long advocated for a fairer and simpler way to determine MPs’ salaries, by linking them to the nominal median income.

“Our policy is very straight forward: if the median income rises by $500, so do MPs’ salaries. If it falls by $500, so do MPs’ salaries.

“In addition, we’ve proposed an alternative solution using the Labour Cost Index for the public service.

“Both of our proposals would have delivered smaller pay rises than the Government’s proposal. John Key needs to seriously consider our solutions now that his proposal looks like a farce,” Mrs Turei said.

Further information – MP pay

1. Under the current system

Base salaryAnnual change in base MP salaryAnnual % change in base MP salary
2007/08$126,200
2008/09$131,000 $4,8003.8%
2009/10$131,000 $- 0.0%
2010/11$134,800 $3,8002.9%
2011/12$141,800 $7,0005.2%
2012/13$144,600 $2,8002.0%
2013/14$147,800 $3,2002.2%
2014/15$156,000 $8,2005.5%
Total $29,800

From Statutory Regulations: Parliamentary Salaries and Allowances Determinations

2. If the Government’s proposed new system had been in place since 2007/08

Under the new rulesBase salaryAnnual change in base MP salaryAnnual % change in base MP salary
2007/08$126,200
2008/09$131,087$4,8873.8722%
2009/10$138,260$7,1745.4725%
2010/11$142,864$4,6043.3299%
2011/12$146,793$3,9292.7499%
2012/13$151,222$4,4293.0171%
2013/14$154,123$2,9011.9182%
2014/15$156,462$2,3401.5180%
Total $30,262

From the Quarterly Employment Survey, published in the Labour Market Statistics, by Statistics New Zealand

Note that this assumes that the personal benefits provided to Members of Parliament and the superannuation subsidy would also rise by the same percentage figure, as under the proposed Bill, it is the whole package which is adjusted by the annual percentage figure. The Bill specifies that the figure should be rounded to four decimal places.

3. If Green Party policy (SOP #53) had been in place since 2007/08

Base salaryAnnual change in base MP salaryAnnual % change in base MP salary
2007/08$126,200
2008/09$127,139$9390.7437%
2009/10$127,243$1040.0820%
2010/11$126,774-$469-0.3688%
2011/12$127,869$1,0950.8637%
2012/13$128,390$5210.4078%
2013/14$129,172$7820.6092%
2014/15$130,476$1,3041.0092%
Total $4,276

From the New Zealand Income Survey: Median weekly income from all sources, by Statistics New Zealand

4. If the Labour Cost Index (SOP #54) measurement had been in place since 2007/08

5. Base salaryAnnual change in base MP salaryAnnual % change in base MP salary*
2007/08$126,200
2008/09$128,598$2,3981.9%
2009/10$133,099$4,5013.5%
2010/11$133,764$6650.5%
2011/12$135,236$1,4711.1%
2012/13$136,588$1,3521.0%
2013/14$139,183$2,5951.9%
2014/15$140,714$1,5311.1%
Total $14,514

From the Labour Cost Index (LCI), published in the Labour Market Statistics, by Statistics New Zealand

*NOTE: 2008-09 annual percentage change data is from the year to 30 September 2008, whereas all other data is from years to 30 June. This is because LCI data for the year to 30 June 2008 was not readily available.

In all the above examples, the change to be applied for MPs’ salary determinations for the current year under the new/proposed rules is calculated from the change that occurred in the QES, LCI, or median income in the previous year.

© Scoop Media

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