Higher Salaries Commission

Setting MPs’ remuneration and allowances - who’s responsible and how the package is determined

A Background Paper prepared by the Higher Salaries Commission

December 2001

The Parties Involved

The system for paying salaries and other entitlements to MPs and Ministers is complex, and involves:

„« The Higher Salaries Commission (HSC), which sets MPs’ and Ministers’ salaries, allowances and the superannuation subsidy for non Government Superannuation Fund members.

„« The Speaker and the Minister for Ministerial Services who set other entitlements for MPs and Ministers, and

„« The Parliamentary Service and Department of Internal Affairs’ Ministerial Services Branch which administer the MPs’ and Ministers’ salaries, allowances and other entitlements.

What do MPs receive?

As with all other professionals and business employees, MPs receive remuneration. They also recover expenses. It is important to distinguish clearly between the two.

Remuneration is payment or benefit in return for services provided. It includes:

„« Salary

„« Crown contributions to superannuation, and

„« Some other benefits

Expenses include

„« All costs that are directly related to the performance of Parliamentary duties. These are paid by a combination of allowances and reimbursable expenditure. For the latter, receipts are required.

The Higher Salaries Commission is limited by statute to determine salary, the superannuation subsidy and allowances. There are a range of other benefits and expenses which are also paid and administered by other agencies as above.

This division of responsibilities has evolved over time and creates some difficulties. A committee, headed by Jeff Todd, is reviewing the process and will report to Parliament in February 2002.

How does the Higher Salaries Commission approach its task?

The HSC:

„« Conducts an annual survey of private sector remuneration

„« Subscribes to other surveys which compare public and private sector salaries

„« Obtains information from the State Services Commission

„« Reviews statistical information about general wage and inflation movements

„« Hears submissions from the Members Services Committee that represents all parties

„« Receives submissions from individual MP’s

„« Holds discussions with appropriate officers of Parliament

„« Reviews remuneration scales from other parliamentary systems - notably Australia and the UK.

Why are the deliberations of the HSC not made public?

The HSC Act (Section 9) requires the Commission to maintain confidentiality in carrying out its functions. The fact that information given to us remains confidential enables people to have free and frank discussions with us. This ensures that the Commission has a sound basis to make its judgements. Wherever possible the Commission cross checks information from other sources.

The final determinations are published.

EMBARGOED UNTIL 4.00 PM 2000/392

13 DECEMBER 2001

PARLIAMENTARY SALARIES AND ALLOWANCES

DETERMINATION 2001

_______

Pursuant to section 16 of the Civil List Act 1979 and to the Higher Salaries Commission Act 1977, the Higher Salaries Commission makes the following determination (to which is appended an Explanatory memorandum).

Contents

1 Title

2 Commencement

3 Expiry

4 Interpretation

5 Salaries

6 Allowances

7 Revocation

_________ Schedule 1

Salaries payable under section 16 of Civil List Act 1979

Schedule 2

Allowances payable under section 16 of Civil List Act 1979

_________

Determination

1 Title

This determination is the Parliamentary Salaries and Allowances Determination

2001.

2 Commencement

This determination is deemed to have come into force on 1 October 2001.

3 Expiry

This determination expires on 30 June 2002.

4 Interpretation

In this determination,„o

member of the Executive means a member of the Executive Council or a Parliamentary Under-Secretary

Parliamentary business means the undertaking in New Zealand of any task or function that a member could reasonably be expected to carry out in his or her capacity as a member of Parliament and that complements the business of the House of Representatives; and includes any of the following in New Zealand:

(a) attending a sitting of the House; or

(b) attending a meeting of a select committee of the House of which the

member is a member or which the member is required to attend because of being in charge of a Bill or other matter under consideration by the committee or for any other valid reason relating to the business of the committee; or

(c) undertaking research or administrative functions that relate directly to

the business of the House; or

(d) attending meetings for the purpose of representing electors or explaining

the application of policy; or

(e) attending caucus meetings which are expressly for the purpose of

enhancing the Parliamentary process; or

(f) attending regional or national meetings of his or her party; or

(g) attending any ceremony or official function or national or international

conference as a representative of Parliament or with the authority of the House

party means a parliamentary political party whose members in the House include at least 1 member elected as a constituency or list candidate for that party

primary place of residence means, in relation to a member of Parliament, the place of residence that the Higher Salaries Commission approves from time to time as the member’s primary place of residence in New Zealand

Wellington commuting area comprises the cities of Wellington, Lower Hutt, Upper Hutt, and Porirua and the Paraparaumu Ward of the Kapiti Coast District.

5 Salaries

(1) The salaries payable under section 16 of the Civil List Act 1979 are those set out in Schedule 1.

(2) No member of Parliament may, at any 1 time, be paid, under any of the provisions of Schedule 1, more than 1 salary and, if a member holds 2 or more positions, the salary payable to that member is that payable for the position for which the highest salary is payable.

6 Allowances

(1) The allowances payable under section 16 of the Civil List Act 1979 are those set

out in Schedule 2.

(2) Each allowance provided for in Schedule 2 is paid to the recipient for the purpose of reimbursing the recipient for expenses arising from that recipient's official and parliamentary duties.

7 Revocation

The Parliamentary Salaries and Allowances Determination 20001 is revoked.

1S.R. 2000/246

________________________________________

Schedule 1 cl 5 (1)

Salaries payable under section 16 of Civil List Act 1979

Note: No member of Parliament may be paid more than 1 salary under this schedule.

Office

Yearly rate of salary payable on and after 1 October 2001

$

Members of the Executive

Prime Minister 244,100

Deputy Prime Minister 180,900

Each member of the Executive Council who is a Minister of the Crown holding 1 or more portfolios and who is a member of Cabinet

162,600

Each member of the Executive Council who is a Minister of the Crown holding 1 or more portfolios, but who is not a member of Cabinet

143,900

Each other member of the Executive Council 115,500

Each Parliamentary Under-Secretary 112,400

Officers of the House of Representatives

Speaker of the House of Representatives 162,600

Deputy Speaker 116,600

Each Assistant Speaker 98,200

Leader of the Opposition

Leader of the Opposition 162,600

Office

Yearly rate of

salary payable on and after 1 October 2001

$

Other Party Leaders and Deputy Leaders

Each member of Parliament who is the Leader of a party:

Base salary

plus

For each additional member of the party up to a maximum of 5

plus

For each additional member of the party in

excess of 5

100,200

1,050

630

Each member of Parliament who is the Deputy Leader of a party whose members in the House number not less than 35

110,300

Whips

In respect of each party whose members in the House number not less than 6,„o

One Whip

Base salary

Plus

For each member of the party in

excess of 6

98,700

525

In respect of each party whose members in the House number not less than 25,„o

One Junior Whip

102,900

Plus, if a Whip referred to in 1 of the provisions under this heading Whips is also the Senior Government Whip

2,100

Office

Yearly rate of

salary payable on and after 1 October 2001

$

Chairpersons of select committees

Each member of Parliament who is„o

(a) the chairperson of the Regulations Review Committee; or

(b) the chairperson of a subject select committee specified in Standing Order 190 of the Standing Orders of the House of Representatives:

98,700

Deputy chairpersons of select committees

Each member of Parliament who is„o

(a) the deputy chairperson of the Regulations Review Committee; or

(b) the deputy chairperson of a subject select

committee specified in Standing Order 190 of

the Standing Orders of the House of

Representatives:

91,500

Other Members of Parliament

Each other member of Parliament 90,500

______________________________________

cl 6(1) Schedule 2

Allowances payable under section 16 of Civil List Act 1979

Part 1

Allowances

Members of the Executive

1 Expenses allowance

Each member of the Executive is to be paid an expenses allowance in accordance with the following table:

Office Yearly rate of

expenses allowance

$

Prime Minister 29,500

Deputy Prime Minister 13,000

Each member of the Executive Council (other than the Prime Minister and the Deputy Prime Minister) who is a Minister of the Crown holding 1 or more portfolios, whether or not a member of Cabinet

12,000

Each other member of the Executive Council 10,500

Each Parliamentary Under-Secretary 9,500

2 Additional allowance for Minister of Foreign Affairs and Trade

The Minister of Foreign Affairs and Trade is to be paid, in addition to that

Minister's expenses allowance under clause 1, an allowance at the rate of $6,000 a year to provide for expenses incurred in connection with that Minister's official duties.

Part 1„ocontinued

3 Travelling allowance

(1) Each member of the Executive is to be paid a travelling allowance in respect of

each occasion on which the member of the Executive is, in the course of travelling within New Zealand on Parliamentary business, absent both„o

(a) from the Wellington commuting area; and

(b) from his or her primary place of residence.

(2) The rate of the travelling allowance payable in respect of each such occasion is a sum equal to the actual and reasonable cost of the expenses incurred, with a maximum of $320 per day or part of a day.

(3) However, subclause (4) applies if the occasion involves the attendance of the person entitled and the partner of that person at an official function, being an official function„o

(a) that the person entitled attends by reason of the duties of his or her

office; and

(b) that the person entitled is invited to attend or is required to attend

primarily because of the office that the person entitled holds; and

(c) that the partner of the person entitled necessarily attends.

(4) The rate of the travelling allowance payable in respect of each occasion referred

to in subclause (3) is a sum equal to the actual and reasonable costs of the expenses incurred, with a maximum of $480 per day or part of a day.

(5) In this clause, day means a period of 24 hours.

4 House allowance

A house allowance at the rate of $2,000 a year is to be paid to each member of the Executive who is not provided with a residence at the public cost.

Part 1„ocontinued

5 House and grounds maintenance allowance

A house and grounds maintenance allowance at the rate of $1,500 a year is to be paid to each member of the Executive to assist in the maintenance of his or her primary place of residence.

Officers of the House of Representatives

6 Speaker

The Speaker of the House of Representatives is to be paid„o

(a) a basic expenses allowance at the rate of $12,000 a year; and

(b) an additional allowance at the rate of $8,500 a year to provide for

expenses incurred in connection with the office of Speaker; and

(c) a day allowance in accordance with clause 15; and

(d) the travelling allowance that would be payable to the Speaker under

clause 3 if the Speaker were a member of the Executive; and

(e) the house and grounds maintenance allowance (if any) that would be

payable to the Speaker under clause 5 if the Speaker were a member of

Executive.

7 Deputy Speaker

The Deputy Speaker is to be paid„o

(a) a basic expenses allowance at the rate of $9,500 a year; and

(b) an additional allowance at the rate of $7,500 a year to provide for

expenses incurred in connection with the office of Deputy Speaker; and

(c) a day allowance in accordance with clause 15; and

(d) a night allowance in accordance with clause 16.

Part 1„ocontinued

8 Assistant Speakers

Each Assistant Speaker is to be paid„o

(a) a basic expenses allowance at the rate of $7,000 a year; and

(b) an additional allowance at the rate of $1,000 a year to provide for

expenses incurred in connection with the office of Assistant Speaker; and

(c) if an Assistant Speaker is a constituency member, a constituency

allowance at the appropriate rate specified in clause 14; and

(d) a day allowance in accordance with clause 15; and

(e) a night allowance in accordance with clause 16.

Leader of the Opposition and other Party Leaders and Deputy Leaders

9 Leader of the Opposition

The Leader of the Opposition is to be paid„o

(a) a basic expenses allowance at the rate of $12,000 a year; and

(b) if the Leader of the Opposition resides in the Wellington commuting

area,„o

(i) a house allowance at the rate of $2,000 a year; and

(ii) a house and grounds maintenance allowance at the rate of $1,500 a

year; and

(c) if the Leader of the Opposition does not reside in the Wellington

commuting area but is in Wellington on Parliamentary business,„o

(i) a day allowance in accordance with clause 15; and

(ii) a night allowance in accordance with clause 16; and

(d) if the Leader of the Opposition is, in the course of travelling within New Zealand on parliamentary business, absent both„o

(i) from the Wellington commuting area; and

(ii) from his or her primary place of residence,„o

Part 1„ocontinued

the travelling allowance that would be payable under clause 3 if the Leader of the Opposition were a member of the Executive.

10 Other party Leaders

(1) Each member of Parliament who is the Leader of a party is to be paid„o

(a) a basic expenses allowance„o

(i) at the rate of $10,000 a year if and so long as that party's members

in the House number not less than 25; and

(ii) at the rate of $9,500 a year if and so long as that party's members in

the House number not less than 13 nor more than 24; and

(iii) at the rate of $9,000 a year if and so long as that party's members in the House number not less than 6 nor more than 12; and

(iv) at the rate of $7,000 a year if and so long as that party's members in the House number less than 6; and

(b) if a Leader is a constituency member, a constituency allowance at the

appropriate rate specified in clause 14; and

(c) a day allowance in accordance with clause 15; and

(d) a night allowance in accordance with clause 16.

(2) This clause does not apply to a member to whom an allowance is payable under any of the provisions of clauses 1 to 9.

11 Deputy Leaders

(1) Each member of Parliament who is the Deputy Leader of a party whose members in the House number not less than 35 is to be paid„o

(a) a basic expenses allowance at the rate of $7,000 a year; and

(b) an additional allowance at the rate of $2,000 a year to provide for expenses incurred in connection with the office of Deputy Leader; and

Part 1„ocontinued

(c) where a Deputy Leader is a constituency member, a constituency allowance at the appropriate rate specified in clause 14; and

(d) a day allowance in accordance with clause 15; and

(e) a night allowance in accordance with clause 16.

(2) This clause does not apply to a member to whom an allowance is payable under any of the provisions of clauses 1 to 10.

Members

12 Constituency members

(1) Each constituency member of Parliament is to be paid„o

(a) a basic expenses allowance at the rate of $7,000 a year; and

(b) a constituency allowance at the appropriate rate specified in clause 14; and

(c) a day allowance in accordance with clause 15; and

(d) a night allowance in accordance with clause 16.

(2) This clause does not apply to a member to whom an allowance is payable under any of the provisions of clauses 1 to 11.

13 List members

(1) Each list member of Parliament is to be paid„o

(a) a basic expenses allowance at the rate of $7,000 a year; and

(b) a day allowance in accordance with clause 15; and

(c) a night allowance in accordance with clause 16.

(2) This clause does not apply to a member to whom an allowance is payable under any of the provisions of clauses 1 to 12.

Part 2

Further provisions relating to allowances

Particular allowances payable under Part 1

14 Constituency allowance

(1) The constituency allowance payable under Part 1 is„o

(a) $8,000 a year for a member for an electoral district listed in Group A:

(b) $11,000 a year for a member for an electoral district listed in Group B:

(c) $14,000 a year for a member for an electoral district listed in Group C:

(d) $16,000 a year for a member for an electoral district listed in Group D:

(e) $18,000 a year for a member for an electoral district listed in Group E:

(f) $19,000 a year for a member for an electoral district listed in Group F:

(g) $20,000 a year for a member for an electoral district listed in Group G:

(2) The constituency allowance is payable under clauses 8(c), 10(1)(b), 11(1)(c), and 12(1)(b).

(3) In this clause, references to Groups are references to the Groups in Schedule E of the 6 July 1998 Report of the Representation Commission (1996-1999, AJHR, H.1).

15 Day allowance

(1) The day allowance payable under Part 1 is payable if a member is away from the member’s primary place of residence and is„o

(a) engaged on Parliamentary business; or

(b) in Wellington but unable to attend a sitting of the House or a meeting of a select committee because of sickness or some other reason accepted by the Speaker of the House as sufficient.

Part 2„ocontinued

(2) However, a day allowance is not payable

(a) to a constituency member in respect of periods servicing that member’s own electorate; or

(b) to a member of the Executive.

(3) The rate of the day allowance is„o

(a) $56 for a day on which the period of parliamentary business is 6 hours or more:

(b) $28 for a day where the period of parliamentary business is less than 6 hours but not less than 4 hours.

(4) The day allowance is payable under clauses 6(c), 7(c), 8(d), 9(c)(i), 10(1)(c), 11(1)(d), 12(1)(c), and 13(1)(b), and is subject to those clauses.

(5) In this clause,„o

day means a period of 24 hours:

period means the time spent on parliamentary business, including the travelling time required to undertake that business.

16 Night allowance

(1) The night allowance payable under Part 1 is payable if a member incurs actual and reasonable costs on overnight accommodation while the member is engaged on parliamentary business. This is normally either„o

(a) when a member who resides outside of the Wellington commuting area is

on parliamentary business in Wellington and could not reasonably be expected to get home by conventional methods or safely; or

Part 2„ocontinued

(b) in instances when accommodation is outside of the Wellington commuting area and the member is at least 100 kilometres from that member’s primary place of residence and could not reasonably be expected to get home by conventional methods or safely.

(2) The rate of the night allowance is the sum required to reimburse the member for actual and reasonable costs already incurred in accordance with subclause (1), except that the sum must not exceed„o

(a) $160 if the accommodation is in commercial premises outside Auckland;

and

(b) $180 if the accommodation is in commercial premises in Auckland; and

(c) $50 in the case of other premises.

(3) The maximum amount that may be paid to any member under this clause by way of reimbursement for overnight accommodation in the Wellington commuting area, in any period of 6 months beginning on 1 July or 1 January, is $11,000 for a Whip or the Leader of a party and $10,000 for any other member.

(4) The night allowance is payable under clauses 7(d), 8(e), 9(c)(ii), 10(1)(d), 11(1)(e), 12(1)(d), and 13(1)(c), and is subject to those clauses.

Allowances additional to those payable under Part 1

17. Wellington accommodation allowance

(1) A Wellington accommodation allowance is payable to a member whose primary place of residence is outside the Wellington commuting area if„o

Part 2„ocontinued

(a) the member is not provided with a residence at the public cost; and

(b) the member uses, in the Wellington commuting area, when the member is in the Wellington commuting area for the purpose of carrying out parliamentary business, accommodation owned by that member or accommodation rented by that member on a continuous basis for use in lieu of overnight accommodation; and

(c) the member has elected, by written notice to the General Manager of the Parliamentary Service, to be paid a Wellington accommodation allowance.

(2) The rate of the Wellington accommodation allowance is the sum required to reimburse the member for the actual and reasonable net costs already incurred by the member in using that accommodation in lieu of overnight accommodation in accordance with subclause (1).

(3) The maximum amount that may be paid to any member under this clause, in any period of 6 months beginning on 1 July or 1 January, is $8,500 for a Whip or the Leader of a party and $8,000 for any other member.

(4) The maximum amount in total that may be paid to any member under this clause and clause 16 by way of reimbursement for overnight accommodation in the Wellington commuting area, in any period of 6 months beginning on 1 July or 1 January, is $9,800 for a Whip or the Leader of a party and $9,000 for any other member.

(5) At any time while an election under subclause (1) is in force, the member by whom the election was made is not entitled to be paid a night allowance under clause 16 in respect of accommodation in the Wellington commuting area.

Part 2„ocontinued

(6) A member who has elected to be paid a Wellington accommodation allowance ceases to be entitled to be paid that allowance if the member, by written notice to the General Manager of the Parliamentary Service, revokes the election.

18 Allowance for purpose of motor vehicle

(1) A constituency member, following each election at which the member is elected or re-elected, is entitled to be paid an allowance (to be applied in or towards the purchase by the member of a motor vehicle) if„o

(a) the member is a member to whom clause 8(c) or clause 10(1)(b) or clause 11(1)(c) or clause 12(1)(b) applies; and

(b) the member, within 4 months after the date of the return of the writ for the election of the member, notifies the General Manager of the Parliamentary Service, in writing, that the member wishes to be paid an allowance under this clause.

(2) The maximum allowance payable under this clause is„o

(a) $7,200 a year for a member for an electoral district listed in Group A:

(b) $9,900 a year for a member for an electoral district listed in Group B:

(c) $12,600 a year for a member for an electoral district listed in Group C:

(d) $14,400 a year for a member for an electoral district listed in Group D:

(e) $16,200 a year for a member for an electoral district listed in Group E:

(f) $17,100 a year for a member for an electoral district listed in Group F:

(g) $18,000 a year for a member for an electoral district listed in Group G.

(3) Subject to subclause (4), if a member of Parliament to whom clause 8(c) or clause 10(1)(b) or clause 11(1)(c) or clause 12(1)(b) applies elects to be paid an allowance under this clause, the member is not entitled to receive or to be paid a

Part 2„ocontinued

constituency allowance under any of those provisions in respect of the period of 12 months beginning on the day after polling day for the election at which the member was last elected or re-elected.

(4) If the amount of the allowance paid to a member under this clause is less than the amount of the maximum allowance payable to that member under this clause, the constituency allowance payable to that member in respect of the period specified in subclause (3) must be reduced in proportion. For example, if the member is paid 75% of the maximum allowance payable to that member under this clause, the constituency allowance payable to that member in respect of the period specified in subclause (3) is to be 25% of the constituency allowance that would otherwise have been payable to that member in respect of that period.

(5) In this clause, references to Groups are references to the Groups in Schedule E of the report of the 6 July 1998 Report of the Representation Commission (1996-1999, AJHR, H.1).

19 Car reimbursement

(1) A member of Parliament who uses that member’s own car when travelling on parliamentary business (except where the travel is undertaken by a constituency member in servicing his or her electorate) is entitled to be paid a car reimbursement allowance for that travel.

(2) The rates of reimbursement payable under this clause are in accordance with the standard rates prescribed by the Inland Revenue Department.

(3) Travel within an electorate as part of a journey to or from the House must not, for the purposes of subclause (1), be treated as servicing an electorate.

Part 2„ocontinued

20 Security system allowance

A member who has a security system installed at his or her primary place of residence is entitled to be reimbursed for the actual and reasonable costs up to a maximum of„o

(a) for installing the system $400:

(b) for annual costs of monitoring and call-outs $600.

Dated at Wellington this 11th day of December 2001.

H D Peacock, Chairman.

B A Wakem, Member.

W R Mulholland, Member.

______________________________

Explanatory memorandum

1 Salaries

1.1 As in every other year, the Commission has not found it easy to decide what is the appropriate salary level for politicians. No time is the right time to give a pay increase but, if they are not given regularly, the level of pay will fall further behind what could be regarded as comparable levels for positions with the same degree of responsibility, complexity, and workload.

1.2 Sound governance makes an immeasurable difference to the prosperity and well-being of a country. The general public demand excellence from their politicians but tend to resent any pay rises they are given. The Commission is very cognisant that, in order to get good governance, Parliament must be able to attract and retain capable personnel.

1.3 The Commission is concerned that the gap between the levels of pay for politicians and comparable positions does not widen and, accordingly, has granted rates of increase in line with market movements for those comparable positions.

2 Allowances

The allowances have basically been maintained at the same levels as were set in the previous determination with 2 exceptions, namely„o

- the nightly allowance has had its maximum increased from $160 to $180 in respect of accommodation in Auckland, due to the increased rates being charged in that city:

- if a member could have stayed in commercial accommodation and claimed the nightly allowance but instead stays privately, a reimbursement of actual costs up to $50 may be claimed. This is in line with a recent suggestion in the Auditor-General’s report (Parliamentary Salaries, Allowances and Other Entitlements, July 2001). It is seen as fair to the member, the host, and to the taxpayer.

ENDS

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