Remuneration Authority (Members of Parliament Remuneration) Amendment Bill

I move, That the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill be now read a first time. In accordance with the Remuneration Authority Act, the Remuneration Authority recently released the Parliamentary Salaries and Allowances Determination 2015, which provides for an increase in the remuneration received by MPs of 3.56 percent, effective from 1 July 2014. The size of this increase is disproportionate to salary movements in the wider public sector and the current rate of inflation. The Government considers that this is not appropriate.

Under the current provisions of that Act the Remuneration Authority is required to review and issue determinations of MP salaries and allowances at least once every 3 years, considering information from a range of sources including relativity to comparable positions, the need to recruit and retain competent persons, and the requirements of the job. These criteria have resulted in an increase that the Government believes is unfair to taxpayers and does not reflect the average wage growth of the wider public sector. It is therefore necessary to make amendments to legislation to amend the criteria that the Remuneration Authority must consider when setting salaries for members of Parliament. The decision to amend the authority’s discretion is not taken lightly. However, the change is necessary to ensure that MPs’ remuneration movements reflect those in the wider public sector.

This bill is an omnibus bill that amends two Acts: the Remuneration Authority Act 1977 and the Members of Parliament (Remuneration and Services) Act 2013. The first change is to set aside the part of the Parliamentary Salaries and Allowances Determination 2015 that relates to salaries. It then sets out a new requirement on the Remuneration Authority to solely consider public sector wage movements when determining the remuneration of MPs.

The bill does this by pegging MPs’ remuneration to the quarterly employment survey, or QES, for the public sector average ordinary-time weekly earnings for fulltime-equivalent employees. The quarterly employment survey is a sample survey carried out every 3 months by Statistics New Zealand. Each quarter it collects information from organisations in the public and private sectors at 18,000 different locations. It captures information on hourly earnings, weekly earnings, weekly paid hours, and the number of filled jobs. Information from the quarterly employment survey is used in the production of Statistics New Zealand’s quarterly gross domestic product and other productivity statistics and for labour market and economic analysis. Changes in quarterly employment survey measures are also used in legislation to benchmark figures such as the level of national superannuation and paid parental leave.

The quarterly employment survey measures actual wage growth, rather than wage inflation. Using this means that MPs’ remuneration will increase in line with the average public sector salary. Given that the quarterly employment survey measures actual wage growth, it is susceptible to potential sudden increases or decreases due to fluctuations in employment. As such, the bill also requires that the percentage change for each of the reported quarters for any financial year be averaged out to smooth any such spikes or dips. Under this bill, the authority will be required, on an annual basis, to adjust MPs’ remuneration by the quarterly employment survey public sector index, using the June rate from the previous year measured against the current year. For the June 2014 year, the quarterly employment survey public sector increase was 1.5 percent.

The bill will make a minor change to the formula for determining MPs’ remuneration. The authority will be required to take the previous year’s base salary and superannuation and multiply this by the quarterly employment survey index. This figure will be the remuneration for the current year. The authority will be required to adjust remuneration to take account of personal benefits where there is a change to the level of an existing entitlement provided. A recent example of this is in the 2015 determination, where the Remuneration Authority reduced the value of the travel entitlement to account for tightened provisions around the use of travel by family members. In this scenario the reduction in personal benefit created as the result of that tightened provision will be shifted to the cash component of the remuneration—that is, base salary. It will not be subject to the quarterly employment survey adjustment in the first year in which it is transferred. There are no changes to how the authority, the Speaker of the House, and the Minister responsible for Ministerial Services determine the value of personal benefits for MPs and their families, such as travel. These changes will also not affect any of the persons that the Remuneration Authority determines remuneration for other than MPs.

Although the current practice of the authority is to gazette a determination for parliamentary salaries and allowances on an annual basis, it is required to do so only every 3 years. The bill requires that the authority must fix MPs’ salaries on an annual basis to ensure salaries stay in line with annual changes in public sector wages.

The MPs’ salary determination that was issued by the Remuneration Authority on 26 February 2015 will be revoked, apart from the provisions in this determination that relate to allowances, which stay in place. The authority gazetted its determination for the 2014-15 financial year based on existing statutory criteria. So that the new criterion applies to salary adjustments from 1 July 2014, the bill revokes and overwrites the effect of the 2015 determination for salaries. The provision relating to allowances will remain in effect. The 2013 determination will come back into force until the authority is able to gazette a new determination for the period of 1 July 2014 to 30 June 2015 based on the amendments Parliament has made to the Act. Any changes in salaries resulting from the new determination will be backdated to 1 July 2014.

This bill responds to the disproportionate growth in MPs’ total remuneration by providing a sensible measure that reflects the average growth in public sector wages. I commend this bill to the House.

The Labour Party will support and vote through all stages of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. We will do that because, like most members in this House, we never asked for a big pay increase, we never wanted a big pay increase, and we do believe there ought to be restrictions on remuneration. Having said that, there are a few matters that need to be discussed.

The first, I would say to the Minister for Workplace Relations and Safety, is that I have just received a copy of the papers that go with the bill. I have just received the departmental disclosure statement from the Ministry of Business, Innovation and Employment. I had no chance to read it before I stood to speak—in fact, I had 2 minutes—because it was so late in being provided. So then I went through what is in that report and I looked at the questions that were asked of the Government and at the responses from the ministry. Here are some of them. “Were any regulatory impact statements provided to inform the policy decisions that led to this Bill?”—answer: “NO”. “Has further impact analysis become available for any aspects of the policy to be given effect by this Bill?”—answer: “NO”. “For the policy to be given effect by this Bill, is there analysis available on: (a) the size of the potential costs and benefits?”—answer: “NO”. “(b) the potential for any group of persons to suffer a substantial unavoidable loss of income or wealth?”—“NO”. “Has there been advice provided by the Attorney-General on whether any provisions in this Bill might limit the rights and freedoms, etc.?”—“NO”. “Has there been any external consultation on the policy to be given effect in this Bill or in the drafting of this Bill?” The answer is “NO”.

I go on through. “Does this Bill affect …” etc., etc. Can I say to the Minister that this bill affects everybody in this House, and it would have been really good if this sort of information had been made available last week or the week before when this bill was proposed. This must have been available to the Government. Let us get things right. We were meant to debate this last week. We were told we were having urgency last week, and then, at the last minute, the whole thing was pulled. I now note that this is version 7.3 of the Supplementary Order Paper to fix the formula. We have also noted, Minister, that it is pretty sloppily worded. So there has been a hasty decision to bring this in and we do not believe, Minister, that you have necessarily done the work on it. Certainly, the Ministry of Business, Innovation and Employment has pointed out that there are lots of things in this bill that have not been looked at, which is the normal practice in any legislation.

What we now know is that the sole criterion for setting remuneration under this bill will be the quarterly employment survey for the public sector average ordinary-time weekly earnings for fulltime-equivalent employees, using the average for the year to June compared with the average of the previous year to June. Using this measure means the remuneration of members of Parliament will increase in line with the average public sector salary. So what I want to ask the Minister is whether this is different from what was proposed last week and how exactly it is different from what was proposed last week. I will get on to that in a moment.

I want to first of all point out that this bill has been a long time in its gestation. In 2010, just before Christmas, John Key urged restraint over the setting of MPs’ salaries. That was 5 years ago. In November 2011 John Key said he was disappointed with part of the MPs’ salary increase. That was 4 years ago. In October 2013 John Key said MPs’ salary increases should be small or zero. That was 2 years ago. Come forward to 26 February 2015 when John Key said in Parliament that he may change the law on how MPs’ rates are set in the future. Today we are about to do that, but for practically every year for 5 years the Prime Minister was going to do something about the pay rises that MPs receive. The Prime Minister talked about doing it for days when a decision came out from the Remuneration Authority, and then he retreated back to the ninth floor to do nothing. Finally, he has decided to do something about it. He had the power to do something about it. He had the numbers to do something about it. He had the ability to consult with members of the House to do something about it, but it is only now that we have a bill before us, rushed into this House to be passed under urgency so that members of Parliament do not receive the increase that was provided through the Remuneration Authority.

As I said, none of us asked for the pay rise. I have yet to meet one of my colleagues who would want this sort of pay increase. We feel that we should not be getting pay increases that are greater than other New Zealanders’. We all know what happens when members of Parliament are seen to get more than other people; there is a backlash from the public. So we believe that there ought to be a proper way of setting the salaries. Of course, that is why we ended up with the Remuneration Authority. There is a history of political meddling in the way salaries and conditions are set. A very good example arose over the last few days over former members. When you look at the history of that, it goes right back to the 1970s when MPs were trying not to take bigger increases and it was put into travel.

So we have had political meddling going on in MPs’ salary setting for a long time. We do need to have a way that sets it fairly and in line with other New Zealanders. What we want to know from the Minister when he gets into the chair a little later on is whether he has got the formula right. I am not sure, because last week when we were meant to be debating this bill I just happened to read David Farrar’s blog. Unlike the Government, he had done some work on the methodology that the Government was using to set MPs’ salaries. What did he find? He found, in fact, that if MPs used the formula put up by the Government last week, we would have got a bigger pay increase than what was actually provided. Under the new legislation that was put up last week the average would have been 3.1 percent; under the current law it would have been 1.7 percent. So what we want to know, Minister, is whether you have got it right now. We do not want to come back into this House to fix up a mistake. So the Minister is saying yes, he has got it right—a guarantee from the Minister that this formula will do the job; this formula will be fair. In fact, I have to say, Minister, we would argue that until the Government addresses the very high salaries paid to chief executive officers of Government departments, we are not actually addressing some of the problem in New Zealand. So we would like to see how that is going to be addressed in the future.

We will support this bill. We want to see our salaries reined in. We also want to see the salaries of chief executive officers in the public sector reined in because they have got way out of kilter with the rest of those who work in New Zealand. So we will closely examine, Minister, when you are in the chair in the Committee stage, exactly how it will work because what we do not want to do is to waste the time of this Parliament fixing up a mistake made in a formula because the work was not done before the Prime Minister rushed out to say he was going to do something. It has to be right. This is not good enough. At the end of the day every member in this House takes the odium from the public when our salaries and conditions are raised in the public media. So, Minister, I want the assurance later on that you have got this right, and perhaps you can explain in detail how the formula works, because it is incredibly complex to be able to understand.

Before I address this bill, I would just like to make a comment that I do hope the Green Party is not getting too encouraged by the colour of my tie today, but I would like to acknowledge today is St Patrick’s Day and I wear this in acknowledgment of my wife’s forebears who come from Ireland. I know this has been a very controversial issue over the years—MPs’ remuneration—but how interesting it is today to be standing in the House to debate the decrease of that. Most people would be debating for the increase of their remuneration. Indeed, I believe that we are responding to what the Prime Minister has probably properly assessed to be not just public sentiment but just exactly where things ought to be regarding this issue and this debate.

As the previous speaker, Annette King, has said, his history of comment around this particular area has been that restraint is very important. One of the criteria that the Remuneration Authority looks at when it makes decisions and recommendations around this is the area of prevailing adverse economic conditions. We celebrate that New Zealand is doing better, but it was not long ago that we remember that this country was needing to borrow $300 million a week in order to maintain the services and soften those hard edges of recession for New Zealanders. We are coming out of that dire period of time and this country is starting to do well, but we still need restraint, and it is unfair—and we would even use that term “unethical”—for us to say to the people of New Zealand to exercise restraint while MPs’ salaries appear to be increasing unrestrained. It is important for us here in this House not only to lead debates but to live debates—to be examples of that which we hope other people will follow. I know that is a concept that, I think, many people would perhaps wonder at, but that is the aspiration and the ideal that we would ought to have in this House. So it is important for us to address this matter.

One of the other areas that the authority looks at is this issue of fair relativity with comparable positions, and no doubt there are discussions, decisions, and determinations made about what those comparable positions may be. But what this Government and no doubt those who support this bill have determined is to say that the increases should be comparable to that of the public sector. I support that, because, indeed, we are members of the public sector. We do stand in this place to serve the public. We are public servants. Although there are many aspects of our work that may go beyond that which the public sector may do at large, there are many demands and many pressures. In terms of the positions that people have, they can be very short, and often it is very difficult for MPs when they leave this House to find their way back into the workforce. There are all of these factors.

The fact is also that the work that we do is often demanding upon our families and upon our time, and I have not yet come across an MP who works 40 hours a week. They all tend to work more. They all tend to put in huge effort, and I have not come across an MP who does this job for the money. They do it because they believe in New Zealand. They want to improve New Zealand. They do it because they want to make a difference, and I know many MPs who work 70-plus and 80-plus hours a week in service of their communities. So to bring down the salary to an hourly rate is not what this is about. Actually, what this is about is being in step with the public sector and being in step with New Zealanders in terms of remuneration. I think that around this country, New Zealanders, by and large, will say that we are landing in the right space regarding this bill. I look forward to making comment further on in the process of this bill, and I am very pleased to stand in support of it. Thank you.

I rise to speak on the issue of MPs’ pay with some trepidation. I think it would be fair to say there is not a single vote to be gained in this particular debate. I do not think anybody particularly enjoys these kinds of debates in Parliament. It would be fair to say, as the chief whip of the Labour Party, that I did not have a queue of MPs lining up outside my office door this morning wanting to speak on this particular piece of legislation, and I do so myself with some trepidation.

I want to say, right from the very outset, that I absolutely agree with the principle behind this legislation, which is that MPs’ pay should not be out of step with what every other New Zealander is getting at the moment, and I think that is an issue that has been spoken about for some time, and it is absolutely high time that the Parliament address that, so I am pleased that this opportunity has arisen. However, I do have some significant concerns about whether the bill is going to actually deliver on that commitment. I want to make it very clear from the outset that the Labour Party will be voting in favour of this legislation, and we will be voting in favour of it, with all of the reservations that I am about to go through, because voting against it would effectively be voting for the large pay rises that we are trying, through this bill, to decline. So we are going to vote in favour of this legislation, but I want to make it clear that we have reservations.

We have particular reservations about pushing this bill through all stages under urgency, without any kind of proper process around it. The risk of getting it wrong is high in doing that. The risk that we will need to come back and fix it again is high, but, also, the independence of the Remuneration Authority is compromised in the way this bill has been introduced and in the way it is being pushed through. Interestingly, by pushing this bill through under urgency, through all stages, in the way we are today, the Remuneration Authority, which issued the original determination that gave MPs the pay rises, will not get the chance to have any contribution on this debate at all. So the Remuneration Authority will not have the opportunity to come up to the Parliament and say: “OK, if that’s what you’re trying to achieve, this bill won’t do it.” It will not have that opportunity. So we have no external verification that this bill is actually doing what we want it to do, which is that we wanted to ensure that our own pay does not get out of step with the rest of the country. We have no guarantee of that. So, although we are supporting it because we want to deal with the immediate issue, the long-term issue may well still remain.

There have been numbers flying everywhere from different parties, different bloggers, all of whom come up with a different set of calculations that may or may not demonstrate that over the longer term this bill could give us a lower pay rise or a greater pay rise. There are numbers flying around about various proposals to amend the bill that may or may not give us a lower or a higher pay rise. That is one of the problems with pushing a bill through all stages under urgency in the way this bill is being pushed through today. We absolutely support the principle of the bill, but we are not convinced that it is going to be actually delivered on by the words that we have in front of us at the moment.

We have had 5 years to deal with this. The Government has known since November that these pay rises were in the pipeline and likely to come up. Why has it taken until now, until the pay rises have already been awarded and due to be paid into MPs’ bank accounts next week, before we finally get legislation to deal with it? This should have been dealt with months if not years ago, and then it could have been dealt with in a proper, considered process where it would not be rushed through Parliament.

I want to make it very clear that I am also quite uncomfortable at the idea that Cabinet, the executive Cabinet, sets the policies around MPs’ pay. That is why we have an independent body, and the idea that Cabinet can overturn the decisions of the Remuneration Authority when it disagrees with it is bad. It is worrying from a constitutional perspective. I think it is right that Parliament takes another look at the criteria the Remuneration Authority uses, but we have to accept that if we want these decisions to be made independently, then that is what they are—they are independent decisions. Because here is the question: if it is OK in principle for Parliament to legislate for a decision that we disagree with when we think it gives us too much pay, is it OK for Parliament to legislate for a decision that we disagree with that we think gives us not enough pay? Because that is the principle that is being established: that if the authority issues a determination we do not agree with, we will simply legislate over the top of it. I do not think that is a good practice. I think it is right that we set clear criteria. It is absolutely right that, at the moment, the criteria are giving MPs pay rises that are out of step with every other New Zealand and therefore need to be checked and need to be addressed, but I do not think it is right that Cabinet effectively mandates legislating over the top of an authority decision that we disagree with.

I think this decision should have been taken long before that determination was even issued. For 5 years we have been talking about it. Any time in those 5 years this issue could have been dealt with. To some extent we have no choice now but to take the course of action that we are taking, because the Government has dragged its heels on the matter. I think we should certainly give those matters some consideration, and I hope, at some point, there will be the opportunity for some careful reflection on this, to ensure that we do actually get this right for the future.

I also want to make it clear to the Government that I do not see this, and the Labour Party certainly does not see this, in any way as a justification for supressing well-deserved and well-earned pay increases for those many people working in public sector jobs like teachers, nurses, and police, all of whom are going to be making their claims to the Government through collective bargaining in this year’s pay rounds. It would be wrong for the Government to interpret our support for this legislation as a signal that we would support simply not increasing pay for people who have gone without pay increases for many, many years while we have continued to enjoy them. That would be unfair. There are many in the Public Service—and when I say “Public Service” I mean that in the widest possible sense—who have done their bit, who have tightened their belts, who have gone without pay rises of any significance for quite some time, and who, frankly, deserve them, and I think it is wrong for the Government to try to say: “Well, if MPs aren’t getting a pay rise they should not get one either.” That is not right. That is not fair and we are going to be monitoring that very carefully.

With regard to the technical nature of the bill, we will get into that further in the Committee stage, but, again, I want to come back to that fundamental question of whether this bill is actually going to deliver on its objectives and whether, in fact, the calculation that is now being made is a fair one. This bill, at its essence, links MPs’ pay rises to the quarterly employment survey for public servants. The problem with using the quarterly employment survey as a measure is that that also captures people who move into different and higher-paid jobs or who move from part-time to full-time employment, and those types of things that actually lift, potentially, the salary rises higher than they might otherwise have gone. It is not comparing apples with apples. If we were to look at some kinds of standard definitions of what is counted, then that might make a difference, but under the current formula there is real potential, again, that public servants moving up the Public Service hierarchy could therefore inflate MPs’ salaries, and that is the very thing that we are trying to address with this bill. So there are a whole lot of technical issues in this that we are simply not going to be able to explore in the next 3 or 4 or however many hours it takes for Parliament to pass this bill through all stages under urgency.

To recap this first contribution and to summarise the points that I am making, first and foremost, I do not think that MPs should be getting large-scale pay rises and I am pleased the Government is dealing with it. Second, I think we need to be looking at an enduring solution that ensures that our pay—MPs’ pay—is not a subject that we spend time debating in this House, but is determined independently on a clear set of criteria, and I am not yet convinced that the criteria that this bill proposes are going to be the right ones that are going to deliver the outcomes that we are after. And, third, I think this process is flawed. It should not be being done under urgency—although now, because the Government has left it so long, we have no choice and so Labour Party members feel we are forced into the position where we have to support it. And, related to that, this should not be a Cabinet dictate; this should be based on an independent review. It should be determined independently and this is a very bad process.

It is a pleasure to be asked to speak on the Remuneration Authority (Members of Parliament Remuneration Amendment) Bill. We are, of course, living in difficult international times, and although we here in New Zealand are lucky to be enjoying the success of what this Government has achieved over the last 6½ years, we need to be cognisant of what is happening. This bill is about being reasonable, fair, and equitable. It is about providing leadership and taking a stand, which affects all 121 members of this House. It is rightly so that all MPs should be concerned about the level of their remuneration at a time when we as a country are looking and trying to be fiscally prudent.

I believe that the Prime Minister took an important and courageous stance on this matter on 2 March when he said that it was important that we MPs should show restraint. This is a Government living within its means. A 3.56 percent increase was inappropriate when inflation is at 0.8 percent and expected to decline to zero percent by the end of this financial year. Tying our salary increases to the public sector is the right thing to do, especially as a number of significant industries within the public sector are currently about to embark on their annual pay round discussions. It would be wrong for us to accept the 3.56 percent increase and, yet, see these important public servants—such as our teachers, nurses, and police—receive increases below what we have accepted.

Yesterday I had the pleasure of visiting two schools in my electorate, namely Clevedon School and KingsGate School. I saw firsthand what a wonderful job these teachers are doing at these schools—the dedication and the care that they show towards their students both at an academic level but also at a personal level—in trying to create great new citizens for New Zealand. They are all professional people with great skills and training and are entitled to their remuneration. The same goes for those in our nursing and other medical professions, who are just as diligent at looking after our sick and infirm.

On Saturday I had the pleasure of attending the dedication of a new ambulance at the St John’s Centre in Pukekohe. The ambulance was a gift from Malcolm and Shirley Fletcher to the people of Franklin. These two people have already given a previous ambulance, so this is their second gift. It shows what great citizens they are and the caring and generous spirit they have.

When we look at our remuneration structure we were right in overturning our increase. The bill provides that the Remuneration Authority must fix the salaries of MPs so that the salaries, the superannuation component, and the personal benefits are, in a combined sense, fixed or move up in line with the average ordinary-time weekly earnings for fulltime-equivalent employees in the public sector, as shown by the quarterly employment survey. In using the quarterly employment survey, it means that the remuneration of members of Parliament will increase with the average earnings in the public sector. Currently, the Remuneration Authority Act 1977 requires the authority to make determinations for each position within its jurisdiction at least every 3 years, but the amendment will mean that this will occur annually in respect of the salary component.

In summary, we are here to legislate under urgency, firstly, to change the criterion for the Remuneration Authority Act to take away the authority’s discretion on MPs’ pay increases; secondly, to make the sole new criterion the average of the public sector pay increase for the previous year as the total compensation; and, thirdly, to backdate the legislation to 1 July 2014. I think that bringing about this change under urgency is right, especially when I think about some of the people living in my electorate who expect a hard-working MP to do their bit as a public servant. Receiving a salary rate above the quarterly employment survey does not align with these ideals. I commend this bill to the House.

The Green Party is opposing this legislation, and I will describe why in some detail shortly. We do understand it—and we did consider seriously supporting it—because it does provide a criterion on which the Remuneration Authority can consider MPs’ pay, and on that basis it is generally a move in the right direction. It is a publicly available measure that is being used and it could help with transparency with MPs’ pay, except, of course, that the principle is not just that there is a criterion—I mean, the Remuneration Authority already has the ability to use criteria for MPs’ pay—but that it is a criterion that constrains MPs’ pay increases. And there is no evidence on the table, and I heard nothing in the Minister’s speech—and he may have more evidence to provide us all—to show that this measure will constrain MPs’ pay more than the current provisions provide for.

That was our criticism of the previous bill last week—that it did not constrain MPs’ pay increases—and we want to see some evidence that this one will. It is not hard to argue with; it is not a huge issue. If there is evidence, we need to be able to see it, but there is none, and it is very difficult to even do the assessment. We did try to get the Parliamentary Library this morning, with the short time we have had to look at the bill, to see whether it could calculate it, and it is very difficult. And yet we are being asked to support this legislation, with no evidence at all that it will actually do the job it is supposed to do. We are not prepared to whitewash this issue. In fact, we need to make sure that we have proper criteria that restrain MPs’ pay.

The Green Party has put two proposals forward. They will arrive shortly before the House as Supplementary Order Papers. One is where the criteria are based on nominal increases in the median wage, which would significantly constrain MPs’ pay increases. That means that if the median wage goes up by a hundred bucks, then MPs’ pay goes up by a hundred bucks. It is not percentage-based. The second is based on the labour cost index, which is a much better measure than the quarterly employment survey and would also significantly constrain MPs’ pay increases, because that is the principle—not just that there are criteria. There are already criteria that the Remuneration Authority uses. So this bill does not provide any meaningful change to what the current situation is, so why, then, would we give it a tick when it does not actually do anything?

I am really concerned by what I have heard today, so far—we are only halfway through the first reading—about the attitude of MPs to the public. There has been talk about the odium that we all receive as a result of MPs’ pay increases. We do not treat the public fairly in the discussion about MPs’ pay and allowances. We do not make sure that there is an open and transparent system for them to assess the validity of any allowances that we have or the pay increases that we might get or how that pay is set. The Remuneration Authority has been trying to do that a bit better. But to say that MPs get treated with odium and disrespect—and hatred and disgust is what that odium means—is grossly unfair to the public. The public will be pissed off if they think that there is unfairness in our system. It is up to us, then, to demonstrate that the system is fair, and the best way we can do that is not to rush legislation through under urgency because there is a public backlash; it is to have a proper, open, and transparent system.

The Green Party has been arguing now for years and years—it started with Rod Donald—that we should have an independent and full review of MPs’ pay and allowances, and ex-MPs’ entitlements, and have that fully available for scrutiny by the public, so we can have a proper discussion about what it is we need to do our job, the kind of job that we have, making sure we have the tools to do our job, and nothing more. You know—we get paid for the job we do, and we have the resources we need to do the job.

The public, when we have been open and transparent, have been really responsive. The Green Party led the transparency move for our accommodation and travel allowances, if you remember. We opened up our books, and as a result the Speaker then put in a system so that everybody’s travel and accommodation allowances are now known to the public. There were howls of outrage from MPs because they thought that the public would crash in on us from, I do not know, the gallery and have huge problems with what we were spending. In fact, the fact of the transparency gave the public confidence about what we were doing and how we were doing it, and it now largely goes unnoticed. We do not need to treat the public with such disrespect, and neither should we treat this process with such disrespect.

The bill has two parts that I am mostly interested in. The first, of course, is the criterion, which simply does not work to do the job, or at least we have got no evidence that it will. The second is that the bill will revoke the Remuneration Authority’s determination of the pay increase. That is what we need to do—revoke that now. We could do that under urgency. It is in the bill. Then we can have a proper process with a select committee and some time to consider what are the best criteria for the Remuneration Authority to use to constrain MPs’ pay. That would do both jobs. We would stop the pay increase now. We could do that this afternoon.

Then we would also give ourselves the time to look at what are good criteria for the Remuneration Authority to use, and to open it up for public scrutiny, so that the public can have a say on what they think the most appropriate criteria should be to use, and make sure we have got it right. I absolutely agree with Chris Hipkins and others who have spoken that the chances of us having to come back and fix this are very, very high. It has been only a week and a half since the first version of the bill came to Parliament. Then we would know we were doing the right thing, for the right reasons, and doing a good job. That is what we get paid for. That is what this is all about. If we are going to make law, we need to be professional lawmakers and make sure we do a good job, and we do not waste time, and we do deserve the pay that we will eventually get.

But in fact what National and others are showing to the public is that we will be responsive on these issues only when we feel we are under political attack, we will not take them seriously, as they ought to be taken, we will not trust the public to have a say about what our pay and allowances should be, and we will be defensive and hurried about it. I think it is very shameful, actually, what is going on today. It is why we have opposed urgency. It is why we are opposing this bill. It is why we are going to great efforts to find alternatives to put forward to the Parliament, so that parliamentarians can consider different criteria and think about what is the best way to proceed. It is why we are going to see whether we can put forward a Supplementary Order Paper that will just revoke the Remuneration Authority’s decision, and just that, so that we can take time.

We will, no doubt, have some long discussions over the next 24 hours or so about the effect of this bill and the concerns that MPs have about it. I reiterate that I am very much looking forward to the Minister providing the evidence that shows that this constrains MPs’ pay. It may be that the Minister does not intend to constrain MPs’ pay increases, but just to set the criteria. If that is the case, I think he needs to tell us that. It needs to be made very clear that this is not designed to reduce pay increases; it is designed only to put a criterion in place. I do not agree with that, but at least it would be more up front about what we are trying to do, and we are being more up front with the public about the results of this bill. I think that is where, in this whole process, Parliament is really falling down today. It is treating members of the public with such high levels of disrespect. They deserve better from us. Thank you.

Kia ora, Mr Assistant Speaker. I stand on behalf of New Zealand First to put forward a contribution on the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. I would like to acknowledge the contribution by Metiria Turei and some very, very interesting points that she has raised. At this stage, at this first reading, New Zealand First will support this bill through, but I do believe that Metiria Turei has articulated some really very interesting questions, concerns, and points that I hope get fleshed out as we have this conversation. I am not confident about that, but I would like to think that they might be.

I think it has been articulated by the Green Party contribution and by the Labour Party contribution that urgency is not the best way to bring legislation to the floor of the House. It is with serious concern that New Zealand First notes that this bill was supposed to come to the floor of the House a couple of times last week—

💬 Hon Michael Woodhouse: Once. Only once.

Well, it depends on your communication, I guess, Mr Woodhouse. Anyway, a couple of times last week, and today we finally have it. There was the bill and a Supplementary Order Paper. I have received instructions that they have been combined.

💬 Hon Michael Woodhouse: Yes, they have.

They have. So that happened this morning?

💬 Hon Michael Woodhouse: Yes.

It happened this morning. So therefore this bill has actually been available only since just prior to question time, which is not the best way to have confidence that what the bill says is what the Minister in charge of the bill says it will do. I do think that the suggestion put forward by the Green Party contribution, that as there are quite clearly two parts—in the short period of time I have had to look at the contribution from the Ministry of Business, Innovation and Employment, there are quite clearly two parts now to the bill. One stops the inappropriate 3.5 percent increase, and again we agree with the Green Party contribution, with everybody’s contribution, that that is inappropriate.

However, we do not happen to agree with the articulation by the National Party members of the reason why it is inappropriate, suddenly—suddenly we are in urgency. I mean, there have been 6 years in which the Government could have dealt with this situation. It could have changed the criteria without actually looking like it has hauled the Remuneration Authority in for a good hiding and then sent it on its way. The Government could have dealt with this over the last 6 years, as opposed to today.

But it is not anything to do—it has got nothing to do—with the global financial crisis. It has more to do with the 40,000 members of the Public Service who are about to go into bargaining. It has more to do with the 17,000 members in the health sector, mostly clerical assistants and public and mental health workers. It has more to do with the 1,100 corrections staff, 3,100 Inland Revenue Department staff, and 430 Ministry for Women and Statistics New Zealand staff. It has more to do with the staff at the Artificial Limb Service and the 800 Department of Internal Affairs workers, 150 staff from the Blood Service, 1,650 Ministry of Justice workers, 2,400 staff from Child, Youth and Family, 1,150 from the Ministry of Business, Innovation and Employment, and 300 Parliamentary Service workers, who are also going to be seeking acknowledgment for their work and what they do and the fact that they deserve a pay rise.

We also think the timing is particularly interesting, that 2 March was when the Prime Minister made the statement that we were going to be dealing with this now under urgency, after 6 years of opportunity—now under urgency—and that a by-election had been called in Northland. We all know that Northland is a place where the majority of the workers—and the majority of the unemployed in the country, pretty much, sit up in Northland—are also among the most lowly paid inside our nation. So we do not think this has got anything to do with the global financial crisis and constraint from that perspective and that sort of good, warm-fuzzy feeling from the Government at all. We think this is a very political move on behalf of the Government. It happens to be the right move; it is just not well done. We will be listening for further contributions from the Government benches as they try to convince us and the nation that the only reason that this is here now under urgency is that the first part must be dealt with under urgency.

Again, I point to the Green Party contribution around transparency. One of the benefits of the select committee process is the ability for New Zealanders to come in and actually say what they think. I think if there is anything that we should be confident about in this House, it is that should the criterion, should the purpose, should the first part of this bill go to a select committee, we should be confident that we can stand in our place and say to the people of New Zealand: “We do this job. We give it our all. We do it for you. And what do you think that is worth? What is that reasonably and honestly and fairly worth?”. If we cannot do that, then we have got a larger problem than 3.5 percent. So I think it is very interesting and I will listen very carefully to the rest of the conversation around these issues.

I do want to pick up on a point that Ms King said. We are also working on a Supplementary Order Paper, because we find it very interesting, inside the regulatory impact statement, that the bill provides that the authority must fix the salaries of MPs so that they can move up only in line with the movement in the average ordinary time weekly earnings for fulltime-equivalent public sector employees. We would like some clarification around “equivalent public sector employees”—who is that?

💬 Hon Michael Woodhouse: It’s defined in the bill.

Great! The Minister has just said that we will find it in the bill. The fact that we actually had the bill only an hour before question time—thank you so much, Minister. It would be nice to actually be able to read it finally.

💬 Hon Michael Woodhouse: Barbara had it days ago.

Not the bill you incorporated into your Supplementary Order Paper, Minister, but you can keep running that line if you like.

We will bring in a Supplementary Order Paper because we are looking at amending the Remuneration Authority Act 1977 to provide a sole criterion for the Remuneration Authority to consider when reviewing the total remuneration of all positions within its jurisdiction. The current bill amends only the salaries for members of Parliament but leaves untouched the remuneration of judges and chief executive officers of local government, among others. We see that these occupations also should be considered by this Parliament as to whether they are appropriately in line with the rest of the New Zealanders out there putting in a full day’s work for a fair day’s pay. Our Supplementary Order Paper will address those at that top take level, and we believe that it shows leadership. We believe that it would show leadership across the whole of the sector.

It was interesting that Mr Farrar, David Farrar—he is a well-known leftie, I think, is he not—has helpfully compared MPs with judges. An MP used to get 73 percent of what a District Court judge gets, but today they get just 48 percent. This excludes superannuation subsidies that are far more generous to judges. Then Mr Farrar compared Cabinet Ministers with High Court judges. In 1985 they were paid almost the same. Ministers got $957 more. Today a Cabinet Minister gets just 67 percent of what a High Court judge gets. They get paid almost $150,000 less. We are not suggesting that that means we need to go up towards High Court judges; what we are suggesting is that things have got out of kilter.

My final contribution about things getting out of kilter would be the fact that in the 1970s the wages of teachers and members of Parliament were similar. In the 1970s the wages of teachers and members of Parliament were similar. Things have got completely out of kilter. We believe that this is an opportunity to bring it back, but we are not confident that the Government itself knows what is inside this bill and how it will fold out at the end of the day, because it has not taken the time—and it had 6 years to do so—to truly work this through. Kia ora.

I rise in support of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill 2015 for its first reading, but before I begin, like others, I want to extend my support to the people of Vanuatu. My thoughts and prayers are with them as they move through the deaths they have experienced and the destruction. My best to those people.

I pick up on the point of the member opposite who said that talking about members’ remuneration has always been a touchy subject. An interesting fact is that until 1950 our predecessors actually fixed their own salaries. I do not quite remember that. I was actually born in 1974, when the Higher Salaries Commission took over the role. I am sure it was to much relief of many members that it was taken out of their hands, but it certainly did not remove the fact that the public dislike MPs’ salary determinations.

Just before I do talk more about this bill, I want to pick up on two things that were said by previous speakers. My understanding is that there was quite a bit of dialogue with the Remuneration Authority to use some of its implied discretion under the Act that if it was going to set an increase, to make it appropriate. This is a Government that is talking about having people live within their means. We are asking the Public Service to do more, on less. We are asking for better results. It has been said that in support of that a 1 to 2 percent increase is probably the appropriate place for it.

The Remuneration Authority has decided not to do that, and the 3.56 percent increase is seen on this side of the House as neither necessary nor justified. That is the reason why we have now taken these steps to change the Act, to bring this increase back into line.

The other thing too is that I am not too young to remember some shenanigans in 2002 and 2005 in respect of MPs’ salaries and their determinations. So to suggest that we are doing things in a rushed way now—what we are doing is we are saying that this 3.56 percent increase is inappropriate. We have had dialogue with the Remuneration Authority. It has chosen not to take that advice, so we are going to do something about it. I am in support of that bill. This bill adds to the parent Act and will clarify the Act to make determinations fair to the recipient but also to the taxpayer. These changes will obviously bring that to the fore.

As I said before, this decision was not taken lightly, but we want to peg determinations to the average annual percentage change in the public sector pay, as measured by Statistics New Zealand. That means that our pay increase will be in line with the average public sector salary movements. That is only fair because we are public servants. We are bracketed with the people who are nurses, who are teachers, and who are police officers. They are doing a fantastic job. As I said before, this Government is asking our Public Service to deliver more, on less. They are doing that. Their work is valued, but we need to be walking the talk. We need to be seen as being bracketed with them and the work that they do.

I certainly do not question anybody’s motives for being here. We are all here to do a job. We are all here to do the best that we can for our constituents. We may have different ideas about how we do that, but I think the motives are pure, just as our nurses go on to the front line or our police go on to the front line and work hard. It is appropriate that we are in line with that 1 to 2 percent increase, if at all. I look forward to seeing this bill being shepherded through the House. I am in support of it. Thank you.

I would also like to start by extending my condolences to the people of Vanuatu. What is happening over there is a great tragedy and I wish them all the best for their recovery. I commend all the efforts of all New Zealanders who have extended their support via the Red Cross and other agencies.

The people of New Zealand need to know that the Government is introducing a bill that looks as if it is supposed to contain runaway increases in the pay for members of Parliament but, as far as we can tell, will not actually do so. Not only that, the Government is abusing the parliamentary process of urgency to rush through the legislation before anyone notices how flawed and ineffectual it is. It is a bit like the Government’s approach to climate change. It can claim that it is doing something about climate change because it has got an emissions trading scheme, even though emissions continue to rise. The emissions trading scheme is a smokescreen that has no effect other than to enable the Government to pretend that it is doing something.

Much like last week’s proposal, the latest version of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill uses a poor linking mechanism. It sounds reasonable in the sense of linking MPs’ pay to public sector pay but we do not believe that it will have any real effect. As a result, it seems as though the bill will likely continue the run of large and unmerited pay rises for MPs. So instead of meaningful reform, the Government is deploying a smokescreen. It wants to be seen to be doing something the week before a knife-edge by-election in Northland without actually doing anything about the issue. In the process it has actually adopted an approach that precludes meaningful scrutiny. It is not allowing public input. It is not looking for expert analysis. It is jamming through superficial changes under urgency and hoping that nobody will notice. The Greens will not support such contempt for proper parliamentary procedure, nor will we support such ineffective changes. We have consistently over many years called for real constraints on MPs’ pay, but this is not it.

I disagree with the member for Rimutaka, Chris Hipkins, who earlier claimed that voting against this bill is the same thing as voting for the status quo, although I can understand his point. If the bill has no meaningful impact—and the member from Rimutaka also said that we could not have any confidence that it will have any meaningful impact—then voting for it is the same thing as voting for the status quo. It is better to vote against a flawed bill. Passing a flawed bill that has no impact will mean that it may be some years before the matter comes back before the House, when we are once again embarrassed by the massive pay rises we are all getting. A completely different approach is needed.

According to this bill, MPs’ pay would be linked to public sector pay as calculated by the quarterly employment survey. A few other people have mentioned this. It is a bizarre choice. The quarterly employment survey is hardly ever used as a measure of pay. Not even the State Services Commission uses it as an indicator of pay. This is because it fails to control for changes in the quantity or quality of labour. As a result, changes in pay, as calculated by the quarterly employment survey, are not necessarily indicative of what workers are earning.

Indeed, we do not have any confidence that linking MPs’ pay to the quarterly employment survey would actually prevent large pay rises. We received this version of the bill only at 10.30 this morning. The analysis we did on last week’s version of the bill showed us that taken over the last 6 years, MPs’ pay would be almost exactly the same now as it is under the status quo. The Government has not provided us with any evidence that this new version would do anything to the contrary.

The Government’s approach to this process shows contempt for the public and for proper procedure. MPs are supposed to represent the people. To that end, the people should have the right to scrutinise any proposed changes to MPs’ pay. However, the Government members seem to have considered this an inconvenience. They want to be popular and they want a quick fix; they do not want select committee scrutiny. As a result, they are rushing the bill under urgency. This is something that the Green Party cannot support, so we will not be voting for the bill at this stage. As my colleague Metiria Turei said, we will be bringing in three different Supplementary Order Papers during the course of this debate, given that we are probably in the minority on the voting front, to attempt to fix some of those problems that we see. Thank you.

Marama Fox—5 minutes.

Kia ora, Mr Assistant Speaker. You know what? We are standing to support this bill, as we do with most first readings. We like to do that because we want to hear what the people, at the select committee stage, think about it. Unfortunately, we have some scepticism around the measures that are going to be in place and whether they will do what the bill outlines. We are going to support the bill through at this stage, in the absence of something else, and I am interested to see what the Greens are going to put forward. In saying that, why are we supporting it? Because, quite frankly, the proposed changes that the Remuneration Authority put forward a couple of weeks ago were embarrassing. They were embarrassing, but not because I do not think MPs deserve it and not because I do not think MPs are hard working.

In fact, I have seen just how hard MPs work. I sat in a meeting with a Minister at 10 o’clock at night—opposite a blood-shot, weary, and tired-looking Minister—who had not eaten all day so I ordered dinner to his office so we could have the meeting. I know how hard they work. So it is not embarrassing because I do not think we deserve it; it is embarrassing because, actually, so does the rest of New Zealand. The rest of New Zealand deserves to have a pay packet that adequately pays them for the job that they do. No matter how hard I work—and I work very hard, as do other Ministers and others MPs, because I am not a Minister, not yet. I have got a husband who is a shearer, who still leaves home before I do and still works twice as hard and then has to look after all the kids on top of that because I am not there.

💬 Jacqui Dean: Sounds like a good man.

He is a good man. I have trained him well. I think that we need to be addressing the remuneration of our country. In fact, our poverty standards in this country are an embarrassment to us. Two hundred thousand - plus people are living in poverty. The greatest number of people who are affected by abject poverty in this country are the children and families of those on a benefit, actually. That group of people deserve to have a rise in the level of their benefit. The hardship on those families is remarkable. We do not understand the hardship that they come into contact with. In fact, our minimum wage is set at the rate of poverty. It is 65 percent of the median wage, and there is some discussion about what that is. But if we are employing people on a minimum wage in this country to be impoverished then we need to ask ourselves—yes, I support this bill because it means we will not get a pay rise that is just, frankly, embarrassing, while our people languish in poverty. Then if we look further at the levels of poverty and if we add hardship to that, it increases the impact on those people.

This wonderful book here, Child Poverty in New Zealand, written by Jonathan Boston and Simon Chapple, outlines exactly what that hardship means. Hardship is enforced lack of essentials; meals with meat or fish are missed or happen only every second day; you do not have two pairs of shoes in good repair; you do not have suitable clothing for special occasions or a winter change of clothing; and arrears more than once a year for rates, electricity, water, vehicle registration, insurance, or warrant of fitness. There is a hardship index for people living in poverty in this country and you may or may not be surprised to find out that 100,000 of those people meet more than eight to 16 of the 20 indicators for hardship according to this book. So, quite rightly, we are embarrassed by the proposed changes to remuneration, not because we do not think that we deserve them but because we because we think the rest of New Zealand deserves them as well. We need to be addressing the minimum wage in this country and making it a living wage. Do not pay people to be impoverished. Then the people who are receiving a benefit or welfare because of their circumstances need to be supported out of poverty, not supported into poverty and extreme hardship.

That is why today we are supporting this bill, but we are sceptical that the changes are actually going to make the difference that they intend, when you think that some chief executive officers of ministries and Governments actually get paid way more than their Ministers. So at this point and at this time we support it. Thank you.

It is great to be able to speak on and support the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. First, I would like to congratulate the Minister in charge, the Hon Michael Woodhouse, on the work that he has done on this bill in such a short time. The Remuneration Authority (Members of Parliament Remuneration) Amendment Bill, sponsored by the Hon Michael Woodhouse, is to amend the Remuneration Authority Act 1977. This bill is going through all stages today under urgency. This is because the latest increase, which was determined by the Remuneration Authority, was to increase the salary of members of Parliament by 3.56 percent. Although this decision was made independently of members of Parliament, we should not be receiving this increase because it is disproportionate to increases in the public sector.

When this issue was raised by the Prime Minister the Remuneration Authority referred to a specific criterion in the Remuneration Authority Act 1977 as the reason for this increase, and that is why this change is necessary. This change will tie the salaries of members of Parliament to the public sector and will take away the Remuneration Authority’s discretion when setting the salaries of members of Parliament. Given that inflation is 0.8 percent this kind of increase is not necessary. I am really proud to be part of this team that believes in delivering for our Kiwi families and children. We are taking action; it is not just about talking—like the Greens we heard. This is not a new issue. This is not an issue that is raised for the first time. It is about fairness for the taxpayer’s dollar.

The amendment will change the process of how the Remuneration Authority reviews the salaries of members of Parliament. So, first, it will take away the Remuneration Authority’s discretion when setting the salaries of members of Parliament. Second, it will make the average public sector pay movement the sole criterion for determining increases in the salaries of members of Parliament. This will be backdated to 1 July 2014. This amendment will mean that the average annual percentage change in public sector pay, as measured by Statistics New Zealand’s quarterly employment survey, will be used to determine a member of Parliament’s salary. Using the quarterly employment survey will mean that the increases that members of Parliament will get will be in line with the wider public sector. The law change will be backdated to 1 July 2014, which means that the determination of 3.56 percent of the Remuneration Authority will not be awarded. This increase will be somewhere around 1.5 percent.

Currently, the Remuneration Authority has to take into account several factors, such as relativity to comparable positions and the requirements of the job. With this change the authority will just need to annually apply the average quarterly employment survey index for the June year to give an increase to members of Parliament. The Remuneration Authority will continue to have the ability to change the mix of cash and non-cash items in the overall pay package. This indexing of the salaries of members of Parliament to the quarterly employment survey will be done at the same time every year. This is after the publication of the quarterly employment survey in June every year. This will make sure that the increases we get are in line with those our teachers, nurses, and other workers get.

If we get pay increases that are more than the public sector, it is not a good look, and this is not what our people expect from us. We need to lead by example—that is, to do what we say, and that is what our Prime Minister, the Rt Hon John Key, and the National-led Government are about. Pay and pay increases, I understand, are rewards for a person’s hard work, dedication, and commitment to that person’s work. As well as that, I know and I recognise that members of Parliament work hard, they are committed, and they are dedicated. But we are not here for the financial reward. I am here to serve our people; I am here to serve our country. So I am really honoured to be part of this team that believes in delivering more for less. It is about listening to our people and it is about being fair to our people, so I support this bill.

As other Labour members have done in this debate, I rise to support the first reading of this bill. I do so because I think what this bill represents is a step in the right direction towards sorting out the issues that lie in the way that MPs’ pay is determined. I do not do it on the basis of the fact that this is a great process or that this is, necessarily, in a perfect state at the moment. It is not. I think what we have seen over the last week is an indication of the fact that, I predict, we will be back debating this issue again at some point in the near future.

But if we actually look at the principle here, I think it is shared by parties across the House. The goal here is that our pay is, in some way or other, more closely linked to what is happening for the median, average—whatever calculation we are using—New Zealanders and their pay and income. That is a goal that I think is actually shared around the House. The difficulty some members are having with this legislation is, first, whether this is the correct mechanism; and, second, whether this process is going to deliver that mechanism. I can stand up here today and say I prefer an approach that links us to something like the average wage in the public sector, but I see real shortcomings in those particular criteria, and I will return to that in a minute.

In terms of the process, this has been mishandled by the Government. I think we are up to about the seventh or eighth version of the criteria. That is a very hard thing to keep track of—to actually understand exactly where we have got to. It is quite possible that there are unforeseen consequences in this legislation. I am not here, you know, disparaging the Minister; I just think the pace at which this has happened means that it is likely that not all of those scenarios have been thought through. So I come to this somewhat sceptical around that but acknowledging that we do need to make an effort to show that we know that we in this House are well paid for what we do—every member of this House works hard for that pay—but that when it comes to a notion of what kind of process there should be for increasing pay, it needs to relate more to what the average New Zealander is going through than it currently does. That is the issue here.

I think the Remuneration Authority has been given a pretty hard rap out of all of this. The Remuneration Authority has done what was asked of it in the Remuneration Authority Act. The Act, particularly in section 18, asks it to compare us with what it believes to be the relativity of similar jobs. Over a period of time, it has interpreted that to be, effectively, around executive pay. Once upon a time this was all done—when the Assistant Speaker in the Chair was in the mid-point of his parliamentary career—by something called the Higher Salaries Commission.

The ASSISTANT SPEAKER (Hon Trevor Mallard): That’s now.

That is now. That is correct. In the early part of his parliamentary career, this was done by something called the Higher Salaries Commission. That gives an indication as to what was being thought about in terms of MPs’ pay—higher salaries. It goes off to the Remuneration Authority, and it continues to interpret that. So when it came back with a 3.5 percent pay increase, plus the extra bits that had been changed around as a result of moving from non-cash to cash recognition, it was doing what Parliament had previously asked of it. The reality is that what this has exposed in New Zealand is the fact that executive pay has been rampantly increasing, while those on median wages and those on low wages have been struggling. That is actually what the 3.5 percent and 5.5 percent pay increase has led New Zealanders to realise.

So you are in a situation now where the average chief executive officer of a company in New Zealand earns 26 times what the average worker in that firm does. That has increased, I might add, in the last 6 years. It used to be 22 times. It has gone up to 26 times over the last 6 years. Nearly half the population, year on year, does not get a pay increase. They are the factors that mean people will put their hands up and say: “This is not right.” So the real underlying issue in this bill is, actually, about the inequality in pay in New Zealand and the fact that hard-working people in New Zealand have not seen a pay increase for many years.

Today in the House we heard Bill English tell us once again what people have been told in the past: that they have to tighten their belts, that times are tough, but that there are good times around the corner. That is what Bill English told New Zealanders before the last election. Today in the House he said: “That promise is off the table now because now we have got low inflation in New Zealand, and pay increases cannot be justified.” New Zealanders were promised before the last election an average pay increase of $6,600 over the next 3 years, and today Bill English wrote that off and said: “Only very moderate pay increases are going to happen.” So this piece of legislation tries to go about correcting a problem that is much deeper. It is a problem about the value of pay for New Zealanders.

There was an interesting study by the Productivity Commission released in the last month that shows that over a 25-year period, pay for New Zealanders has fallen 16 percent behind productivity increases. We are always told that as productivity increases so will wages, because productivity will drive more efficient businesses. Well, the reality is that that gap has been created. This is what we are now seeing globally: the retention by capital of wealth away from those who earn salaries and wages. In New Zealand we now have the evidence and the proof from the Productivity Commission that pay is 16 percent below where it should be. So that is what lies behind the problems that we have experienced in the last few weeks on this issue, because for those on high incomes, they keep going up. Those on middle and low incomes in New Zealand are stuck, and so when our pay is pegged to those on high incomes, naturally, New Zealanders will react and will say: “What is going on there? That is not the experience I am having in my community.” That is the issue that lies behind this and, of course, is not being addressed at all by the National Party’s side of the House across the economy.

Related to that is a concern I have about the mechanism here. I do believe this is a step in the right direction, but I think that by tagging this to public sector pay, we reopen another can of worms on this issue, and that is we are now tagging this to something that is in the control completely of politicians: public sector pay. It is all very well for Bill English to stand up and say: “Well, we’ve got the teachers, we’ve got the nurses, and we’ve got the police this year. They’re going to have to accept modest pay increases.” Now it is all linked together. My view is that we are taking a step here, the next step of which should be a proposal around something that looks across the economy. I know the Green Party has proposed the idea of a median income—that may well be where we should end up. But it needs to be something that looks at the economy as a whole, because that is something the Government can influence positively but not control.

I think we are getting ourselves back. We are going backwards and forwards, if you look back over the decades, on whether politicians should be responsible for setting their own pay. No, we need to give that job to somebody else. We give that job to somebody else, we set the criteria, we do not like the criteria, and we bring the job back to us again. This is not a sustainable solution. We need a sustainable solution that links this to something that reflects where ordinary, everyday, average, median New Zealanders are—but, fundamentally, wage growth in New Zealand is unequal. Executive pay has been bounding ahead, while those on real wages, those on median wages, have been struggling. That is the issue this country needs to get its head around. That is an issue the National Party is ignoring. We will support this legislation because it begins the process of more directly linking MPs’ pay with what ordinary New Zealanders are doing. But the process around this bill has been flawed, and I predict, unfortunately, that this is not the last time this Parliament will need to address this issue.

I am pleased to stand to take a short call on the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. I am pleased to see that our members across the way over there are supporting this bill, because I can tell you that when I hear the member Robertson talk about executive salaries rising, I worked in an industry—in the health sector, actually—many moons ago, and I saw that. We struggled away with the paltry sums that we got to pay our people. To be honest, when I came here, I did not expect any pay rise, because that is not what I am here for. I am here to work for the people. I am here to represent the people. So when the Prime Minister made the statement that he made about stopping the pay rise of 3.56 percent for our MP salaries, I was absolutely delighted.

I want to thank Mr Woodhouse for leading this bill and for taking it through to its completion. I also want to commend my fellow speakers behind me who have articulated the appraisal of this particular bill and the work, albeit fast, that has gone into it to date. I can tell you that the results that we have had out there and the kōrero that is happening out there with the public—they are very pleased to see that this Government is actually listening to them and that we are a responsible Government and are managing the finances of this country with great vigour and responsibility, which all people of this country would be looking forward to seeing. So without any further ado—there are a couple more stages to go on this—I commend the bill to the House.