Remuneration Authority (Members of Parliament Remuneration) Amendment Bill

I move, That the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill be now read a second time. I want to acknowledge and thank the members who have made what I believe are very considered contributions on the bill. Although we will, in due course, be in the Committee of the whole House, where I can respond to some of the more technical questions that have been raised in the first reading speeches, I do want to touch on a few of the less technical and background questions and challenges that have been raised.

Starting with Mr Young, I think, who made a very salient point that today is St Patrick’s Day. Indeed, he quipped that this was a rather Irish thing to do: for Parliament to be legislating for a pay drop relative to what was expected. But I think we all agree that in principle it is the right thing to do—it is just the method and the practice. I acknowledge Mr Hipkins’ point, where he asked the very correct question: if it is OK for MPs to legislate to set aside a pay increase that they believe is too high, what is to stop MPs legislating to set aside a pay increase they believe is too low? Well, the short answer is nothing. Parliament is the architect of its own destiny. But I would say this: the National Party is a minority party in this Parliament, and for this legislation to pass, it requires the support of other parties, which I am pleased to say it has, with the exception of the Green Party—and I make no criticism about that, because I do understand the principal basis upon which the Greens are opposing this legislation. I will come back and criticise some of the other comments that have been made by the Green Party, but certainly not its reasons for not supporting this bill. But I would say to Mr Hipkins that it would be a very brave Parliament—and, indeed, a very brave Government—that did that. So what we are doing, we are doing for, I think, a considerable period of time.

I understand that it is incumbent on me, as the Minister sponsoring the bill, and on this House, to make sure that we get the principles—as articulated by the Prime Minister’s wishes and Cabinet’s decision—clearly laid out in legislation. Mrs King asked me what was different about the bill from what was prepared last week, and which necessitated a slight delay while what I described as a technical amendment was put through. The difference was twofold, really. One was a minor mathematical change in the algebra, which would have had the transfer of non-cash to cash benefit then subject to the quarterly employment survey uplift. I did not believe that was appropriate in the circumstances because, indeed, that was a current-year valuation of a change in a non-cash entitlement. So the algebra was changed to add that part of it—or subtract it, as the case may be—back into the calculation of remuneration, salary, and superannuation, after the quarterly employment survey was applied.

The second difference was a transitional provision between the 2013 determination and the 2015 determination, which would be an issue going forward but, actually, manifests in the authority’s determination of the calculation of the value of a self-drive vehicle for Ministers. Ministers have had, for a very, very long time, access to self-drive vehicles—and we can argue and debate whether or not there is a personal benefit, and how much of a personal benefit there is—but, indeed, the authority set a value on that in 2015 that was not included in the 2013 determination. It was, therefore, a tricky transitional provision.

Indeed, what we have done by addressing that, as it was drafted in the first bill, was to remove that altogether from the calculation and simply say this: if an MP is gaining what is perceived to be a personal benefit right now, and the value of that benefit in the authority’s estimation is attributed to it or has changed—either because of inflation or something else—then that change would not form part of the calculation. On the other hand, if, as is the Speaker’s prerogative, there has been a reduction in the actual entitlement, which has a change in the value, as was the case in the 2015 determination, when constraints were put on spousal travel, for example, and there was a reduction in the value of the current perceived value of the benefit, if that occurs—and there are very few times now where we have actually got non-cash benefits left—in the future, then that will need to be taken into account. But there will be no other change in the value or perceived value of the existing bundle of so-called non-cash benefits, because the authority has pointed out that there may be a private benefit—for example, for cellphones, internet at home, those things that we see as tools to do our job. But the authority is actually talking about attributing a personal benefit value to that. My view is that while that is in existence now, any attribution of future value should not reduce an MP’s salary. The formula does that—you can feel free to check that in the Committee of the whole House.

The next issue—in fact, it was raised by both Mrs King and Mrs Martin—is around the Prime Minister’s comments about talking a good game but not doing anything. Well, actually, the Prime Minister’s comments did have the effect on the authority of reducing the impact of the increases received through what were quite straightened times. It is not my usual practice to disagree with one of my colleagues, but Ms Dowie did make a comment about an instance where the Remuneration Authority decided not to heed the advice or the request of the Prime Minister. I am going to partially defend the authority in that regard because, indeed, what it believed it was doing was applying the letter of sections 16 and 18 of the Remuneration Authority Act. Indeed, when I first started thinking about this, I misread the difference between prevailing economic circumstances and countervailing economic circumstances. What the authority has determined is that there are no countervailing economic circumstances that would warrant a more modest increase in MPs’ salaries.

The authority’s other role, as set out in that Act—I am quoting section 18 here—is “to achieve and maintain fair relativity with the levels of remuneration received elsewhere;”. And that is where it gets difficult. Where is there a relative role? What do we compare ourselves with? There have been criticisms of runaway rises in executive salaries in the public sector. Well, I do not agree with that. I simply do not agree with that. I am not going to agree with that, and we are not changing anything in respect of the Remuneration Authority’s determinative powers to set the salaries for about 80 senior public servants. Indeed, Ms Fox talked about public sector pay being well above that of the Ministers. Well, so what? The Commissioner of Police has 12,000 staff, a $1.5 billion budget, an incredibly complex organisation to run—and I have got seven staff, and I am the humble Minister. It is true. Is that a valid comparison? Because I do not think it is. I would say that the relativity—and this is a personal view, not the Government’s view—but I do consider that the relativity is actually around seeing the Minister as the chairman of the board, rather than as an executive. We do not do the job; nor should we. We should be nose and fingers out—as good chairs are—not chief executive officers, because I am not the chief executive officer of the Police; Commissioner Bush is.

I think that underscores the difficulty with the question of relativity—that the Government has said: “You know what? We are paid fairly for what we do now, and the level of increase is inappropriate in the circumstances, and this is the right thing to do.” I will, in the Committee of the whole House, address the technical questions around the quarterly employment survey—why we have it, what its history is. And, indeed, Mr Farrar will now be in Hansard because I am going to address his specific blog because I think it is important to understand it in its broader context. In the meantime, I do appreciate what I have considered to be very intelligent interventions, and I look forward to that continuing.

Thank you, Mr Speaker, and can I thank the Minister for taking seriously the issues raised by members during the debate on the first reading of this bill. It is probably a shame that there are not more people to hear it. Maybe there are many out there in radioland, but other members would perhaps be interested in hearing this debate, too, because it is a very important one. This bill today is one that I believe will, at the end of the day, receive the majority support of this House. I take the points of the Green Party around process and around the fact that there is no select committee looking at this bill. I noted that New Zealand First also raised particularly the first part of this bill not going to a select committee. But we understand the haste, because this bill will be a very, very untidy mess if it does not pass all its stages over the next few hours, because members of Parliament would then receive their remuneration as set out by the authority, and then there would have to be a retrospective clawback of that—very untidy, very messy.

So I understand the haste, but I do go back, Minister Woodhouse, to the fact that this is not a new issue, and, you know, for the last 5 years, as I said, whenever this comes up, there is a firestorm around it and comments are made about it by the leader, the Prime Minister of New Zealand. And we all wear the odium of the fact that nothing has been done to make a fair way of setting parliamentary salaries. We all know that there is opposition to parliamentary salaries, and it is one of those very, very lively debates that happen whenever there is some determination made. So I think, Minister, that maybe this is something that as a new Minister last year you might have liked to have raised, because we always know there is going to be a Remuneration Authority determination coming out at a particular time, and to have got ahead of it and to have got it into a select committee to allow some public input into it would have made this process so much better. It would have also had proper scrutiny, because, let us face it, the job that was done was hurried—and I am not blaming you, Minister. I realise that you had to bring forward a bill when the Prime Minister had made the announcement of what the formula would be. But then you had to make the formula fit his commentary, and it did not work.

We got an algebraic formula that, when your own National Party blogger did the work that should have been done by the Prime Minister’s advisers and by the Minister’s advisers—when that work was not done, we found that we would have ended up, using that formula, having got more money. What a lot of fools we would have looked if, last week, we had hurriedly gone through with what was—

💬 Hon Michael Woodhouse: That’s not true.

So you are going to address David Farrar’s blog? That is good because I want to know where he got it wrong, and others who have read that and have looked at the figures have supported it. So, Minister, when you get in the chair, I want you to go through step by step how it was wrong last week but it is right now; and why, if it was right last week, it is not the same now. You see, it was either right or wrong last week, and we could have gone ahead with it. So there was something seriously wrong with it.

So, Minister, the new part of this—and I am struggling to understand it, but I would like you to give an explanation when we get to the Committee stage—is the new Part 2? You talked of it being a non-cash benefit versus a private benefit, and of how that will be calculated in the future, and I think we need to understand, with better examples perhaps, what you mean. You mentioned ministerial cars, but this covers all members of Parliament, not just Ministers. So, Minister, could you come back with examples of what you mean in terms of how this change would work—what could not be changed, and what could be changed? I do not get this from the bill. I do not understand it from the bill. So I think we would be better informed if you could come back, Minister, with those answers.

I do agree with the Minister that it is no good having the Prime Minister jawboning the Remuneration Authority. That just does not work. The authority was put there in good faith, with an independent role, and it was carrying out its role as it was asked to do. So it is not the villain of the piece; it was doing the job that was given to it. And jawboning over 5 years was not going to change what it was required to do by law. It did not change that. So it became a media exercise, I think, rather than a serious exercise by the Prime Minister.

I do not believe, Minister, that your argument around chief executive officers and relativities is a fair one. You see, I think that chief executive officers are paid too much. I cannot believe that we have got chief executive officers now being paid well over half a million dollars in salary. I do not care how big their department is or how small it is—and you could look at some pretty small Government departments that are getting very hefty salaries, indeed. There has been no talk of doing anything about that, and that is part of the overall picture that does need to be addressed.

Minister, you talked about being the Minister of Police and about how the Commissioner of Police has 10,000 staff—men and women—working hard on the front line. I totally agree with you, having been a Minister of Police, but I also know that as the Minister of Police, the buck stops with you. So the commissioner may well carry out the policy requirements and the operational requirements, but the policy comes from the Government of the day. The policy comes from the Minister, and the accountability, as the Minister has found out, comes right back to his plate at the end of the day. So it is not just a matter of being like the chairman of a board, overseeing everything that happens around them: “Your turn to speak. Your turn to speak. What are your suggestions?”. As a Minister, it is actually a matter of driving and leading. That is how I have always seen it. What has happened here is we have got a huge discrepancy now between the chief executive officers and their Ministers. But, even worse, there is a huge discrepancy between public and civil servants and their chief executive officers, and a huge discrepancy between those in the workforce who are working in the private sector and those in the hierarchy of the Public Service. We need to address those issues.

Today we are addressing this bill, and will support it, because I have yet to meet any members on our side of the House, in the Labour Party, who have said: “I want a pay increase. I asked for a pay increase. I advocated for a pay increase. I want more.” That is totally untrue. In fact, we have had many discussions on how we wished there were not those levels of increase and on how we would rather be benchmarked or judged by what was going on, perhaps in the public and private sectors, rather than just in this formula that we have got. But what we have got is what we have got, and, Minister, we will be holding you accountable for getting it right because none of us—not one, not even members of your backbench—want to be back here again fixing up a mess that has not been properly thought through. So let us put it on record: the Minister is going to tell us in the Committee stage that he is absolutely certain he has got it right and that we will not have to fix this, as a mess, by next year when a determination is made.

So we look forward to some really comprehensive answers from the Minister when he is in the chair, and, hopefully, he is able to be in the chair for the whole debate, because when you get a substitute Minister, they cannot answer the questions that have been raised in this very good debate here today. So Labour supports the second reading of this bill.

Thank you to our two previous speakers—the Hon Michael Woodhouse and the Hon Annette King—for the comments that you have made. I think they are very important, and I do concur with the Minister for Workplace Relations and Safety on what he has just shared regarding the level of responsibility—which is quite different from his responsibility—of chief executives of major Government departments, who work very hard for the benefit of the public. We know that the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill has come to the House because the Remuneration Authority chair, John Errington, referred specifically to the criteria set out in legislation as the reason behind the increases. As the Hon Annette King just referred to, the authority was doing its job, as the legislation directed it to.

There come times when the parameters and the requirements that have been set need to be reviewed. That is the job of Parliament. This is what has happened. The time has come. It is due season that we look at this because the resonance of that increase that the authority recommended be put in place, in due diligence of its job, was not perceived by the general population nor by members in this House to be appropriate. We live in a climate where the inflation rate is 0.8 percent. The authority, by due determination of all the difference factors that it has considered, says that the increase to come to members of Parliament, to Ministers, to the Prime Minister should be 3.6 percent, when the Government itself is saying to our employers and certainly to the public sector that what we need to see are restrained increases over the years to come—not lacking generosity but being responsible, being prudent, knowing the situation of our recovery.

As I said in my first reading speech it was not long ago when this country borrowed $300 million a week to continue the services that New Zealanders needed during that time. Since then we have come through to a modest surplus, but we have built up debt. It is not just a matter of a surplus; it is also a matter of the solvency of our country, which is incredibly important, and so this country needs to be prudent in terms of its growth and its progress. It was deemed that the example being set by members of Parliament in terms of the remuneration they were about to receive was counter-culture and against every conventional wisdom that we have been articulating regarding wage increases in our economy at this present time. So this is how this bill came to pass. The chair, John Errington, and those who are supporting his decision, made that decision specifically according to the criteria set out in the legislation as the reason behind those increases. So it is prudent and proper that if this Parliament wants to see a change—a change that we believe to be needed—then this Parliament needs to determine the criteria, which is what this bill is about. Thank you.

I rise to speak on the second reading of this bill. This would normally be the point at which we would be reflecting upon the interesting and diverse submissions that had come to the select committee that would have been set up. I imagine a bill of this type would have attracted a lot of interest, actually. There would have been a lot of hearings. There would have been the traditional argument between Opposition members and Government members about whether 5 minutes or 10 minutes is actually enough for a submitter to make their point. We would have jousted over that and got our way through. I predict that the select committee probably would have travelled on this bill, and gone to Auckland and Christchurch and taken on board the views of people from right across the country.

💬 Hon Michael Woodhouse: It’s such a burning issue.

Well, the Minister for Workplace Relations and Safety interjects and says: “It’s such a burning issue.” Actually, it is. It actually is something that worries and concerns New Zealanders and that is because, I believe, of the reasons I mentioned in my first reading speech. The concerns are not so much about what we as politicians are being paid, but, actually, about what ordinary working New Zealanders are being paid and the fact that they have not had a pay increase. In the last year 40-odd percent of them have not had a pay increase. That is what drives the anger, the concern—the fact that there is a greater disparity being created, yet again, by this. So I do want to make the point, in all seriousness, that clearly it is less than desirable to have now moved immediately to the second reading of this bill.

I think everyone in the House would recognise that a piece of legislation like this would benefit from having a select committee process. Any time you see an algebraic equation show up in a piece of legislation, it should go to a select committee, and I think it is really important that when we are—

💬 Hon Michael Woodhouse: The member should’ve paid more attention at King’s High School in fourth form. He’d have got it right.

Well, no, actually—things went wrong for me in maths when they started including letters with the numbers, Mr Woodhouse. But, no, the fact is that when we get a piece of legislation like this with a formula-based approach, it would be better if it was before a select committee. What we know—and the reason the Labour Party is supporting this piece of legislation, as I said in my first reading contribution—is that we share the goal that the kind of pay increase that was put forward for us by the Remuneration Authority is not right. It is not acceptable. We want to see MP pay much more closely aligned with what average workers are getting in terms of pay increases, and this bill takes us a step in that direction. It is not, to my mind, the end of this discussion, but it is a step away from the kinds of pay increases that were proposed in recent weeks.

I want to take a moment to talk about some of the issues that the Minister raised in his speech at the start of the second reading. The first of those is around the whole question of what has happened to chief executive pay. This is relevant because that is the relativity that is going on here—or with executive pay more broadly, shall we say. That is the relativity that the Remuneration Authority looks at under section 18 of its Act.

There is no doubt that we have seen massive pay increases for chief executives in the public sector and the private sector, and the Minister is actually just plain wrong to assert that that is not what has happened in New Zealand. Actually, my own view is that no Public Service chief executive should be paid more than the Prime Minister. I do not understand that. I think that that sends the wrong signals. I simply do not believe, when we are getting up to the $400,000, $500,000, or $600,000 area, that we are in a situation where there is some kind of concern about recruitment of quality people for those roles. I think that is wrong. You know, we have got the State Services Commissioner, who got a 9 percent pay increase after a shocker of a year, frankly. What kind of situation are we in when those kinds of pay increases are going on?

As I said earlier, when we get to the point in New Zealand workplaces where we have got a chief executive being paid 26 times the average worker’s pay, we have got ourselves out of whack. I note that if you look at the ANZ, with a $4.1 million salary for the ANZ chief executive, the ANZ’s chief executive is paid 120 times what the lowest-paid worker within the ANZ is paid. That is out of control. That is disproportionate.

What we need in New Zealand is a sustained programme of lifting the wages of ordinary New Zealanders, and that comes through a variety of means. It does come through productivity increases—there is no doubt about that—but the disjuncture that I mentioned in the first reading between productivity growth and wage increases in New Zealand in the last 25 years needs further exploration, and that is around some questions about the bargaining power of workers and the real value of the minimum wage. Those are the real considerations around wages in New Zealand that are being ignored by this Government, and now we have this piece of legislation to paper over the cracks that we have got here.

The Minister did not, in his contribution, address to my satisfaction—and I hope we come back to it in the Committee stage of this debate—the question of the particular mechanism being chosen here, the quarterly employment survey for public service workers, as the best benchmark we can have. There are two concerns I have about that. The first of those is the fact that public sector pay is in the control of politicians in all sorts of ways. We had Bill English saying on the television on Sunday that 4 percent is out for teachers, nurses, and the police. We can certainly debate the merits of whether that is fair or not, but that indicates the level of control a politician has about that. We all know that. We all know that when the Ministry of Education sits down with the teacher unions later this year, what they negotiate will come back to the table of the Ministers.

So the very thing that we are about to benchmark ourselves to is in the control of Ministers, and that takes us back years in terms of whether or not we should be setting our own pay. As my colleague Chris Hipkins said earlier, you know, we can put it up or we can put it down. This provides me with my biggest issue with this bill, and I want to hear from the Minister in the Committee stage why the quarterly employment survey for public sector workers is being used. Why not look across the whole economy? That takes that out of the equation, because there are public servants all over New Zealand who are now thinking: “Well, this is just going to mean an absolute certainty that we are down to 1 percent or lower in pay increases because the politicians will be too scared to put the pay up because it will lift their pay as well.”

On the other side of the fence, there are committees of Parliament debating these issues all the time. So the Officers of Parliament Committee is right now debating pay and salary around the Ombudsman and around other Officers of Parliament, as well. As politicians, we are constantly involved in what it is that makes up public sector pay, and I think the Government needs to explain very carefully to us why it is limiting this to the public sector. If we looked across the economy more broadly, then I would have more comfort. As I say, I think it is a step in the right direction because it delinks us from the runaway executive salaries, but it does not, in my view, provide a broad enough look across the economy at wage increases, and I think we need to take another look at that. I think it is really important also that we go back to asking the Minister to describe in some more detail the difference between the quarterly employment survey as a measure and other measures of public sector pay as well, and I am sure he will do that as those concerns have been raised online.

So in the second reading of the bill, once again, we on the Labour Party side find ourselves in the position of supporting a piece of legislation that takes a step forward to ensure that we do not get silly, disproportionate, unrealistic pay increases like that proposed by the Remuneration Authority and that we are drawn closer to the experience of working New Zealanders in terms of the kinds of pay increases they have got. But it is highly suboptimal to be here today having not had this go to a select committee, having had year after year of the Prime Minister telling us we must do something about this, and then we have to rush this through because, as my colleague Annette King said, the shambles that would be created about that pay going into our accounts and then coming out again would be ridiculous. So we have to get this done, but the fact is that the Government has dropped the ball around this issue consistently now, and it now brings to us something where there are still many, many questions outstanding, which we will take up in the Committee stage.

It is a pleasure to again talk to this bill, at the second reading of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. It is certainly interesting to hear the diverse submissions from a number of the members, and particularly the revelation from the previous speaker Grant Robertson, who is, obviously, the Opposition spokesperson on finance, that he has trouble with algebraic equations. I would have thought that he would have revelled in those calculations and would be looking forward to running his calculator over the sums, but obviously not.

The argument seems to have been slightly diverted. This bill is actually about us as MPs, and I think, personally, that the Prime Minister was particularly courageous in making this change, which he announced on 2 March. It is all about showing restraint. It is also about members of Parliament showing leadership. It is about the Government continuing to live within its means. I also would like to reiterate that the Prime Minister has a number of times previously discussed this issue, and it came as no surprise that he finally had to act on it. The aspersion that this is a sudden, rushed response is not correct. The Prime Minister has been clear about his position on this over a number of years and, ultimately, we have got to a point today where we, as MPs, are doing what is right.

As most people know, the bill has three parts. The first bit is about changing the criteria in the Remuneration Authority Act 1977 to take away the authority’s discretion on MPs’ pay increases. Secondly, it puts in place a sole criteria that when determining pay increases it will be the average of the ordinary-time weekly earnings for a fulltime-equivalent employee in the public sector using the quarterly employment survey. Thirdly, the changes, of course, will be backdated to 1 July 2014.

In essence, the bill provides for the Remuneration Authority to fix the salary of MPs, having regard for their salaries, having regard for their superannuation subsidy, and, thirdly, having regard for their personal benefits—a combination of all three—in line with public sector pay increases. The law will come into force immediately following Royal assent and, as I noted before, will be effective from 1 July last year. The result will be an increase of 1.5 percent versus the 3.56 percent that was proposed.

Using the quarterly employment survey will mean that the authority no longer has to take into account other factors such as comparable positions, and there has been a number of speakers talk on that, about other industries. We are public servants and we are here to serve the public, and it is probably appropriate in this case that we have a different perspective on what our salaries and remuneration should be.

The Remuneration Authority will just need to apply the annual quarterly employment survey amount. This will give certainty. It will be clear to everyone what our remuneration is and how it has been based and, of course, it is referenced back to the public sector. The Remuneration Authority can still look at the elements of our pay, whether it has cash or non-cash elements, and the indexing will occur at the same time every year.

I commend this bill to Parliament. Thank you.

I just wanted to pick up on something that the member for Wellington Central, Grant Robertson, said in his comments a few moments ago, which is that this is a burning issue, that people do care about it, and that it is therefore appropriate that we are dealing with it. I agree. I mean, this is a burning issue, and it has been a burning issue for years and years and years. So it seems strange that given that it has been a burning issue for all of this time, we cannot take a few weeks—or, as the Attorney-General likes to call it, 6 months of chit-chat—to do this properly, to actually consider this properly.

Mr Robertson also referred to the problem of some of the links between public sector pay versus the whole economy. He talked about the income gaps between people who are earning—also between people who are earning versus earners and those who own capital. I wanted to just reflect on that a little bit at the moment, because it does have implications for why this bill is the way it is—in fact, why our pay has been organised the way that it is.

Since the early 1970s the gains of productivity have accumulated more to capital than they have to labour. That is just a straight economic fact. It was about 1990 when that really took off in New Zealand. That was, I think, the last year that wages in New Zealand rose at the same rate that our productivity did, and, as a natural consequence of that, as the proceeds from productivity have accumulated more and more to capital, the gains from that have accumulated more and more to chief executives’ pay, because they are awarded more and more on the shareholder returns.

So how that is affecting us is that in order to get public sector chief executives, they also have to get paid at a level that can compete with private sector chief executives. That has been behind this huge drive to pay chief executives more and more and more while everybody else has kind of largely flattened out. So this is one of the reasons we think that linking it, in the way that it is linked, is not a great one.

I said that we are going to be introducing some Supplementary Order Papers later on. I thought I would just introduce them now to kind of warm everybody up to them. So the first would see MPs’ salary movements being indexed to movements in the nominal median individual income, as determined by the New Zealand Income Survey published by Statistics New Zealand. So that means that if the median income of New Zealanders goes up, then MPs’ salaries would go up by the same dollar amount. If the median income of New Zealanders goes down, then MPs’ salaries would similarly go down. That then ties our interests to the economic interests of New Zealanders, rather than having them bifurcated. It is a simple and transparent way for the Remuneration Authority to calculate MPs’ salaries, and it would focus our minds. More important, it is a fairer system. Percentage increases just widen the gap between top earners and everybody else. So since the 2007-08 financial year, MPs would have received an increase of only $4,276 under this Supplementary Order Paper as opposed to $29,800 under the current system. So if we are serious about tackling this, then we need to take some initiative.

Our second Supplementary Order Paper does not go quite as far as that one but it is still better—we believe—than what the Government is proposing. So instead of tying MPs’ pay increase to the public sector pay increase as calculated in the quarterly employment survey, we would be using the labour cost index. The labour market statistics are a truer measure of the actual rate of increase than the quarterly employment survey because they measure what people are actually paid by employers rather than income. Under that system since the 2007-08 financial year MPs would have received an extra $14,514 rather than the $29,800 that we have actually received since that year. So if the Government is determined to use a percentage-based system, then that, we believe, is superior to the quarterly employment survey.

I will just repeat those. Under the status quo, under the current system, since the 2007-08 financial year the increase has been a total of $29,800. That is why the public are getting—we think, rightfully—outraged about that; very few other people have had that kind of increase in that short a time. Under our Supplementary Order Paper in which we are linking the increase to the median income, that would have been only $4,276. So instead of $29,800 it would have been $4,276. Under our second Supplementary Order Paper it would have been $14,514. So we have run the numbers on these and we are confident in them and we believe that the Government can be confident in them as well. The problem that we have got with the bill as it is presented, of course, is that we do not have anything that we can really compare it with because of the process, as we said, that has been rushed.

Just to sum up, as I was saying, I just wanted to reflect on the points that have been raised by some of the other speakers about the widening gap in New Zealand that has been driven largely by the changes in which the rewards of productivity are accumulating to capital over labour and the effect that that is having on chief executive pay and the effect that that is having therefore on the benchmarks that we have historically been measured against, and that is why we are kind of in the pickle that we are in. So we believe, as Mr Robertson said, that tying it to something that is going on in the broader economy—not just one sector of the economy but the broader economy—and tying it to the economic interests of all New Zealanders makes far more sense than the proposal as it is.

We will be introducing both of those Supplementary Order Papers as soon as we can because, as we have noted before, we are struggling to keep up with this truncated and unfortunate process. Thank you.

Kia ora. I rise on behalf of New Zealand First. Yes, it is a very difficult thing to keep up with this legislation; it is quite truncated. I appreciate the contribution of the Green Party member James Shaw and also the contribution of the Labour Party members. This has been one of the more educational debates to take place in this House for quite some time. That is because it is a burning issue. If it was not a burning issue, if the people of New Zealand did not care about it, then, believe me, we would not be here talking about it. It is my understanding that the Government actually knew about the announcement before the announcement was going to be made. It had an opportunity to actually take advice prior to the Remuneration Authority coming forward with its recommendation, but Christmas is not really a good time to actually make these announcements. So we end up where we are now.

Again, I think all of us have said how unfortunate it is that we are in this place and this moment without the true ability to even just give it full attention. It is around algebra. I mean, I do not know how many people in this House who would stick their hand up and say they are brilliant mathematicians when it comes to algebra. I am looking; there is nobody. That is good.

💬 Hon Michael Woodhouse: I am now.

Mr Nash has put his hand up. We will be testing Mr Nash in the dinner hour. And the Minister has said that he has very quickly learnt an awful lot about algebra—so there you go. I have to admit that I have been upstairs working through it myself, trying to figure out what those letters actually mean. I think what has been most valuable about the contributions for me, anyway, to date is, one, the contribution from the first Green Party spokesperson, who asked why we do not consider splitting this out. Minister, why do we not consider splitting this out? Let us put a stop to the 3.5 percent. We all agree that the 3.5 percent is just out of whack and is not acceptable. Why do we not consider actually splitting it out, then, and taking a moment? Let us just go back to what we had before. None of us, that I can pick up, was gagging for an increase in pay. None of us was lobbying. None of us was trying to actually get more money because all of us are very aware of people inside our areas who live on a heck of a lot less, or who are trying to live on a heck of a lot less than what we get paid to do our job.

There would be no argument. We would probably not even need to take any more calls if we actually split that bit out and said: “Stop the 3.5. Go back to what it was prior to the Remuneration Authority.” And then let us take the next year to put the new equation, the new criteria, through a select committee process. Let us take some time and allow this voice of New Zealand—the voice of New Zealand—which we know is out there, to actually come and submit around a select committee process, because then we would have an enduring solution, and I think that has been what has been pointed out by previous speakers as well. We have no doubt that this will come back. We often get pieces of legislation that have been pushed through. Let us give the benefit of the doubt. You know, the staff who write the legislation are doing their best under time pressures. There is an outcome that is being desired and it is algebra.

The equation was not right last week so are we sure—are we sure, are we sure—that the modelling done this week is right? Are we sure that the quarterly employment survey is the thing that we should be working on? Are we sure that when we say in the legislation that “the Quarterly Employment Survey for the public sector average ordinary time weekly earnings for fulltime-equivalent employees using the change for the average for the year to June compared with the average for the previous year to June.” that that is going to give us the outcome that we seek? And what is the outcome that we seek? What we seek is that we do not want to be treated—I believe this is what we seek—unduly better than any other New Zealand worker out there. We want to be treated fairly just as they wish to be treated fairly. I do think that Mr Robertson’s point, reiterated by Mr Shaw, around the inequality that has grown between the average worker’s salary or wage and that of chief executive officers has contributed to this issue, and, yet, we are not addressing it. I do think that that is something that if we were able to take more time, we could have a really good look at it. I think this has highlighted that major issue.

It just struck me that when the National Party member for the Wairarapa spoke last week, he spoke on a bill where he argued about the need for the capacity for employers in his area to bring in workers who would work for the dollars they were offering as opposed to the member for Wairarapa standing and arguing that the employers of the Wairarapa needed to be supported to be able to pay the dollars the workers required and the dollars they would take that work for. Too often we are hearing about this. Too often we are hearing that New Zealanders will not take the job; whereas, in reality, New Zealanders will not take the job for the pay and conditions that are offered. And then there is an argument, often from the Government benches, that we therefore must bring in people to fill those positions that New Zealanders will not take. So I think it is a valid statement, a valid comment, that the lower pay scales and the higher pay scales inside the public sector area of New Zealand have got completely out of kilter.

Are we appropriately attaching our pay to the right criteria, through this bill? I would say that there is some mood that perhaps we are not. New Zealand First is also working to try to get a Supplementary Order Paper into the House—I am not sure how successful we will be—to make this bill, which is to amend the Remuneration Authority Act 1977, cover all the people whom the Remuneration Authority has to consider, not just members of Parliament. We think that that recognises how out of kilter these payments have become.

There have been a couple of contributions from the Government benches. They have given the impression that we are voting for a pay cut, and that is not the case. The words “pay drop” were used by Mr Woodhouse and, I believe, by Ms Dowie and also by Mr Young in the first contribution, if you go back. They gave the suggestion that we were voting to give back money or to have a pay cut. Actually, we are not. We are voting against an increase that was inappropriate. I just want to be really clear. We are not being that magnanimous. We are voting against an increase that is inappropriate. I would not want anybody to think that there are all these shining halos all over the place. What we have found ourselves in is a situation that reflects a problem in the wider society. We are not addressing the problem in the wider society and we know that that problem affects the lower-paid workers in New Zealand. It affects every other area of their lives.

New Zealand First is not confident that this bill is going to do anything about that. It is not part of the criteria. It is not part of the brief. We get it. But maybe, just maybe, if we could take the first part to select committee, maybe, just maybe, we might be able to have a conversation about the wider issues. Kia ora.

In this second reading of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill I just want to clarify a couple of points raised by me in the first reading. In doing so I agree with the member opposite, the Hon Annette King, that there is certainly no point in jawboning the authority. There certainly is not. But as part of this amendment, I believe that the criteria not only needs to be clear but needs to be fair, in the grand scheme of things, when we look at the economy in New Zealand and, obviously, globally. As part of that, I agree with what the Minister for Workplace Relations and Safety said. It is incredibly difficult to make comparisons between an MP’s role and other comparable roles. What is comparable when you take into account staffing levels, accountability, skills, and results? That is not necessarily underselling us, either, but it is just incredibly hard to do when you look at the differences in the roles.

I do believe that aligning us with the public sector, the quarterly employment survey, and the average salary movements, and bracketing us with those hard-working individuals and officials who work for the Public Service, is fair. We are experiencing 0.8 percent inflation. As has been mentioned by the Prime Minister, if any increase is appropriate, a 1 to 2 percent increase is appropriate in these times, as we are asking our officials to live within their means and do more on less. With that, I commend this bill to the House.

Debate interrupted.