Remuneration Authority (Members of Parliament Remuneration) Amendment Bill

The next call is a split call. Metiria Turei—5 minutes.

I just want to follow on from my colleague James Shaw and also to acknowledge the contribution from Grant Robertson who particularly focused on both inequality and that being the driver of increased pay and the driver of the concern about it, but also his, I think, very clear description of the fact that this change means that the Government is in control of MPs’ pay. That is exactly the opposite of what many years of work have led to. It is exactly the opposite of the last Remuneration Authority bill that we dealt with in the Government Administration Committee a couple of years ago, which was designed to give it more authority over MPs’ pay and allowances. So we are going backwards very quickly here.

I do note that the Minister for Workplace Relations and Safety did not answer my question in his last contribution as to whether the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill would constrain MPs’ pay increases. I can assume only that is because either he does not know, because they have not done the modelling, or he knows that it is essentially the status quo.

💬 Hon Michael Woodhouse: I will address that in my speech.

Well, you had the opportunity, Minister, to address it earlier.

💬 Hon Michael Woodhouse: I didn’t have the time. Sadly, I didn’t have the time.

You did have the time. It would be good to do so quite soon, because otherwise there is no assumption we can make, except that the reason why the Government has chosen the quarterly employment survey as the criterion for the Remuneration Authority is that it makes no change and that that was politically palatable to National Party MPs. But actually they do not want to find any means of constraining MPs’ pay. I would like to think that that is not the case, but until we see evidence to the contrary that really is the only assumption we can make.

There was a very good discussion earlier about inequality and the fact that part of the reason why MPs’ pay is such an issue is that there are massive increases for people who are being paid high wages, and basically wages are static and going backwards for many on lower incomes. That is certainly true. The Green Party has been very clear about policy on that as well. Our Supplementary Order Paper 57, which we are putting forward today to link MPs’ pay to nominal increases in the median wage, is the one that we put forward last year, so it has been on the table and available for the Government to take up for 12 months now. We have also very clearly set out issues around chief executive officer pay—for example, the requirement for companies to disclose chief executive officer salaries more clearly, define them, and provide rationale for those pay increases; to have staff members on the committees that set those chief executive officer pay increases; to require New Zealand’s large companies to report on the pay ratio between their highest-paid and lowest-paid staffers; and, to include pay ratios in Government procurement and for Government agencies.

Pay ratio is a major issue here. It is the increasing gap between those on the lowest rates and those at the top. We see more information coming out today from the Council of Trade Unions, describing how those in the top 1 percent have increased their income by around $100,000 between March 2011 and March 2013, meaning that the increase is now 9.7 times more than that for the average worker. This is what is being seen daily by ordinary New Zealanders who are doing their best to get ahead. We have a country of two halves. The bottom half are static or going backwards, fighting every day to have a good job and to do their best but still are not getting anywhere. We have the other half who are slowly moving forward, and then at the very top there is the 1.25 percent who are moving ahead in leaps and bounds. For as long as MPs attach their salary to those top levels, we will continue to be part of the problem.

We can solve it. We can be part of the solution by attaching our salary increases to the nominal increases in the median wage, which means that we link ourselves to the bulk of the New Zealand population and we have fair pay increases, based on a criterion that is not determined by Government but determined by our overall approach to our economic and social policy. That is where the Green Party would like to see this Parliament go. We think it is the fairest thing to do. Thank you.

Iain Lees-Galloway—5 minutes.

This is my first opportunity to speak on the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. I have not been following the debate this afternoon, so I apologise if I traverse—

💬 Hon Ruth Dyson: What?

I know. It is a shock. I apologise if I traverse material that has been traversed by other members previously. Let us be honest about why it is that we find ourselves debating this legislation. It is because the independent Remuneration Authority, in determining the salary increases that MPs should receive, determined a level that it believed was fair but was significantly out of kilter with what ordinary New Zealanders have received in terms of pay rises over the last 6 years or so. We have heard on a number of occasions that the Prime Minister has said that in his opinion MPs’ pay does not need to rise as much as it has done, and that people would feel aggrieved about the pay increases that MPs get, but that is in the context, I say to the Prime Minister, of ordinary working New Zealanders not getting ahead under his Government. I appreciate that the Greens have offered a Supplementary Order Paper linking MPs’ pay to median wages, because median wages have barely moved under this Government, certainly in real terms. Most people who are on the median wage actually in real terms find themselves worse off today than they did 6 years ago.

It is interesting that the Government often talks about “average” wages, which are pulled up by those at the very top getting proportionately very large pay increases whilst those who are in the middle and on lower incomes are not really getting pay increases that allow them to get ahead. That is why I think this Government so studiously avoids talking about the median wage, but if it did and if it actually talked about what ordinary people who are on this middle income are getting, then the story would not be nearly as rosy as it makes it out to be.

We agree with, and we will vote for, legislation that perhaps tries to pare back the increases to our salaries to make them align more closely with what ordinary working people get, but we really just do not think the process around this has been all that clever. First of all, as we said, the Prime Minister has been talking about this for years and years and years, and yet suddenly he felt the need to act. I think the suddenly came along after some polling a couple of weekends ago. The focus groups probably told the Prime Minister that he needed to act and he needed to act fast. And this is a Prime Minister who is in need of some good news. Let us be honest. It has been a pretty rough start to the year. The Prime Minister was in need of something to demonstrate that he was in touch with the voters, and this one suddenly popped out of the box. It was going to be debated last week, but after it was tabled it was discovered that there were a few flaws. The Government went back to the drawing board and it has come back to this this week—

💬 Hon Ruth Dyson: What were the flaws?

Ruth Dyson asks what the flaws were. It is hard to know even where to begin, but I think the fundamental flaw was possibly that we could have ended up with a greater pay rise, as a result of the legislation, than we originally were. There were problems with it, clearly. That is what happens when legislation is drafted after a focus group on a Sunday afternoon and tabled at the beginning of the week and then the intention is to put it through under urgency. So now we are back here this week, hopefully with an improvement to the legislation. We will vote for this because we think this is, hopefully, going to move things in the right direction, but we suspect that we will be back in the future. If we do have to come back in the future, we hope that we do this with an appropriate process that actually gives the full machinery of government and all the officials the opportunity to have input into the drafting of the legislation, and that it gives the public the opportunity to offer their thoughts so that we can actually build a piece of legislation like we do normally. This is why we have the process we have, so that we can build good, robust, long-lasting legislation that is actually fit for purpose and does the job it is meant to do.

We are concerned that we are likely to find ourselves having to come back and address this issue again in the future. We also have concerns—I know that others have traversed this—around the fact that this links MPs’ pay to the public sector. The public sector is actually the group of workers whose pay MPs have the most influence over. I can see that the Assistant Speaker is indicating that I am coming close to time, so I will take my seat, but I look forward to the Committee stage.

You will take your seat, yes.

Thank you for the opportunity to speak on the second reading of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. As we have heard, the Minister has addressed various issues raised by the Opposition. The main issue is that this issue cannot be addressed without changing the legislation. The sole criterion that will determine a member of Parliament’s pay increase has been debated, and the sole criterion in the bill is the right one, which I will address later on.

The Remuneration Authority (Members of Parliament Remuneration) Amendment Bill is to amend the Remuneration Authority Act 1977 to require the Remuneration Authority to solely consider public sector wage movements when determining salary increases for members of Parliament.

I am taking a short call to say that I am fully supportive of this bill. This bill is about fairness. This bill actually helps the Remuneration Authority so that the salaries of members of Parliament, assessed under section 16(2) of the Members of Parliament (Remuneration and Services) Act 2013, can move up in line with those in the public sector. This bill sets the frequency of these adjustments. It also clarifies for the Remuneration Authority if there is no movement in the average earnings in the public sector.

There has been criticism from other parties of rushing this through. This bill has been thoroughly thought through. It is time we address this issue, and not just talk about it. The criticism from members of the public normally is that the pay increases of members of Parliament are higher than those in the public sector. This bill is to address that issue. As we know, this bill is going through all stages today under urgency. This is because there is no justification seen in the Remuneration Authority’s determination of an approximately 3.5 percent increase in the salaries of members of Parliament.

There were some comments from the Opposition about some positions in the public sector and even the private sector being very highly paid. Those salaries are decided by the market. Why would people work in a country if they are not rewarded for the value they add to the organisation? We need to be able to recruit and retain good people, but this bill is not about their salary; this bill is about addressing the salary increases of members of Parliament only.

The Government must ensure that people are listened to and are treated fairly, and that is what this bill is about. We must lead by example, and that is why I support this bill. I look forward to contributing more on later stages. Thank you.

Once again, at peak listening time, I get the opportunity to take a call in this second reading of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. I just have to acknowledge the member who has just resumed her seat and say that that was a courageous attempt to defend what has been a series of amazing errors on behalf of the Government. We were told on Monday last week by the Leader of the House: “There will be urgency tomorrow to pass the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill.” So we were all prepared. There was no sign of the bill. Actually, there was no sign of the Leader of the House either, but that is not always a bad thing. Then we were told on Tuesday that the plans had changed and there would now be urgency on Wednesday to correct the MPs’ pay issue. Wednesday came and went. We were then told it was going to be Thursday. So in a 3-day sitting week we were told that all 3 days would be the day for urgency, and then on Thursday we were told it would be this week.

We received yesterday—or perhaps even earlier today; yesterday I think—version 7.3 of the Supplementary Order Paper that has now been incorporated into the bill. This is not a well-considered, well-thought-through piece of legislation. The original draft risked parliamentarians—

💬 Hon Michael Woodhouse: I’m hurt.

I do not hold responsible the Minister who is braving it and fronting it in the House. He may not have had the opportunity to read the latest version. I am not sure whether it has been run past him, actually. But take the chance to, before the third reading. It would be worth it. It would be worth it from our point of view to have this bill, which is designed to correct the decision of the Remuneration Authority—and I say “correct” in the broadest terms, because it has now become a political exercise—to make sure that MPs do not get a huge pay rise when, clearly, other people deserve it much more. That is the point of this legislation.

The original legislation the Government was going to bring in several times last week ran the risk of increasing the pay of members of Parliament even further than the Remuneration Authority had proposed.

Sitting suspended from 6 p.m. to 7.30 p.m.

As I was saying prior to the dinner adjournment, it is a good opportunity during the second reading of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill to compare the actions that are proposed in this legislation with the portrayal by the Government of why it is taking this action under urgency and, actually, what is happening in the rest of the world.

I certainly support this legislation, and all Labour members will be voting for it, but I have to say that it is a bit of a mess. We had on three occasions last week, actually four counting Monday, the Leader of the House saying that this legislation would be introduced under urgency the next day. The Minister Gerry Brownlee, Leader of the House, said that to us on Monday. Tuesday came and went. It did not happen. On Tuesday he said it would be introduced on Wednesday. Wednesday came and went—no legislation. On Wednesday he said it would be Thursday. Thursday came and went. Members returned home after the House rose—still no legislation.

Then today we have the legislation, with version 7.3 of the Supplementary Order Paper. This has gone through a lot of changes. Now we are going through all stages under urgency. The Supplementary Order Paper has now been incorporated into the bill. It is another structural change to the legislation that we are considering, rather than having that as a Supplementary Order Paper, and none of the opportunities of the usual consideration of a select committee.

Even though it has taken the Government 6 years to decide that the process of the Remuneration Authority for setting MPs’ wages is not what it likes—it has been in power for 6 long years—now we get under urgency, through all stages, a bill that has clearly been problematic. The bill that was going to be introduced last week could not be introduced, for a very good reason. The errors in it were detected at the last minute—I do not know who detected them. It was possibly the Hon Christopher Finlayson. He seems to be one who actually reads legislation; he is the only one whom I have noticed, actually, out of the entire Cabinet. Somebody picked up the fact that the proposed legislation ran the risk of actually increasing the salaries of members of Parliament by more than the Remuneration Authority had suggested, and clearly that was not a runner.

Although we support this legislation I have to say that the Government portraying itself as being fairer is a total nonsense. I do not think it is good practice to put in rushed legislation, through all stages under urgency, if you are serious about fixing a problem. It certainly could have been done some time ago. We knew that this issue was going to come up. Again, prior to Christmas last year there could have been some proper cross-party talks about an alternative mechanism for fixing the salaries of members of Parliament that could be open and transparent, and that the public could have some confidence in.

At the same time as this legislation is going through and the Government is saying: “We are doing this because we want to be fair.”, the Prime Minister and the Minister of Finance are announcing, via the media, to the public servants of New Zealand that they are going to have their wage increase, promised by the Prime Minister and the Minister of Finance during the 2014 election campaign, evaporate. Suddenly that promise, like many of National’s promises, is worth absolutely nothing. Actually the National Party campaigned on a promise of a good increase in the wages of public servants, and now it is saying: “No, we cannot afford it.” I guess it wants to put some of that money into its made-up surplus as well.

The Government has increased the minimum wage by a measly 50c an hour—50c an hour—for the lowest-paid workers in New Zealand, and it is trying to portray itself as fair and considerate. Well, it is obviously a nonsense. The Government is ripping off New Zealand workers and New Zealand businesses to the tune of—not a little bit—$350 million a year, the equivalent of 700 jobs, that New Zealand workers and employers are paying in overcharged ACC levies. They do not need to be charged that much. They are paying too much in their ACC levies, and that money is being taken out of ACC and put into a surplus. We have not seen that sort of behaviour since the Rt Hon Robert Muldoon. This legislation is being portrayed as: “We want to be fair. We want to make sure that MPs do not get huge salary increases, while we are giving tuppence-ha’penny to the people on the minimum wage.” But the truth is that is exactly what this Government is doing.

This has been quite a hashed process, as I indicated. Last week we had several indications from the Leader of the House about this legislation being introduced under urgency, and it has come in only today. We did have over seven versions of the Supplementary Order Paper, none of which made sense. There has not been any public debate on what should be the core principles if the Remuneration Authority regime is going to be changed. In my view they are that the setting of any salaries for members of Parliament should not be made by members of Parliament; they should be independent, it should be publicly transparent and accountable, and it should have fair considerations. Part of that should be the consideration of what other people in our society are getting in terms of their wage remuneration.

I remember in the 2009 Budget, the first Budget that this National-led Government brought in, there were massive tax cuts for the wealthiest people in New Zealand and at the same time there were cuts to home-care services for older New Zealanders. There was also nothing to help the wages of the people on the lowest income, the minimum wage workers, in New Zealand. Bill English said during that debate in Parliament that if people in New Zealand wanted to earn more money, they should work harder. That is what he said in this House—if people wanted to earn more money, they should work harder.

I know that all members of Parliament work hard and come into this House to do better for their country. It is the highest form of public service, but it is by no means the only form of public service. So we should not get paid more than we are worth. Public servants in New Zealand should get paid what they are worth and they are not, and people on the minimum wage deserve to have their contribution valued more. Thank you.