Remuneration Authority (Members of Parliament Remuneration) Amendment Bill

I move, That the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill be now read a third time. The bill is the Government’s response to the most recent determination of the Remuneration Authority, which provides for an increase in the remuneration received by MPs of 3.56 percent, effective from 1 July 2014. The Government considers this increase to be disproportionate to the salary movements in the wider public sector and unfair to taxpayers. The bill limits the Remuneration Authority consideration to applying the wage growth in the public sector, as measured by the quarterly employment survey, to MPs’ remuneration. The bill provides a fair response to the disproportionate increase in MPs’ remuneration by providing a measure that reflects the average growth in public sector wages. This ensures that the taxpayer is not unfairly burdened by any unwarranted increases in remuneration. In summation, the Government believes that these alignments will align MPs’ remuneration with that of the wider public sector and will strike the right balance between the interests of taxpayers and those whose remuneration is being assessed. I commend the bill to the House.

That was a slightly shorter contribution from the Minister for Workplace Relations and Safety, Michael Woodhouse, than I was anticipating. I am happy to rise to do my final contribution in this debate on the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. I want to just first of all say that the mechanism that this House establishes for determining how MPs’ pay should be set is a very important one constitutionally. It is not good practice for Parliament itself to be voting on, debating, and setting, effectively, what the taxpayer should pay us for doing this job. It is important that we put in place a robust mechanism that removes those decisions from this House and places them with an independent body that can make those decisions rigorously and independently.

I think the public of New Zealand would like to have that reassurance that in fact we are not here feathering our own nests and debating things that are going to be in our own best interests and that there is someone independent making decisions about what a fair rate of pay for members of Parliament should be. This is, in fact, an important issue. No one here is arguing for a significant pay increase at the moment, but ensuring that MPs receive a sufficient and appropriate level of remuneration is actually important for the transparency and integrity of the democratic system of government. It is actually one of the guards that we have against corruption. Making sure that MPs are appropriately remunerated for the job that we do is one of the ways that the public of New Zealand and the taxpayer can have the reassurance that we are working for them and not for other people who are paying us and giving us money for the work that we do. The only way that the public can have the assurance that that is what is happening is when those decisions are made completely independently of this House and when there are robust criteria for doing so.

It has been apparent for some time now that there were issues with the criteria that the Remuneration Authority had in determining what MPs’ pay should be, and it is high time that the House resolved those issues. This is not a good process for doing that. We have had 5 years of concerns. We have had 5 years where the criteria could have been properly and appropriately amended without the need to resort to urgency. It is, therefore, unfortunate that we now find ourselves in this position where if we do not conclude this debate this week under urgency—through all of the bill’s stages—then MPs will get the significant pay increases next week that we are here tonight trying to stop from happening. That could have been avoided if this had been dealt with through a much better, more rigorous, and proper process. Unfortunately, that has not happened, and therefore urgency is the only way now to stop those pay rises going through and being in MPs’ bank accounts next week.

We on the Labour Party side have listened very carefully to the debate and we have engaged with it in good faith, with the principle being that we wanted to stop those rises going through and we wanted to make sure that the criteria are amended in a way that is robust and that will provide an enduring and independent solution for how MPs’ pay is set. That is the reason that we voted in favour of the legislation and in favour of urgency, because without urgency, as I have said, there would have been no way to stop those pay increases.

However, having listened to the debate, we did vote in favour of Supplementary Order Paper 58 put forward by Metiria Turei, which would have resulted in the legislation being passed now but stopping only those pay increases, and leaving for another day the decision around what the new criteria should be, because we do not think that this is a good process. We would rather that it went through a more rigorous process, particularly, and this is a big issue for me because I would like to ensure that the Remuneration Authority—the experts on this; the people who have to actually implement it—is able to provide some scrutiny of the legislation that we are now passing. It has not had the opportunity to do so and it will not have the opportunity to do so. As a result we cannot be sure that the legislation that we are passing now is actually going to do what it purports to do in the short term and in the long term. There is a possibility that in the long term this will give us bigger pay increases than the existing criteria that we have, which we are now replacing. That is one of the reasons there needs to be greater scrutiny of these matters—so that we can be sure that the bill does what it is supposed to do. We do not have that because of the way this process has been rushed.

One of the concerning things that became very apparent during the debate is that this debate is, in fact, only partly about MPs’ pay and that, actually, the wider agenda from the Government is to suppress the pay overall across the whole of the public sector, including teachers, doctors, nurses, police, prison officers, and so on—we could go on and on through all of the professions. It is very disappointing to hear members from the National Party referring to those who work for the good of the public and who want pay increases as union thugs. I think that is very disappointing. I think that after a long period of time when their pay rises have not kept up with inflation—in fact, in real terms their salaries have gone backwards—it is fair enough that they are asking for a pay increase.

I heard Bill English claiming—I think it was either today or yesterday—that, in fact, teachers, for example, have had pay rises above inflation. So I went and looked at the top of the teacher salary scale. These are the most experienced teachers, the longest-serving—teachers, the ones who do not have any other management roles or whatever and who are just simply at the top of the teacher salary scale. Here are the real numbers: in 2009 they were paid $68,980 and as of last year they were paid $72,646. So let us be clear. These are the most experienced teachers. That is a 5.3 percent pay increase. What did inflation do during that time? It was 9.3 percent during that time. Actually, in real terms, a teacher who has no management responsibilities and who is at the top of the salary scale has gone backwards in the last 4 or 5 years under this National Government, and yet Bill English is saying that they should not be getting any pay increase at all. They have seen the real value of their incomes eroded during that time.

So the Government is up against the wall this year when a lot of these big public sector collective agreements come up for negotiation because actually people have been promised for 5 years by this Government—and maybe longer—that there will be jam tomorrow, but jam never actually comes, and they are saying that they have had enough of that. I think that is quite understandable. I think it is wrong that the Government uses this debate on MPs’ pay to try to suppress the debate over wider pay issues within the public sector. I do not think MPs should be getting significant pay increases of the magnitude that were recently awarded, but I actually do think it is probably time to look at some of those pay rates in the public sector because there has been a lot of belt tightening.

Finally, I just want to make one last contribution in this debate, and that is around the actual formula that this bill is now establishing, which links MP pay increases to the average increases within the public sector. As I have raised during earlier parts of this debate, that can create some unintended consequences because the overall average increase in the public sector can be distorted by higher-than-average increases in managerial salaries for those at the top of the salary scale and lower increases for those who are on regular and low incomes. As a result, our pay will go up while the pay of the people whom we are most interested in protecting—the people out there who are not getting pay increases—continues to go backwards. So this formula does not necessarily deliver on the sentiment and the value proposition that the Government is putting forward, which is one of the reasons why this rushed process is not acceptable. The Labour Party has supported this bill going through simply because we had no choice. It was the only way to stop those significant pay increases going through next week. It is not good process. The Government could have, and should have, acted on this much, much earlier.

Thank you for the opportunity to speak on the third reading of this bill. Can I just say there were some pertinent points that Chris Hipkins, the previous speaker, made, and thank you for the support that he and his colleagues have given to this bill. I think when we look at how the Remuneration Authority determines its salary bands and settings, one of the things that it does do is look at fair relativity with comparable positions, the need to be fair to both individuals whose pay is being set and to taxpayers, the requirements of the job, the need to recruit and retain competent individuals, and any prevailing adverse economic conditions.

I guess, in many regards, the mystery of the magic of how all of this comes together is now being faced with a different process, which I believe brings transparency. Every year the salaries are set in accordance with this formula, so that we are not going to get any big surprises and huge headlines. It is going to be predictable. It is going to be something that the public sector across the board has already received the previous year. I think, in many regards, people in our country will say this is a process that is going to work and brings that degree of transparency, certainty, and, I would say, even equivalency through this process. I am very happy, in the final reading of this bill, to commend it to the House. Thank you.

I support this bill and commend it to the House.

It is a pleasure to rise to lend my support to this Remuneration Authority (Members of Parliament Remuneration) Amendment Bill of 2015. This bill is all about MPs showing leadership. We, as MPs, need to demonstrate restraint. It is only appropriate that this bill makes these changes. The Prime Minister foreshadowed some of his concern and the outcomes are just. Aligning our pay to the public sector is a good way to go. It is fair, it is equitable, and it is reasonable. I commend the bill to the House. Thank you very much.

The Green Party will continue to oppose this legislation. I want to thank Labour and New Zealand First for supporting Supplementary Order Paper 58—the one to restrict MPs’ pay rises so that it would have given us a chance to deal with the substantive legislation in a more timely and democratic manner. I really do appreciate that support. I also understand how difficult it is to have to deal with Supplementary Order Papers at such short notice for parties, so thank you for your consideration.

We are opposing this legislation because it does not do what the Government says it wants it to do. It is actually designed for an entirely different purpose. The purpose of the legislation, as we have seen described by the Minister in his contributions during the Committee stage, is to constrain public sector pay. That became very, very obvious from the Minister’s statements. He talked about “profligate public spending”—is that right? There were comments from the National Party about “union thugs”. I think both of those comments, just in such a short debate on what should otherwise have been quite a tight conversation about MPs’ pay increases, just go to show that there is no intention by National to constrain MPs’ pay. It is simply using the political opportunity of this supposedly huge public outrage to attack ordinary workers—people like teachers and nurses, people who are involved in the Public Service, people who dedicate their lives to helping New Zealanders get through the various circumstances that they have to get through. National is clearly intent on attacking them. It follows on from other legislation that National has put forward that has taken out the tea breaks, for example, for New Zealand workers, and that has continued the plan of National since it took Government to erode the conditions of workers in the private sector and, increasingly, in the public sector. This legislation has been used to do exactly that.

New Zealanders should rightly feel that they have been manipulated by National through the use of this bill and that their concerns about MPs’ pay rises have been trodden on by National with this bill because this bill does not constrain MPs’ pay, but is being used to attack their own people. When we are talking about New Zealanders in a context like this, we are talking about people who are in the Public Service or have dedicated their lives in some form to the public sector. We are talking about family members of people who work in the Public Service. We are not that far removed from each other in this country. We are a little, tiny country, and we are very connected to each other. There is no real “us” and “them”, and so when Government uses legislation and manipulates legitimate public concern for nefarious political purpose—that is, keeping pay low for workers—every MP in this House should be seriously concerned and prepared to tell the New Zealand public what is being done to them by this Government.

Our initial assessment of this legislation was that it failed to do the job that it was supposed to do. Our committed opposition to this bill continues and is strengthened because it is so clear that this was a manipulative exercise by the Prime Minister, the Minister for Workplace Relations and Safety, and the National Government, and we will have no part of it. The Green Party is opposed to this bill. Thank you.

Kia ora Mr Assistant Speaker. I rise for the final contribution of New Zealand First on the bill, and I pick up on the comments made by Metiria Turei. It is unfortunate that it appears the Government has taken an opportunity to actually step on the workers of New Zealand. New Zealand First is very disappointed that Supplementary Order Paper 58, which the Green Party put up, and which would have split off and therefore stopped the 3.5 percent increase for MPs here tonight—but that Supplementary Order Paper would have sent the conversation about the Remuneration Authority’s set of criteria by which it sets the pay of members of Parliament through a much longer process. It would have sent that back and into another bill that would have gone through the select committee process, which the New Zealand public would have had the opportunity to speak about.

If the purpose here today is to say to the New Zealand public that we, the members of Parliament, understand that times are tough—and they are tougher for some than they are for others—and if the purpose of this moment in time is to say that we understand that, that could have been done by a single piece of legislation that said: “We will not accept that.” It was not a requirement for us to actually come up with another formula here tonight. New Zealand First agrees with the Labour Party—we are concerned about the formula. The fact that it was version seven by the time we got to 10.30 today, with people manipulating algebra here, there, and everywhere, gives nobody any confidence that this is right. Not a single one of us—and, actually, not a single backbencher—understands that equation, I guarantee it.

💬 Paul Foster-Bell: That’s not right.

Guarantee it—you might not be sitting on the backbench tonight, Mr Foster-Bell, but I will guarantee that the ones who are do not understand that equation. But that is not the point.

It is really unfortunate that the conversation ended up going down to comments like “union thugs”. It is very, very unfortunate. That was not the purpose that we were all here for tonight. It was unnecessary. This was supposed to be about us making sure that the New Zealand public—and Mr Bayly keeps saying it—saw leadership from us. It is very unfortunate that, as it would appear through the statements made by the Minister for Workplace Relations and Safety and through other members, this is actually not about us. This is about controlling New Zealanders as they enter into what are supposed to be negotiations. It is a great shame that that is where this Parliament has come to—that we are prepared to legislate now to stop free and frank and honest negotiations between workers and ourselves. It is an indictment upon this Parliament.

The other thing that we do need to be careful of—and New Zealand First, again, agrees with the contribution by Mr Hipkins; it has been particularly enlightening, Mr Hipkins’ contribution, and it has been very worthwhile listening to—is around the word “corruption”. I know it is hard sometimes, but sometimes the truth has to be said, and in this moment, with this contribution, Mr Hipkins has been enlightening. It is around the word “corruption”, and it is quite a serious thing, to be frank. It is around the word “corruption”. There was a time in this Parliament when the only people who could come to it were rich, white men who had independent means. They were the only people who could come here. The only reason we have the diversity we have today is that we have a system that supports a variety of representation. We must make sure that we, the Parliament, do not turn this thing so far back that we end up with rich, white men as representatives for us all, because we know how badly that works.

New Zealand First is disappointed. We will support this bill. We will support it because we must stop the 3.5 percent pay rise for ourselves when we cannot share it across our nation with other people. That is true. But we also would reiterate, again, that we would have preferred the criteria to be set with the public, not by us on the public, because at the end of the day they pay us, and they should have had a voice in that algebraic equation. Kia ora.

I commend this bill to the House.

I would like to start by thanking the public servants who helped to draft the legislation and who were in here later tonight, after hours, to help guide it through the House. It must have been hard for them to hear the Minister say that one of the motivations for this bill was to hold down their wages in the future.

I think that there are a number of flaws with this bill. The Government’s motivation for tying MPs’ remuneration to that of the public sector, specifically, is one of them. In saying to public servants and teachers and firefighters and doctors and nurses and so on that we are going to tell members of Parliament that they should be afraid of the public backlash on their own pay in order to hold down your pay is, I think, absolutely outrageous, and it is one of the reasons why we are opposed to this bill.

It is poor-quality legislation—we can see that. We have no idea what the actual impact of this will be. There was no regulatory impact statement. We brought numbers to this House analysing what we knew of the bill last week. We brought numbers to the House that showed what the changes would have been under both of our Supplementary Order Papers, but the Minister did not do that. We have actually not been shown by the Government what the actual impact of this legislation would be. So we are about to pass a bill and we do not actually know what it is and, as a number of people have said, most people in this House who are voting for it do not know what the algebraic equation in the bill actually means—what it says. It is a shocking piece of lawmaking.

That is, in large part, because it is being passed under urgency, and I would like to say that the National Government has had 6 long years to do something about what is now considered a burning issue. Six long years—long years—in which it has done absolutely nothing until the last 10 days, when all of a sudden it was so important, it was so important, that we had to use urgency as if this was some kind of national emergency. It is not a national emergency; it is an emergency for National. This is not worthy of an abuse of this process. The Minister has provided no case for this bill to come through under urgency. We could have put this through under a normal legislative programme. We could have had select committee stages, we could have heard the evidence, we could have heard from the public, we could have weighed the options, and we would have had a much higher-quality bill, where people actually understood what the impact was going to be when they voted for it. They would have actually understood that, but tonight, instead, we are going to vote on a bill, it is going to pass, and we have no idea what it is actually going to do, except in some kind of theory.

I would like to thank Labour and New Zealand First, in particular, and I would also like to thank the Māori Party for its gracious words about the Supplementary Order Papers that we put forward in Metiria Turei’s name. We know that because this is such a poor-quality piece of legislation—a number of MPs have said this—we will be back in the House talking about this legislation before too long, because we know that it is busted. So we will be fixing it, and we will be calling on those who supported us tonight on those Supplementary Order Papers for their support to fix the legislation and to tie MP remuneration to the New Zealand median wage, which would tie MPs’ economic interests to those of all New Zealanders. If we were to do that, our pay would rise and fall with the pay of the country as a whole.

So we have made that case, we appreciate that it has been listened to by both sides of the House, and we have done everything that we can on this one. We will continue to hold that flame alive. We will not be voting for this bill, although some people have said that this is some kind of improvement on the status quo. But we will not be voting for something that is such an appalling abuse of process and such a poor-quality piece of legislation. It is better to retain the status quo, and to allow that to happen, than it is to put through such a shoddy piece of legislation. We will be looking forward to the next time—and I cannot imagine it will be too long—that we have to address this. Thank you.

Although the Māori Party congratulates the Prime Minister on moving at lightning speed to address the obvious anomalies, and although we are about making change—and this is one that we support—while we are at it, let us be bold. Let us have the courage to take a fresh look at the bigger picture of income inequality. I am reminded of the wisdom of Dr Martin Luther King Jnr: “The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.” The challenge and controversy has to be in tackling head-on the widening income inequality and, in particular, to understand the financial material hardship of whānau Māori.

A recent study by Lisa Marriott and Dalice Sim revealed that, although New Zealand has had some success in reducing inequalities, the gaps in inequality among the majority of the indicators investigated in this study show worsening outcomes for Māori and Pacific people. A total of 21 indicators were investigated, including health, knowledge, skills, employment, standards of living, cultural identity, and social connectedness. Of those 21, 12 indicators—57 percent—reported increasing gaps between Māori and non-Māori over the last decade.

So this is where we come to whānau ora. One of the six outcomes that we might expect to see whānau succeeding in under favourable conditions is wealth creation, so we want to add that concept into the discussion. How is it fair that on one hand we can give out 50c, and on the other hand we still will see an increase of about $5,000 and more under this piece of legislation? Let us not just settle ourselves into being satisfied with that new public sector index while that means that MPs’ salaries will still increase in line with average public sector salaries, because all that those parallel increases will do is sustain and retain the existing inequalities of remuneration.

We all know that inequality has a long-term effect. Income inequality experienced early in life leads to reduced social mobility later in life. I understand that we are running out of time. I know that we want to get this through and we have come here under urgency, but I want to make these points. We could investigate having a living wage. The Māori Party thinks it should be $18.80. We currently have a minimum wage that is set at a level of poverty. We are paying people to be impoverished, and that needs to change. We should add urgency to that. Let us address income inequality in this country. I like the fact that we are doing something about this and we are taking it seriously, but there is so much more that we need to take seriously in regard to income.

I will finish with this: successive parliaments have created abject failure in addressing income inequality in a meaningful way. Labour or National, Māori Party or the Greens—whatever ideas have come up through members’ or Government bills, through select committees or question time, the point is we still have not fixed the widening gaps. We are pleased that we have moved quickly and clearly to fix the issues around the remuneration of MPs, but if we can move that rapidly for this issue, why not apply the same rigour to looking at the issue of income inequality and addressing the enduring circumstances associated with whānau poverty in a sustainable, effective, and mana-enhancing way? Kia ora, Mr Assistant Speaker.

I support the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill and commend the bill to the House. Thank you.