Remuneration Authority (COVID-19 Measures) Amendment Bill

on behalf of the Minister of State Services: I move that the COVID amendment remuneration bill be read a third time.

ASSISTANT SPEAKER (Hon Ruth Dyson): No, you need to say the name of the bill correctly.

Sorry, Madam Speaker. I move, That the Remuneration Authority (COVID-19 Measures) Amendment Bill be now read a third time.

This Remuneration Authority bill is appropriate for the times and it has National’s support. It’s appropriate that senior elected officials, whether they be members of Parliament or whether they be mayors, councillors, or a whole range of commissioners that serve various roles, note that ordinary New Zealanders, whether they’re in their ordinary jobs or are people with their businesses, are taking huge economic pain in the wake of COVID-19, and for that reason, it is appropriate that others, including members of Parliament, share in that burden personally.

Can I also say, National supports the principle that the Remuneration Authority independently set the amount. I think we get ourselves into real difficulty when people set their own salaries. Members of Parliament are in that unusual situation, as are mayors and councillors, of being responsible for public expenditure, and I commend the bill for providing the power for the Remuneration Authority to be able to reduce salaries in the very unusual situation that we are in. But, actually, for the decision to rest with the Remuneration Authority, I think we go down a slippery slope when we have the salaries of elected officials, effectively, being determined by themselves.

The last point I’d make is National does, unusually, support the passage of this bill through all stages—as you’ve seen—under extraordinary circumstances. The reality is that this is a temporary bill; it’s not a permanent one. We all accept that COVID-19 is an exceptional type of circumstance, once in a generation, and perhaps once in a century. So, for that reason, the passage of such legislation that’s got a finite period and that’s directly related to the national emergency is appropriate to carry through.

The last point I’d want to make is about expenditure—that is, if we look at this year’s Budget and the $100 billion - plus of expenditure, the amount of savings associated with a relatively small group of people is very minuscule in the big picture. But if I have a concern, it is that the Government has gone for an approach of just spraying money, almost as though the quantity of money is more important than the quality. While it is appropriate that members of Parliament, mayors, and other elected officials share in the burden, there is an extra obligation on Government, which National will be vigorously pursuing, and that is ensuring that every dollar that is being spent in the Budget is well spent, and I worry that the emphasis is on the quantity of the spend rather than the quality.

So I simply wish to indicate National’s support for the legislation.

Thank you, Madam Speaker. I rise on behalf of New Zealand First to speak on the Remuneration Authority (COVID-19 Measures) Amendment Bill. New Zealand First will support the bill.

I agree with the Hon Dr Nick Smith, the last speaker, that in the scheme of what we are looking at in the scheme of the Budget that has just been announced, the money that we are talking about, in the scheme of a country, is not that great. I also agree with the member that nobody wants to use such—well, urgency, lightly. But also, I’ve never seen what just happened here before—just in my time, I’ve never seen the Leader of the House move that we not have first reading, second reading, or a committee stage. But the reality of the reason why the majority of the House agreed to that was because it’s pointless discussing this. It is pointless taking time for us to go backward and forward and backward and forward about what we, as politicians, know to be true, which is that New Zealanders are going to be hurting, and we should actually take a cut, too.

It is a temporary piece of legislation and, as Dr Smith quite rightly pointed out, the public may not understand that we don’t set our own salaries. The public asked that of us some years ago. They said that there’s a conflict of interest when the Parliament can decide what they’re going to pay themselves. So, therefore, the Remuneration Authority does that for us, and, strangely enough, that means we have to ask them and give them the power to actually take money away from us, as well.

Now, I’m sure many of the public might like the Remuneration Authority to have that power for a much longer period of time. But it is time-limited, and I guess the only thing that New Zealand First hopes—like the rest of, I believe, this Parliament hopes—is that the pain that the New Zealand public will feel will be time-limited as well, and that as we come together to try and rebuild our economy outside the other side of COVID-19, this is just one of the smallest little bits that we can do in this House. Kia ora.

Thank you, Madam Speaker. I rise on behalf of ACT in support of the Remuneration Authority (COVID-19 Measures) Amendment Bill. It is absolutely right and proper that at a time when people across the New Zealand economy, or at least the private sector, are taking 10, 15, 20, or, in some cases, up to 70 percent reductions in pay, Parliament should be at least somewhat making its own contribution and showing its own leadership. But the way that we have come to it also reveals so much about the clunkiness and inertia of the political process to do something that the rest of the country had to do with urgency months ago.

This is a Parliament that when the Government wants it to, can pass legislation such as the public health measures a couple of days ago in less than 24 hours, and yet the pathway of getting to this legislation has taken us over two months. It was 17 March when I first said to the House that Parliament is going to have to take this sort of initiative, and it was, if I remember rightly, 14 April when the Prime Minister was happy to bathe in national—indeed, global—media adulation for her leadership and announcing that an MP pay cut would be made. Yet here we are, a month later, still introducing a bill that has an inferior outcome, and don’t forget that along the way, I sought twice to introduce a bill that would have cut all MPs’ pay—no ifs, no buts—and the Prime Minister’s party, or members of it, vetoed the introduction of that bill.

Today, we have before us this Remuneration Authority (COVID-19 Measures) Amendment Bill, which doesn’t actually cut MPs’ pay in the way that most people would recognise as a pay cut. All this legislation does—and it needs to be said and, let’s be clear, because no one else has said it—is it says the Remuneration Authority can cut MPs’ pay by up to 20 percent for up to six months, and it looks like—as far as anyone can tell—that’s going to be voluntary and up to the individual MP.

Well, it gets more interesting, because I have amendments on the Table that I expected to be debated that would have made it mandatory for MPs’ pay to be cut by 20 percent—not voluntary—because, you see, in the private sector, people aren’t taking voluntary pay cuts, as proposed in this bill; they are taking mandatory pay cuts. If we are to show leadership, we should be doing it the way the private sector up and down this country is, and the funny thing is that in a stitch-up between parties on both sides of the House, it’s been agreed not to even have a committee stage and debate those amendments.

That’s what needs to be put on the record, and that’s what people at home need to understand: Parliament didn’t even want to debate making these pay cuts mandatory. They want to keep them voluntary, and why might that be? Well, I suspect the reason is that some members in the Government parties don’t actually plan to take it. No problem: I have another amendment here which would fix that from the public point of view very simply by saying that for these specific individual pay cuts in this period, the Remuneration Authority must publish who took it. But, unfortunately, this House and parties on both sides stitched up and agreed not to debate transparency. So it won’t be compulsory and it won’t be transparent who voluntarily took it. That’s the legislation that is being debated and rushed through the House without even having the debate on whether it’s compulsory or whether it’s transparent.

I hope that members from other parties will get up and say what their intention is, because I’ve been making it clear for weeks—in fact, months—that this has to happen, and I’ll certainly be signing up for the 20 percent over six months, but what about the other MPs in other parties? Are we going to hear, for example, from the Green Party that it doesn’t apply to their MPs because they tithe their salary to the Green Party election campaign? Is that what they’re going to say? Well, it’s not compulsory—the House didn’t want to debate that—and there won’t be transparency. So, in theory, we’ll never know unless there’s a leak—and I should certainly hope not—from the Remuneration Authority. So is the Green Party going to siphon their voluntary, non-transparent pay cut into their election fund? I hope the Green member will get up. She’s shaking her head at me, so she should get up, take a call, and actually say it.

And what about the Labour Party? Is it true that the reason it took so long to bring this legislation to the House and the reason they were so eager not to debate making the pay cut compulsory and transparent is that there are Labour Party backbenchers who do not want to take the pay cut and have no intention to? Well, there are a further 10 calls—10 speeches—remaining in this debate, if members of Parliament wish to take them, so I hope that those members who didn’t want to debate making it compulsory or transparent are going to get up and tell the New Zealand public what their intentions are, because I think that the public deserves to know.

Here’s another reason why they should do it. It is true, as Tracey Martin has said, that in the context of a Government aiming to spend and borrow an extra $140 billion, MPs’ pay, I’m afraid to say, is a relatively—in fact, a very—small amount of money. So this fiscal saving to the taxpayer won’t be noticed amongst the Government’s other largesse, but the example that it sets can have an impact on the expectations of pay for civil servants up and down this country. I would say that if civil servants look and they say, “It’s compulsory for us, but the MPs in Parliament did a stitch-up where they refused to make it compulsory, refused to make it transparent who did it voluntarily, and refused to debate either of those two things.”, you’re going to have serious dissension amongst the Civil Service, who are required to take the 20 percent pay cut, and you’re not going to see much wiggle room on voluntary pay cuts in the Civil Service.

I’m talking about highly paid civil servants—those on $600,000 or $700,000, in some cases. Thousands of them on six-figure salaries are going to say, “Well, if the Parliament engaged in a stitch-up, if they didn’t make it compulsory, and we don’t even know how many, if any, of them agreed to take it, then why should we?”, and then one of the main benefits of this legislation, of MPs showing leadership and transparency in order to inspire cost reductions for the taxpayer in the Public Service, is lost. That’s not leadership, but it also tells us something about this Government.

As I mentioned, the Prime Minister was more than happy to take the adulation for great leadership and for declaring there would be a pay cut. But, as is so often the case with this Government, the marketing was there, the spin was there, but there was no bill ready to actually deliver it. Even after the passage of a month, when this House has managed to urgently pass all sorts of legislation from the registration of forest workers to registering tobacco importers, it somehow hasn’t managed to get around to this vital MP pay cut bill.

So I support the bill. It’s been a long time coming—far too long in the view of the ACT Party—but let it be remembered always that this Parliament refused to debate making it compulsory and refused to debate making it transparent as to who has taken it voluntarily. Thank you, Madam Speaker.

Thank you, Madam Speaker. I’ll take a brief call just to clarify the Government’s position in bringing this bill into the House. Our Government is leading in unprecedented times. As a result of the COVID-19 pandemic, we are seeing worldwide disruption to our social and economic lives. In New Zealand, many in the private sector, as has been said, are losing their jobs or facing significant pay reductions.

On 15 April, the Prime Minister announced that Ministers and Public Service chief executives had agreed to a six-month pay reduction in recognition of the wide impact of the COVID-19 pandemic on many people’s incomes. We were clear that this initiative is about leadership, not austerity. Our Government will continue to work towards fair pay for lower-paid workers—especially the people we have been relying on as essential workers.

I note the solidarity displayed by other leaders across the executive, across Parliament, and across local government who have also committed to making a pay reduction. The Public Service chief executives, whose pay is set by the State Services Commissioner, have already implemented this reduction. Several Crown entity chief executives have reached agreement with their boards to do the same.

Of course, many of those wishing to take this reduction, including Ministers, have their pay determined by the Remuneration Authority under the Remuneration Authority Act 1977. The authority exists to de-politicise the setting of pay for public and statutory officials. The authority is not allowed to make a determination that reduces an individual’s pay, other than for local government in some circumstances, and the organisations making the payments must pay according to their determination.

The Government has considered several possible mechanisms to effect the pay reduction. Of those, we believe the simplest and fairest is to amend the Act to enable the authority to make a temporary determination in regard to certain officers covered by the Act. This approach allows the authority to consider individual circumstances in each case—for example, whether that person has already made an equivalent donation to charity. It also preserves the principle that the authority determines what is paid.

This is a time-limited bill that comprises one clause and one schedule—fairly simple, most would say. The clause allows the Remuneration Authority to determine a temporary pay reduction of up to 20 percent for up to six months for some of the people whose remuneration it determines. The Schedule details which of the positions covered by the Remuneration Authority are within the scope for the clause. The authority has the right to determine that no reduction or a smaller reduction is appropriate in the circumstances of some individuals, so reductions will, in fact, vary. The bill sets the maximum available reduction at 20 percent for a period of up to six months.

The Schedule sets out those who are covered by this bill, including many public sector leaders such as Ministers, MPs, and chief executives of several Government departments. Crown entity members and local government elected members are also included. Some other positions where pay is determined by the Remuneration Authority are outside the scope of this bill, including the judiciary, quasi-judiciary roles such as tribunal members, Governors-General, and community board members.

The Remuneration Authority consults with those whose pay it determines and can be trusted to apply any reduction carefully, fairly, and in consultation with those affected. Any determination for reduced pay will need to be made by 30 June 2020 this year, and applied on or before 30 July this year. The provision will expire on 31 January 2021. After the temporary reduction determination expires, the pay of those affected will return to their base amount.

These are the facts—the clear facts—of this short, essential piece of legislation, that I’m sure the vast majority of this House will support.

I’m conscious that we only have a small number of matters to complete the Order Paper, but we’re fast approaching the lunch break. So I seek leave for us to continue sitting and extend it into the lunch break, until we complete the matters on the Order Paper.

💬 Hon Gerry Brownlee: Well, all business of the House.

All business in the House—I apologise, I misspoke. All business in the House—whew!

That was close. Leave is sought for that purpose. Is there any objection? There appears to be none.

Thank you, Madam Speaker. The Green Party is supporting this bill, but, ultimately, it doesn’t fit with our policy. We have a longstanding position regarding MP pay that it should be tied to the dollar movements in the median wage, up and down, and this bill does not achieve that.

We think we missed an opportunity for a more systemic and fair review of MP pay. It’s vitally important to us that we recognise the value of people working both in the Public Service and the private sector, that we raise incomes for those who have the lowest incomes, and that MPs and Ministers do not receive such high levels of pay that they become out of touch with ordinary New Zealanders. We think that our pay should be linked, fundamentally, to what’s happening for ordinary New Zealanders. But we will support this bill. Thank you, Madam Speaker.

I stand briefly to speak in favour of the bill. All New Zealanders are aware that the current period and circumstances that our country faces are unprecedented. It’s the view of members—certainly on this side of the House and, I think, more widely—that it is appropriate for the Remuneration Authority to take those matters into account when it sets the remuneration not only for members of Parliament but for other people for whom it has responsibility. We think that this bill balances that imperative with the fact that we do need to sustain an independent process for the setting of higher pay for members of Parliament and for other people, as well. So it’s a good bill in that respect.

I do just want to briefly address—and I actually do this out of respect to the member—the concerns raised by Mr Seymour in the course of this debate. The point I’d simply make—and I don’t make it with chagrin, but I think it’s an important point—is to say that if members wish to participate in the business of the House, including questions about whether leave is sought, members need to be in the House to do that. That is something that is incumbent upon all members, and the processes of the House in that regard were followed appropriately.

I note that members and parties have other mechanisms, as well, to engage in the decisions of the Remuneration Authority. The Remuneration Authority, at the outset of this process, sought submissions from members and from parties, and is seeking further submissions at the moment about how the terms of this bill—soon to be Act—might be applied to its decisions. So I’d just point out to the member that there are still mechanisms available for him to make his points known in terms of how the Remuneration Authority might make its decision, and it would be entirely possible—whether it happens or not, I couldn’t say—for the Remuneration Authority to make a decision that is consistent with what that member wishes to see, if his arguments are strong enough when he makes a submission to them.

This is a good bill. It ensures that members of Parliament and other people whose pay is set by the Remuneration Authority have their pay set in a way that is consistent with the economic shock of COVID-19. It ensures that we retain the independence—the important independence—of the remuneration-setting process, and I’m pleased that it has wide support. I commend it to the House.

Bill read a third time.