MPs pay rises to be cancelled!

John Key has announced:

Prime Minister John Key today announced an overhaul of the Remuneration Authority Act, tying MP salaries to those of the wider public sector, which will be passed under urgency.

Mr Key says the decision was made after the Remuneration Authority’s latest determination which saw the total remuneration received by MPs increased by about 3.5 per cent.

“That increase was neither necessary nor justified at a time when inflation is at 0.8 per cent,” says Mr Key.

“While the decision was made independently of MPs, they should not be receiving increases which are disproportionate to the wider public sector.”

Mr Key says the Remuneration Authority referred specifically to the criteria contained in the Remuneration Authority Act 1977 as the reason for the increases, therefore a law change was necessary.

The change will take away the Authority’s discretion when setting MP pay. The sole criteria will now be the average public sector pay increase for the previous year.

As I have blogged previously I’m against annual backdated pay increases for MPs. The latest increase was not justified.

However while it is good to see the Government moving to make changes, this is not necessarily the best alternative to the status quo.  It could create a perverse incentive for future governments to agree to high levels of public sector pay rises, so that they get the same increase.

Ministers anticipate more detailed advice from officials on the measure to be used, which will be set out in the legislation, likely to be introduced in the next sitting session.

The press release doesn’t mention urgency, but journalists are reporting it will be passed under urgency. If this is the case, I’m against that happening. Urgency should be for laws that need to be amended urgently because of a loophole. Not for turning down embarrassing pay increases.

At a minimum the proposed new law should go to a select committee for public submissions. Even though the law is reducing the level of future pay increases for MPs, it should not be decided by them, with no public input.

So it is good to see the Government taking action, but it would be good to make sure we have time to consider if it is the best alternative to the status quo.

UPDATE: Actually the press release does mention it is being passed under urgency – at the very beginning. I missed it.