Covid-19 coronavirus: Councils told to hold off on voluntary pay cuts decisions

Remuneration Authority chairwoman Dame Fran Wilde emailed a letter to mayors and regional council chairs today acknowledging there was confusion about the situation. Photo / File

The Remuneration Authority has written to councils across the country today asking them to consider holding off on making decisions around pay cuts.

Councillors and mayors have publicly declared they'll be taking "voluntary pay cuts" in solidarity with their constituents, but some say the move gives nothing back to ratepayers without a law change.

Local Government elected members do not technically have the ability to reduce their pay, which is determined by the independent Remuneration Authority and set in legislation.

So, many elected members are giving a slice of their salary to charities instead.

Remuneration Authority chairwoman Dame Fran Wilde emailed a letter to mayors and regional council chairs today acknowledging there was confusion about the situation.

"Many of you have contacted the Remuneration Authority asking for a pay freeze, others have asked for reductions – or announced in the media you will be asking for a pay freeze or a pay reduction – and others have pledged money to local charities."

Wilde reiterated elected members could not technically take a pay cut but this did not stop them from donating to charity.

She said the Authority was able to decide on a zero increase in future determinations, effectively a pay freeze, if it believed that it was warranted by the prevailing economic conditions.

Wilde said she understood there were mixed views in local government.

"We also know that many local government elected members are on relatively low levels of remuneration and, as you know, in order to make local government a more viable option for potential candidates we have been working to try to ameliorate that with the approach we have taken over the last couple of years."

Local Government Minister Nanaia Mahuta has previously said she was aware some Local Government elected members have considered taking a pay cut in view of the hardship being faced in their communities.

She said the move would require an amendment to the Remuneration Authority Act and the Local Government Act.

"Work to facilitate this is being actively considered," Mahuta said.

Wilde told elected members in her letter she had no information about what the Government may decide or the timing.

"However, we understand that when Parliament resumes sitting next week a Covid-19 'omnibus bill' may be introduced and obviously that could be an appropriate vehicle for any changes."

She said if there was any decision, then timeliness would be an issue and suggested councils refrain from making decisions on remuneration until it was clear whether and how the Government would amend any legislation.

"I understand that you are all under considerable public pressure, including from approaches from lobby groups, but urge you to wait till there is more clarity on what may happen", Wilde said.

Local Government New Zealand issued a statement earlier today saying the Remuneration Authority should be left to set fair pay levels for local government elected members, and given the appropriate tools to do so to reflect the challenging economic circumstances imposed by the Covid-19 emergency.

"This comes as many elected members across the sector have sought to take a pay cut to reduce the burden on ratepayers, but have been prevented from doing so because this is not an option available under the Remuneration Act 1977."