Key Points:

A pay rise for MPs and ministers of between 3.8 per cent and 4.8 per cent has been confirmed this afternoon.

As forecast by the Herald this morning, Prime Minister John Key's salary rises from $375,000 a year to $393,000.

The annual pay increase awarded to members of Parliament was made public this afternoon after being decided by the independent and low-profile Remuneration Authority.

MPs do not decide their own pay, but the issue has often been controversial - particularly in 2005, when the authority decided to correct "slippage" in the rates and gave Helen Clark a 9.4 per cent rise.

In deciding how much the politicians will be paid, the authority takes into account pay rises in the public service and the judiciary, and also looks at private sector rates.

Today's rise has been announced as the country slides into recession, and is likely to be put under the microscope as the new Government looks for ways to trim spending.

Recruitment and remuneration specialists yesterday said the labour market over the time the authority has been examining - from July 1 last year to June 30 this year - was very competitive.

"You're certainly looking in that 4 to 5 per cent range in terms of general market movements," said Sheffield Ltd senior reward consultant Sherry Maier.

Public sector pay rises have also been outstripping the private sector.

Others said base salary movements varied and depended on skills and competition for talent.

Official figures put public servant adjusted salary and wage rises in the year to June 30 at 3.7 per cent.

But unadjusted figures - considered the best indicator of "take-home pay" - were as high as 5.5 per cent for the public and private sectors combined.

Former Prime Minister Helen Clark was paid a salary of $375,000 over the past year, and her deputy Michael Cullen got $264,500.

As both have moved out of leadership roles and on to the Opposition benches, their pay will tumble to near $130,000 even when the new rise is taken into account.

Mr Key will get the rise added to the existing Prime Minister's salary of $375,000. His salary as Leader of the Opposition was $233,000.

Mr Key is a multimillionaire after a career in the financial world and gives most of his political salary to charities.

He has said he intends to continue doing that with the bigger pay packet.

The biggest winners are the National MPs who have gone from Opposition seats to Cabinet positions.

Among them are Gerry Brownlee, Simon Power, Judith Collins, Tony Ryall, Anne Tolley and Paula Bennett.

Their salaries will go from around $130,000 to near $240,000.

Ministers outside the Cabinet - who include United Future's Peter Dunne, Act's Rodney Hide and Heather Roy and Maori Party co-leaders Tariana Turia and Pita Sharples - get almost $200,000.

New Labour Party leader Phil Goff gets the same money for being Leader of the Opposition as he got for being a Cabinet minister.

As well as getting more money for becoming ministers, John Key's new team get expense allowances and the use of a fleet of silver BMW limousines.


John Key
* Before the election $233,000
* Yesterday $375,000
* From today $393,000

Helen Clark
* Before the election $375,000
* Yesterday $126,000
* From today $130,000


* PM A$330,000 ($388,000)
* Cabinet ministers A$219,000 ($258,000)
* Leader of the opposition A$235,000 ($277,000)
* MP A$127,000 ($149,000)

* Prime Minister £189,000 ($514,000)
* Cabinet minister £138,000 ($375,000)
* Leader of the Opposition £131,000 ($356,000)
* MP £62,000 ($169,000)

* President US$400,000 ($728,000)
* Senate minority and majority leaders US $188,000 ($342,000)
* Senator US$169,000 ($308,000)

* NZ Herald staff; additional reporting by Paula Oliver