PM says he told Remuneration Authority salary rise should be small - or none at all.

Prime Minister John Key has hinted the Remuneration Authority is lining up a good pay rise for MPs this year, saying he had been consulted on the proposed increase and had told the authority he believed only a small, if not zero, pay rise should be offered.

Mr Key would not reveal what the proposed increase was or what he had said but hinted it was above the rate of inflation.

"But bluntly, I'm not in favour of big pay increases for MPs. If it was my vote, it would be no pay increases, but I don't get that vote."

He said there might be a valid argument for low increases to an MPs' salary to keep pace with inflation. "That would be the top end. But I don't buy the argument that they're out of whack with the rest of the private sector or the public sector." Inflation over the 2012/13 year was 0.7 per cent.


Wage increases across the board is one of the factors the authority takes into account when setting the salary, which it usually announces in December and is backdated to July.

Mr Key said he often copped the blame for those increases, although the authority was independent and made its own decisions. "They just consulted with me, as they consult with other political parties."

For the past three years, MPs have been given pay increases of between 1.4 per cent and 1.9 per cent, as well as a $5000 lump sum increase in 2011 to compensate for the loss of international travel perks.

In 2009, there was a zero increase which both Labour and National had called for in the economic downturn.

Mr Key's bill to hand over the responsibility of setting most of the MPs perks from the Speaker to the independent Remuneration Authority will also come back before Parliament this week. That bill has been watered down by the select committee considering it so the Speaker will retain the power to set MPs' travel entitlements, but the authority will take over entitlements for spouses.

After a raft of expense scandals involving MPs' perks Mr Key reviewed the system in 2010 and introduced the bill, as well as setting up a system ensuring MPs could use their international travel perks only for work purposes which had the Speaker's approval.

That resulted in the Remuneration Authority boosting MPs' base salaries with a $2000 payment in 2010, and then a further $5000 in 2011 because it had taken the personal benefit of the perk into account when setting salaries in the past.

Mr Key said the decision to keep MPs' travel within the hands of the Speaker was unanimously agreed on by parties in Parliament.


MPs' pay
Between 2009 and 2012:
*MPs salaries rose by 2.9 per cent
*General wages rose 5.6 per cent

*2012: 1.9 per cent increase
*2011: 1.5 per cent pay rise plus $5000 to compensate for cut in travel allowances.
*2010: 1.4 per cent pay rise plus $2000 lump sum to compensate for reduced use of travel perks.
*2009: zero increase, after both National and Labour called for a freeze in the recession.