PM’s regular ‘disappointment’ with racheting salaries hits crunch time.

Down the years, one taxpayer-funded government entity has stood out from the rest of the Wellington-spawned shoal of commissions, boards and agencies in being secretive, obstructive, publicity averse and downright unhelpful.

Given the Remuneration Authority usually succeeds in pleasing no-one bar the well-recompensed judiciary - the pull-up-the-drawbridge approach to the slings and arrows of the political world is understandable to some degree.

This week the authority became the authority without authority, at least in terms of its most high-profile role - the setting of the salary levels for MPs.

Despite it being regarded as an entity which is strictly independent of Government, the authority has effectively been rudely stripped of that task by what looked like prime ministerial fiat.


It may be that independence which stopped John Key tackling the authority head-on before now.

From his early days in power, the Prime Minister has regularly expressed "disappointment" with the large and plentiful number of upwards salary adjustments being issued by the authority, whose determinations also include the country's judges and local body mayors and councillors.

Such was Key's seeming lack of follow-through that his opponents had accused him of crying wolf over salary increases. That was not entirely accurate.

Amidst the economic uncertainty generated by the global financial crisis, the new National minority Government brought amending legislation before Parliament within months of taking office in 2008 which required the Remuneration Authority to take into account "any adverse economic conditions" in making its determinations based on evidence from an authoritative source, such as the regular Treasury-published economic and fiscal update.

That stipulation was weakened by an out-clause which meant the authority did not have to be persuaded by that advice, thereby preserving the authority's independence.

This week Key took charge with such a vengeance that by the end of the week not a few groups who fall under the purview of the authority were similarly, astonishingly, demanding they too be subject to a real pay cut.

Key humiliated the authority, effectively rubbishing the work that went into the latest determination of MPs' salaries released just days before he flagged an overhaul of the way they would be adjusted in future.

The authority's crime was that it did its job properly. Too properly.


Its latest determination that the basic MP's salary be increased by 5.5 per cent - a figure which is way above the level of inflation, but which would have stuffed an extra $8200 into politicians' pockets - was also way out of National's comfort zone, with the governing party bound to cop the likely public backlash for not doing something about it.

With his patience with the authority having finally run out - and with one eye no doubt firmly focused on the byelection in the National-held electorate of Northland - Key has done something about it.

The job of working out politicians' pay in future should take all of five minutes once someone has worked out the average public sector pay increase for the previous 12 months.

That average will be the new and sole criterion for determining whether MPs get a pay rise and how big that increase will be.

It is a solution, and a very populist one. But it is not a long-term answer. Unless the State Services Commission decides to slam a similar brake on the salaries paid to public service chief executives, then the relative pay scales will get seriously out of whack.

It has long been not only unfair, but also patently absurd that the head honchos of some government departments and ministries get larger pay packets than the Prime Minister and the Minister of Finance.

If the State Services Commission did come on board, that would only end up further widening the pay gap between the public and private sectors. It may be an honour to serve as an MP or as senior public servant. But with some ministries having billion dollar-plus budgets, this may be false economy if you end up offering only peanuts and thereby get monkeys.

Such considerations underpin the near 30-year-old Remuneration Authority Act, the law which stipulates the criteria which the authority should apply in determining pay levels.

These include having regard for the need to achieve and maintain fair relativity with the levels of remuneration received elsewhere; being fair to the person whose salary package is being determined; being fair to the taxpayer or ratepayer; and having regard to the need to recruit and retain competent people.

It is the politicians who are responsible for the law, of course. None rushed to the defence of the Remuneration Authority this week. When a subject like MPs' pay hits the headlines, every political party has one objective - staying on the right side of public opinion. And public opinion means no MP is going to be caught advocating a pay rise for himself or herself no matter what the potential merits or justification may be.

Yet Key and the leaders of other parties in Parliament cannot say they did not know what was coming.

In its last annual report tabled in the House last year, the Remuneration Authority warned that based on current movements in remuneration for top level executive positions, it appeared that the gap between market remuneration and the remuneration of senior members of the Cabinet was now greater than in the past.

Furthermore, the authority would be reviewing this increasing gap during the coming year.

Given the authority's statutory responsibilities to narrow the pay gap, it is not altogether that surprising that given the gap is widening, the authority did not respond favourably to yet another letter from the Prime Minster urging a nil increase in MPs' pay.

That such entreaties fall on deaf ears (or seem to do so) only enhances the authority's less than welcoming public image.

The best that can be said for the Remuneration Authority - and its previous incarnation as the Higher Salaries Commission - is that it at least treats everyone equally, whether it be Prime Ministerial pleas that the authority deliver a nil increase or journalists asking when the next, highly-anticipated but usually over-due pay determination will be published.

For many a year, the answer to the latter question would almost invariably be "not today" or, if you were really lucky and the voice on the other end of the line had sipped the milk of human kindness recently, the response might go as far as saying "not this week". But no further information would be offered no matter how abject, tragic, pitiful or ridiculous the pleading.

Unlike journalists, Prime Ministers can only be fended off for so long before they lose patience.

Question time

How good is your recall of current affairs and political knowledge? See if you can answer all 10 correctly.


Which country's Prime Minister said New Zealand had breached its trust by spying on its citizens?

a) Tonga

b) Samoa

c) Fiji

2. Which Pacific leader described his nation's intelligence agency as the Coconut Wireless?
a) Samoa Prime Minister Tuilaepa Sailele Malielegaoi
b) Cook Islands' Prime Minister Henry Puna
c) Niue Premier Toke Talagi

3. What type of business does National's Northland byelection candidate Mark Osborne own?
a) a bike shop
b) rural supplies
c) a beauty salon

4. Which candidate got the highest amount in donations for last year's election?
a) Labour MP Stuart Nash
b) Mana leader Hone Harawira
c) National leader John Key

5. When did NZ First leader Winston Peters last stand in the Northland region?
a) 1972
b) 1984
c) 1993

6. What is written on the side of Winston Peters' Northland byelection campaign bus?
a) Force for the North
b) May the force be with Winston
c) Midnight bus to Moerewa

7. Which Green MP announced this week he would run for the co-leadership position?
a) Gareth Hughes
b) James Shaw
c) Kennedy Graham

8. Prime Minister John Key plans to peg MPs' salary increases to what?
a) inflation
b) public service chief executive salaries
c) average wage increase across the public sector

9. Which Conservative Party candidate has been kicked off the board and suspended from the party?
a) Garth McVicar
b) Christine Rankin
c) Larry Baldock

10. Which MP called for an independent criminal review commission after Teina Pora's conviction was overturned by the Privy Council?
a) David Clendon (Greens)
b) Jacinda Ardern (Labour)
c) Richard Prosser (NZ First)

Answers: 1. a, 2. c, 3. c, 4. b, 5. a, 6. a, 7. a, 8. c, 9. c, 10.b