Fact check: Are politicians' pay rises actually too big?

The Government is introducing a law-change it hopes will curb pay rises from politicians. Photo / Mark Mitchell

The Government will today introduce legislation it hopes will reduce the size of annual pay increases for our already well-paid politicians. The Green Party says it doesn't go far enough and wants MP raises linked to what the rest of the country is getting.

But have Members of Parliament actually been getting raises bigger than the rest of us?

Inflation

Some people pointing to the increase in MPs' pay have compared them with inflation.

The most usual measure for this is the Consumer Price Index, or CPI, an estimate of how much the cost of things we regularly pay for increases each year.

Looking at official data since 2007, salary increases for backbenchers have been well above CPI growth. Roughly speaking, that tells us MPs have been getting richer over the past decade.

But how does that compare to everyone else?

We might be better off to compare MP pay rises to median pay increase across the country.

But taking 2007 as a starting point, if we compare how much individual New Zealanders' incomes have grown in percentage terms - according to figures from Statistics New Zealand - MPs' salaries haven't actually kept up.

Between 2007 and 2017 there's only one year - 2008 – where MPs would have earned less under the policy.

In fact, if the median income rule had been introduced in 2007, a backbencher would have received $172,000 in 2018, compared to the about $164,000 they made.

We can also compare politicians' raises to those of households to get a similar result.

Apart from in 2011, MPs would have still earned more every year since 2007 if their raises were linked to household income data from Stats NZ.

For added measure, we can also compare salary rises for politicians to the actual growth of wages, according to the Reserve Bank.

That shows us that since 2007, MPs' pay increase have tracked slightly below, but close to wage rises across the country.

Actual wage rises

But politicians earn a lot more than the average worker. The median income in 2018 was about $36,500.

That means a similar percentage increase in their wage means a lot more extra money than for most.

The Green Party says it wants MPs pay rises to only go up as much as the average worker's, dollar-for-dollar.

If that was the case going back to 2007, the average backbencher would today be earning about $16,500 - or 11 per cent - less than they are now.

So, would pegging MPs' pay rises to everyone else's pay actually reduce their pay?

MPs would have actually gotten bigger pay rises than they did if their income went up at the same rate as everyone else's.

But if the increases were dollar-to-dollar what the average worker has received in raises, politicians would be making a lot less than they are.