Prime Minister Helen Clark's salary will increase $60,900 in an overhaul of politicians' pay announced today.
The boost, effective from November 1, takes Miss Clark's basic salary to $305,000 before tax but her total remuneration package is worth up to $400,000.
The Remuneration Authority sets MPs' remuneration packages in association with the Parliamentary Services Commission. Remuneration was last set two years ago.
Authority chairman Hutton Peacock said Miss Clark had the "toughest job in the country" and an equivalent private sector position would demand a seven-figure salary. However, that would not be acceptable to taxpayers, he said.
"I don't think any western country pays anywhere near what the job would justify if you really looked at the marketplace," Mr Peacock said, adding that United States President George W Bush earned only about US$200,000 ($330,470).
Miss Clark is not the only big winner - her deputy, Finance Minister Michael Cullen, goes from a salary of $180,900 to $218,000, while Cabinet ministers go from $162,600 to $195,000.
"All the executive have had a reasonable rise," Mr Hutton said.
"(But) the Cabinet minister, in many cases, is still paid less than the head of the department who reports to them.
In a pre-emptive strike against likely criticism of the large increases compared with others in the public service, Mr Hutton said it was not fair to compare Miss Clark and her ministers with a nurse or "basic public servant".
"... these are executive positions and they govern the country," he said.
"They're very senior positions and we expect a lot from politicians."
National leader Don Brash's salary as leader of the opposition will increase 20 per cent, from $162,600 to $195,000.
All backbench MPs, whether they have electorates or are list MPs, get a $19,500 salary increase, taking them from $90,500 to $110,000.
Mr Hutton said the previous base salary was "appropriate but a little low". The new rate made them the equivalent of lower to middle managers in the public service.
"We said 'what is a reasonable package?'," he said.
"It is a responsible job. They are governing the country."
Backbenchers' total remuneration package will be $142,700 for those not in the Government Superannuation Fund (GSF), while those in it will have a total package of $146,000. MPs elected before 1992 qualify for the GSF, while those elected post-1992 have a different super scheme.
The increase in total remuneration for backbenchers ranges on average from 4.1 per cent for a constituency member who is in the GSF to 16.2 per cent for a list member not in the GSF. Mr Hutton admitted backbenchers with the largest electorates could be worse off as they lost constituency allowances which averaged $11,200.
Electorate MPs will receive a mileage allowance, for which they will have to provide receipts.
All MPs will have a new basic expense allowance of $12,815, all of which is tax free. That is for genuine expenses such as meals, luggage, raffle tickets and donations.
All the remuneration packages include perks such as overseas travel for MPs and their spouses.
The overhaul follows concern that many tax-free allowances were no more than income by another name.
Authority member Beverley Wakem said many of those allowances had arisen because the base salary was too low.
"But in times of wage freezes in the past, various bits were added that were kind of salary extenders," she said.
"Certainly, when I arrived here (six years ago) my first reaction to it all was it was an absolute dog's breakfast and it was time to clear that up."
The remuneration packages do not cover such things as chauffeured car travel, accommodation entitlements and security system reimbursements.
ACT MP Rodney Hide said MPs' wages should be set before an election and not be changed for the three-year term.
"I do think they should take on board what the public think because they are the customers and they pay for it," he said.
"When Helen Clark promised to boost wages, I had assumed it was the wages of working people, not MPs. I think she'll have a hard time explaining this."
Green MP Rod Donald said the overhaul was good but it had failed to deliver what the public had been demanding on MPs' travel perks.
A spokeswoman for Miss Clark, who is out of the country, said she would not comment on Remuneration Authority matters.
Speaker Jonathan Hunt's spokeswoman said he had no comment.
MPs new basic salaries, effective from November 1, at a glance (previous salary in brackets):
* Prime Minister: $305,000 ($244,100)
* Deputy prime minister: $218,000 ($180,900)
* Ministers: $195,000 ($162,600)
* Speaker of the House: $195,000 ($162,600)
* Leader of the Opposition: $195,000 ($162,600)
* Backbench MPs: $110,000 ($90,500)
How New Zealand politicians' basic salaries compare with their overseas counterparts after increases announced today (all figures in $NZ):
Prime minister: New Zealand, $305,100; Australia, $288,956; Canada, $351,426; Britain, $493,567.
Cabinet minister: New Zealand, $195,000; Australia, $191,711; Canada, $260,055; Britain, $359,569.
Leader of the opposition: New Zealand, $195,000; Australia, $205,603; Canada, $260,035; Britain, $342,824.
Backbench MP: New Zealand, $110,000; Australia, $111,136; Canada, $175,713; Britain, $158,576.
Deputy prime minister: New Zealand, $218,000; Australia $227,830.