It’s taken months of negotiations, several rejected offers and a change of government but police officers and other staff will soon learn how much their pay will increase as the Government and the Police Association head to final offer arbitration.
The Government, represented by police in discussions with the association, has been unable to put forward a pay increase proposal that the majority of about 10,000 association members have voted in favour of.
Its latest offer, believed to be worth almost $800 million, was shot down by 75 per cent of those who voted. Police Association president Chris Cahill said the offer fell “well short of addressing officers’ concerns and very real needs”.
Without a deal, the stalemate will be resolved through something akin to a Wild West showdown where both sides have one chance to put forward their best deal and one person – the arbitrator – decides which one will be adopted.
The result of that decision could have significant impacts on police and the Government at a time when officers are reaching for food donations amid the high cost of living, as well as the coalition’s aim to introduce more intensive policies targeting gangs and levels of public crime, and Finance Minister Nicola Willis attempting to provide promised tax cuts in a fiscally constrained environment.
The procedure for how the arbitration process will be conducted isn’t set in stone but there is a legislated framework that is likely to be followed.
Both sides – the Government, through the police, and the Police Association – will submit their final proposal in writing to the arbitrator, barrister and employment law specialist Vicki Campbell. They then have a chance to respond after seeing each other’s final offer.
Following that, a hearing is held – usually lasting about a day – and is an opportunity for police and association representatives to speak to their proposals before the arbitrator.
Witnesses could also be called during the hearing to endorse either side’s position. In the past, the association has put up economists in an attempt to show its proposed pay increase is warranted in the current economic climate. Officers have also appeared to speak about the realities of policing.
From there, it’s up to Campbell to decide which proposal to go with. There are no compromises or combinations, one of the offers will be chosen in its entirety.
In 2021, Cahill described this winner-takes-all format as the “simple brutality” of the final offer arbitration process. He was the president the last time arbitration was triggered, in which the association was successful in getting its proposal selected in January 2022.
Cahill said it was clearer in 2022 that the then Labour Government hadn’t made a reasonable offer, whereas circumstances were less straightforward now.
“Inflation has been different, police budgets are different, government finances are different, there’s increasing workloads on police so there’s quite a few balls in the air this time and it’s certainly a more interesting set of negotiations.”
While a timeline hadn’t been set, Cahill hoped a hearing could be held before the end of May. He suspected a final decision wouldn’t be made before the end of June.
Earlier this week, police came out in droves to vote down the Government’s latest offer, with 8670 of the roughly 10,000 association members casting their vote – 75 per cent were against while the remainder approved.
The offer included a $5000 general wage increase from November 2023, a 4 per cent increase from July 2024, another 4 per cent increase from July 2025 and a $1500 one-off payment once the matter was settled. Paid overtime was also included from July 2025.
Police Minister Mark Mitchell claimed the overall cost of the package had been increased by $250m compared with the offer rejected in March. Cahill considered the March offer to be worse than what was put forward by the previous Labour Government in September.
Communication from the association to members said while the offer hadn’t met its claims, police had advised this week’s proposal couldn’t be improved “due to the Government’s serious financial pressures”.
The Government did have one last chance to improve its offer but any major changes appeared unlikely. Prime Minister Christopher Luxon said on Thursday he believed the Government had put its “best foot forward” with the deal and was disappointed it hadn’t been accepted.
The Herald asked Mitchell whether the Government would better its offer. He didn’t answer, saying he wouldn’t comment while arbitration was under way.
The association had been strong on having the pay increase backdated to July last year to account for what Cahill believed were unnecessary delays in progressing negotiations. It appeared the Government had gone some way in satisfying that through the $5000 increase from November.
Cahill said the recent pay bump teachers received was a good marker for what the association was seeking, saying increases of 6 per cent, 4 per cent and 4 per cent over two years would be fair.
“That’s the sort of base figure that we would have in mind. That won’t meet everyone’s expectations but it’s a case of getting the balancing act between what people want and what we can justify in an argument.”
This was an important aspect of final offer arbitration for Cahill. The winner-takes-all format meant submitting a proposal that was too costly or too conservative was a risk.
“We could go in and lobby for a 10 or 15 per cent pay rise but if we didn’t win that because our arguments aren’t based on sound evidential basis, all we’ve done is look good that we’ve had a fight,” he said.
“If we haven’t won it, there’s not much point in having a fight.”
The Policing Act provides Campbell with criteria she must consider when choosing between the offers.
They are:
– the recruitment and retention of police
– fairness and equity in the rate of pay and conditions of employment
– any changes in the skills, duties, or responsibilities of the job
– any changes in productivity arising from such things as the introduction of new technology
– relativities within the proposed agreement, and between it and other agreements
– recognising the special conditions applicable to police, including being unable to strike
Cahill explained police could argue other factors should be considered but it was Campbell’s decision how much weight to give them.
In his response to this week’s rejection, Mitchell said the Government had been “very open about the financial challenges we’ve inherited”. In other public comments, Mitchell has been quick to frame any offer in the context of limited Government resources.
Cahill said the government in 2008 attempted to have the ability to pay for an offer legislated as one of the criteria in the Policing Act, but it was unsuccessful.
He argued there would always be fiscal constraints and therefore it shouldn’t be a deciding factor.
“The easiest way for the Government to deal with it is to simply say, ‘We’re not going to fund the police’, and police can say, ‘We’ve got no money to pay for this’.
“We think fairness and equity are the big issues that need to be addressed.”
Cahill believed inflation was central to the association’s success in 2022, which secured a 3.5 per cent increase.
“I think [the government] was offering 2 or 2.5 per cent when inflation at the time was already at 4.7 per cent and hitting higher.
“Inflation, that was the key.”
Given inflation exceeded 7 per cent that year, Cahill conceded the win might have felt hollow for some in the police but said it was an example of the nature of final offer arbitration.
Data released this week showed the annual rate of inflation had slowed to 4 per cent. New forecasts published on Friday by Infometrics predicted inflation to drop below 3 per cent by early 2025. If accurate, the Government’s latest offer included a pay increase above inflation from mid-2025 – something Mitchell has regularly pointed out.
However, Cahill was wary.
“The local inflation, for want of a better phrase, it’s pretty high and doesn’t seem to be softening. That’s certainly why we don’t believe what we’ve asked for to date is unrealistic or unfair.”
Section 69 of the Policing Act prohibits strikes by uniformed, constabulary staff, given their role in upholding public safety. This restriction does not apply to non-sworn civilian staff.
According to Cahill, that’s been the case since at least the 1950s. The same rule applied to the Defence Force but not to teachers or nurses.
Cahill said there was a strong appetite for reform.
“The members want change because they don’t feel they’ve been listened to.”
However, he was realistic about the odds of any parties supporting legislative change to enable frontline police to walk off the job.
“That would be very difficult to get any government to agree to change that law because it’s suddenly going to put them under pressure, even an opposition to agree to it because it’s going to put them under pressure if police end up taking up that option in the future.”
He did float the possibility of finding a middle ground where industrial action could occur as long as it didn’t compromise public safety, saying it would be something the association would soon consider.
Safely assuming the association’s offer costs more than what the Government proposes, it would have to stump up the extra cash quickly.
The timing is relevant given Willis will unveil her first Budget on May 30, which will almost certainly occur before arbitration is concluded.
The possibility of the Government losing will be factored in. If the association’s proposal exceeds the Government’s by more than $100m, it will be listed in the Budget as a specific fiscal risk – essentially scenarios that could affect the Government’s books.
The Government would have to pay for costs incurred in the current financial year as part of this year’s Budget, while any further costs could be made as pre-commitments against future Budgets.
It wasn’t clear whether there was a deadline the Government would have to abide by. Cahill said the Labour Government took eight to 10 weeks when the association last won in arbitration.
The result of final offer arbitration could have many consequences for the Government, the police workforce and by extension, public safety.
If the Government was required to front up with more funding than it thought it could afford, that could risk other government programmes being defunded or hinder the recovery of New Zealand’s economy. In March, Willis conceded she won’t be able to get the books back into surplus by 2026/27, as National promised, and may struggle to do so in the following year.
If the Government is successful but hasn’t improved its offer, it risks officers leaving the workforce, according to Cahill.
“Anecdotally, a lot of officers are waiting to see how this is settled before they make a decision whether they remain in police.”
A depleted police workforce would hurt the Government in several ways.
All three parties in the coalition Government ran on tougher crime policies and some are soon to be implemented, including banning gang patches in public, running boot camps for recidivist young offenders and committing to a reduction in the number of victims of violent crime.
It comes amid attractive recruitment drives from Australia, which Mitchell this year admitted was complicating the Government’s goal to train 500 extra police in two years.
While the association was also subject to those risks if a successful proposal wasn’t good enough, Cahill hoped this week’s vote had conveyed to the Government how police were feeling.
“It sends a message to me and I’d be surprised if [they] didn’t get the same message that police are not happy out here.”
Adam Pearse is a political reporter in the NZ Herald press gallery team, based at Parliament. He has worked for NZME since 2018, covering sport and health for the Northern Advocate in Whangārei before moving to the Herald in Auckland, covering Covid-19 and crime.
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