A move to rein in politicians' pay doesn't give moral authority to the Government in upcoming pay negotiations, public sector representatives say.

Prime Minister John Key will use urgent legislation to overhaul the Remuneration Authority Act as a result of anger at the size of MPs' pay increases.

MPs' pay will now be pegged to the average public sector pay increase for the previous year.

That means the latest pay rise will now be between 1 and 2 per cent - with the Government taking more advice before revealing the exact amount.


Richard Wagstaff, the Public Service Association national secretary, said 40,000 members in bargaining this year earn a lot less than those in Parliament.

"I think it is a political distraction what the PM says ... now they think they have the moral authority to tell everyone else, no matter how badly paid, they don't deserve a pay rise."

PPTA president Angela Roberts said teachers' pay had not kept pace with inflation.

"[MPs] have basically kept up with inflation, and what they're saying is they'd like to keep up. We have a hefty catch-up before we can go into the future with a keep-up [pay-rise]."

Last Thursday the Remuneration Authority announced MPs' pay would increase by 5.5 per cent - which translated to an $8200 pay rise for backbenchers.

The authority said that once a reduction in the travel entitlement was taken into account pay packages would increase by 3.5 per cent.

Mr Key said legislation would be passed in urgency so that pay increases could be brought down.

There was a chance back-pay may be paid next week, in which case politicians would need to pay the money back or have future wages deducted, Mr Key said.


Asked about upcoming public sector pay negotiations, Mr Key said the Government had previously asked people to show restraint.

Yesterday's announcement was welcomed by the Green Party as a fairer way to set pay.

"We've been pushing for a fairer system for setting MPs' pay for a long time and we're glad that the Government has listened," co-leader Metiria Turei said.

The move to rein in MPs salaries should also look at "excessive rises" in the pay of public service chief executives, Labour says.

"Some of these CEOs have had stratospheric pay increases in recent years," said Labour leader Andrew Little.

"At the same time, people earning the minimum wage are working two or three jobs to pay the bills and feed their families - and their pay will only increase by 50 cents an hour this year."

Mr Little said yesterday's announcement by Prime Minister John Key on MPs' pay was a perfect opportunity to take a wider look at public service salaries.

John Errington, the chair of the Remuneration Authority, said at this stage it was not appropriate to comment on the Prime Minister's announcement.

Pay changes

John Key, Prime Minister

Was: $428,500 to $452,300 (rise of 5.5%).

Now: $428,500 to $434,928 (rise of 1.5%*).

Bill English, Deputy Prime Minister
Was: $303,900 to $320,800 (rise of 5.5%).
Now: $303,900 to $308,459 (rise of 1.5%*).

Cabinet ministers
Was: $268,500 to $283,400 (rise of 5.5%).
Now: $268,500 to $272,528 (rise of 1.5%*).

Andrew Little, Leader of the Opposition
Was: $268,500 to $283,400 (rise of 5.5%).
Now: $268,500 to $272,528 (rise of 1.5%*).

Backbench MP
Was: $147,800 to $156,000 (rise of 5.5%).
Now: $147,800 to $150,017 (rise of 1.5%*).

*New rise is not yet confirmed but will be between 1-2 per cent.