Prime Minister Jacinda Ardern says the Government will be freezing all MP salaries and allowances for a year while a “fairer formula” for pay increases is found.
The Government will introduce legislation next month under urgency to amend the Remuneration Authority Act. This is the only way MPs pay can be changed.
Ardern has taken the issue up with Labour’s Coalition partners, as well as the leader of National and ACT – Ardern says all parties appeared supportive of the moves.
The Remuneration Authority – an independent body that sets MPs salaries – advised that it was planning to increase MPs pay by 3%.
But Ardern says that was “not acceptable to this Government.”
“Cabinet agreed while the Government is focused on improving incomes for ordinary working Kiwis, it’s just not appropriate for MPs to be the subject of such an increase.”
The Government will now be developing what Ardern believes to be a fairer formula for future pay increases.
She would not, however, be drawn on what that formula could look like as it is too early in the process.
But she did hint that the new formula might not be based on a percentage increase.
“When you look at percentage increases, as a formula for salary increases, that only continues to extend the gap between MPs and others in the middle or the bottom end.”
The move, she says, does not save a lot of money but it will send a “signal about the Government’s values.”
Ardern says there has been an increasing gap in income between some of the richest and poorest New Zealanders.
“It’s just not right for us to have an increase like that currently, so we want to change the way our salary increases are calculated in the future.”
She says the move is not at all connected to National Leader Simon Bridges spending, which hit headlines last week.
The conversation about MPs pay started a couple of weeks ago, Ardern says – “it is completely unrelated.”
She also says it has nothing to do with the industrial action which has been happening across the country over the last month or so.
In 2015, Parliament made an alteration to the way MPs salary increases were calculated.
Ardern says it was done with “good intent, but what I think we have seen, as the outcome of the formula change, I don’t think sits with our expectations.”