Pay rise must not cost taxpayer - Key

PM says 10% increase at this time would outrage public. Photo / Mark Mitchell

Prime Minister John Key has dampened suggestions that MPs might be headed for a 10 per cent pay rise to compensate for a proposed stop to private travel perks.

"I think the New Zealand public would be outraged if parliamentarians took this moment to give themselves a generous pay increase when others simply don't enjoy that opportunity," he told the Weekend Herald yesterday.

"If there was to be a move away from benefits and therefore additional compensation in cash, my expectation is that MPs should exercise restraint because we are operating in a time when other New Zealanders are exercising restraint."

Any pay-for-perks switch would "certainly have to be fiscally neutral at best, if not a reduction in cost to the taxpayer", he said.

An independent three-yearly review of Parliament's spending recommended that private travel perks for MPs and their spouses end.

"If the remunerative aspects of travel entitlements were incorporated into MPs' salaries, there would be an approximate 10 per cent increase in MPs' salaries [on average] but no change in MPs' total remuneration [as the subsidies for private travel would be discontinued]," says the report by former Speaker Sir Doug Kidd and economist Phil Barry.

The report recommends a stop to two main types of travel perk: the international travel discount of 25 per cent (after one term), 50 per cent (after two), 75 per cent (after three) and 90 per cent (after four); and the domestic travel of spouses not related to parliamentary business.

Mr Key said there had been a move in the private sector towards packages that were solely in cash and not in perks and benefits.

"So there may be some logic in Parliament moving in that direction."

But he said the system was complicated and there would be no logic to giving MPs a 10 per cent increase across the board.

Mr Key said he did not use the private travel perk himself (he is entitled to a 50 per cent discount for private trips) so increasing his salary to compensate for something he had not lost would not be logical.

"Steven Joyce [National list MP] is a Cabinet minister but enjoys no international travel discount because he hasn't been there long enough. But Ross Robertson is a backbencher and is fully entitled to a 90 per cent travel discount. So why would you give Steven Joyce twice the increase of Ross Robertson [Manukau East Labour]?"

The MPs and spouses international travel perk - which requires no approval and has no limit - cost $600,000 last year.

The spouse and dependent domestic air costs last year were $900,000 but because the entitlement is for all domestic travel there are no details recorded as to which trips are private and which are parliamentary.

The review acknowledged that MPs often use that travel perk for work-related travel, though to what extent is not known.

The review is in the hands of Speaker Lockwood Smith, who will take soundings from party leaders and his advisory group, the Parliamentary Service Commission.