Top pay review to reflect hard times

Governor-General Anand Satyanand was awarded a pay rise against his wishes. Photo / Mark Mitchell

The normally taciturn body which sets politicians' salaries has finally responded publicly to MPs' call for a pay freeze by saying it will "give weight" to the economic recession in this year's determination.

The Remuneration Authority will also take into account submissions from public office-holders and the slowing of the rise in public and private sector executive-level salaries.

The authority, which determines pay rises for MPs, the judiciary, specified statutory officers and members of local authorities, has previously given little indication of how it might respond to intense political pressure not to award MPs a pay rise this year.

However, the authority's recognition in its annual report of economic and fiscal factors may be short-circuited by pending Government legislation likely to contain provisions which will enable MPs who do not want a pay rise not to be given one.

Under current practice, MPs who do not want the extra money still get it and have to offload it themselves, most commonly either to charity or back into the Crown accounts.

A spokeswoman for Prime Minister John Key yesterday said work was progressing on a legislative solution.

Although there was talk earlier in the year of such legislation, it is now seen as more of a priority after the Governor-General, Sir Anand Satyanand, was awarded a pay rise by the authority despite his specifically requesting he not be given one.

The authority argued that its "adjustment" of Sir Anand's tax-free salary merely compensated him for last October's and this April's tax cuts.

Noting the Governor-General's request in its report, the authority said the adjustment put him on the same basis as someone receiving no increase in gross salary from 2008 through 2009. Sir Anand is paying the extra money back into the Crown accounts.

The report acknowledges a letter it received in January from Prime Minister John Key urging it to exercise restraint in line with the Government's response to the deepening recession and the consequent impact on the Government's fiscal position.

The authority said it had anticipated a slowdown in the rate of increase in executive remuneration during late 2008 and 2009. Mr Key's letter had "reinforced" the approach the authority had taken in not fully compensating statutory officers to the extent survey data on executive pay rates suggested it should.

"It (the letter) also confirmed the authority should give weight in its remuneration decisions to the economic and fiscal situation, together with submissions from office-holders and the slowing of movement in public and private sector executive level remuneration."

At the time the letter was written the authority's chairman, David Oughton, said it was too early to gauge whether there would be a pay increase for MPs this year as work on that determination did not get under way until August. He has since stepped down from the post which is vacant.

Last year's determination awarded MPs pay rises of between 3.8 and 4.8 per cent, the basic remuneration being adjusted by the movement in the consumer price index.

The authority said the increase for all parliamentary positions was lower than the salary movements in senior state sector positions in the previous year. It said maintaining relativities between Parliament, the judiciary and the public service was a "challenge".

GIVING BACK

They do not make a song and dance about it, but MPs' pay rises often go to charity or what they (or their superiors) consider to be a worthy cause:

* John Key vowed to donate "a good part" of his government pay to charity if he became Prime Minister.

* Green MP Sue Bradford donated half her back-pay in 2006 to help low-paid workers.

* Labour MPs each forked out between $10,000 and $30,000 in 2007 to clear a party debt.

* Former Labour MP Mike Moore used to talk of the ever-recurring offer no MP could refuse - being asked to buy a raffle ticket (or more likely several books of raffle tickets).