Todd McClay: MP salary increases out of step with reality

Rotorua MP Todd McLay will donate the increase in his salary to a worthwhile cause.

Two income-related events received public attention last week. The first was an increase of the minimum wage and the second was an increase in MPs' salaries.

The minimum wage is the lowest level that an adult can lawfully be paid for work.

It was announced that it would increase to $14.75 per hour, the seventh increase since we came to government six years ago.

In 2008, it sat at just $12 per hour and has increased by 23 per cent since then.

There is often debate about how quickly this wage should increase. Treasury advice is that to move it up too quickly will result in job losses - and it will be those who have the lowest levels of skill and fewest options in the job market who will lose out.

A cafe or restaurant that employs 10 people is likely to consider cutting back its workforce by one or two people when wage rises cannot be passed on to customers through increased prices.

This is not a good outcome for anyone.

Therefore, there needs to be balance between what businesses can absorb and a fair wage for our lowest-paid workers.

This needs to be coupled with options for training and retraining so they can gain the skills needed to get higher skilled and better paying jobs.

MP salaries are also to increase. A few years ago we changed the law so that Parliament no longer makes decisions about what we are paid.

This degree of independence and transparency is important. The Remuneration Authority now holds responsibility for setting MP salaries and they have decided that MPs are not paid enough.

When I was first elected your MP six years ago we faced the global financial crisis and a recession.

Unemployment was increasing and households were worried about paying the bills.

Few people were getting pay rises. At that time, MPs were also awarded a pay increase. I said I didn't want it and wouldn't take it. I was told that I couldn't give it back so instead decided to donate the funds to local charities.

While the economy is now in a much more positive place, with jobs growing and incomes rising, it is my view that this increase announced last week is out of step with the reality of what is happening in our community.

This issue does seem to come up often, and in part it's because of the independent nature of the Remuneration Authority.

Its independence should not be challenged.

I have a personal view that our salaries should be set once every three years before an election. Then both candidates and the public know exactly where they stand. Others will have different ideas about how this is best decided. Debate on this issue is healthy, and it is important.

Since becoming Prime Minister, John Key has made a significant number of changes to open Parliament and MP spending up to public scrutiny. In fact, he has arguably done more than any other Prime Minister before him. When he says this increase is not reasonable, he means it.

There was an election last September.

I have a three-year contract with the people of the Rotorua electorate. A pay increase at this time is not necessary for me. For this reason, over the next year, as with six years ago, I will again donate the increase on my MP's salary to worthwhile local organisations and causes.

I am sure they can use the money just as well.

-Todd McClay is the MP for Rotorua.