Robertson Grant: Remuneration Authority (Members of Parliament Remuneration) Amendment Bill — First Reading Second ReadingText is incorporated into the Bound VolumeRobertson Grant: Remuneration Authority (Members of Parliament Remuneration) Amendment Bill — First Reading Second Reading[Sitting date: 17 March 2015. Volume:704;Page:2290. Text is incorporated into the Bound Volume.]GRANT ROBERTSON (Labour—Wellington Central): As other Labour members have done in this debate I rise to support the first reading of this bill. I do so because I think what this bill represents is a step in the right direction towards sorting out the issues that lie in the way that MPs’ pay is determined. I do not do it on the basis of the fact that this is a great process or that this is necessarily in a perfect state at the moment. It is not. I think what we have seen over the last week is an indication of the fact that I predict we will be back debating this issue again at some point in the near future.But if we actually look at the principle here I think it is shared by parties across the House. The goal here is that our pay is in some way or other more closely linked to what is happening for the median average—whatever calculation we are using—New Zealandersand their pay and income. That is a goal that I think is actually shared around the House. The difficulty some members are having with this legislation is first whether this is the correct mechanism; and second whether this process is going to deliver that mechanism. I can stand up here today and say I prefer an approach that links us to something like the average wage in the public sector but I see real shortcomings in those particular criteria and I will return to that in a minute.In terms of the process this has been mishandled by the Government. I think we are up to about the seventh or eighth version of the criteria. That is a very hard thing to keep track of—to actually understand exactly where we have got to. It is quite possible that there are unforeseen consequences in this legislation. I am not here you know disparaging the Minister; I just think the pace at which this has happened means that it is likely that not all of those scenarios have been thought through. So I come to this somewhat sceptical around that but acknowledging that we do need to make an effort to show that we know that we in this House are well paid for what we do—every member of this House works hard for that pay—but that when it comes to a notion of what kind of process there should be for increasing pay it needs to relate more to what the average New Zealander is going through than it currently does. That is the issue here.I think the Remuneration Authority has been given a pretty hard rap out of all of this. The Remuneration Authority has done what was asked of it in the Remuneration Authority Act. The Act particularly in section 18 asks it to compare us with what it believes to be the relativity of similar jobs. Over a period of time it has interpreted that to be effectively around executive pay. Once upon a time this was all done—when the Assistant Speaker in the Chair was in the mid-point of his parliamentary career—by something called the Higher Salaries Commission.The ASSISTANT SPEAKER (Hon Trevor Mallard): That’s now.GRANT ROBERTSON: That is now. That is correct. In the early part of his parliamentary career this was done by something called the Higher Salaries Commission. That gives an indication as to what was being thought about in terms of MPs’ pay—higher salaries. It goes off to the Remuneration Authority and it continues to interpret that. So when it came back with a 3.5 percent pay increase plus the extra bits that had been changed around as a result of moving from non-cash to cash recognition it was doing what Parliament had previously asked of it. The reality is that what this has exposed in New Zealand is the fact that executive pay has been rampantly increasing while those on median wages and those on low wages have been struggling. That is actually what the 3.5 percent and 5.5 percent pay increase has led New Zealanders to realise.So you are in a situation now where the average chief executive officer of a company in New Zealand earns 26 times what the average worker in that firm does. That has increased I might add in the last 6 years. It used to be 22 times. It has gone up to 26 times over the last 6 years. Nearly half the population year on year does not get a pay increase. They are the factors that mean people will put their hands up and say: “This is not right.” So the real underlying issue in this bill is actually about the inequality in pay in New Zealand and the fact that hard-working people in New Zealand have not seen a pay increase for many years.Today in the House we heard Bill English tell us once again what people have been told in the past: that they have to tighten their belts that times are tough but that there are good times around the corner. That is what Bill English told New Zealanders before the last election. Today in the House he said: “That promise is off the table now because now we have got low inflation in New Zealand and pay increases cannot be justified.” New Zealanders were promised before the last election an average pay increase of $6600 over the next 3 years and today Bill English wrote that off and said: “Only very moderate pay increases are going to happen.” So this piece of legislation tries to go about correcting a problem that is much deeper. It is a problem about the value of pay for New Zealanders.There was an interesting study by the Productivity Commission released in the last month that shows that over a 25-year period pay for New Zealanders has fallen 16 percent behind productivity increases. We are always told that as productivity increases so will wages because productivity will drive more efficient businesses. Well the reality is that that gap has been created. This is what we are now seeingglobally: the retention by capital of wealth away from those who earn salaries and wages. In New Zealand we now have the evidence and the proof from the Productivity Commission that pay is 16 percent below where it should be. So that is what lies behind the problems that we have experienced in the last few weeks on this issue because for those on high incomes they keep going up. Those on middle and low incomes in New Zealand are stuck and so when our pay is pegged to those on high incomes naturally New Zealanders will react and will say: “What is going on there? That is not the experience I am having in my community.” That is the issue that lies behind this and of course is not being addressed at all by the National Party’s side of the House across the economy.Related to that is a concern I have about the mechanism here. I do believe this is a step in the right direction but I think that by tagging this to public sector pay we reopen another can of worms on this issue and that is we are now tagging this to something that is in the control completely of politicians: public sector pay. It is all very well for Bill English to stand up and say: “Well we’ve got the teachers we’ve got the nurses and we’ve got the police this year. They’re going to have to accept modest pay increases.” Now it is all linked together. My view is that we are taking a step here the next step of which should be a proposal around something that looks across the economy. I know the Green Party has proposed the idea of a median income—that may well be where we should end up. But it needs to be something that looks at the economy as a whole because that is something the Government can influence positively but not control.I think we are getting ourselves back. We are going backwards and forwards if you look back over the decades on whether politicians should be responsible for setting their own pay. No we need to give that job to somebody else. We give that job to somebody else we set the criteria we do not like the criteria and we bring the job back to us again. This is not a sustainable solution. We need a sustainable solution that links this to something that reflects where ordinary everyday average median New Zealanders are—but fundamentally wage growth in New Zealand is unequal. Executive pay has been bounding ahead while those on real wages those on median wages have been struggling. That is the issue this country needs to get its head around. That is an issue the National Party is ignoring. We will support this legislation because it begins the process of more directly linking MPs’ pay with what ordinary New Zealanders are doing. But the process around this bill has been flawed and I predict unfortunately that this is not the last time this Parliament will need to address this issue.