Woodhouse Michael: Remuneration Authority (Members of Parliament Remuneration) Amendment Bill — Second Reading In Committee Third ReadingText is incorporated into the Bound VolumeWoodhouse Michael: Remuneration Authority (Members of Parliament Remuneration) Amendment Bill — Second Reading In Committee Third Reading[Sitting date: 17 March 2015. Volume:704;Page:2310. Text is incorporated into the Bound Volume.]Hon MICHAEL WOODHOUSE (Minister for Workplace Relations and Safety): It is my pleasure to take the first of what I hope will not be too many calls because the bill is so well worded clearly articulated and mathematically correct that I am sure members who are of a mathematical bent will have no problem understanding it. On the other hand there may be some questions from other less erudite mathematicians in the Chamber including—and I must acknowledge one of my colleagues whom I just cannot remember who pointed out in the second reading that the person who aspires on behalf of Labour to be the Minister of Finance in a future Labour Government does not understand any of the algebra that was put in the bill. So I do hope that he has had some remediation over the dinner break.I do want to touch on a couple of the points that are specific to clauses in the bill and were made in both the first and second readings. I want to commence by touching on an issue raised by Tracey Martin in respect of equivalency in the question of the definition of “full-time equivalent” as described in new section 18B(2) inserted by clause 7 relating to how the average ordinary weekly earnings of fulltime-equivalent employees in the public sector is determined. Her question indicated or perhaps suggested that equivalency was “equivalent roles” in the public sector. The definition in that clause is very clear that that is not what is being suggested. Indeed “full-time equivalent” is a very well-used nomenclature not only in the public sector but in all sectors to describe that which is full-time not that which is equivalent. So it is not as if the Remuneration Authority is having to determine equivalent roles and then take a quarterly employment survey stratification of that. The quarterly employment survey as published quarterly and smoothed in the way that the bill describes it is the method for calculating. It is very straightforward; it does not require any great leap of faith or determination by the Remuneration Authority.I also want to touch on the issues raised by a number of members in respect of the use of the public sector quarterly employment survey as the determining calculation of the increase. In particular reference was made—at least by Mrs King—to a blogger’s analysis which she described as highlighting an error in the bill as it was introduced and she suggested that it was the formula that somehow would have resulted in MPs’ pay being higher had that original bill been passed. That is simply not correct and indeed that was not what the blogger was saying either. All the blogger was saying was that if one calculates the quarterly employment survey from 2009 to 2015 the term of this Government the average—Hon Annette King: That’s what I said.Hon MICHAEL WOODHOUSE: No that is not what Mrs King said. Mrs King said that the formula was flawed and resulted in the withdrawal of the bill last week. That is not accurate.Hon Annette King: Why was it withdrawn then?Hon MICHAEL WOODHOUSE: I mentioned why it was withdrawn. If the member had been listening to my second reading speech—and I suggest she goes back to Hansard—that was very clearly articulated. If she wants me to answer the same question a second time because she is mathematically challenged I am very happy to do that. But let us look at the annual quarterly employment survey as analysed by that blogger because indeed it is true that the average—Clare Curran: Name the blogger.Hon MICHAEL WOODHOUSE: Mr Farrar on Kiwiblog. I can give that member the date if she wishes. It is true that the average increase were it calculated over that period of time would have been higher than the actual increases that were handed down by the Remuneration Authority under the current legislation. Why was that? There were straitened times.The Remuneration Authority quite rightly interpreted the legislation in the way that it was intended. Indeed this is the only increase for all the tub-thumping and rhetoric from the other side about the Prime Minister talking a good game and not acting. In fact the Remuneration Authority listened very carefully and this determination set out in 2015 was the first increase of over 2 percent since this Government came to office. In 2009 and 2010 the quarterly employment survey increases were 4.8 percent and 5.5 percent. Why was that? It was because that was the ongoing sequelae of an out of control Labour Government that taxed and spent and taxed and spent and built up the Public Service until it was out of control in terms of numbers and salary growth and that locked this Government in to wage increases that went out years ahead. That was the parting gift—that was the parting gift to the incoming National Government. Ten years of deficits and salary increases that the Labour Government arranged before it left office—4.8 percent and 5.5 percent.Hon Annette King: So it’s a wide-ranging debate is it?Hon MICHAEL WOODHOUSE: Well I am addressing the questions and the challenges around the quarterly employment survey Mrs King. But if one looks at the moderate sensible serious analysis and control of Government spending as has been the case since this Government came to office and as articulated in the quarterly employment survey from 2011 to 2015 one paints a very different picture which is why the quarterly employment survey and the salary increase that is the consequence of this bill when it is passed will be 1.5 percent. I suggest to the Labour Opposition members that if they aspire to the Treasury benches again they will do so knowing that their profligate spending will have direct benefit for them and the public will have no truck with that. They had no truck with it when Labour did it as the Government—it was rightly thrown out as a consequence and it looks a long long time away from getting anywhere near the Treasury benches again. The quarterly employment survey is an appropriate measure for that purpose.Ms Turei challenged me to say whether the bill was designed to restrict or constrain MP pay increases and she said that if that is the case the Minister should say so. Well I say this: it is designed to constrain members’ pay increases to the same pay increases that are possible in the public sector they run. I think that the public understands that and says that that is fair enough. It is true that the circular argument could be: “Well the higher the public sector pay is the higher the MPs’ pay is.” And the counterfactual is also true. But I say good luck to any Government that wants to run that argument or to any Opposition that wants to run that argument lest they be in Government in the future.The last thing I will say is in relation to Grant Robertson’s intervention in the second reading around public servants’ pay being linked to ministerial pay. He said that he did not believe that public servants should be paid any more than the Prime Minister or other Ministers in their charge. It may be that the member was aware that the Remuneration Authority is actually aligned with him in that thinking. But here is the paradox in the member’s intervention. For all the tub-thumping about the scale of public sector executive pay increases the independent body that sets the pay for the public sector senior staff is the Remuneration Authority. If the Remuneration Authority thinks those people are worth that amount of money by the best analysis it is able to make in accordance with the law and if Mr Robertson thinks that the pay of the Prime Minister should be no less than that of any other public servant then I think we have started to come to the reason why we are here. Those relativities and the direction in which the Remuneration Authority was heading would have seen massive increases in MPs’ and Ministers’ pay which I think—the Government thinks—are not acceptable to the New Zealand taxpayer and are not acceptable to the Government.These are very sensible changes that actually take away some of that tension rather than add to it. The changes leave the Remuneration Authority free to continue to determine the salaries of those senior public servants and judges in an unfettered manner. That is what the public wanted; that was very clearly the response that we had on 25 February when the Remuneration Authority sent out its determination. The bill will achieve that and I think it is a very sensible response. I stand ready to answer any technical questions—technical questions—that the Opposition may have.