SpeechREMUNERATION AUTHORITY (MEMBERS OF PARLIAMENT REMUNERATION) AMENDMENT BILL (NO 2)First ReadingHon IAIN LEES-GALLOWAY (Minister for Workplace Relations and Safety): I move That the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill (No 2) be now read a first time. I nominate the Education and Workforce Committee to consider the bill.The Remuneration Authority is an independent body responsible for setting the remuneration of key public office holders such as members of Parliament judicial officers elected local government officials and the Governor-General. For all positions except members of Parliament the authority sets remuneration by taking into account criteria set out in the Remuneration Authority Act 1977. MPs' pay is a matter of considerable public interest and the Act has been amended a number of times over the past 10 years. Most recently in 2015 Parliament amended the Act to remove the authority's discretion and introduce a formula that linked MPs' salaries to the percentage increases in the average weekly wages of public servants. It's worth noting that the Remuneration Authority has no discretion in setting the proposed increase as the increase is determined by a formula set in law. This formula has resulted in unacceptably high percentage increases to MPs' already high salaries compared to the previous criteria-based approach.Since the 2015 changes MP salary increases have ranged from 2.46 percent to 4.06 percent per year compared to average increases of 1.7 percent in the four years prior to the 2015 changes. In absolute terms the dollar increases since 2015 are also higher. Given the level of pay MPs receive relative to the average wage in New Zealand a high percentage increase can result in a significant increase to the total amount that MPs are paid. The repeatedly high annual pay increases under this formula call into question whether the settings for determining MPs' pay are fit for purpose.Members will recall that last year the Prime Minister announced a freeze on MPs' pay which was implemented by Parliament because the increase at the time proposed under the formula was unacceptably high. As part of that pay freeze the Government reviewed the mechanism for determining increases in MPs' pay. Officials consulted the authority to test options and to ensure that any proposed changes would be fit for purpose.The Government believes that the current system for setting MPs' salaries is unfair to taxpayers and must change. The Government has introduced this bill to address the issue of disproportionate increases in MPs' total remuneration by restoring the legislation to its pre-2015 position and returning discretion to the authority.The bill amends the Remuneration Authority Act 1977 and the Members of Parliament (Remuneration and Services) Act 2013 to establish a new process for how the authority sets the salaries of MPs. The bill restores the authority's discretion to determine MPs' salaries based on criteria. Other public office holders whose salaries are already adjusted based on the criteria have received smaller pay increases than MPs. The authority favours this criteria-based approach and considers that this would equip it with the flexibility to take into account changing circumstances or changing requirements of roles and would be the most durable system for setting MPs' pay. The bill restores the requirement for the authority to consider the value of the personal benefit arising out of entitlements when setting MPs' salaries. This requirement was removed in 2015 and the authority did not support its removal.The bill requires the authority to make this year's determination of MPs' pay under this restored system. Finally the bill links the authority's reviews to the electoral cycle so that the authority would conduct one review after each general election and would set MPs' pay for the entire term of Parliament specified on a year-by-year basis.I'd like to briefly comment on how these changes fit with the Government's wider plan. The Government is committed to ensuring that all New Zealanders share in our economic success. Wages are starting to rise as a result of the Government's policies meaning more New Zealanders are sharing in the benefits of economic growth. Figures out in August show average ordinary-time hourly earnings of $32.37 an hour were up 4.4 percent from a year ago—the biggest rise since June 2009. The minimum wage has gone up to $17.70 this year. This is benefiting approximately 209000 workers lifting wages throughout the economy by $231 million per year and making a big difference for working families. For a full-time worker this means an extra $48 a week before tax—enough to make a real difference for working people.Those changes have ensured that working people in New Zealand are receiving fair wages. We need to ensure that those of us who receive the highest earnings remain in touch with those increases and those rates of pay for ordinary working people. This bill responds to the disproportionate growth in MPs' salaries and will ensure that in the future MPs' salaries are reasonable and justified in relation to the increases received by working Kiwis. I commend this bill to the House.