Shaw James: Remuneration Authority (Members of Parliament Remuneration) Amendment Bill — First Reading Second ReadingText is incorporated into the Bound VolumeShaw James: Remuneration Authority (Members of Parliament Remuneration) Amendment Bill — First Reading Second Reading[Sitting date: 17 March 2015. Volume:704;Page:2300. Text is incorporated into the Bound Volume.]JAMES SHAW (Green): I just wanted to pick up on something that the member for Wellington Central Grant Robertson said in his comments a few moments ago which is that this is a burning issue that people do care about it and that it is therefore appropriate that we are dealing with it. I agree. I mean this is a burning issue and it has been a burning issue for years and years and years. So it seems strange that given that it has been a burning issue for all of this time we cannot take a few weeks—or as the Attorney-General likes to call it 6 months of chit-chat—to do this properly to actually consider this properly.Mr Robertson also referred to the problem of some of the links between public sector pay versus the whole economy. He talked about the income gaps between people who are earning—also between people who are earning versus earners and those who own capital. I wanted to just reflect on that a little bit at the moment because it does have implications for why this bill is the way it is—in fact why our pay has been organised the way that it is.Since the early 1970s the gains of productivity have accumulated more to capital than they have to labour. That is just a straight economic fact. It was about 1990 when that really took off in New Zealand. That was I think the last year that wages in New Zealand rose at the same rate that our productivity did and as a natural consequence of that as the proceeds from productivity have accumulated more and more to capital the gains from that have accumulated more and more to chief executives’ pay because they are awarded more and more on the shareholder returns.So how that is affecting us is that in order to get public sector chief executives they also have to get paid at a level that can compete with private sector chief executives. That has been behind this huge drive to pay chief executives more and more and more while everybody else has kind of largely flattened out. So this is one of the reasons we think that linking it in the way that it is linked is not a great one.I said that we are going to be introducing some Supplementary Order Papers later on. I thought I would just introduce them now to kind of warm everybody up to them. So the first would see MPs’ salary movements being indexed to movements in the nominal median individual income as determined by the New Zealand Income Survey published by Statistics New Zealand. So that means that if the median income of New Zealanders goes up then MPs’ salaries would go up by the same dollar amount. If the median income of New Zealanders goes down then MPs’ salaries would similarly go down. That then ties our interests to the economic interests of New Zealanders rather than having them bifurcated. It is a simple and transparent way for the Remuneration Authority to calculate MPs’ salaries and it would focus our minds. More important it is a fairer system. Percentage increases just widen the gap between top earners and everybody else. So since the 2007-08 financial year MPs would have received an increase of only $4276 under this Supplementary Order Paper as opposed to $29800 under the current system. So if we are serious about tackling this then we need to take some initiative.Our second Supplementary Order Paper does not go quite as far as that one but it is still better—we believe—than what the Government is proposing. So instead of tying MPs’ pay increase to the public sector pay increase as calculated in the quarterly employment survey we would be using the labour cost index. The labour market statistics are a truer measure of the actual rate of increase than the quarterly employment survey because they measure what people are actually paid by employers rather than income. Under that system since the 2007-08 financial year MPs would have received an extra $14514 rather than the $29800 that we have actually received since that year. So if the Government is determined to use a percentage-based system then that we believe is superior to the quarterly employment survey.I will just repeat those. Under the status quo under the current system since the 2007-08 financial year the increase has been a total of $29800. That is why the public are getting—we think rightfully—outraged about that; very few other people have had that kind of increase in that short a time. Under our Supplementary Order Paper in which we are linking the increase to the median income that would have been only $4276. So instead of $29800 it would have been $4276. Under our second Supplementary Order Paper it would have been $14514. So we have run the numbers on these and we are confident in them and we believe that the Government can be confident in them as well. The problem that we have got with the bill as it is presented of course is that we do not have anything that we can really compare it with because of the process as we said that has been rushed.Just to sum up as I was saying I just wanted to reflect on the points that have been raised by some of the other speakers about the widening gap in New Zealand that has been driven largely by the changes in which the rewards of productivity are accumulating to capital over labour and the effect that that is having on chief executive pay and the effect that that is having therefore on the benchmarks that we have historically been measured against and that is why we are kind of in the pickle that we are in. So we believe as Mr Robertson said that tying it to something that is going on in the broader economy—not just one sector of the economy but the broader economy—and tying it to the economic interests of all New Zealanders makes far more sense than the proposal as it is.We will be introducing both of those Supplementary Order Papers as soon as we can because as we have noted before we are struggling to keep up with this truncated and unfortunate process. Thank you.