Remuneration Authority (Members of Parliament Remuneration) Amendment Bill — Second Reading In Committee Third ReadingText is incorporated into the Bound VolumeRemuneration Authority (Members of Parliament Remuneration) Amendment Bill — Second Reading In Committee Third Reading[Sitting date: 17 March 2015. Volume:704;Page:2304. Text is incorporated into the Bound Volume.]Remuneration Authority (Members of Parliament Remuneration) Amendment BillSecond ReadingDebate resumed.The ASSISTANT SPEAKER (Lindsay Tisch): The next call is a split call. Metiria Turei—5 minutes.METIRIA TUREI (Co-Leader—Green): I just want to follow on from my colleague James Shaw and also to acknowledge the contribution from Grant Robertson who particularly focused on both inequality and that being the driver of increased pay and the driver of the concern about it but also his I think very clear description of the fact that this change means that the Government is in control of MPs’ pay. That is exactly the opposite of what many years of work have led to. It is exactly the opposite of the last Remuneration Authority bill that we dealt with in the Government Administration Committee a couple of years ago which was designed to give it more authority over MPs’ pay and allowances. So we are going backwards very quickly here.I do note that the Minister for Workplace Relations and Safety did not answer my question in his last contribution as to whether the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill would constrain MPs’ pay increases. I can assume only that is because either he does not know because they have not done the modelling or he knows that it is essentially the status quo.Hon Michael Woodhouse: I will address that in my speech.METIRIA TUREI: Well you had the opportunity Minister to address it earlier.Hon Michael Woodhouse: I didn’t have the time. Sadly I didn’t have the time.METIRIA TUREI: You did have the time. It would be good to do so quite soon because otherwise there is no assumption we can make except that the reason why the Government has chosen the quarterly employment survey as the criterion for the Remuneration Authority is that it makes no change and that that was politically palatable to National Party MPs. But actually they do not want to find any means of constraining MPs’ pay. I would like to think that that is not the case but until we see evidence to the contrary that really is the only assumption we can make.There was a very good discussion earlier about inequality and the fact that part of the reason why MPs’ pay is such an issue is that there are massive increases for people who are being paid high wages and basically wages are static and going backwards for many on lower incomes. That is certainly true. The Green Party has been very clear about policy on that as well. Our Supplementary Order Paper 57 which we are putting forward today to link MPs’ pay to nominal increases in the median wage is the one that we put forward last year so it has been on the table and available for the Government to take up for 12 months now. We have also very clearly set out issues around chief executive officer pay—for example the requirement for companies to disclose chief executive officer salaries more clearly define them and provide rationale for those pay increases; to have staff members on the committees that set those chief executive officer pay increases; to require New Zealand’s large companies to report on the pay ratio between their highest-paid and lowest-paid staffers; and to include pay ratios in Government procurement and for Government agencies.Pay ratio is a major issue here. It is the increasing gap between those on the lowest rates and those at the top. We see more information coming out today from the Council of Trade Unions describing how those in the top 1 percent have increased their income by around $100000 between March 2011 and March 2013 meaning that the increase is now 9.7 times more than that for the average worker. This is what is being seen daily by ordinary New Zealanders who are doing their best to get ahead. We have a country of two halves. The bottom half are static or going backwards fighting every day to have a good job and to do their best but still are not getting anywhere. We have the other half who are slowly moving forward and then at the very top there is the 1.25 percent who are moving ahead in leaps and bounds. For as long as MPs attach their salary to those top levels we will continue to be part of the problem.We can solve it. We can be part of the solution by attaching our salary increases to the nominal increases in the median wage which means that we link ourselves to the bulk of the New Zealand population and we have fair pay increases based on a criterion that is not determined by Government but determined by our overall approach to our economic and social policy. That is where the Green Party would like to see this Parliament go. We think it is the fairest thing to do. Thank you.The ASSISTANT SPEAKER (Lindsay Tisch): Iain Lees-Galloway—5 minutes.IAIN LEES-GALLOWAY (Labour—Palmerston North): This is my first opportunity to speak on the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. I have not been following the debate this afternoon so I apologise if I traverse—Hon Ruth Dyson: What?IAIN LEES-GALLOWAY: I know. It is a shock. I apologise if I traverse material that has been traversed by other members previously. Let us be honest about why it is that we find ourselves debating this legislation. It is because the independent Remuneration Authority in determining the salary increases that MPs should receive determined a level that it believed was fair but was significantly out of kilter with what ordinary New Zealanders have received in terms of pay rises over the last 6 years or so. We have heard on a number of occasions that the Prime Minister has said that in his opinion MPs’ pay does not need to rise as much as it has done and that people would feel aggrieved about the pay increases that MPs get but that is in the context I say to the Prime Minister of ordinary working New Zealanders not getting ahead under his Government. I appreciate that the Greens have offered a Supplementary Order Paper linking MPs’ pay to median wages because median wages have barely moved under this Government certainly in real terms. Most people who are on the median wage actually in real terms find themselves worse off today than they did 6 years ago.It is interesting that the Government often talks about “average” wages which are pulled up by those at the very top getting proportionately very large pay increases whilst those who are in the middle and on lower incomes are not really getting pay increases that allow them to get ahead. That is why I think this Government so studiously avoids talking about the median wage but if it did and if it actually talked about what ordinary people who are on this middle income are getting then the story would not be nearly as rosy as it makes it out to be.We agree with and we will vote for legislation that perhaps tries to pare back the increases to our salaries to make them align more closely with what ordinary working people get but we really just do not think the process around this has been all that clever. First of all as we said the Prime Minister has been talking about this for years and years and years and yet suddenly he felt the need to act. I think the suddenly came along after some polling a couple of weekends ago. The focus groups probably told the Prime Minister that he needed to act and he needed to act fast. And this is a Prime Minister who is in need of some good news. Let us be honest. It has been a pretty rough start to the year. The Prime Minister was in need of something to demonstrate that he was in touch with the voters and this one suddenly popped out of the box. It was going to be debated last week but after it was tabled it was discovered that there were a few flaws. The Government went back to the drawing board and it has come back to this this week—Hon Ruth Dyson: What were the flaws?IAIN LEES-GALLOWAY: Ruth Dyson asks what the flaws were. It is hard to know even where to begin but I think the fundamental flaw was possibly that we could have ended up with a greater pay rise as a result of the legislation than we originally were. There were problems with it clearly. That is what happens when legislation is drafted after a focus group on a Sunday afternoon and tabled at the beginning of the week and then the intention is to put it through under urgency. So now we are back here this week hopefully with an improvement to the legislation. We will vote for this because we think this is hopefully going to move things in the right direction but we suspect that we will be back in the future. If we do have to come back in the future we hope that we do this with an appropriate process that actually gives the full machinery of government and all the officials the opportunity to have input into the drafting of the legislation and that it gives the public the opportunity to offer their thoughts so that we can actually build a piece of legislation like we do normally. This is why we have the process we have so that we can build good robust long-lasting legislation that is actually fit for purpose and does the job it is meant to do.We are concerned that we are likely to find ourselves having to come back and address this issue again in the future. We also have concerns—I know that others have traversed this—around the fact that this links MPs’ pay to the public sector. The public sector is actually the group of workers whose pay MPs have the most influence over. I can see that the Assistant Speaker is indicating that I am coming close to time so I will take my seat but I look forward to the Committee stage.The ASSISTANT SPEAKER (Lindsay Tisch): You will take your seat yes.Dr PARMJEET PARMAR (National): Thank you for the opportunity to speak on the second reading of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. As we have heard the Minister has addressed various issues raised by the Opposition. The main issue is that this issue cannot be addressed without changing the legislation. The sole criterion that will determine a member of Parliament’s pay increase has been debated and the sole criterion in the bill is the right one which I will address later on.The Remuneration Authority (Members of Parliament Remuneration) Amendment Bill is to amend the Remuneration Authority Act 1977 to require the Remuneration Authority to solely consider public sector wage movements when determining salary increases for members of Parliament.I am taking a short call to say that I am fully supportive of this bill. This bill is about fairness. This bill actually helps the Remuneration Authority so that the salaries of members of Parliament assessed under section 16(2) of the Members of Parliament (Remuneration and Services) Act 2013 can move up in line with those in the public sector. This bill sets the frequency of these adjustments. It also clarifies for the Remuneration Authority if there is no movement in the average earnings in the public sector.There has been criticism from other parties of rushing this through. This bill has been thoroughly thought through. It is time we address this issue and not just talk about it. The criticism from members of the public normally is that the pay increases of members of Parliament are higher than those in the public sector. This bill is to address that issue. As we know this bill is going through all stages today under urgency. This is because there is no justification seen in the Remuneration Authority’s determination of an approximately 3.5 percent increase in the salaries of members of Parliament.There were some comments from the Opposition about some positions in the public sector and even the private sector being very highly paid. Those salaries are decided by the market. Why would people work in a country if they are not rewarded for the value they add to the organisation? We need to be able to recruit and retain good people but this bill is not about their salary; this bill is about addressing the salary increases of members of Parliament only.The Government must ensure that people are listened to and are treated fairly and that is what this bill is about. We must lead by example and that is why I support this bill. I look forward to contributing more on later stages. Thank you.Hon RUTH DYSON (Labour—Port Hills): Once again at peak listening time I get the opportunity to take a call in this second reading of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. I just have to acknowledge the member who has just resumed her seat and say that that was a courageous attempt to defend what has been a series of amazing errors on behalf of the Government. We were told on Monday last week by the Leader of the House: “There will be urgency tomorrow to pass the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill.” So we were all prepared. There was no sign of the bill. Actually there was no sign of the Leader of the House either but that is not always a bad thing. Then we were told on Tuesday that the plans had changed and there would now be urgency on Wednesday to correct the MPs’ pay issue. Wednesday came and went. We were then told it was going to be Thursday. So in a 3-day sitting week we were told that all 3 days would be the day for urgency and then on Thursday we were told it would be this week.We received yesterday—or perhaps even earlier today; yesterday I think—version 7.3 of the Supplementary Order Paper that has now been incorporated into the bill. This is not a well-considered well-thought-through piece of legislation. The original draft risked parliamentarians—Hon Michael Woodhouse: I’m hurt.Hon RUTH DYSON: I do not hold responsible the Minister who is braving it and fronting it in the House. He may not have had the opportunity to read the latest version. I am not sure whether it has been run past him actually. But take the chance to before the third reading. It would be worth it. It would be worth it from our point of view to have this bill which is designed to correct the decision of the Remuneration Authority—and I say “correct” in the broadest terms because it has now become a political exercise—to make sure that MPs do not get a huge pay rise when clearly other people deserve it much more. That is the point of this legislation.The original legislation the Government was going to bring in several times last week ran the risk of increasing the pay of members of Parliament even further than the Remuneration Authority had proposed.Sitting suspended from 6 p.m. to 7.30 p.m.Hon RUTH DYSON: As I was saying prior to the dinner adjournment it is a good opportunity during the second reading of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill to compare the actions that are proposed in this legislation with the portrayal by the Government of why it is taking this action under urgency and actually what is happening in the rest of the world.I certainly support this legislation and all Labour members will be voting for it but I have to say that it is a bit of a mess. We had on three occasions last week actually four counting Monday the Leader of the House saying that this legislation would be introduced under urgency the next day. The Minister Gerry Brownlee Leader of the House said that to us on Monday. Tuesday came and went. It did not happen. On Tuesday he said it would be introduced on Wednesday. Wednesday came and went—no legislation. On Wednesday he said it would be Thursday. Thursday came and went. Members returned home after the House rose—still no legislation.Then today we have the legislation with version 7.3 of the Supplementary Order Paper. This has gone through a lot of changes. Now we are going through all stages under urgency. The Supplementary Order Paper has now been incorporated into the bill. It is another structural change to the legislation that we are considering rather than having that as a Supplementary Order Paper and none of the opportunities of the usual consideration of a select committee.Even though it has taken the Government 6 years to decide that the process of the Remuneration Authority for setting MPs’ wages is not what it likes—it has been in power for 6 long years—now we get under urgency through all stages a bill that has clearly been problematic. The bill that was going to be introduced last week could not be introduced for a very good reason. The errors in it were detected at the last minute—I do not know who detected them. It was possibly the Hon Christopher Finlayson. He seems to be one who actually reads legislation; he is the only one whom I have noticed actually out of the entire Cabinet. Somebody picked up the fact that the proposed legislation ran the risk of actually increasing the salaries of members of Parliament by more than the Remuneration Authority had suggested and clearly that was not a runner.Although we support this legislation I have to say that the Government portraying itself as being fairer is a total nonsense. I do not think it is good practice to put in rushed legislation through all stages under urgency if you are serious about fixing a problem. It certainly could have been done some time ago. We knew that this issue was going to come up. Again prior to Christmas last year there could have been some proper cross-party talks about an alternative mechanism for fixing the salaries of members of Parliament that could be open and transparent and that the public could have some confidence in.At the same time as this legislation is going through and the Government is saying: “We are doing this because we want to be fair.” the Prime Minister and the Minister of Finance are announcing via the media to the public servants of New Zealand that they are going to have their wage increase promised by the Prime Minister and the Minister of Finance during the 2014 election campaign evaporate. Suddenly that promise like many of National’s promises is worth absolutely nothing. Actually the National Party campaigned on a promise of a good increase in the wages of public servants and now it is saying: “No we cannot afford it.” I guess it wants to put some of that money into its made-up surplus as well.The Government has increased the minimum wage by a measly 50c an hour—50c an hour—for the lowest-paid workers in New Zealand and it is trying to portray itself as fair and considerate. Well it is obviously a nonsense. The Government is ripping off New Zealand workers and New Zealand businesses to the tune of—not a little bit—$350 million a year the equivalent of 700 jobs that New Zealand workers and employers are paying in overcharged ACC levies. They do not need to be charged that much. They are paying too much in their ACC levies and that money is being taken out of ACC and put into a surplus. We have not seen that sort of behaviour since the Rt Hon Robert Muldoon. This legislation is being portrayed as: “We want to be fair. We want to make sure that MPs do not get huge salary increases while we are giving tuppence-ha’penny to the people on the minimum wage.” But the truth is that is exactly what this Government is doing.This has been quite a hashed process as I indicated. Last week we had several indications from the Leader of the House about this legislation being introduced under urgency and it has come in only today. We did have over seven versions of the Supplementary Order Paper none of which made sense. There has not been any public debate on what should be the core principles if the Remuneration Authority regime is going to be changed. In my view they are that the setting of any salaries for members of Parliament should not be made by members of Parliament; they should be independent it should be publicly transparent and accountable and it should have fair considerations. Part of that should be the consideration of what other people in our society are getting in terms of their wage remuneration.I remember in the 2009 Budget the first Budget that this National-led Government brought in there were massive tax cuts for the wealthiest people in New Zealand and at the same time there were cuts to home-care services for older New Zealanders. There was also nothing to help the wages of the people on the lowest income the minimum wage workers in New Zealand. Bill English said during that debate in Parliament that if people in New Zealand wanted to earn more money they should work harder. That is what he said in this House—if people wanted to earn more money they should work harder.I know that all members of Parliament work hard and come into this House to do better for their country. It is the highest form of public service but it is by no means the only form of public service. So we should not get paid more than we are worth. Public servants in New Zealand should get paid what they are worth and they are not and people on the minimum wage deserve to have their contribution valued more. Thank you.A party vote was called for on the question That the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill be now read a second time.Ayes 106New Zealand National 59; New Zealand Labour 32; New Zealand First 11; Māori Party 2; ACT New Zealand 1; United Future 1.Noes 14Green Party 14.Bill read a second time.In CommitteeHon MICHAEL WOODHOUSE (Minister for Workplace Relations and Safety): I seek leave for all parts of the bill to be taken as one question.The CHAIRPERSON (Hon Chester Borrows): Leave is sought for that purpose. Is there any objection? There is none.Parts 1 and 2 schedule and clauses 1 and 2Hon 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.Hon ANNETTE KING (Deputy Leader—Labour): We are down to the business end of this bill and it is time for some answers from Minister Woodhouse because in effect he has become the select committee the public the officials the arbiter the judge and the jury on this bill. He started his contribution in the Committee stage by telling us it was a very well-worded bill. We would first of all say: “Minister if that is well-worded it reflects your muddled thinking.” It is a very woolly worded bill. He also said it is grammatically correct. I am sure we have got some people on this side who can go through and see whether we have got the apostrophes in the right places. Maybe Hekia Parata our Minister of Education might like to go through it but maybe she does not need to because the Minister was crowing about how it is grammatically correct as if that was very important. He then said there are some less mathematically erudite people amongst us. I say to the Minister that if he is so mathematically erudite can he please explain the missing “p”. That is what I want you to explain to us Minister. Tell us about the missing “p” in your formula. The first formula you put up had two “p”s in it and now you have one “p”. So for those who do not know what the formula is the formula that we now have is: Sr + Sur = (Sp + Sup × (a ÷ b) – P.Hon Michael Woodhouse: “Pr”.Hon ANNETTE KING:But in the old one there was another “p”. I do not know where your “r” is at the last bit.Hon Michael Woodhouse: It’s in here. On page 3 at line 20.Hon ANNETTE KING: On page 3? I am on page 1 and I am reading out your amendments Minister—your amendments. So I want you to tell the Committee and the listeners—who will be very interested in how mathematically erudite you are—what the missing “p” meant. Why were there two “p”s in the old formula last week and only one “p” this week? I think this is important because the Minister told us how erudite he is that he knows algebra and that he could tell us what it meant. So Minister in a minute get on your feet and tell us about the missing “p” because I thought that was a pretty arrogant sort of a speech—telling people in here that you understood it and they did not. Maybe there are people here who do not. That is not a criticism of them and everybody has a right to question you Minister on what your legislation means.You also said Minister that David Farrar the trusted blogger of the National Party is now at this very moment polling up in Northland to see whether they are going to win or not. When National’s very reliable blogger its pollster put up a blog according to the Minister he got it totally totally wrong. He said he used Statistics New Zealand’s quarterly employment survey. He also said to his surprise it did not save any money. He was talking about the brains trust in the National Cabinet which put this together. He said MPs would have got even larger pay increases using the Prime Minister’s preferred methodology. Under the new law Minister if this law had been in place for the last 6 years or 5 years there would have been an average increase of 3.1. Is that right Minister?Hon Michael Woodhouse: I explained the—Hon ANNETTE KING: Is that right Minister?Hon Michael Woodhouse: The member wasn’t listening.Hon ANNETTE KING: No it does not matter. You are there to answer the questions; my job is to ask them. He cannot answer it. Under the current law the average would be 1.7. That is what David Farrar said. He has not withdrawn it—he has not withdrawn it. I would like the Minister to give David Farrar a little tinkle on the phone and tell him to write a new blog because thousands of New Zealanders read that and laughed. They laughed at a Government that brought in a bill last week and had to put it on the shelf for a week because it had not got something right. But we are not allowed to know what we did not get right in that bill because the Minister has not explained what went wrong last week. So Minister when you get a chance can you stand up and tell us why we were not debating the bill last week? Apart from the missing “p” there has been very little it seems to me that has changed. The member has got some answers he needs to give.I want to also address some of the issues he then diverted into. I thought “Well this must be a wide-ranging debate.” because he then could go back 7 years to talk about the previous Labour Government. He said that we were a Government that spent spent spent. Well can I say to the Minister that you have been a Government that has cut cut cut. You have had tax cuts—not for the ordinary people who are on low wages and who do not get big pay increases but tax cuts for those who already had the most. But worse than that you reduced the Public Service with lots of smoke and mirrors. The way you do it with smoke and mirrors is to say you are reducing the total number. “We are taking the back room to the front office.”Then we go to our financial reviews we go through the financial reviews and we find out that—oh yes—the Government might have reduced some numbers from the back office. They have now been relabelled and they have got new names and we have now got a whole lot of consultants who have taken over from the Public Service. So when you see the actual figures the number of public servants who are now employed by the National Government is slightly higher than it was under a Labour Government. The Minister just made a lot of noise about it.I have to say Minister that you know when a Government is not in control and it is what I call the “couch measure”—the expenditure on couches. You see under a National Government thousands was spent on couches for the bottoms of the Health Funding Authority people and for its former Minister Jenny Shipley. And what do we have now? We have the Ministry of Business Innovation and Employment spending thousands of dollars on couches. That is how the Government is hiding its expenditure—by putting it into fancy fittings. So Minister do not give us a lecture on what happened in the past because we can give you one right back and I think ours is probably a better one.Can I just conclude by saying that the Remuneration Authority was given a job to do. Today it has become the whipping boy—the whipping boys and girls—for the Minister because it did the job as it was required to under the law. It made a determination. We do not like the determination. We do not want its determination but it made a determination. Then the Minister said that by the Remuneration Authority’s best analysis it gave pay increases to chief executive officers. And what are we complaining about? Well it did the same for members of Parliament and we are complaining.Why not fetter the Remuneration Authority’s ability to give big pay increases to chief executive officers? That would be fair. This bill is to make it fair for members of Parliament when it comes to their remuneration. It should be fair. We should not be getting greater pay increases than other New Zealanders but neither should chief executive officers. That part is not being addressed by this Government. It is running away and running scared from it. So I say we will support this bill but I believe and I predict that the Minister will be back in a year’s time—Hon Ruth Dyson: Doing a Simon Bridges.Hon ANNETTE KING: —yes doing a Mr Bridges—correcting yet another mistake in rushed legislation that has not had the scrutiny it ought to have. It could have achieved what the Government wanted if it had not spent 5 years talking about it. The Government could have brought in legislation that went to a select committee but it has to pass this bill so it can stop members getting the pay increases that were given by the Remuneration Authority. So perhaps better planning and being a bit more mathematically erudite in terms of working out your timetable in Parliament might work.METIRIA TUREI (Co-Leader—Green): I just want to ask a couple of questions to get some clarification from the Minister in the chair Michael Woodhouse before I talk about the three Supplementary Order Papers on the Table under my name. The first thing is I think he was saying earlier that under National’s watch there has been no increase greater than 2 percent in MPs’ pay except for this most recent one. Am I right Mr Woodhouse that that was your comment? Because that is certainly not what the Parliamentary Library has said. It has described the percentage increases in MPs’ pay under the current regime as being from 2010-11 2.9 percent; 2011-12 5.2 percent; 2 percent in 2012-13; and 2.2 percent in 2013-14.There have been significant increases in MPs’ pay and they are percentage increases which means of course that compared with those on lower incomes who are getting a similarincrease—and it is very rare that they would—MPs’ pay is still going up considerably more in cash terms.That is where there is a significant failure in this bill that the Green Party intends to remedy with our Supplementary Order Paper 57 because this bill still applies a percentage increase. So if there is a 1.5 percentincrease or whatever it is arising out of the quarterly employment survey calculation and that is applied to MPs we still get more cash in our pockets than most of the rest of the public sector. That is the problem. Our wages will continue to grow and the gap between MPs and the rest of the population will continue to grow when you use a percentage formula because percentage formulas when you are talking about pay increases are very blunt tools. Percentage increases sound good because everyone is in theory getting the same but in fact when you have an increasingly divided society it means that those who get rich get richer faster and those at the bottom stay stuck.The Green Party solution to this which we announced in March last year—so it has been available for the Government to consider for some time—is to attach MPs’ pay not to percentage increases in the median wage but to nominal increases. So if the median wage goes up by 50 bucks a year MPs’ wages go up by 50 bucks a year. If it goes up by 200 bucks a year MPs’ wages go up by 200 bucks a year. Under our Supplementary Order Paper if it goes down if people lose forward momentum in their wages and in the median wage then so do MPs. Some of you will have seen the calculations that we sent out. In at least one of the years 2010-11 if our proposal was in place and had been in place since 2007 then in 2010-11 MPs’ pay would have gone down because the nominal median wage went down.We think it is so important to attach it to real income and the real lives of ordinary New Zealanders so that we are directly connected to their lived experience of their place in the economy. For MPs it might not be a problem. Losing 500 bucks a year in our pay is not necessarily going to mean that we are going to have problems buying milk and bread right? Because we all get paid pretty bloody well in this place. But for those on low wages and particularly on the median wage and wages lower than that it does make a difference. Every dollar makes a difference and we are shielded from that.We make the decisions about the dollars that they get and we are shielded from the reality of that. Hell I cannot even get the Prime Minister to come to a decile 1 school to meet with the kids there who do not have lunch every day. If we are that separated from the community we are supposed to be here to represent then of course we are going to make decisions that are not in its best interests but are instead in ours—which is exactly what the Minister’s bill as he has put it forward is doing. It makes it look like he is doing something useful; it is essentially the maintenance of the status quo. It locks in increases in MPs’ pay on a percentage basis and thereby increases the inequity between MPs and the community we are here to represent. We can change that at virtually no cost to ourselves. I agree with whoever it was on the National side who said we are not here for the money. Right? I totally agree with that. If that is the case then why are we so concerned to make sure we lock in pay increases for ourselves? Nobody else gets anything like that kind of certainty in their pay including the staff who work in this place. Nobody gets that level of certainty. Why can we not allow ourselves to be connected in this way to the rest of the community?I strongly urge members to look at our amendment Supplementary Order Paper 57. I just want to acknowledge the staff from the Clerk’s Office who have managed to prepare these three Supplementary Order Papers for the House in a very short period of time. Have a look at the calculation there—yes it uses algebra too; no I do not pretend to understand it. I am very grateful for those who do and are able to interpret our intentions into this technical bill. It does mean that we would have a direct pay-relationship with the majority of the community. It would be in our best interests then to improve the circumstances of everybody in our community not just the wealthy few. That is our responsibility. It is our responsibility as the Government on that side of the House and it is our responsibility as a Parliament to always be making decisions in the best interests of the majority of New Zealanders and particularly in the economic interests of the most vulnerable. This bill gives us a chance to do that in a very demonstrable physical way where we are affected—MPs would be affected—by our poor decisions that leave poorer New Zealanders worse off. That would be a true connection that we could make with our community. So I urge members to support this Supplementary Order Paper. Thank you.CHRIS HIPKINS (Labour—Rimutaka): I am very happy to take a call during the Committee stage of this bill. I listened very carefully to the contribution of the Minister Michael Woodhouse. I thought he made some interesting points and I thank him for the clarifications that he made during that speech at the beginning of this Committee stage. I would of course point out to him that questioning the numeracy skills of other members in a bill that he had to withdraw and then reintroduce because the numeracy in it was wrong was probably not such a good approach to opening the debate. However I do accept what the Government is trying to achieve. I think it would be wrong for us to come here and say that what the Government is trying to achieve is wrong. In fact it is what we all are wanting to achieve which is actually to bring MPs’ pay increases in line with everybody else’s.There is of course significant heat in the debate around the best way to do that. Unfortunately this is not the best forum in which to tease that out because we simply do not have the time or access to the expertise in order to be able to weigh up and assess the various options before us so that we actually get a solution that works. I for one would very much like to hear from the Remuneration Authority the people who have to actually implement this bill because what we are doing is constructing a new set of criteria that they are going to have to take away and figure out how they are going to interpret and how they are going to implement. But we are not giving them the opportunity to come to us and say that this is what this will actually mean in regard to their interpretation of the legislation that we are now passing.I do not think that is a good thing because I think it could mean that we will get something at the end of this year—or in a couple of months once the authority has issued a new determination—that is not what we are anticipating in this bill. It is also quite conceivable that in a year or two’s time the authority will be making determinations that we did not envisage as we passed this legislation. The only way that we can know those things is by actually getting the authority to come in and explain to us how it will interpret this. Unfortunately there is no opportunity for it to do so because this is being debated under urgency.I think it is very concerning that the Government is dismissing what are quite legitimate concerns being raised both in Parliament and outside of Parliament about the linking of this to the average of public sector pay. It is based on full-time equivalence but there are some issues within that. Let us take for example the restructuring within the Public Service. If you take a bunch of Government departments and amalgamate them together what tends to happen is that the number of managers and people on higher salaries increases because people who are going into managing a Government department of several thousand employees typically want to be paid more than if they were going in to manage a smaller Government department with a couple of hundred employees. We have seen significant reorganisation in the public sector over the last 6 or 7 years. In fact there was a reorganisation under the previous Government as well and in almost all of the instances where Government departments were amalgamated together the number of employees earning six-figure salaries significantly increased.So what this means by linking to the average overall is that we are not taking into account the fact that management salaries can increase significantly while the salaries of those on modest incomes can stay the same or in real terms in fact can even go backwards. So we could be getting a pay rise while the vast bulk of people working in the public sector are actually staying the same or going backwards because the management salaries at the top end are going up not just because they are getting big pay rises but because the overall composition of the way the Public Service is structured is changing and there are more managerial positions than there were previously because Government departments are getting bigger as a result of what has been in some cases I think some quite useful rationalisation.There has of course been management creep as well. The number of management roles stepping up over for example that $100000 a year threshold has actually increased quite significantly over the last 4 or 5 years despite the wage constraint within the Public Service. What that means of course is that those who are on modest incomes—the vast bulk of people—are either staying relatively stagnant or going backwards. The pay rises in 2009-10 that the Minister mentioned in his contribution included some pay increases for teachers nurses people working in other health professions the police—Hon Michael Woodhouse: Oh that’s all right then—runaway inflation’s OK.CHRIS HIPKINS: So is the Minister saying that he thinks there is not a single teacher in the country who should be paid more?Hon Michael Woodhouse: More than what? More than they are?CHRIS HIPKINS: No no the question—it is quite a simple question. Are teachers paid sufficiently or should they be paid more? There is no answer from the Government. The Government thinks that every teacher and nurse and police person—policeman or woman—is paid perfectly sufficiently and should get no pay rise and I think that is reflective of the attitude of the current Government. It has no answer—no answer. Dead silence when asked whether teachers or nurses or doctors or police should be paid any more.Ron Mark: How much are they getting?CHRIS HIPKINS: Absolutely no answer whatsoever. And that is a very good question that Ron Mark has asked: how much are they actually going to get? They have got pay rounds coming on this year and of course we know that the Government wants to dampen down expectations around that. Having gone with next to no pay rises for the last 4 or 5 years there are some expectations that—in fact Bill English promised them at the last election National promised at the last election to raise average wages significantly—the Government is going to deliver on that. Silly old public for believing what National had to say.Of course I do want to also note that two of those professions within the public sector—two of the largest of those professions teachers and nurses—are dominated by women. Would we in fact be that willing to suppress their pay if they were male-dominated professions? Would they be doing better? We know that overall men tend to do better and women’s pay has been suppressed and that has certainly been the case within the public sector.I want to just turn briefly to the Supplementary Order Papers introduced by the Green Party before I finish this particular contribution. I have had a chance to skim the Supplementary Order Papers that the Greens sent through. We did not get them until this afternoon and we did not get the final versions until just recently. That is not the Green Party’s fault; that is the Government’s fault for introducing this legislation late and only giving clarity around what we were actually going to be passing quite late. So we have not had the chance to go through those Supplementary Order Papers to tease them out and to be able to test them in the way that we would like to if we were going to give our support to them.I absolutely accept that there is a very real possibility that the Supplementary Order Papers that the Green Party is putting forward may be much better than the bill that we are debating but we simply do not have the opportunity given this urgency to go through and tease that out and test that properly and we would want to do that before we are willing to lend our support to them. So it is not a reflection of the fact that we do not agree necessarily with what has been drafted by the Greens; it is simply that we do not have the opportunity to go through it and test it properly. I absolutely appreciate the goodwill that the Green Party is showing in trying to come up with a solution that might actually deliver a better outcome than what the Government is proposing with this legislation.So overall I think it is important when we take away all the heat that we get back to the principle of what we are debating here: MPs’ pay should not be out of whack with the pay of every other New Zealander. Every New Zealander has had to tighten their belt over the last—well every New Zealander except for those on the highest incomes who generally have done pretty well over the past 4 or 5 years. But the vast bulk of working New Zealanders have had to tighten their belts over the last 4 or 5 years because of the economic climate and because their salaries have not been increasing in the way that they would hope.But I actually think that there is an expectation amongst New Zealanders now that National was to be believed when it promised significant salary and wage increases at the last election because it was in the National Party manifesto. I am happy to go and print it off for those members on the other side who did not read their own manifesto. New Zealanders expect to have some pay increases. The Government suppressing public sector wages for valuable public sector jobs—and we are not talking just about people who sit in offices in Wellington but we are talking about front-line people like teachers nurses doctors police and people who work in the Defence Force; those roles that we think are absolutely front-line services—means that those people are going to suffer if the Government continues to suppress wages in the way that it does.This should be a high-wage economy not a low-wage economy. The current Government’s aspiration seems to be that it is quite happy for it to be a low-wage economy. I would love to see MPs’ salaries going up in a few years’ time because everybody else in New Zealand is doing so well. That should be the aspiration of the current Government. It is not the aspiration of this Government.JAMES SHAW (Green): I would like to start by just responding to one of the comments from Mr Hipkins and thank you very much for your acknowledgment. You said that the Labour Party was not going to be supporting our Supplementary Order Papers because you had not had time to test and tease out the Supplementary Order Papers but of course you have not had time to test out the primary legislation either. So I say take a punt because it is not going to be any different from voting for the legislation as it stands. Nobody really knows how this is going to turn out so you might as well take a chance on us as they say. I think that I heard the Minister in his earlier comments talking about the reason for tying the MP remuneration to the Public Service. I believe I understood you correctly when you said that one of the reasons to do that is to make sure that a future Labour Government or a Labour-led Government would have the incentive to hold down public sector pay because it would be so ashamed of the consequences of having its own pay—Hon Michael Woodhouse: No that’s not what I said.JAMES SHAW: That is what I understood you to say before and I think that using the public outrage at MP pay increases to score a political manoeuvre to restrict public sector pay increases is kind of sneaky to tell you the truth. I would also just say that that could actually backfire. So what you are relying on is the fear of the opprobrium that future members of Parliament could attract in terms of their own pay increases to hold down public sector increases but I have a suspicion that the reverse could actually happen. So yes there would be some kind of reticence about allowing public sector pay to increase too much in case that means that MP pay goes up too much and therefore you get a public backlash—I can see that rather unfortunate logic there—but in time with the economic incentive of doing that to public sector pay you are actually saying to future MPs: “Increase public sector pay and your pay goes up.” Right? That is the actual economic incentive that you are saying to future Governments. So there is actually an economic incentive for MPs to increase public sector pay enormously. That would be quite convenient actually for MPs at an economic level at least.This is one of the reasons why we think that MP remuneration should not be tied purely to the public sector but it should be tied to that of the population as a whole and why it should be tied to the median income as we have laid out in our Supplementary Order Paper 57. I would like to get a response to that in the next round. The other thing is that I just wanted to say that we do have an opportunity given that just about everybody except for those on the Government benches has spoken about what a poor process this is—and this is not exactly lawmaking at its finest I think you will agree Mr Chair—that the third Supplementary Order Paper that we have got—The CHAIRPERSON (Hon Chester Borrows): Order! Please be seated. I have given the member quite a bit of latitude when he has referred to “your” but asking me whether I would agree with what he is saying—he cannot do that and bring me into the debate. Please carry on.JAMES SHAW: I beg your pardon Mr Chair. So we are looking for support for the third Supplementary Order Paper Supplementary Order Paper 58 which would ensure that members of Parliament did not receive the most recent round of pay increase as outlined by the Remuneration Authority but would give us time to actually go through a proper process with this legislation so that we can have a select committee process so that we can hear from experts so that we can hear from the Remuneration Authority and so that we can actually do a decent job of lawmaking around this. So if we cannot get support for our first Supplementary Order Paper which would tie MP remuneration to the interests of the population as a whole and if we cannot get support for the second Supplementary Order Paper which would use a better measure of public sector pay than the one that has been proposed then perhaps we could have support for our third Supplementary Order Paper the principle of which is to not take the pay increase that we were given and to give ourselves the time to do this properly.IAIN LEES-GALLOWAY (Labour—Palmerston North): I have learnt something interesting during the course of this debate and over the last few days and that is that according to the Minister for Workplace Relations and Safety pay rises in the public sector are a bad thing.Dr Megan Woods: What?IAIN LEES-GALLOWAY: Pay rises in the public sector are a bad thing according to Minister Woodhouse. This came up when the National Party’s pet blogger David Farrar started blogging around the issues of connecting MPs’ pay to public sector salaries. In particular he identified that there were periods of time in recent history when MPs’ pay rises would have been higher had they been tagged to the pay increases the public sector got. The Minister turned round and said that that was all Labour’s fault—that that was the result of a profligate Labour Government that seemed to believe in this bizarre notion that nurses and doctors and teachers and the Defence Force—Sue Moroney: And the police.IAIN LEES-GALLOWAY: —and the police force deserve a pay rise and that it is somehow a bad idea that these people should be paid a reasonable wage for the work they do. Of course one of the things that is important to note about a lot of those professions is they are quite heavily unionised which means that these are people who have got—[Interruption]—I do not know whether or not that means that the National Party thinks they are bad people but it does mean they have got the strength of collective bargaining. So if some of those groups did well in their bargaining—Paul Foster-Bell: Union thugs. Hired goons and the union thugs.IAIN LEES-GALLOWAY: So teachers according to Paul Foster-Bell are union thugs. The police are union thugs. Firefighters are union thugs. Nurses are union thugs. That is the language we get from the National Party—even the quiet little church mouse Paul Foster-Bell calls nurses “union thugs”. There you have it ladies and gentlemen. That is the approach we get from the National Party. The fact that these unionised workforces were able to negotiate for themselves good pay rises and the fact that the National Party thinks that that was a bad thing give us I think some insight into some of the employment relations legislation changes we have seen over the last few years deliberately designed to suppress wages by curtailing the influence and the bargaining power of the unions. So that I think tells us a lot about what the National Party thinks about the public sector getting pay rises.Hon Paula Bennett: Give it a bit more—you haven’t quite exaggerated enough. Take it to another level. Take your exaggeration to another level.IAIN LEES-GALLOWAY: Paula I simply quoted your own member back to you. I cannot exaggerate his words. I cannot exaggerate his words. He told me what he thought. He told me what he thought and I repeated those words back to him. I would hardly call that ramping it up.This bill does seek to do a good thing. The problem is that the mechanism it uses is poor and the process that has been used to bring this legislation before the House is extremely poor. This is an issue that has been around for a long time. As soon as John Key became the Prime Minister one of the first things I remember him talking about was the issue of MPs’ pay rises and them potentially being disproportionate when compared with the pay increases he expected ordinary working people—people who depend on work to make a living—would actually be able to get in New Zealand. So he has had 6 years—getting on 7 years—to do something about this issue.The latest round of pay increases obviously did not do very well in the polling. When David Farrar went out there and did the polling when they ran the focus groups over the weekend clearly there was a significant backlash from the public around the latest pay increase and so they felt they had to do something. So after the Sunday afternoon focus group quickly they ran off to the officials and got a draft bill organised and it was quickly introduced to the House. As we know that draft bill was then sort of left on the table for a while as all the issues with it were sorted out. The National Party went back to the officials and tried to figure it out. It tried to figure out how to do this properly without a proper process where we actually hear from as Chris Hipkins said the Remuneration Authority.I would actually genuinely like to know whether the Minister has consulted with the Remuneration Authority and for that matter who else the Minister has consulted with about this. What outside advice has the Minister actually sought in order to get this legislation as right as possible given that it will not go to a select committee? We are not giving the officials the proper length of time to actually closely examine this legislation and make sure it is fit for purpose. The public have no opportunity to come and give us their view on this legislation. Organisations like the Remuneration Authority have no opportunity to come to a select committee and give us their views to make sure this legislation is fit for purpose. We have had experience in this House under this Government of rushed legislation in the past and we have had the experience of having to come back to the House sort it out and make it right. There are a number of ways in which members in Parliament tonight have questioned the mechanism that is being used.I would like to turn to the Green Party’s Supplementary Order Papers. As Chris Hipkins has outlined because the legislation in its final form arrived late the Supplementary Order Papers then came after that and we really have not had time to consider them. I take James Shaw’s sort of wheel of fortune approach. I appreciate his view that we are taking a bit of a gamble on the Government’s legislation—why not take a gamble on the Greens? The simple fact is that the Government does have the machinery of Government behind it. It has the best opportunity to get this right.Actually we in the Labour Party were looking at some similar Supplementary Order Papers particularly around the labour cost index. I think we were going in the same direction as the Greens were. We decided we did not want to muddle the process any more than it already was and we were going to have to rely on the Government and its superb officials who have been put under a lot of pressure to try to get this legislation right. That is the benefit of being in Government—you have the whole operation behind you to get these things right. We do not have the same level of support in the Opposition. So we will take a gamble on the Government’s legislation. We suspect though as I am sure the Green members suspect that although this might be a step in the right direction we are going to be back looking at this again some time in the near future.The fact is that the reason there is so much discontent out in the general public about what MPs get paid is that essentially people who work for a living have been under a pay freeze for the last 6 years. As costs have gone up—many of those costs driven by decisions made by this Government when it cut taxes for the extremely wealthy put GST up put the petrol tax up and put ACC levies up so it could achieve a phoney surplus. All of those things are driving costs up for working people; meanwhile they are not seeing their wages go up at the same rate. That is where the distress about MPs’ pay actually comes from. So if this Government wanted to do something about the things that are driving people’s concerns about MPs’ pay it would actually have a laser-like focus on ensuring that people who work for a living and who are on median wages actually saw some progress actually felt as though they were getting ahead in life and actually felt as though their wages and salaries were sufficient to make ends meet to pay the bills to put a roof over their heads to feed their children and to try to get ahead in life. If the Government had a focus on those things we probably would not have to be here debating this legislation tonight.I agree that actually tagging our wages to what the general working population gets would be a good incentive for us to have our focus in the right place. I think we will be back having a look at mechanisms like that sometime in the future. This is a step in the right direction as a response to the outrage cried out by the New Zealand public but it is legislation by focus group. It is rushed and it is muddled and my fear is that it is going to be just another mistake on this path and that we are going to be back trying to fix it up again in the future.Hon MICHAEL WOODHOUSE (Minister for Workplace Relations and Safety): It is not my normal practice to challenge some of the outrageous things that our friends on the other side say—Hon Members: But.Hon MICHAEL WOODHOUSE: —but I do feel it is important to put some of the more outrageous comments in context. I can actually solve a mystery. I now know why the media thought that a technical problem with the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill was going to result in MPs’ salaries going up more than was expected and that is because Iain Lees-Galloway told them. He admitted as much in his second reading speech that why the bill was delayed was because the salaries would have inadvertently gone up. Well he made that up. He madeup a lot of his intervention. He talked about the National Government thinking that pay rises in the public sector are a bad thing that I as Minister have no time or inclination for unions. Nothing could be further from the truth. As the chief executive officer of Mercy Hospital I worked very closely with the New Zealand Nurses Organisation; the Amalgamated Engineering Printing and Manufacturing Union; and the Service and Food Workers Union and I had a very good working relationship with them. They are an important part of the employment relations landscape.Mr Shaw twisted words as well which I need to clarify—very very important. He has suggested that what I said was that this bill when passed would provide an economic incentive for keeping a lid on public sector wages. That is not what I said. What I said was that it would shine a second light on profligate spending increases by irresponsible Governments and I stand by those comments.Dr Megan Woods: What does that mean?Hon MICHAEL WOODHOUSE: It means stop spending so much because it is a proper discipline for Governments to have.Hon Member: How much is too much?Hon MICHAEL WOODHOUSE: How much? That is a very good question because that was the question I asked Mr Hipkins when he asked me whether public sector employees should get more. More than what? More than they are currently getting? More than inflation? More than the private sector? More than MPs? More than 4 percent? It was a rhetorical and stupid question. The one thing I will agree with Mr Hipkins on is this: we do want we all want a high-wage economy but one cannot legislate for a high-wage economy. One creates the climate to enable businesses to have the confidence to invest grow employ upskill and pay more and then gets out of the way and leaves businesses to get on with it and the public sector which I have to say is responsible for the same fiscal disciplines that the private sector is. We know that the public have had to tighten their belts through straitened times and they expect the Government to do the same.Now to the mystery of the missing “p” and Mrs King’s challenge. It is the one technical question I have been asked in the Committee stage and of course that is the purpose of the Committee of the whole House. The first bill when drafted had two “p”s in the equation in new section 18B set out in clause 7. One “p” referred to “personal benefit determinations in the previous year” and the other “p” referred to “personal benefit determinations in the current year”. Subtract one from the other effectively in amongst the algebraic equation. There was an issue in the transition because of calculations in 1 year that were not made in the other. So two “p”s became one and that is defined as the sum of the parts. There is no missing “p”. In the second bill one “p” does the work of two and I think that is a great metaphor for this Government. Productivity is up in the “p” sector. One “p” is doing the work of two under this Government and I think that is a really good metaphor for this bill.SUE MORONEY (Labour): That last speech was from the Minister the Hon Michael Woodhouse who lives just down the road from Wendy’s which has opened up in Dunedin using zero-hour contracts and he is all good with that. That comes from the Minister who is actually allowing aiding and abetting zero-hour contracts.I want to speak about the amendments to the Remuneration Authority Act 1977 because that Act has been a longstanding convention as to how we set MPs’ pays in this Parliament. The idea that we have an independent authority that actually undertakes an analysis of similar occupations and similar work that is done in New Zealand compares it with what MPs do and then makes a determination based on that is actually quite an interesting notion. In tearing that down the question that I want to ask the Minister is whether he is also attacking the Court of Appeal which has asked actually that a very similar process to this be undertaken to determine equal pay for rest home workers. In fact the Court of Appeal has asked that in the Kristine Bartlett case—where she has contested very bravely yes with her union the Service and Food Workers Union the idea that rest home workers are not being paid fairly—the parties come together and actually run through a process that is pretty similar to what the Remuneration Authority currently does; that is to look at similar work that has been done by male-dominated occupations and to see whether in fact the very low pay that is paid to rest home workers is the pay that it should be.So the question I have to ask the Minister is that in repealing and changing the process that the Remuneration Authority has been through is he also preparing to amend the Equal Pay Act 1972 so that rest home workers cannot get their equal pay issues attended to in the Court of Appeal? I seriously want the Minister for Workplace Relations and Safety to rise in terms of this debate and answer that question because there are tens of thousands of New Zealand women workers in low-paid industries who are going to be dependent on the outcome of that particular process. I want to know whether this is actually the stalking horse for making that change to the Equal Pay Act 1972. The Remuneration Authority and its processes are very similar to the sorts of processes that the Court of Appeal has asked the parties to go through in that case.I really want to turn this debate a little bit on its head. Yes absolutely I agree and we in the Labour Party agree that MPs’ pays should not be disproportionate to the pay of people in New Zealand generally. That is something that we strongly believe in because we believe in more equality and we in the Labour Party do not want growing inequality. So really what we should be thinking about if we want a high-pay high-skills economy is whether we should be actually tossing out these sorts of processes or should we be saying that perhaps those processes should be open to other groups of workers other groups of female-dominated occupational workers because that in fact is what the Court of Appeal is asking for in that event. I hope that this bill is not the forerunner of the Government cheating New Zealand women workers out of their day in court and out of actually having a fair process for setting their wages and conditions.I also want to raise the issue about the gender impact of the insinuation that the Minister has put before the House that this bill is a way of dampening down Public Service pay expectations because we know that some of the very big contracts up for negotiation this year involve tens of thousands of female workers of women workers—teachers and nurses. If this is the stalking horse for the Government dampening down the expectations of those workers who let us face it through the years of this National Government and the global financial crisis have sacrificed wage increases for the good of the country—they have sacrificed wage increases for the good of the country and it is their timenow.DAVID CLENDON (Green): I am pleased to be able to speak to this very bad piece of drafted legislation. It is a very disingenuous bill I should say. I think my favourite part of it is in new section 18B(2) which is to be inserted in the Remuneration Authority Act by clause 7. We get this wonderful formula that purports to be an objective formula intended to produce a transparent measurable non-arbitrary outcome. I had the privilege and benefit of studying economics as part of my Master’s programme at Lincoln University. Part of the discovery for me in terms of discovering economics was the extent to which economists rely on what are apparently very complex and convoluted formulae—and indeed they are—but inevitably they rest on a very dodgy basic assumption that is almost inevitably flawed. I think of that when I see this because this formula purports to produce a way of establishing income changes for MPs that is not arbitrary and that is transparent. What it endeavours to disguise is the political opportunism that lies beneath this bill.I have seldom seen a piece of legislation that was such a pure expression of political opportunism. The PM and his cohort saw an opportunity to capture the public outcry—the annual public outcry—following the announcement from the Remuneration Authority that MPs were going to get another pay rise.This cannot have been news to this Government that the public has been unhappy about the way in which MPs are awarded annual pay rises. The Green Party has been ringing this bell for many years and highlighting the importance the necessity of finding a non-arbitrary means a fair and reasonable means of establishing what is appropriate remuneration for MPs. We are absolutely in favour of linking it to something in the real world. The point about this legislation is that it has chosen something more or less at random—in this case Public Service increases or not. That is a defensible proposition. There are many more other defensible propositions and Mr Hipkins touched on this in his contribution earlier. The Greens have put forward our ideas about what we could link it to. I know that the Public Service Association and the public sector unions have offered a solution—something we could link to. I am sure that if the Remuneration Authority itself had the opportunity to speak to a select committee it actually might come up with some pretty sensible ideas about how we could do something better than simply sending the authority away to come up with a number every year having the public outcry and then getting on with business as usual.This is an appalling abuse of parliamentary process. There is no urgency underlying this legislation. It is not news that the public gets unhappy every year. It is not news that the way in which we set MPs’ salary conditions benefits and the like has been a debatable question and a point that has been contested for a very long time. I defy anybody to say that there is genuine urgency to resolve this matter here today.The point has been made several times that we thought we were having this debate a week ago but then with no notice the urgency motion that we expected on I think Wednesday afternoon simply did not eventuate with no information coming to at least two of the parties in this House representing about 20 percent of its membership. We actually did not know what was going to be going on that afternoon because the Leader of the House did not deign to tell us what was going to be going on reflecting the utter confusion of this Government which had this bright idea that it would ride this populist wave by coming out and speaking against the proposed increase in MPs’ salaries but then it suddenly realised that actually it is not as simple as that. You need some smart thinking. You need some information some analysis. You need input from expert authorities organisations and interest groups—it is called a select committee process. It is called a sensible deliberate sober addressing of a problem to come to the best solution.I have to say I have been surprised to hear from our other Opposition parties today a very good critique of this bill. There have been some very accurate and clear critiques of it highlighting its many flaws. Again one speaker—a Labour speaker I think—highlighted the fact that inevitably we will get unexpected outcomes and we will get perverse outcomes because we do not really know what we are signing up for tonight. The point has been made that some people actually trust that the Government has got it near enough right to merit having this bill supported today. We do not think it has got it anywhere near right. We think that given a proper parliamentary process we could probably come to a robust position that would actually endure over time and that would be fit for purpose none of which you could say about this bill.Any legislation that is drafted in a great rush based on an enthusiasm to appeal to populism to the public mood and to have a crack at MPs—and fairly so—is almost inevitably doomed to fail. What is the urgency around this? I would be interested to hear from the Minister what the reason for urgency on this is—the real underlying reason. Yes there was public outcry as there was last year and the year before that and the year before that. Why was a bill to change the process to change the system not brought to the House 3 years ago or 5 years ago by his Government? Why did it wait until there was an outcry—a big media storm about it—and suddenly decide to resort to this very shabby process to make law in the course of 5 or 6 hours that inevitably will deliver suboptimal outcomes?This is a very poor way to make law. The content is weak. It has obviously been thrown together in great haste. The process is appalling. It is anti-democratic and we are pleased and proud to be opposing this abuse of parliamentary time.Hon RUTH DYSON (Labour—Port Hills): I want to make just a brief contribution in the Committee stage of this legislation. The first point I want to make is to just express my disappointment in the Minister given that this is an issue that has had extreme public interest and actually he has got an overwhelming majority of members of Parliament supporting it. I would have thought that it would be a better approach to the Committee stage of the House during what is clearly rushed legislation—it is being put through under urgency; we have not had any consultation—to answer questions seriously and to listen to the comments particularly members like the co-leader of the Green Party Metiria Turei. She has three Supplementary Order Papers in her name. She has put up some arguments that should be considered. This is the only opportunity we have got. Instead the Minister has really made arrogance an art form tonight. There are better ways of doing that sometimes. I know that the Minister likes that approach but I do not think that it is always the best way. So I just caution him that at times like this when there is a lot of public interest—not just in the outcome but in the process as well—it is worth putting a little more effort in and trying to get it right.The second point I want to make is to reinforce the concern that Iain Lees-Galloway expressed in his earlier contribution—that is the dismissal by the Government of the use of median wage and its insistence on looking at average wage. It distorts what is happening in the real world. It undermines exactly what should be the purpose of this legislation which is to provide a fair basis for relativity when looking at the increase in wages for members of Parliament compared with other people. By using the average it always looks at what is often the result of an increasing number of people on much higher wages rather than what is happening to people on lower wages.The final point that I want to make is just to express my shock at a National Party member tonight who referred to public servants as “union thugs”—people like firefighters teachers nurses doctors a lot of caregivers in public hospitals and some really good people actually who we have argued during this debate should be getting a fair increase in their wages after having sat on the side line and waited for the last 6 years under a National Government. It is quite an inappropriate term. It was quite a surprising term. For somebody who stood in Wellington Central seeking votes it was quite a stupid thing to say actually. But I just want to express my sorrow that that sort of terminology is used in a debate that is actually not heated. This has been a pretty calm debate. It has been one where lots of different perspectives could have been listened to respectfully and could have been considered and answered and they were not.My concluding comment is to really tease the Minister for winding us up about saying how bad the seven first drafts of this legislation were. He was accusing us of making that up. It was his own blogger and pollster David Farrar who alerted the public to the fact—not the insinuation the fact—that the first seven versions of this legislation were all considered and thrown out by somebody in higher circles than the Minister. It was probably the Hon Chris Finlayson I suspect who is regarded as being the single member of Cabinet who actually reads his papers and draft legislation. All those seven versions were thrown out. It is widely known that the reason for them being thrown out was that instead of making sure that members of Parliament got a lower salary increase what they actually risked doing was giving members of Parliament a bigger salary increase. I find that point amusing. I think the Minister has been suitably embarrassed by it but he should not resort to name-calling. He should not accuse other members of Parliament of making things up which is what he did. We all know that it is true. He may not have ever read that earlier legislation and that is why perhaps he is remaining in ignorant bliss.I just return to the first point I made. This is a bill we support. It could have been proceeded with tonight with a little more dignity and I regret it was not.JAMES SHAW (Green): I would just like to respond to some of the comments of the Minister earlier. I think he may have misunderstood me so I just want to clarify. I think it is an important point for the passage of the bill. We were talking about the incentives that are contained in tying MPs’ remuneration to that of the public sector versus the wider public. The Minister for Workplace Relations and Safety clarified that his comments were that in tying MPs’ remuneration to the public sector it would shine a light on profligate Government spending in the future. I understand that. I just want to talk about how that works. What are the mechanics of shining a light on profligate Government spending? What that is saying is that if the Government allows public sector pay to increase therefore MPs’ pay will also increase and there will be a public backlash against members of Parliament for getting increased pay. Therefore there is an incentive for MPs to hold down public sector pay. That is how it works. It is relying on MPs being afraid of a public backlash so I understand what the Minister is saying when he says that.What I am saying is that that is one incentive that is pulling in one direction but that there is also another incentive pulling in the other direction which is an economic incentive. Tying MPs’ remuneration to public sector pay gives members of Parliament the economic incentive to increase public sector pay because when their pay increases so does that of members of Parliament. There are two incentives and they are pulling in different directions. I was suggesting to the Minister that if he is relying on using public outrage over MPs’ remuneration to hold down public sector pay which is I think an outrageous and very sneaky move given the current climate that may not actually work for the Minister because MPs also have another incentive in the other direction which is to increase public sector wages. They may choose to allow public sector wages to increase and just wear the outrage that we get from the public for allowing our own pay to increase along with it.There are a couple of things that I want to say about that. The primary one is that New Zealanders as I understand it do not want us to pass this bill in order to hold down the pay of teachers nurses doctors civil servants police officers and firefighters. They want us to hold down our pay. The point of the bill is to hold down MPs’ remuneration not that of the public sector and using the public outrage over MPs’ pay to hold down public sector pay is I think itself an outrageous move. The Minister’s approach using the fear of the public backlash is one incentive pulling in one direction and there is another one at play. By the Minister’s own admission shining a light on profligate Government spending may not actually work as far as the Minister is concerned. The bill is flawed in so many ways but part of the Minister’s own reasoning as I understand it is to use this bill to hold down other people’s pay other than our own pay. In fact according to his own logic it may not work because of the law of economic incentives which is that tying MPs’ remuneration to that of the public sector gives MPs the economic incentive to allow public sector pay to increase.I think public sector pay should increase. I think that would be a good thing right? You are going to have a Government at some point that does think that is a good thing—sometime soon we hope. But the Minister’s own logic which is that this is an opportunity to hold down public pay may not work according to his own plans. Thank you.RON MARK (NZ First): I rise to take a brief call basically just to get a few of my thoughts on the record. I have sat here quietly and listened to this debate as it has progressed and a couple of statements have stood out really glaringly to me. I think New Zealand First has made its view very clear. We support this legislation. We are not unhappy with the moves to curb the level of increase that members of Parliament have been accorded by the Remuneration Authority. It does not go far enough. It does not focus on the top end of the Civil Service—those chief executives and those people such as the Commissioner of Police who the Minister for Workplace Relations and Safety says thoroughly deserve their $300000 or $400000 a year that they get paid. We do not accept that.Actually if I was to take the Minister’s own words that it serves as an opportunity to shine a light on public expenditure then we would say to the Minister that he is absolutely right. It does serve as an opportunity to shine a light on public expenditure. It is an absolute opportunity to look seriously at what senior civil servants are being paid. We have had many opportunities to listen to the National Party whilst in Opposition over the years saying exactly that and saying exactly that about the chief executive officers of—oh what was one—Environment Canterbury for example and the Christchurch City Council. So it really is time for some people to put their money where their mouth is and actually move on those things that once before seemed to be quite abhorrent to them and yet today they seem to want to justify.The bottom line is that New Zealanders the very people whom the Minister says they are seeking to listen to in this legislation are saying this as well Minister. The levels of pay of some of our senior civil servants are unacceptably high to them. So I expect this Government will come forward with another piece of legislation to deal with that matter as well. If it means curbing the way in which the State Services Commission or the Remuneration Authority sets measures and determines those salaries then let us have that. Let us get on with it. And while we are there let us have a look at how they deal with the salaries and the allowances that are paid to officials elected to local government.The remuneration levels of some of the mayors in rural provincial New Zealand—and I can speak with authority because I have been one for 4 years—are pathetic in comparison to the duties and responsibilities that those mayors hold. The amount of money that some of our councillors are being remunerated for 6 days a week 7 days a week being on call 24 hours a day just like any MP would not even cover the cellphone bills that some of the National Party members were spending when I was in coalition Government as a junior Government whip. I can say that with clear authority because I was there as a whip you know. The Minister himself has been a whip and he knows the exact expenditure levels of each and every MP both outside Cabinet—The CHAIRPERSON (Hon Trevor Mallard): I would like the member to sit when I stand please. What I am going to give now not so much to that member but to the Committee generally is a warning that we have had quite a wide-ranging series of second reading speeches in the Committee stage of this bill. The Committee has accepted at the second reading the general direction and principles of the legislation. We are now talking about the technical details within the clauses and I would like members from now on to speak to them. Thank you.RON MARK: Thank you for the guidance Mr Chair. Like I said I just wanted to speak to some of the comments that had been made. I think Tracey Martin has already expressed New Zealand First’s view. We are comfortable with the legislation going forward. We are comfortable with supporting it. We do caution and I would add to the chorus of caution here that legislation that is moved in haste is often legislation that is technical in detail.I am not a mathematician by any stretch of the imagination although I did study engineering and I worked very hard at that. But I worry—and I would endorse the concerns of some people who have spoken earlier—about legislation that is technical in this nature fiscally technical and about the potential for error and that we might end up having to redress this all again. I do think that we have moved with haste. I understand the Minister’s need for doing that but I do think there is a danger here particularly given that the legislation has not gone through the scrutiny of a select committee for finding ourselves back here redressing this again.I want to finish by addressing with your tolerance Mr Chairman a comment made by the Minister in the chair himself: “We all want a high-wage economy.” Well zero-hour contracts do not give you that manipulating employment statistics for people who work only 1 hour a week do not give you that and driving down wages by employing foreign students and misusing and abusing foreign labour do not give you that Minister.METIRIA TUREI (Co-Leader—Green): I just wanted to address the other two Supplementary Order Papers in my name which I have not talked about yet but also just to note for the public two things. First the Minister has confirmed that this bill will not constrain MPs’ pay. What it does is it locks in increases. It will not constrain MPs’ pay. MPs’ pay will continue to grow at a percentage level and therefore increase the gap between MPs and the lower-paid workers in this country. That is what this change will do. It is one of the reasons why we are not supporting this bill.The second thing I would say is that the Minister went on at length in the Committee stage about constraining Public Service pay constraining Government spending which clearly demonstrates the purpose of this bill. This bill is not designed to meet the public’s concerns about MPs’ pay increases; it is designed to have a mechanism to justify keeping Public Service pay low. That was clear in the reasoning. The Minister has spent more time talking about this as a mechanism to keep Public Service pay low than about the public concern around MPs’ pay increases which clearly shows the purpose of this bill.I have two Supplementary Order Papers still. I have described one; I have another one Supplementary Order Paper 59 which uses a different mechanism in terms of the Public Service. What this one does is it uses the labour cost index from the labour market statistics. This Supplementary Order Paper is an alternative to the first one. It would mean that since 2007 MPs’ pay instead of going up by $30000 which it does under the current regime would have gone up by only $14000. So we would have had half the pay increases over the last few years than we do have under the current situation. It is a means to constrain MPs’ pay and is a much better measure for Public Service pay than the quarterly employment survey because this bill bases the change in salary and wage rates for the Public Service but it is a better measure.The labour market statistics are a much truer measure of the actual rate of increase than the quarterly employment survey because they measure what people are actually being paid by employers. This would mean it is a much fairer approach to using the Public Service as some kind of measure. It does mean there would have been a significant decrease in MPs’ pay over the last 6 years so it is a genuine constraint. The quarterly employment survey can be used but it is a very crude measure. What it does in the Government’s bill is it essentially maintains the status quo and locks in increases.Employers ask Statistics New Zealand about information on pay rates and they ask about the labour cost index. It is a truer measure of public sector pay. The State Services Commission uses the labour cost index. Its Human Resource Capability Survey of Public Service departments uses the labour cost index. Even the State Services Commission thinks it is a better measure for looking at pay rates across the public sector.Importantly we have also linked this to the changes in salary and wages for the Public Service as opposed to the public sector. The public sector is not an exact group to use for something this important. It is a much wider pool and includes higher wage movements in health education and local government. The Public Service is narrower and it puts MPs in a much closer position to public servants as they are more commonly understood so it is a better measure. If the intention of the parties is to have a measure that is related to the Public Service then ourSupplementary Order Paper59 is a much better clearer measure and it actually will constrain MPs’ pay increases.Our thirdSupplementary Order Paper which my colleague James Shaw has also touched on is the one that essentially removes everything in the bill except for the bit that revokes the current determination. So thisSupplementary Order Paper58 if it went through would mean that the current determination of the Remuneration Authority to increase MPs’ pay would be stopped. It would mean that this new determination would not proceed so MPs would not get their pay rise. But it would also mean that there is no additional measure so the current pay and conditions that MPs are working under would remain. Doing that would give us time to look at this bill through aselect committeeprocess and to have an opportunity for MPs and parties to look at each other’s alternatives.I do accept that for other parties that have looked at ourSupplementary Order Papers I understand their concern that they simply have not had time to assess them properly because there has not been time as part of the bill because we are in urgency. So it would mean that there would be alternatives other than the Greens’. TheMāoriPartyNew Zealand First theLabour Party ACT—I do not know whether it is supporting the bill; I would be very surprised about that but ACT may have ideas about how to constrain MPs’ pay. All of those ideas would be able to be put on the table and presented to the public. The public would have a chance to investigate and interrogate those ideas and to come to us and tell us what kinds of conditions what criteria and what constraints they would like to see and we would be able to come up with an enduring solution.So there is an option on the table tonight for political parties to stop the current pay increase—that isSupplementary Order Paper58—and then for us to step back a bit have another look at the Minister’s bill take it through aselect committeeprocess properly and have a fuller investigation as to what is the right measure because I agree there is no doubt that there are going to be mistakes in this and we are going to have to come back. And as can happen the mistake could be a significant embarrassment to theGovernment. It is the kind of thing where you could see where maybe there will be significant pay increases instead which is not theGovernment’s intention and it will have to come back to us and ask us to support fixing its mistake. Frankly that would be extremely difficult to tolerate and stomach because the Government has been well warned—the Minister has been well warned—that a mistake is likely and that there were alternatives on the table to prevent that from happening. So I would urge members to vote in favour of the preferred option which is tying MPs’ pay to the nominal median wage.The second option is tying it to the labour cost index which is a Public Service measure but a more appropriate tighter Public Service measure. And third if you do not like either of those measures then at least vote for the thirdSupplementary Order Paperto stop the current pay increase so that we can go away and have a good and decent look at this legislation.The fact is theGovernmenthas got the numbers. TheGovernmenthas got the numbers to pass whatever legislation it chooses—at least for the moment; that is true—so there is no need for urgency. The Minister has made no argument at all for urgency. He has not said a single thing about why it all has to be done tonight while the rest of the country is watchingThe Bachelor New Zealand and is very distracted I understand. There is no justification for doing this in urgency and he has made none because there is none. So it really is shocking that something so serious could be treated so trivially but given his own argument that the core reason for this bill is actually to constrain Public Service pay then I guess we cannot be surprised. It is a shame that National would treat both the Remuneration Authority and the New Zealand public and particularly the Public Service in such a shabby way. Thank you.MARAMA FOX (Co-Leader—Māori Party): I just wanted to rise and take a call on this at this stage because I wanted to assure the New Zealand public who are watching—because this is far more riveting than The Bachelor New Zealand—that in fact we have considered Supplementary Order Papers 57 58 and 59 that the Green Party has put forward and discussed them in the length of time that we have been given to discuss them at length and come up with what we think are our answers to this. The Greens have suggested in Supplementary Order Paper 57 that the median wage be the determining factor for whether we go up or go down. If the median wage goes up $100 then our MPs’ wages go up $100. Essentially the idea is not a bad one but there is just not the time in the shortened period that we have had to look at it to put enough detail around that and what about this what about that and what other factors might then impact on that.In a different Supplementary Order Paper they have suggested attaching MPs’ wages to the two indexes the quarterly employment survey and the labour cost index. The quarterly employment survey is based on actual real people. In fact if we look at it consistently we also have the paid parental funding and the superannuation determined by the quarterly employment survey and it is about actual people. We actually think that that is OK. The labour cost index is about wage inflation and it is done on a statistical theoretical basis so we are happy to support the Supplementary Order Paper which talks about the quarterly employment survey. This is because I am an expert in these fields and I have taken all the due consideration of the time given to us to consider this. We have rung people. We have gone out to our constituents. We have discussed it. We have tried to do what we need to do to ensure that we are supporting something that we can hand on heart say that we think this is what we should support given the circumstances that we are in.According to the Remuneration Authority apparently the Remuneration Authority could not use its discretion because of a piece of legislation that talked about equality. If we talked about setting our wages at the same level as people who work in a similar area across the public and private sectors then MPs’ wages would go up and that is what it determined. There was no appetite for that and that is why we are here having this conversation under urgency. The whole country stood up and said: “Please do not do this. That is ridiculous.” The reason they did it is because we do not give the same urgency to low incomes the minimum wage and the levels of benefit which need to have some urgency applied to them. That is why our people are living in poverty and we need to adjust that.I want to assure the public that we have considered the Supplementary Order Papers that the Greens have put forward. I want to thank the Greens for putting them forward because at least they have given us some options to look at. In this stage we think that we are happy with the legislation that has been put forward as it stands given the short period of time. We would have liked some more time. We would have liked the opportunity for the public to have submissions around this. Given the circumstances we are happy to support it. Thank you.DAVID CLENDON (Green): I just wanted to briefly make a couple of further points firstly about the commencement which of course is the day after a procedural assent etc. but in fact this is retrospective legislation. The effect of this legislation is to take us back to a day or a week before the Remuneration Authority fulfilled its mandate to come up with a proposal about an increase or a change in MPs’ salaries and to pretend that never happened.We generally are very suspicious of retrospective legislation. I am not blind to the fact that our third-choice Supplementary Order Paper—I think—also suggests a retrospective move to basically overturn the decision that was made. But not then to endeavour in the course of a week to cobble together in haste an inadequate substitute for that decision-making process which flawed as it may be—and we do agree absolutely that is has been flawed for a very long time. We wonder why the Government has not taken steps if it is genuinely concerned that that process of setting remuneration is flawed. Why has it waited until this moment to shove through a bill in the course of a few hours on a Tuesday afternoon? I do think that that is a point that we have yet to hear an answer from the Minister about. What is the basis of the rationale or the excuse for urgency?The other point I would like to comment on again is that the bill talks about a 12-month cycle. If we had the luxury of a proper parliamentary process if we could take advice from elsewhere and listen to submissions we might hear an argument—and it has been put before—that ought we not perhaps put this on a 36-month cycle rather than a 12-month cycle so that MPs come into this House at each election knowing roughly what their income their package of benefits and so on is going to be for the next 3 years? I would argue that might take some of the heat out of the public objection. At least it would be 3-yearly rather than an annual circus. I would suggest that if we do benchmark MPs’ salary movements to some average then you have got a 3-year average rather than a 12-month one which I think would make it more robust potentially more reliable and longer lasting.Again these are symptoms of something that has been cobbled together in great haste without adequate thought and without drawing on the undoubted expertise that is available in the communities of interest—be they specialised or simply the members of the public who might want to have a say. I wonder whether part of the Government’s determination to have this done and dusted in a few hours on a Tuesday is because it is unwilling to expose itself to the public to public input because undoubtedly a select committee looking at some alternative proposition would take the opportunity to have a crack at MPs. You would hear a lot of opinion a lot of rhetoric undoubtedly and that is fair comment. Maybe we ought to simply expose ourselves to that have a proper process and think about things like whether we should look at a 3-year rather than a 12-month cycle and whether we ought not underline the public outcry about MP remuneration. Should we not stop and think to ourselves: “Why is it that the public objects so strongly to MPs getting paid a bit more?”Maybe it is something to do with the behaviour that is routinely displayed in this House not least of all at question time—the yelling the shouting the behaviour that ought not be accepted in a third-form English class in any college on a given afternoon. Perhaps we need to look a bit more closely at ourselves our own behaviours and our own practices for an explanation of why the public does get so very angry when they see MPs apparently getting an increase in pay. I think—to channel our former colleague Mr Robertson—that maybe we need to think again about a code of conduct for this House. Maybe if the public saw us behaving in a way befitting members of this Chamber more often and more routinely maybe some of the heat would go out of this debate and it would become more rational more focused and a little bit more objective than it currently is. Thank you.MELISSA LEE (National): I move That the question be now put.Motion agreed to.A party vote was called for on the question That the amendment set out on Supplementary Order Paper 57 in the name of Metiria Turei to clause 7 be agreed to.Ayes 14Green Party 14.Noes 106New Zealand National 59; New Zealand Labour 32; New Zealand First 11; Māori Party 2; ACT New Zealand 1; United Future 1.Amendment not agreed to.A party votewas called for on the question That the amendments set out on Supplementary Order Paper 58 in the name of Metiria Turei to clauses 5 6 7 8 11 and the schedule be agreed to.Ayes 57New Zealand Labour 32; Green Party 14; New Zealand First 11.Noes 63New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.Amendments not agreed to.A party votewas called for on the questionThat the amendment set out on Supplementary Order Paper 59 in the name of Metiria Turei to clause 7 be agreed to.Ayes 14Green Party 14.Noes 106New Zealand National 59; New Zealand Labour 32; New Zealand First 11; Māori Party 2; ACT New Zealand 1; United Future 1.Amendment not agreed to.Parts 1 and 2 schedule and clauses 1 and 2 agreed to.Bill reported without amendment.Report adopted.Third ReadingHon MICHAEL WOODHOUSE (Minister for Workplace Relations and Safety): I move That the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill be now read a third time. The bill is the Government’s response to the most recent determination of the Remuneration Authority which provides for an increase in the remuneration received by MPs of 3.56 percent effective from 1 July 2014. The Government considers this increase to be disproportionate to the salary movements in the wider public sector and unfair to taxpayers. The bill limits the Remuneration Authority consideration to applying the wage growth in the public sector as measured by the quarterly employment survey to MPs’ remuneration. The bill provides a fair response to the disproportionate increase in MPs’ remuneration by providing a measure that reflects the average growth in public sector wages. This ensures that the taxpayer is not unfairly burdened by any unwarranted increases in remuneration. In summation the Government believes that these alignments will align MPs’ remuneration with that of the wider public sector and will strike the right balance between the interests of taxpayers and those whose remuneration is being assessed. I commend the bill to the House.CHRIS HIPKINS (Labour—Rimutaka): That was a slightly shorter contribution from the Minister for Workplace Relations and Safety Michael Woodhouse than I was anticipating. I am happy to rise to do my final contribution in this debate on the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. I want to just first of all say that the mechanism that this House establishes for determining how MPs’ pay should be set is a very important one constitutionally. It is not good practice for Parliament itself to be voting on debating and setting effectively what the taxpayer should pay us for doing this job. It is important that we put in place a robust mechanism that removes those decisions from this House and places them with an independent body that can make those decisions rigorously and independently.I think the public of New Zealand would like to have that reassurance that in fact we are not here feathering our own nests and debating things that are going to be in our own best interests and that there is someone independent making decisions about what a fair rate of pay for members of Parliament should be. This is in fact an important issue. No one here is arguing for a significant pay increase at the moment but ensuring that MPs receive a sufficient and appropriate level of remuneration is actually important for the transparency and integrity of the democratic system of government. It is actually one of the guards that we have against corruption. Making sure that MPs are appropriately remunerated for the job that we do is one of the ways that the public of New Zealand and the taxpayer can have the reassurance that we are working for them and not for other people who are paying us and giving us money for the work that we do. The only way that the public can have the assurance that that is what is happening is when those decisions are made completely independently of this House and when there are robust criteria for doing so.It has been apparent for some time now that there were issues with the criteria that the Remuneration Authority had in determining what MPs’ pay should be and it is high time that the House resolved those issues. This is not a good process for doing that. We have had 5 years of concerns. We have had 5 years where the criteria could have been properly and appropriately amended without the need to resort to urgency. It is therefore unfortunate that we now find ourselves in this position where if we do not conclude this debate this week under urgency—through all of the bill’s stages—then MPs will get the significant pay increases next week that we are here tonight trying to stop from happening. That could have been avoided if this had been dealt with through a much better more rigorous and proper process. Unfortunately that has not happened and therefore urgency is the only way now to stop those pay rises going through and being in MPs’ bank accounts next week.We on the Labour Party side have listened very carefully to the debate and we have engaged with it in good faith with the principle being that we wanted to stop those rises going through and we wanted to make sure that the criteria are amended in a way that is robust and that will provide an enduring and independent solution for how MPs’ pay is set. That is the reason that we voted in favour of the legislation and in favour of urgency because without urgency as I have said there would have been no way to stop those pay increases.However having listened to the debate we did vote in favour of Supplementary Order Paper 58 put forward by Metiria Turei which would have resulted in the legislation being passed now but stoppingonly those pay increases and leaving for another day the decision around what the new criteria should be because we do not think that this is a good process. We would rather that it went through a more rigorous process particularly and this is a big issue for me because I would like to ensure that the Remuneration Authority—the experts on this; the people who have to actually implement it—is able to provide some scrutiny of the legislation that we are now passing. It has not had the opportunity to do so and it will not have the opportunity to do so. As a result we cannot be sure that the legislation that we are passing now is actually going to do what it purports to do in the short term and in the long term. There is a possibility that in the long term this will give us bigger pay increases than the existing criteria that we have which we are now replacing. That is one of the reasons there needs to be greater scrutiny of these matters—so that we can be sure that the bill does what it is supposed to do. We do not have that because of the way this process has been rushed.One of the concerning things that became very apparent during the debate is that this debate is in fact only partly about MPs’ pay and that actually the wider agenda from the Government is to suppress the pay overall across the whole of the public sector including teachers doctors nurses police prison officers and so on—we could go on and on through all of the professions. It is very disappointing to hear members from the National Party referring to those who work for the good of the public and who want pay increases as union thugs. I think that is very disappointing. I think that after a long period of time when their pay rises have not kept up with inflation—in fact in real terms their salaries have gone backwards—it is fair enough that they are asking for a pay increase.I heard Bill English claiming—I think it was either today or yesterday—that in fact teachers for example have had pay rises above inflation. So I went and looked at the top of the teacher salary scale. These are the most experienced teachers the longest-serving—teachers the ones who do not have any other management roles or whatever and who are just simply at the top of the teacher salary scale. Here are the real numbers: in 2009 they were paid $68980 and as of last year they were paid $72646. So let us be clear. These are the most experienced teachers. That is a 5.3 percent pay increase. What did inflation do during that time? It was 9.3 percent during that time. Actually in real terms a teacher who has no management responsibilities and who is at the top of the salary scale has gone backwards in the last 4 or 5 years under this National Government and yet Bill English is saying that they should not be getting any pay increase at all. They have seen the real value of their incomes eroded during that time.So the Government is up against the wall this year when a lot of these big public sector collective agreements come up for negotiation because actually people have been promised for 5 years by this Government—and maybe longer—that there will be jam tomorrow but jam never actually comes and they are saying that they have had enough of that. I think that is quite understandable. I think it is wrong that the Government uses this debate on MPs’ pay to try to suppress the debate over wider pay issues within the public sector. I do not think MPs should be getting significant pay increases of the magnitude that were recently awarded but I actually do think it is probably time to look at some of those pay rates in the public sector because there has been a lot of belt tightening.Finally I just want to make one last contributionin this debate and that is around the actual formula that this bill is now establishing which links MP pay increases to the average increases within the public sector. As I have raised during earlier parts of this debate that can create some unintended consequences because the overall average increase in the public sector can be distorted by higher-than-average increases in managerial salaries for those at the top of the salary scale and lower increases for those who are on regular and low incomes. As a result our pay will go up while the pay of the people whom we are most interested in protecting—the people out there who are not getting pay increases—continues to go backwards. So this formula does not necessarily deliver on the sentiment and the value proposition that the Government is putting forward which is one of the reasons why this rushed process is not acceptable. The Labour Party has supported this bill going through simply because we had no choice. It was the only way to stop those significant pay increases going through next week. It is not good process. The Government could have and should have acted on this much much earlier.JONATHAN YOUNG (National—New Plymouth): Thank you for the opportunity to speak on the third reading of this bill. Can I just say there were some pertinent points that Chris Hipkins the previous speaker made and thank you for the support that he and his colleagues have given to this bill. I think when we look at how the Remuneration Authority determines its salary bands and settings one of the things that it does do is look at fair relativity with comparable positions the need to be fair to both individuals whose pay is being set and to taxpayers the requirements of the job the need to recruit and retain competent individuals and any prevailing adverse economic conditions.I guess in many regards the mystery of the magic of how all of this comes together is now being faced with a different process which I believe brings transparency.Every year the salaries are set in accordance with this formula so that we are not going to get any big surprises and huge headlines. It is going to be predictable. It is going to be something that the public sector across the board has already received the previous year. I think in many regards people in our country will say this is a process that is going to work and brings that degree of transparency certainty and I would say even equivalency through this process. I am very happy in the final reading of this bill to commend it to the House. Thank you.IAIN LEES-GALLOWAY (Labour—Palmerston North): I support this bill and commend it to the House.ANDREW BAYLY (National—Hunua): It is a pleasure to rise to lend my support to this Remuneration Authority (Members of Parliament Remuneration) Amendment Bill of 2015. This bill is all about MPs showing leadership. We as MPs need to demonstrate restraint. It is only appropriate that this bill makes these changes. The Prime Minister foreshadowed some of his concern and the outcomes are just. Aligning our pay to the public sector is a good way to go. It is fair it is equitable and it is reasonable. I commend the bill to the House. Thank you very much.METIRIA TUREI (Co-Leader—Green): The Green Party will continue to oppose this legislation. I want to thank Labour and New Zealand First for supporting Supplementary Order Paper 58—the one to restrict MPs’ pay rises so that it would have given us a chance to deal with the substantive legislation in a more timely and democratic manner. I really do appreciate that support. I also understand how difficult it is to have to deal with Supplementary Order Papers at such short notice for parties so thank you for your consideration.We are opposing this legislation because it does not do what the Government says it wants it to do. It is actually designed for an entirely different purpose. The purpose of the legislation as we have seen described by the Minister in his contributions during the Committee stage is to constrain public sector pay. That became very very obvious from the Minister’s statements. He talked about “profligate public spending”—is that right? There were comments from the National Party about “union thugs”. I think both of those comments just in such a short debate on what should otherwise have been quite a tight conversation about MPs’ pay increases just go to show that there is no intention by National to constrain MPs’ pay. It is simply using the political opportunity of this supposedly huge public outrage to attack ordinary workers—people like teachers and nurses people who are involved in the Public Service people who dedicate their lives to helping New Zealanders get through the various circumstances that they have to get through. National is clearly intent on attacking them. It follows on from other legislation that National has put forward that has taken out the tea breaks for example for New Zealand workers and that has continued the plan of National since it took Government to erode the conditions of workers in the private sector and increasingly in the public sector. This legislation has been used to do exactly that.New Zealanders should rightly feel that they have been manipulated by National through the use of this bill and that their concerns about MPs’ pay rises have been trodden on by National with this bill because this bill does not constrain MPs’ pay but is being used to attack their own people. When we are talking about New Zealanders in a context like this we are talking about people who are in the Public Service or have dedicated their lives in some form to the public sector. We are talking about family members of people who work in the Public Service. We are not that far removed from each other in this country. We are a little tiny country and we are very connected to each other. There is no real “us” and “them” and so when Government uses legislation and manipulates legitimate public concern for nefarious political purpose—that is keeping pay low for workers—every MP in this House should be seriously concerned and prepared to tell the New Zealand public what is being done to them by this Government.Our initial assessment of this legislation was that it failed to do the job that it was supposed to do. Our committed opposition to this bill continues and is strengthened because it is so clear that this was a manipulative exercise by the Prime Minister the Minister for Workplace Relations and Safety and the National Government and we will have no part of it. The Green Party is opposed to this bill. Thank you.TRACEY MARTIN (Deputy Leader—NZ First): Kia ora Mr Assistant Speaker. I rise for the final contribution of New Zealand First on the bill and I pick up on the comments made by Metiria Turei. It is unfortunate that it appears the Government has taken an opportunity to actually step on the workers of New Zealand. New Zealand First is very disappointed that Supplementary Order Paper 58 which the Green Party put up and which would have split off and therefore stopped the 3.5 percent increase for MPs here tonight—but that Supplementary Order Paper would have sent the conversation about the Remuneration Authority’s set of criteria by which it sets the pay of members of Parliamentthrough a much longer process. It would have sent that back and into another bill that would have gone through the select committee process which the New Zealand public would have had the opportunity to speak about.If the purpose here today is to say to the New Zealand public that we the members of Parliament understand that times are tough—and they are tougher for some than they are for others—and if the purpose of this moment in time is to say that we understand that that could have been done by a single piece of legislation that said: “We will not accept that.” It was not a requirement for us to actually come up with another formula here tonight. New Zealand First agrees with the Labour Party—we are concerned about the formula. The fact that it was version seven by the time we got to 10.30 today with people manipulating algebra here there and everywhere gives nobody any confidence that this is right. Not a single one of us—and actually not a single backbencher—understands that equation I guarantee it.Paul Foster-Bell: That’s not right.TRACEY MARTIN: Guarantee it—you might not be sitting on the backbench tonight Mr Foster-Bell but I will guarantee that the ones who are do not understand that equation. But that is not the point.It is really unfortunate that the conversation ended up going down to comments like “union thugs”. It is very very unfortunate. That was not the purpose that we were all here for tonight. It was unnecessary. This was supposed to be about us making sure that the New Zealand public—and Mr Bayly keeps saying it—saw leadership from us. It is very unfortunate that as it would appear through the statements made by the Minister for Workplace Relations and Safety and through other members this is actually not about us. This is about controlling New Zealanders as they enter into what are supposed to be negotiations. It is a great shame that that is where this Parliament has come to—that we are prepared to legislate now to stop free and frank and honest negotiations between workers and ourselves. It is an indictment upon this Parliament.The other thing that we do need to be careful of—and New Zealand First again agrees with the contribution by Mr Hipkins; it has been particularly enlightening Mr Hipkins’ contribution and it has been very worthwhile listening to—is around the word “corruption”. I know it is hard sometimes but sometimes the truth has to be said and in this moment with this contribution Mr Hipkins has been enlightening. It is around the word “corruption” and it is quite a serious thing to be frank. It is around the word “corruption”. There was a time in this Parliament when the only people who could come to it were rich white men who had independent means. They were the only people who could come here. The only reason we have the diversity we have today is that we have a system that supports a variety of representation. We must make sure that we the Parliament do not turn this thing so far back that we end up with rich white men as representatives for us all because we know how badly that works.New Zealand First is disappointed. We will support this bill. We will support it because we must stop the 3.5 percent pay rise for ourselves when we cannot share it across our nation with other people. That is true. But we also would reiterate again that we would have preferred the criteria to be set with the public not by us on the public because at the end of the day they pay us and they should have had a voice in that algebraic equation. Kia ora.SARAH DOWIE (National—Invercargill): I commend this bill to the House.JAMES SHAW (Green): I would like to start by thanking the public servants who helped to draft the legislation and who were in here later tonight after hours to help guide it through the House. It must have been hard for them to hear the Minister say that one of the motivations for this bill was to hold down their wages in the future.I think that there are a number of flaws with this bill. The Government’s motivation for tying MPs’ remuneration to that of the public sector specifically is one of them. In saying to public servants and teachers and firefighters and doctors and nurses and so on that we are going to tell members of Parliament that they should be afraid of the public backlash on their own pay in order to hold down your pay is I think absolutely outrageous and it is one of the reasons why we are opposed to this bill.It is poor-quality legislation—we can see that. We have no idea what the actual impact of this will be. There was no regulatory impact statement. We brought numbers to this House analysing what we knew of the bill last week. We brought numbers to the House that showed what the changes would have been under both of our Supplementary Order Papers but the Minister did not do that. We have actually not been shown by the Government what the actual impact of this legislation would be. So we are about to pass a bill and we do not actually know what it is and as a number of people have said most people in this House who are voting for it do not know what the algebraic equation in the bill actually means—what it says. It is a shocking piece of lawmaking.That is in large part because it is being passed under urgency and I would like to say that the National Government has had 6 long years to do something about what is now considered a burning issue. Six long years—long years—in which it has done absolutely nothing until the last 10 days when all of a sudden it was so important it was so important that we had to use urgency as if this was some kind of national emergency. It is not a national emergency; it is an emergency for National. This is not worthy of an abuse of this process. The Minister has provided no case for this bill to come through under urgency. We could have put this through under a normal legislative programme. We could have had select committee stages we could have heard the evidence we could have heard from the public we could have weighed the options and we would have had a much higher-quality bill where people actually understood what the impact was going to be when they voted for it. They would have actually understood that but tonight instead we are going to vote on a bill it is going to pass and we have no idea what it is actually going to do except in some kind of theory.I would like to thank Labour and New Zealand First in particular and I would also like to thank the Māori Party for its gracious words about the Supplementary Order Papers that we put forward in Metiria Turei’s name. We know that because this is such a poor-quality piece of legislation—a number of MPs have said this—we will be back in the House talking about this legislation before too long because we know that it is busted. So we will be fixing it and we will be calling on those who supported us tonight on those Supplementary Order Papers for their support to fix the legislation and to tie MP remuneration to the New Zealand median wage which would tie MPs’ economic interests to those of all New Zealanders. If we were to do that our pay would rise and fall with the pay of the country as a whole.So we have made that case we appreciate that it has been listened to by both sides of the House and we have done everything that we can on this one. We will continue to hold that flame alive. We will not be voting for this bill although some people have said that this is some kind of improvement on the status quo. But we will not be voting for something that is such an appalling abuse of process and such a poor-quality piece of legislation. It is better to retain the status quo and to allow that to happen than it is to put through such a shoddy piece of legislation. We will be looking forward to the next time—and I cannot imagine it will be too long—that we have to address this. Thank you.MARAMA FOX (Co-Leader—Māori Party): Although the Māori Party congratulates the Prime Minister on moving at lightning speed to address the obvious anomalies and although we are about making change—and this is one that we support—while we are at it let us be bold. Let us have the courage to take a fresh look at the bigger picture of income inequality. I am reminded of the wisdom of Dr Martin Luther King Jnr: “The ultimate measure of a man is not where he stands in moments of comfort and convenience but where he stands at times of challenge and controversy.” The challenge and controversy has to be in tackling head-on the widening income inequality and in particular to understand the financial material hardship of whānau Māori.A recent study by Lisa Marriott and Dalice Sim revealed that although New Zealand has had some success in reducing inequalities the gaps in inequality among the majority of the indicators investigated in this study show worsening outcomes for Māori and Pacific people. A total of 21 indicators were investigated including health knowledge skills employment standards of living cultural identity and social connectedness. Of those 21 12 indicators—57 percent—reported increasing gaps between Māori and non-Māori over the last decade.So this is where we come to whānau ora. One of the six outcomes that we might expect to see whānau succeeding in under favourable conditions is wealth creation so we want to add that concept into the discussion. How is it fair that on one hand we can give out 50c and on the other hand we still will see an increase of about $5000 and more under this piece of legislation? Let us not just settle ourselves into being satisfied with that new public sector index while that means that MPs’ salaries will still increase in line with average public sector salaries because all that those parallel increases will do is sustain and retain the existing inequalities of remuneration.We all know that inequality has a long-term effect. Income inequality experienced early in life leads to reduced social mobility later in life. I understand that we are running out of time. I know that we want to get this through and we have come here under urgency but I want to make these points. We could investigate having a living wage. The Māori Party thinks it should be $18.80. We currently have a minimum wage that is set at a level of poverty. We are paying people to be impoverished and that needs to change. We should add urgency to that. Let us address income inequality in this country. I like the fact that we are doing something about this and we are taking it seriously but there is so much more that we need to take seriously in regard to income.I will finish with this: successive parliaments have created abject failure in addressing income inequality in a meaningful way. Labour or National Māori Party or the Greens—whatever ideas have come up through members’ or Government bills through select committees or question time the point is we still have not fixed the widening gaps. We are pleased that we have moved quickly and clearly to fix the issues around the remuneration of MPs but if we can move that rapidly for this issue why not apply the same rigour to looking at the issue of income inequality and addressing the enduring circumstances associated with whānau poverty in a sustainable effective and mana-enhancing way? Kia ora Mr Assistant Speaker.Dr PARMJEET PARMAR (National): I support the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill and commend the bill to the House. Thank you.A party vote was called for on the question That the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill be now read a third time.Ayes 106New Zealand National 59; New Zealand Labour 32; New Zealand First 11; Māori Party 2; ACT New Zealand 1; United Future 1.Noes 14Green Party 14.Bill read a third time.