Remuneration Authority (Members of Parliament Remuneration) Amendment Bill — First Reading Second ReadingText is incorporated into the Bound VolumeRemuneration Authority (Members of Parliament Remuneration) Amendment Bill — First Reading Second Reading[Sitting date: 17 March 2015. Volume:704;Page:2274. Text is incorporated into the Bound Volume.]Remuneration Authority (Members of Parliament Remuneration) Amendment BillFirst 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 first time. In accordance with the Remuneration Authority Act the Remuneration Authority recently released the Parliamentary Salaries and Allowances Determination 2015 which provides for an increase in the remuneration received by MPs of 3.56 percent effective from 1 July 2014. The size of this increase is disproportionate to salary movements in the wider public sector and the current rate of inflation. The Government considers that this is not appropriate.Under the current provisions of that Act the Remuneration Authority is required to review and issue determinations of MP salaries and allowances at least once every 3 years considering information from a range of sources including relativity to comparable positions the need to recruit and retain competent persons and the requirements of the job. These criteria have resulted in an increase that the Government believes is unfair to taxpayers and does not reflect the average wage growth of the wider public sector. It is therefore necessary to make amendments to legislation to amend the criteria that the Remuneration Authority must consider when setting salaries for members of Parliament. The decision to amend the authority’s discretion is not taken lightly. However the change is necessary to ensure that MPs’ remuneration movements reflect those in the wider public sector.This bill is an omnibus bill that amends two Acts: the Remuneration Authority Act 1977 and the Members of Parliament (Remuneration and Services) Act 2013. The first change is to set aside the part of the Parliamentary Salaries and Allowances Determination 2015 that relates to salaries. It then sets out a new requirement on the Remuneration Authority to solely consider public sector wage movements when determining the remuneration of MPs.The bill does this by pegging MPs’ remuneration to the quarterly employment survey or QES for the public sector average ordinary-time weekly earnings for fulltime-equivalent employees. The quarterly employment survey is a sample survey carried out every 3 months by Statistics New Zealand. Each quarter it collects information from organisations in the public and private sectors at 18000 different locations. It captures information on hourly earnings weekly earnings weekly paid hours and the number of filled jobs. Information from the quarterly employment survey is used in the production of Statistics New Zealand’s quarterly gross domestic product and other productivity statistics and for labour market and economic analysis. Changes in quarterly employment survey measures are also used in legislation to benchmark figures such as the level of national superannuation and paid parental leave.The quarterly employment survey measures actual wage growth rather than wage inflation. Using this means that MPs’ remuneration will increase in line with the average public sector salary. Given that the quarterly employment survey measures actual wage growth it is susceptible to potential sudden increases or decreases due to fluctuations in employment. As such the bill also requires that the percentage change for each of the reported quarters for any financial year be averaged out to smooth any such spikes or dips. Under this bill the authority will be required on an annual basis to adjust MPs’ remuneration by the quarterly employment survey public sector index using the June rate from the previous year measured against the current year. For the June 2014 year the quarterly employment survey public sector increase was 1.5 percent.The bill will make a minor change to the formula for determining MPs’ remuneration. The authority will be required to take the previous year’s base salary and superannuation and multiply this by the quarterly employment survey index. This figure will be the remuneration for the current year. The authority will be required to adjust remuneration to take account of personal benefits where there is a change to the level of an existing entitlement provided. A recent example of this is in the 2015 determination where the Remuneration Authority reduced the value of the travel entitlement to account for tightened provisions around the use of travel by family members. In this scenario the reduction in personal benefit created as the result of that tightened provision will be shifted to the cash component of the remuneration—that is base salary. It will not be subject to the quarterly employment survey adjustment in the first year in which it is transferred. There are no changes to how the authority the Speaker of the House and the Minister responsible for Ministerial Services determine the value of personal benefits for MPs and their families such as travel. These changes will also not affect any of the persons that the Remuneration Authority determines remuneration for other than MPs.Although the current practice of the authority is to gazette a determination for parliamentary salaries and allowances on an annual basis it is required to do so only every 3 years. The bill requires that the authority must fix MPs’ salaries on an annual basis to ensure salaries stay in line with annual changes in public sector wages.The MPs’ salary determination that was issued by the Remuneration Authority on 26 February 2015 will be revoked apart from the provisions in this determination that relate to allowances which stay in place. The authority gazetted its determination for the 2014-15 financial year based on existing statutory criteria. So that the new criterion applies to salary adjustments from 1 July 2014 the bill revokes and overwrites the effect of the 2015 determination for salaries. The provision relating to allowances will remain in effect. The 2013 determination will come back into force until the authority is able to gazette a new determination for the period of 1 July 2014 to 30 June 2015 based on the amendments Parliament has made to the Act. Any changes in salaries resulting from the new determination will be backdated to 1 July 2014.This bill responds to the disproportionate growth in MPs’ total remuneration by providing a sensible measure that reflects the average growth in public sector wages. I commend this bill to the House.Hon ANNETTE KING (Deputy Leader—Labour): The Labour Party will support and vote through all stages of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. We will do that because like most members in this House we never asked for a big pay increase we never wanted a big pay increase and we do believe there ought to be restrictions on remuneration. Having said that there are a few matters that need to be discussed.The first I would say to the Minister for Workplace Relations and Safety is that I have just received a copy of the papers that go with the bill. I have just received the departmental disclosure statement from the Ministry of Business Innovation and Employment. I had no chance to read it before I stood to speak—in fact I had 2 minutes—because it was so late in being provided. So then I went through what is in that report and I looked at the questions that were asked of the Government and at the responses from the ministry. Here are some of them. “Were any regulatory impact statements provided to inform the policy decisions that led to this Bill?”—answer: “NO”. “Has further impact analysis become available for any aspects of the policy to be given effect by this Bill?”—answer: “NO”. “For the policy to be given effect by this Bill is there analysis available on: (a) the size of the potential costs and benefits?”—answer: “NO”. “(b) the potential for any group of persons to suffer a substantial unavoidable loss of income or wealth?”—“NO”. “Has there been advice provided by the Attorney-General on whether any provisions in this Bill might limit the rights and freedoms etc.?”—“NO”. “Has there been any external consultation on the policy to be given effect in this Bill or in the drafting of this Bill?” The answer is “NO”.I go on through. “Does this Bill affect …” etc. etc. Can I say to the Minister that this bill affects everybody in this House and it would have been really good if this sort of information had been made available last week or the week before when this bill was proposed. This must have been available to the Government. Let us get things right. We were meant to debate this last week. We were told we were having urgency last week and then at the last minute the whole thing was pulled. I now note that this is version 7.3 of the Supplementary Order Paper to fix the formula. We have also noted Minister that it is pretty sloppily worded. So there has been a hasty decision to bring this in and we do not believe Minister that you have necessarily done the work on it. Certainly the Ministry of Business Innovation and Employment has pointed out that there are lots of things in this bill that have not been looked at which is the normal practice in any legislation.What we now know is that the sole criterion for setting remuneration under this bill will be the quarterly employment survey for the public sector average ordinary-time weekly earnings for fulltime-equivalent employees using the average for the year to June compared with the average of the previous year to June. Using this measure means the remuneration of members of Parliament will increase in line with the average public sector salary. So what I want to ask the Minister is whether this is different from what was proposed last week and how exactly it is different from what was proposed last week. I will get on to that in a moment.I want to first of all point out that this bill has been a long time in its gestation. In 2010 just before Christmas John Key urged restraint over the setting of MPs’ salaries. That was 5 years ago. In November 2011 John Key said he was disappointed with part of the MPs’ salary increase. That was 4 years ago. In October 2013 John Key said MPs’ salary increases should be small or zero. That was 2 years ago. Come forward to 26 February 2015 when John Key said in Parliament that he may change the law on how MPs’ rates are set in the future. Today we are about to do that but for practically every year for 5 years the Prime Minister was going to do something about the pay rises that MPs receive. The Prime Minister talked about doing it for days when a decision came out from the Remuneration Authority and then he retreated back to the ninth floor to do nothing. Finally he has decided to do something about it. He had the power to do something about it. He had the numbers to do something about it. He had the ability to consult with members of the House to do something about it but it is only now that we have a bill before us rushed into this House to be passed under urgency so that members of Parliament do not receive the increase that was provided through the Remuneration Authority.As I said none of us asked for the pay rise. I have yet to meet one of my colleagues who would want this sort of pay increase. We feel that we should not be getting pay increases that are greater than other New Zealanders’. We all know what happens when members of Parliament are seen to get more than other people; there is a backlash from the public. So we believe that there ought to be a proper way of setting the salaries. Of course that is why we ended up with the Remuneration Authority. There is a history of political meddling in the way salaries and conditions are set. A very good example arose over the last few days over former members. When you look at the history of that it goes right back to the 1970s when MPs were trying not to take bigger increases and it was put into travel.So we have had political meddling going on in MPs’ salary setting for a long time. We do need to have a way that sets it fairly and in line with other New Zealanders. What we want to know from the Minister when he gets into the chair a little later on is whether he has got the formula right. I am not sure because last week when we were meant to be debating this bill I just happened to read David Farrar’s blog. Unlike the Government he had done some work on the methodology that the Government was using to set MPs’ salaries. What did he find? He found in fact that if MPs used the formula put up by the Government last week we would have got a bigger pay increase than what was actually provided. Under the new legislation that was put up last week the average would have been 3.1 percent; under the current law it would have been 1.7 percent. So what we want to know Minister is whether you have got it right now. We do not want to come back into this House to fix up a mistake. So the Minister is saying yes he has got it right—a guarantee from the Minister that this formula will do the job; this formula will be fair. In fact I have to say Minister we would argue that until the Government addresses the very high salaries paid to chief executive officers of Government departments we are not actually addressing some of the problem in New Zealand. So we would like to see how that is going to be addressed in the future.We will support this bill. We want to see our salaries reined in. We also want to see the salaries of chief executive officers in the public sector reined in because they have got way out of kilter with the rest of those who work in New Zealand. So we will closely examine Minister when you are in the chair in the Committee stage exactly how it will work because what we do not want to do is to waste the time of this Parliament fixing up a mistake made in a formula because the work was not done before the Prime Minister rushed out to say he was going to do something. It has to be right. This is not good enough. At the end of the day every member in this House takes the odium from the public when our salaries and conditions are raised in the public media. So Minister I want the assurance later on that you have got this right and perhaps you can explain in detail how the formula works because it is incredibly complex to be able to understand.JONATHAN YOUNG (National—New Plymouth): Before I address this bill I would just like to make a comment that I do hope the Green Party is not getting too encouraged by the colour of my tie today but I would like to acknowledge today is St Patrick’s Day and I wear this in acknowledgment of my wife’s forebears who come from Ireland. I know this has been a very controversial issue over the years—MPs’ remuneration—but how interesting it is today to be standing in the House to debate the decrease of that. Most people would be debating for the increase of their remuneration. Indeed I believe that we are responding to what the Prime Minister has probably properly assessed to be not just public sentiment but just exactly where things ought to be regarding this issue and this debate.As the previous speaker Annette King has said his history of comment around this particular area has been that restraint is very important. One of the criteria that the Remuneration Authority looks at when it makes decisions and recommendations around this is the area of prevailing adverse economic conditions. We celebrate that New Zealand is doing better but it was not long ago that we remember that this country was needing to borrow $300 million a week in order to maintain the services and soften those hard edges of recession for New Zealanders. We are coming out of that dire period of time and this country is starting to do well but we still need restraint and it is unfair—and we would even use that term “unethical”—for us to say to the people of New Zealand to exercise restraint while MPs’ salaries appear to be increasing unrestrained. It is important for us here in this House not only to lead debates but to live debates—to be examples of that which we hope other people will follow. I know that is a conceptthat I think many people would perhaps wonder at but that is the aspiration and the ideal that we would ought to have in this House. So it is important for us to address this matter.One of the other areas that the authority looks at is this issue of fair relativity with comparable positions and no doubt there are discussions decisions and determinations made about what those comparable positions may be. But what this Government and no doubt those who support this bill have determined is to say that the increases should be comparable to that of the public sector. I support that because indeed we are members of the public sector. We do stand in this place to serve the public. We are public servants. Although there are many aspects of our work that may go beyond that which the public sector may do at large there are many demands and many pressures. In terms of the positions that people have they can be very short and often it is very difficult for MPs when they leave this House to find their way back into the workforce. There are all of these factors.The fact is also that the work that we do is often demanding upon our families and upon our time and I have not yet come across an MP who works 40 hours a week. They all tend to work more. They all tend to put in huge effort and I have not come across an MP who does this job for the money. They do it because they believe in New Zealand. They want to improve New Zealand. They do it because they want to make a difference and I know many MPs who work 70-plus and 80-plus hours a week in service of their communities. So to bring down the salary to an hourly rate is not what this is about. Actually what this is about is being in step with the public sector and being in step with New Zealanders in terms of remuneration. I think that around this country New Zealanders by and large will say that we are landing in the right space regarding this bill. I look forward to making comment further on in the process of this bill and I am very pleased to stand in support of it. Thank you.CHRIS HIPKINS (Labour—Rimutaka): I rise to speak on the issue of MPs’ pay with some trepidation. I think it would be fair to say there is not a single vote to be gained in this particular debate. I do not think anybody particularly enjoys these kinds of debates in Parliament. It would be fair to say as the chief whip of the Labour Party that I did not have a queue of MPs lining up outside my office door this morning wanting to speak on this particular piece of legislation and I do so myself with some trepidation.I want to say right from the very outset that I absolutely agree with the principle behind this legislation which is that MPs’ pay should not be out of step with what every other New Zealander is getting at the moment and I think that is an issue that has been spoken about for some time and it is absolutely high time that the Parliament address that so I am pleased that this opportunity has arisen. However I do have some significant concerns about whether the bill is going to actually deliver on that commitment. I want to make it very clear from the outset that the Labour Party will be voting in favour of this legislation and we will be voting in favour of it with all of the reservations that I am about to go through because voting against it would effectively be voting for the large pay rises that we are trying through this bill to decline. So we are going to vote in favour of this legislation but I want to make it clear that we have reservations.We have particular reservations about pushing this bill through all stages under urgency without any kind of proper process around it. The risk of getting it wrong is high in doing that. The risk that we will need to come back and fix it again is high but also the independence of the Remuneration Authority is compromised in the way this bill has been introduced and in the way it is being pushed through. Interestingly by pushing this bill through under urgency through all stages in the way we are today the Remuneration Authority which issued the original determination that gave MPs the pay rises will not get the chance to have any contribution on this debate at all. So the Remuneration Authority will not have the opportunity to come up to the Parliament and say: “OK if that’s what you’re trying to achieve this bill won’t do it.” It will not have that opportunity. So we have no external verification that this bill is actually doing what we want it to do which is that we wanted to ensure that our own pay does not get out of step with the rest of the country. We have no guarantee of that. So although we are supporting it because we want to deal with the immediate issue the long-term issue may well still remain.There have been numbers flying everywhere from different parties different bloggers all of whom come up with a different set of calculations that may or may not demonstrate that over the longer term this bill could give us a lower pay rise or a greater pay rise. There are numbers flying around about various proposals to amend the bill that may or may not give us a lower or a higher pay rise. That is one of the problems with pushing a bill through all stages under urgency in the way this bill is being pushed through today. We absolutely support the principle of the bill but we are not convinced that it is going to be actually delivered on by the words that we have in front of us at the moment.We have had 5 years to deal with this. The Government has known since November that these pay rises were in the pipeline and likely to come up. Why has it taken until now until the pay rises have already been awarded and due to be paid into MPs’ bank accounts next week before we finally get legislation to deal with it? This should have been dealt with months if not years ago and then it could have been dealt with in a proper considered process where it would not be rushed through Parliament.I want to make it very clear that I am also quite uncomfortable at the idea that Cabinet the executive Cabinet sets the policies around MPs’ pay. That is why we have an independent body and the idea that Cabinet can overturn the decisions of the Remuneration Authority when it disagrees with it is bad. It is worrying from a constitutional perspective. I think it is right that Parliament takes another look at the criteria the Remuneration Authority uses but we have to accept that if we want these decisions to be made independently then that is what they are—they are independent decisions. Because here is the question: if it is OK in principle for Parliament to legislate for a decision that we disagree with when we think it gives us too much pay is it OK for Parliament to legislate for a decision that we disagree with that we think gives us not enough pay? Because that is the principle that is being established: that if the authority issues a determination we do not agree with we will simply legislate over the top of it. I do not think that is a good practice. I think it is right that we set clear criteria. It is absolutely right that at the moment the criteria are giving MPs pay rises that are out of step with every other New Zealand and therefore need to be checked and need to be addressed but I do not think it is right that Cabinet effectively mandates legislating over the top of an authority decision that we disagree with.I think this decision should have been taken long before that determination was even issued. For 5 years we have been talking about it. Any time in those 5 years this issue could have been dealt with. To some extent we have no choice now but to take the course of action that we are taking because the Government has dragged its heels on the matter. I think we should certainly give those matters some consideration and I hope at some point there will be the opportunity for some careful reflection on this to ensure that we do actually get this right for the future.I also want to make it clear to the Government that I do not see this and the Labour Party certainly does not see this in any way as a justification for supressing well-deserved and well-earned pay increases for those many people working in public sector jobs like teachers nurses and police all of whom are going to be making their claims to the Government through collective bargaining in this year’s pay rounds. It would be wrong for the Government to interpret our support for this legislation as a signal that we would support simply not increasing pay for people who have gone without pay increases for many many years while we have continued to enjoy them. That would be unfair. There are many in the Public Service—and when I say “Public Service” I mean that in the widest possible sense—who have done their bit who have tightened their belts who have gone without pay rises of any significance for quite some time and who frankly deserve them and I think it is wrong for the Government to try to say: “Well if MPs aren’t getting a pay rise they should not get one either.” That is not right. That is not fair and we are going to be monitoring that very carefully.With regard to the technical nature of the bill we will get into that further in the Committee stage but again I want to come back to that fundamental question of whether this bill is actually going to deliver on its objectives and whether in fact the calculation that is now being made is a fair one. This bill at its essence links MPs’ pay rises to the quarterly employment survey for public servants. The problem with using the quarterly employment survey as a measure is that that also captures people who move into different and higher-paid jobs or who move from part-time to full-time employment and those types of things that actually lift potentially the salary rises higher than they might otherwise have gone. It is not comparing apples with apples. If we were to look at some kinds of standard definitions of what is counted then that might make a difference but under the current formula there is real potential again that public servants moving up the Public Service hierarchy could therefore inflate MPs’ salaries and that is the very thing that we are trying to address with this bill. So there are a whole lot of technical issues in this that we are simply not going to be able to explore in the next 3 or 4 or however many hours it takes for Parliament to pass this bill through all stages under urgency.To recap this first contribution and to summarise the points that I am making first and foremost I do not think that MPs should be getting large-scale pay rises and I am pleased the Government is dealing with it. Second I think we need to be looking at an enduring solution that ensures that our pay—MPs’ pay—is not a subject that we spend time debating in this House but is determined independently on a clear set of criteria and I am not yet convinced that the criteria that this bill proposes are going to be the right ones that are going to deliver the outcomes that we are after. And third I think this process is flawed. It should not be being done under urgency—although now because the Government has left it so long we have no choice and so Labour Party members feel we are forced into the position where we have to support it. And related to that this should not be a Cabinet dictate; this should be based on an independent review. It should be determined independently and this is a very bad process.ANDREW BAYLY (National—Hunua): It is a pleasure to be asked to speak on the Remuneration Authority (Members of Parliament Remuneration Amendment) Bill. We are of course living in difficult international times and although we here in New Zealand are lucky to be enjoying the success of what this Government has achieved over the last 6½ years we need to be cognisant of what is happening. This bill is about being reasonable fair and equitable. It is about providing leadership and taking a stand which affects all 121 members of this House. It is rightly so that all MPs should be concerned about the level of their remuneration at a time when we as a country are looking and trying to be fiscally prudent.I believe that the Prime Minister took an important and courageous stance on this matter on 2 March when he said that it was important that we MPs should show restraint. This is a Government living within its means. A 3.56 percent increase was inappropriate when inflation is at 0.8 percent and expected to decline to zero percent by the end of this financial year. Tying our salary increases to the public sector is the right thing to do especially as a number of significant industries within the public sector are currently about to embark on their annual pay round discussions. It would be wrong for us to accept the 3.56 percent increase and yet see these important public servants—such as our teachers nurses and police—receive increases below what we have accepted.Yesterday I had the pleasure of visiting two schools in my electorate namely Clevedon School and KingsGate School. I saw firsthand what a wonderful job these teachers are doing at these schools—the dedication and the care that they show towards their students both at an academic level but also at a personal level—in trying to create great new citizens for New Zealand. They are all professional people with great skills and training and are entitled to their remuneration. The same goes for those in our nursing and other medical professions who are just as diligent at looking after our sick and infirm.On Saturday I had the pleasure of attending the dedication of a new ambulance at the St John’s Centre in Pukekohe. The ambulance was a gift from Malcolm and Shirley Fletcher to the people of Franklin. These two people have already given a previous ambulance so this is their second gift. It shows what great citizens they are and the caring and generous spirit they have.When we look at our remuneration structure we were right in overturning our increase. The bill provides that the Remuneration Authority must fix the salaries of MPs so that the salaries the superannuation component and the personal benefits are in a combined sense fixed or move up in line with the average ordinary-time weekly earnings for fulltime-equivalent employees in the public sector as shown by the quarterly employment survey. In using the quarterly employment survey it means that the remuneration of members of Parliament will increase with the average earnings in the public sector. Currently the Remuneration Authority Act 1977 requires the authority to make determinations for each position within its jurisdiction at least every 3 years but the amendment will mean that this will occur annually in respect of the salary component.In summary we are here to legislate under urgency firstly to change the criterion for the Remuneration Authority Act to take away the authority’s discretion on MPs’ pay increases; secondly to make the sole new criterion the average of the public sector pay increase for the previous year as the total compensation; and thirdly to backdate the legislation to 1 July 2014. I think that bringing about this change under urgency is right especially when I think about some of the people living in my electorate who expect a hard-working MP to do their bit as a public servant. Receiving a salary rate above the quarterly employment survey does not align with these ideals. I commend this bill to the House.METIRIA TUREI (Co-Leader—Green): The Green Party is opposing this legislation and I will describe why in some detail shortly. We do understand it—and we did consider seriously supporting it—because it does provide a criterion on which the Remuneration Authority can consider MPs’ pay and on that basis it is generally a move in the right direction. It is a publicly available measure that is being used and it could help with transparency with MPs’ pay except of course that the principle is not just that there is a criterion—I mean the Remuneration Authority already has the ability to use criteria for MPs’ pay—but that it is a criterion that constrains MPs’ pay increases. And there is no evidence on the table and I heard nothing in the Minister’s speech—and he may have more evidence to provide us all—to show that this measure will constrain MPs’ pay more than the current provisions provide for.That was our criticism of the previous bill last week—that it did not constrain MPs’ pay increases—and we want to see some evidence that this one will. It is not hard to argue with; it is not a huge issue. If there is evidence we need to be able to see it but there is none and it is very difficult to even do the assessment. We did try to get the Parliamentary Library this morning with the short time we have had to look at the bill to see whether it could calculate it and it is very difficult. And yet we are being asked to support this legislation with no evidence at all that it will actually do the job it is supposed to do. We are not prepared to whitewash this issue. In fact we need to make sure that we have proper criteria that restrain MPs’ pay.The Green Party has put two proposals forward. They will arrive shortly before the House as Supplementary Order Papers. One is where the criteria are based on nominal increases in the median wage which would significantly constrain MPs’ pay increases. That means that if the median wage goes up by a hundred bucks then MPs’ pay goes up by a hundred bucks. It is not percentage-based. The second is based on the labour cost index which is a much better measure than the quarterly employment survey and would also significantly constrain MPs’ pay increases because that is the principle—not just that there are criteria. There are already criteria that the Remuneration Authority uses. So this bill does not provide any meaningful change to what the current situation is so why then would we give it a tick when it does not actually do anything?I am really concerned by what I have heard today so far—we are only halfway through the first reading—about the attitude of MPs to the public. There has been talk about the odium that we all receive as a result of MPs’ pay increases. We do not treat the public fairly in the discussion about MPs’ pay and allowances. We do not make sure that there is an open and transparent system for them to assess the validity of any allowances that we have or the pay increases that we might get or how that pay is set. The Remuneration Authority has been trying to do that a bit better. But to say that MPs get treated with odium and disrespect—and hatred and disgust is what that odium means—is grossly unfair to the public. The public will be pissed off if they think that there is unfairness in our system. It is up to us then to demonstrate that the system is fair and the best way we can do that is not to rush legislation through under urgency because there is a public backlash; it is to have a proper open and transparent system.The Green Party has been arguing now for years and years—it started with Rod Donald—that we should have an independent and full review of MPs’ pay and allowances and ex-MPs’ entitlements and have that fully available for scrutiny by the public so we can have a proper discussion about what it is we need to do our job the kind of job that we have making sure we have the tools to do our job and nothing more. You know—we get paid for the job we do and we have the resources we need to do the job.The public when we have been open and transparent have been really responsive. The Green Party led the transparency move for our accommodation and travel allowances if you remember. We opened up our books and as a result the Speaker then put in a system so that everybody’s travel and accommodation allowances are now known to the public. There were howls of outrage from MPs because they thought that the public would crash in on us from I do not know the gallery and have huge problems with what we were spending. In fact the fact of the transparency gave the public confidence about what we were doing and how we were doing it and it now largely goes unnoticed. We do not need to treat the public with such disrespect and neither should we treat this process with such disrespect.The bill has two parts that I am mostly interested in. The first of course is the criterion which simply does not work to do the job or at least we have got no evidence that it will. The second is that the bill will revoke the Remuneration Authority’s determination of the pay increase. That is what we need to do—revoke that now. We could do that under urgency. It is in the bill. Then we can have a proper process with a select committee and some time to consider what are the best criteria for the Remuneration Authority to use to constrain MPs’ pay. That would do both jobs. We would stop the pay increase now. We could do that this afternoon.Then we would also give ourselves the time to look at what are good criteria for the Remuneration Authority to use and to open it up for public scrutiny so that the public can have a say on what they think the most appropriate criteria should be to use and make sure we have got it right. I absolutely agree with Chris Hipkins and others who have spoken that the chances of us having to come back and fix this are very very high. It has been only a week and a half since the first version of the bill came to Parliament. Then we would know we were doing the right thing for the right reasons and doing a good job. That is what we get paid for. That is what this is all about. If we are going to make law we need to be professional lawmakers and make sure we do a good job and we do not waste time and we do deserve the pay that we will eventually get.But in fact what National and others are showing to the public is that we will be responsive on these issues only when we feel we are under political attack we will not take them seriously as they ought to be taken we will not trust the public to have a say about what our pay and allowances should be and we will be defensive and hurried about it. I think it is very shameful actually what is going on today. It is why we have opposed urgency. It is why we are opposing this bill. It is why we are going to great efforts to find alternatives to put forward to the Parliament so that parliamentarians can consider different criteria and think about what is the best way to proceed. It is why we are going to see whether we can put forward a Supplementary Order Paper that will just revoke the Remuneration Authority’s decision and just that so that we can take time.We will no doubt have some long discussions over the next 24 hours or so about the effect of this bill and the concerns that MPs have about it. I reiterate that I am very much looking forward to the Minister providing the evidence that shows that this constrains MPs’ pay. It may be that the Minister does not intend to constrain MPs’ pay increases but just to set the criteria. If that is the case I think he needs to tell us that. It needs to be made very clear that this is not designed to reduce pay increases; it is designed only to put a criterion in place. I do not agree with that but at least it would be more up front about what we are trying to do and we are being more up front with the public about the results of this bill. I think that is where in this whole process Parliament is really falling down today. It is treating members of the public with such high levels of disrespect. They deserve better from us. Thank you.TRACEY MARTIN (Deputy Leader—NZ First): Kia ora Mr Assistant Speaker. I stand on behalf of New Zealand First to put forward a contribution on the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. I would like to acknowledge the contribution by Metiria Turei and some very very interesting points that she has raised. At this stage at this first reading New Zealand First will support this bill through but I do believe that Metiria Turei has articulated some really very interesting questions concerns and points that I hope get fleshed out as we have this conversation. I am not confident about that but I would like to think that they might be.I think it has been articulated by the Green Party contribution and by the Labour Party contribution that urgency is not the best way to bring legislation to the floor of the House. It is with serious concern that New Zealand First notes that this bill was supposed to come to the floor of the House a couple of times last week—Hon Michael Woodhouse: Once. Only once.TRACEY MARTIN: Well it depends on your communication I guess Mr Woodhouse. Anyway a couple of times last week and today we finally have it. There was the bill and a Supplementary Order Paper. I have received instructions that they have been combined.Hon Michael Woodhouse: Yes they have.TRACEY MARTIN: They have. So that happened this morning?Hon Michael Woodhouse: Yes.TRACEY MARTIN: It happened this morning. So therefore this bill has actually been available only since just prior to question time which is not the best way to have confidence that what the bill says is what the Minister in charge of the bill says it will do. I do think that the suggestion put forward by the Green Party contribution that as there are quite clearly two parts—in the short period of time I have had to look at the contribution from the Ministry of Business Innovation and Employment there are quite clearly two parts now to the bill. One stops the inappropriate 3.5 percent increase and again we agree with the Green Party contribution with everybody’s contribution that that is inappropriate.However we do not happen to agree with the articulation by the National Party members of the reason why it is inappropriate suddenly—suddenly we are in urgency. I mean there have been 6 years in which the Government could have dealt with this situation. It could have changed the criteria without actually looking like it has hauled the Remuneration Authority in for a good hiding and then sent it on its way. The Government could have dealt with this over the last 6 years as opposed to today.But it is not anything to do—it has got nothing to do—with the global financial crisis. It has more to do with the 40000 members of the Public Service who are about to go into bargaining. It has more to do with the 17000 members in the health sector mostly clerical assistants and public and mental health workers. It has more to do with the 1100 corrections staff 3100 Inland Revenue Department staff and 430 Ministry for Women and Statistics New Zealand staff. It has more to do with the staff at the Artificial Limb Service and the 800 Department of Internal Affairs workers 150 staff from the Blood Service 1650 Ministry of Justice workers 2400 staff from Child Youth and Family 1150 from the Ministry of Business Innovation and Employment and 300 Parliamentary Service workers who are also going to be seeking acknowledgment for their work and what they do and the fact that they deserve a pay rise.We also think the timing is particularly interesting that 2 March was when the Prime Minister made the statement that we were going to be dealing with this now under urgency after 6 years of opportunity—now under urgency—and that a by-election had been called in Northland. We all know that Northland is a place where the majority of the workers—and the majority of the unemployed in the country pretty much sit up in Northland—are also among the most lowly paid inside our nation. So we do not think this has got anything to do with the global financial crisis and constraint from that perspective and that sort of good warm-fuzzy feeling from the Government at all. We think this is a very political move on behalf of the Government. It happens to be the right move; it is just not well done. We will be listening for further contributions from the Government benches as they try to convince us and the nation that the only reason that this is here now under urgency is that the first part must be dealt with under urgency.Again I point to the Green Party contribution around transparency. One of the benefits of the select committee process is the ability for New Zealanders to come in and actually say what they think. I think if there is anything that we should be confident about in this House it is that should the criterion should the purpose should the first part of this bill go to a select committee we should be confident that we can stand in our place and say to the people of New Zealand: “We do this job. We give it our all. We do it for you. And what do you think that is worth? What is that reasonably and honestly and fairly worth?”. If we cannot do that then we have got a larger problem than 3.5 percent. So I think it is very interesting and I will listen very carefully to the rest of the conversation around these issues.I do want to pick up on a point that Ms King said. We are also working on a Supplementary Order Paper because we find it very interesting inside the regulatory impact statement that the bill provides that the authority must fix the salaries of MPs so that they can move up only in line with the movement in the average ordinary time weekly earnings for fulltime-equivalent public sector employees. We would like some clarification around “equivalent public sector employees”—who is that?Hon Michael Woodhouse: It’s defined in the bill.TRACEY MARTIN: Great! The Minister has just said that we will find it in the bill. The fact that we actually had the bill only an hour before question time—thank you so much Minister. It would be nice to actually be able to read it finally.Hon Michael Woodhouse: Barbara had it days ago.TRACEY MARTIN: Not the bill you incorporated into your Supplementary Order Paper Minister but you can keep running that line if you like.We will bring in a Supplementary Order Paper because we are looking at amending the Remuneration Authority Act 1977 to provide a sole criterion for the Remuneration Authority to consider when reviewing the total remuneration of all positions within its jurisdiction. The current bill amends only the salaries for members of Parliament but leaves untouched the remuneration of judges and chief executive officers of local government among others. We see that these occupations also should be considered by this Parliament as to whether they are appropriately in line with the rest of the New Zealanders out there putting in a full day’s work for a fair day’s pay. Our Supplementary Order Paper will address those at that top take level and we believe that it shows leadership. We believe that it would show leadership across the whole of the sector.It was interesting that Mr Farrar David Farrar—he is a well-known leftie I think is he not—has helpfully compared MPs with judges. An MP used to get 73 percent of what a District Court judge gets but today they get just 48 percent. This excludes superannuation subsidies that are far more generous to judges. Then Mr Farrar compared Cabinet Ministers with High Court judges. In 1985 they were paid almost the same. Ministers got $957 more. Today a Cabinet Minister gets just 67 percent of what a High Court judge gets. They get paid almost $150000 less. We are not suggesting that that means we need to go up towards High Court judges; what we are suggesting is that things have got out of kilter.My final contribution about things getting out of kilter would be the fact that in the 1970s the wages of teachers and members of Parliament were similar. In the 1970s the wages of teachers and members of Parliament were similar. Things have got completely out of kilter. We believe that this is an opportunity to bring it back but we are not confident that the Government itself knows what is inside this bill and how it will fold out at the end of the day because it has not taken the time—and it had 6 years to do so—to truly work this through. Kia ora.SARAH DOWIE (National—Invercargill): I rise in support of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill 2015 for its first reading but before I begin like others I want to extend my support to the people of Vanuatu. My thoughts and prayers are with them as they move through the deaths they have experienced and the destruction. My best to those people.I pick up on the point of the member opposite who said that talking about members’ remuneration has always been a touchy subject. An interesting fact is that until 1950 our predecessors actually fixed their own salaries. I do not quite remember that. I was actually born in 1974 when the Higher Salaries Commission took over the role. I am sure it was to much relief of many members that it was taken out of their hands but it certainly did not remove the fact that the public dislike MPs’ salary determinations.Just before I do talk more about this bill I want to pick up on two things that were said by previous speakers. My understanding is that there was quite a bit of dialogue with the Remuneration Authority to use some of its implied discretion under the Act that if it was going to set an increase to make it appropriate. This is a Government that is talking about having people live within their means. We are asking the Public Service to do more on less. We are asking for better results. It has been said that in support of that a 1 to 2 percent increase is probably the appropriate place for it.The Remuneration Authority has decided not to do that and the 3.56 percent increase is seen on this side of the House as neither necessary nor justified. That is the reason why we have now taken these steps to change the Act to bring this increase back into line.The other thing too is that I am not too young to remember some shenanigans in 2002 and 2005 in respect of MPs’ salaries and their determinations. So to suggest that we are doing things in a rushed way now—what we are doing is we are saying that this 3.56 percent increase is inappropriate. We have had dialogue with the Remuneration Authority. It has chosen not to take that advice so we are going to do something about it. I am in support of that bill. This bill adds to the parent Act and will clarify the Act to make determinations fair to the recipient but also to the taxpayer. These changes will obviously bring that to the fore.As I said before this decision was not taken lightly but we want to peg determinations to the average annual percentage change in the public sector pay as measured by Statistics New Zealand. That means that our pay increase will be in line with the average public sector salary movements. That is only fair because we are public servants. We are bracketed with the people who are nurses who are teachers and who are police officers. They are doing a fantastic job. As I said before this Government is asking our Public Service to deliver more on less. They are doing that. Their work is valued but we need to be walking the talk. We need to be seen as being bracketed with them and the work that they do.I certainly do not question anybody’s motives for being here. We are all here to do a job. We are all here to do the best that we can for our constituents. We may have different ideas about how we do that but I think the motives are pure just as our nurses go on to the front line or our police go on to the front line and work hard. It is appropriate that we are in line with that 1 to 2 percent increase if at all. I look forward to seeing this bill being shepherded through the House. I am in support of it. Thank you.JAMES SHAW (Green): I would also like to start by extending my condolences to the people of Vanuatu. What is happening over there is a great tragedy and I wish them all the best for their recovery. I commend all the efforts of all New Zealanders who have extended their support via the Red Cross and other agencies.The people of New Zealand need to know that the Government is introducing a bill that looks as if it is supposed to contain runaway increases in the pay for members of Parliament but as far as we can tell will not actually do so. Not only that the Government is abusing the parliamentary process of urgency to rush through the legislation before anyone notices how flawed and ineffectual it is. It is a bit like the Government’s approach to climate change. It can claim that it is doing something about climate change because it has got an emissions trading scheme even though emissions continue to rise. The emissions trading scheme is a smokescreen that has no effect other than to enable the Government to pretend that it is doing something.Much like last week’s proposal the latest version of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill uses a poor linking mechanism. It sounds reasonable in the sense of linking MPs’ pay to public sector pay but we do not believe that it will have any real effect. As a result it seems as though the bill will likely continue the run of large and unmerited pay rises for MPs. So instead of meaningful reform the Government is deploying a smokescreen. It wants to be seen to be doing something the week before a knife-edge by-election in Northland without actually doing anything about the issue. In the process it has actually adopted an approach that precludes meaningful scrutiny. It is not allowing public input. It is not looking for expert analysis. It is jamming through superficial changes under urgency and hoping that nobody will notice. The Greens will not support such contempt for proper parliamentary procedure nor will we support such ineffective changes. We have consistently over many years called for real constraints on MPs’ pay but this is not it.I disagree with the member for Rimutaka Chris Hipkins who earlier claimed that voting against this bill is the same thing as voting for the status quo although I can understand his point. If the bill has no meaningful impact—and the member from Rimutaka also said that we could not have any confidence that it will have any meaningful impact—then voting for it is the same thing as voting for the status quo. It is better to vote against a flawed bill. Passing a flawed bill that has no impact will mean that it may be some years before the matter comes back before the House when we are once again embarrassed by the massive pay rises we are all getting. A completely different approach is needed.According to this bill MPs’ pay would be linked to public sector pay as calculated by the quarterly employment survey. A few other people have mentioned this. It is a bizarre choice. The quarterly employment survey is hardly ever used as a measure of pay. Not even the State Services Commission uses it as an indicator of pay. This is because it fails to control for changes in the quantity or quality of labour. As a result changes in pay as calculated by the quarterly employment survey are not necessarily indicative of what workers are earning.Indeed we do not have any confidence that linking MPs’ pay to the quarterly employment survey would actually prevent large pay rises. We received this version of the bill only at 10.30 this morning. The analysis we did on last week’s version of the bill showed us that taken over the last 6 years MPs’ pay would be almost exactly the same now as it is under the status quo. The Government has not provided us with any evidence that this new version would do anything to the contrary.The Government’s approach to this process shows contempt for the public and for proper procedure. MPs are supposed to represent the people. To that end the people should have the right to scrutinise any proposed changes to MPs’ pay. However the Government members seem to have considered this an inconvenience. They want to be popular and they want a quick fix; they do not want select committee scrutiny. As a result they are rushing the bill under urgency. This is something that the Green Party cannot support so we will not be voting for the bill at this stage. As my colleague Metiria Turei said we will be bringing in three different Supplementary Order Papers during the course of this debate given that we are probably in the minority on the voting front to attempt to fix some of those problems that we see. Thank you.The ASSISTANT SPEAKER (Hon Trevor Mallard): Marama Fox—5 minutes.MARAMA FOX (Co-Leader—Māori Party): Kia ora Mr Assistant Speaker. You know what? We are standing to support this bill as we do with most first readings. We like to do that because we want to hear what the people at the select committee stage think about it. Unfortunately we have some scepticism around the measures that are going to be in place and whether they will do what the bill outlines. We are going to support the bill through at this stage in the absence of something else and I am interested to see what the Greens are going to put forward. In saying that why are we supporting it? Because quite frankly the proposed changes that the Remuneration Authority put forward a couple of weeks ago were embarrassing. They were embarrassing but not because I do not think MPs deserve it and not because I do not think MPs are hard working.In fact I have seen just how hard MPs work. I sat in a meeting with a Minister at 10 o’clock at night—opposite a blood-shot weary and tired-looking Minister—who had not eaten all day so I ordered dinner to his office so we could have the meeting. I know how hard they work. So it is not embarrassing because I do not think we deserve it; it is embarrassing because actually so does the rest of New Zealand. The rest of New Zealand deserves to have a pay packet that adequately pays them for the job that they do. No matter how hard I work—and I work very hard as do other Ministers and others MPs because I am not a Minister not yet. I have got a husband who is a shearer who still leaves home before I do and still works twice as hard and then has to look after all the kids on top of that because I am not there.Jacqui Dean: Sounds like a good man.MARAMA FOX: He is a good man. I have trained him well. I think that we need to be addressing the remuneration of our country. In fact our poverty standards in this country are an embarrassment to us. Two hundred thousand - plus people are living in poverty. The greatest number of people who are affected by abject poverty in this country are the children and families of those on a benefit actually. That group of people deserve to have a rise in the level of their benefit. The hardship on those families is remarkable. We do not understand the hardship that they come into contact with. In fact our minimum wage is set at the rate of poverty. It is 65 percent of the median wage and there is some discussion about what that is. But if we are employing people on a minimum wage in this country to be impoverished then we need to ask ourselves—yes I support this bill because it means we will not get a pay rise that is just frankly embarrassing while our people languish in poverty. Then if we look further at the levels of poverty and if we add hardship to that it increases the impact on those people.This wonderful book here Child Poverty in New Zealand written by Jonathan Boston and Simon Chapple outlines exactly what that hardship means. Hardship is enforced lack of essentials; meals with meat or fish are missed or happen only every second day; you do not have two pairs of shoes in good repair; you do not have suitable clothing for special occasions or a winter change of clothing; and arrears more than once a year for rates electricity water vehicle registration insurance or warrant of fitness. There is a hardship index for people living in poverty in this country and you may or may not be surprised to find out that 100000 of those people meet more than eight to 16 of the 20 indicators for hardship according to this book. So quite rightly we are embarrassed by the proposed changes to remuneration not because we do not think that we deserve them but because we because we think the rest of New Zealand deserves them as well. We need to be addressing the minimum wage in this country and making it a living wage. Do not pay people to be impoverished. Then the people who are receiving a benefit or welfare because of their circumstances need to be supported out of poverty not supported into poverty and extreme hardship.That is why today we are supporting this bill but we are sceptical that the changes are actually going to make the difference that they intend when you think that some chief executive officers of ministries and Governments actually get paid way more than their Ministers. So at this point and at this time we support it. Thank you.Dr PARMJEET PARMAR (National): It is great to be able to speak on and support the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. First I would like to congratulate the Minister in charge the Hon Michael Woodhouse on the work that he has done on this bill in such a short time. The Remuneration Authority (Members of Parliament Remuneration) Amendment Bill sponsored by the Hon Michael Woodhouse is to amend the Remuneration Authority Act 1977. This bill is going through all stages today under urgency. This is because the latest increase which was determined by the Remuneration Authority was to increase the salary of members of Parliament by 3.56 percent. Although this decision was made independently of members of Parliament we should not be receiving this increase because it is disproportionate to increases in the public sector.When this issue was raised by the Prime Minister the Remuneration Authority referred to a specific criterion in the Remuneration Authority Act 1977 as the reason for this increase and that is why this change is necessary. This change will tie the salaries of members of Parliament to the public sector and will take away the Remuneration Authority’s discretion when setting the salaries of members of Parliament. Given that inflation is 0.8 percent this kind of increase is not necessary. I am really proud to be part of this team that believes in delivering for our Kiwi families and children. We are taking action; it is not just about talking—like the Greens we heard. This is not a new issue. This is not an issue that is raised for the first time. It is about fairness for the taxpayer’s dollar.The amendment will change the process of how the Remuneration Authority reviews the salaries of members of Parliament. So first it will take away the Remuneration Authority’s discretion whensetting the salaries of members of Parliament. Second it will make the average public sector pay movement the sole criterion for determining increases inthe salaries of members of Parliament. This will be backdated to 1 July 2014. This amendment will mean that the average annual percentage change in public sector pay as measured by Statistics New Zealand’s quarterly employment survey will be used to determinea member of Parliament’s salary. Using the quarterly employment survey will mean that the increases that members of Parliament will get will be in line with the wider public sector. The law change will be backdated to 1 July 2014 which means that the determination of 3.56 percent of the Remuneration Authority will not be awarded. This increasewill be somewhere around 1.5 percent.Currently the Remuneration Authorityhas to take into account several factors such as relativity to comparable positions and the requirements of the job. With this change the authority will just need to annually apply the average quarterly employment survey index for the June year to give an increase to members of Parliament. The Remuneration Authoritywill continue to have the ability to change the mix of cash and non-cash items in the overall pay package. This indexing of the salaries of members of Parliament to the quarterly employment survey will be done at the same time every year. This is after the publication of the quarterly employment survey in June every year. This will make sure that the increases we get are in line with those our teachers nurses and other workers get.If we get pay increases that are more than the public sector it is not a good look and this is not what our people expect from us. We need to lead by example—that is to do what we say and that is what our Prime Minister the Rt Hon John Key and the National-led Government are about. Pay and pay increases I understand are rewards for a person’s hard work dedication and commitment to that person’s work. As well as that I know and I recognise that members of Parliament work hard they are committed and they are dedicated. But we are not here for the financial reward. I am here to serve our people; I am here to serve our country. So I am really honoured to be part of this team that believes in delivering more for less. It is about listening to our people and it is about being fair to our people so I support this bill.GRANT ROBERTSON (Labour—Wellington Central): As other Labour members have done in this debate I rise to support the first reading of this bill. I do so because I think what this bill represents is a step in the right direction towards sorting out the issues that lie in the way that MPs’ pay is determined. I do not do it on the basis of the fact that this is a great process or that this is necessarily in a perfect state at the moment. It is not. I think what we have seen over the last week is an indication of the fact that I predict we will be back debating this issue again at some point in the near future.But if we actually look at the principle here I think it is shared by parties across the House. The goal here is that our pay is in some way or other more closely linked to what is happening for the median average—whatever calculation we are using—New Zealandersand their pay and income. That is a goal that I think is actually shared around the House. The difficulty some members are having with this legislation is first whether this is the correct mechanism; and second whether this process is going to deliver that mechanism. I can stand up here today and say I prefer an approach that links us to something like the average wage in the public sector but I see real shortcomings in those particular criteria and I will return to that in a minute.In terms of the process this has been mishandled by the Government. I think we are up to about the seventh or eighth version of the criteria. That is a very hard thing to keep track of—to actually understand exactly where we have got to. It is quite possible that there are unforeseen consequences in this legislation. I am not here you know disparaging the Minister; I just think the pace at which this has happened means that it is likely that not all of those scenarios have been thought through. So I come to this somewhat sceptical around that but acknowledging that we do need to make an effort to show that we know that we in this House are well paid for what we do—every member of this House works hard for that pay—but that when it comes to a notion of what kind of process there should be for increasing pay it needs to relate more to what the average New Zealander is going through than it currently does. That is the issue here.I think the Remuneration Authority has been given a pretty hard rap out of all of this. The Remuneration Authority has done what was asked of it in the Remuneration Authority Act. The Act particularly in section 18 asks it to compare us with what it believes to be the relativity of similar jobs. Over a period of time it has interpreted that to be effectively around executive pay. Once upon a time this was all done—when the Assistant Speaker in the Chair was in the mid-point of his parliamentary career—by something called the Higher Salaries Commission.The ASSISTANT SPEAKER (Hon Trevor Mallard): That’s now.GRANT ROBERTSON: That is now. That is correct. In the early part of his parliamentary career this was done by something called the Higher Salaries Commission. That gives an indication as to what was being thought about in terms of MPs’ pay—higher salaries. It goes off to the Remuneration Authority and it continues to interpret that. So when it came back with a 3.5 percent pay increase plus the extra bits that had been changed around as a result of moving from non-cash to cash recognition it was doing what Parliament had previously asked of it. The reality is that what this has exposed in New Zealand is the fact that executive pay has been rampantly increasing while those on median wages and those on low wages have been struggling. That is actually what the 3.5 percent and 5.5 percent pay increase has led New Zealanders to realise.So you are in a situation now where the average chief executive officer of a company in New Zealand earns 26 times what the average worker in that firm does. That has increased I might add in the last 6 years. It used to be 22 times. It has gone up to 26 times over the last 6 years. Nearly half the population year on year does not get a pay increase. They are the factors that mean people will put their hands up and say: “This is not right.” So the real underlying issue in this bill is actually about the inequality in pay in New Zealand and the fact that hard-working people in New Zealand have not seen a pay increase for many years.Today in the House we heard Bill English tell us once again what people have been told in the past: that they have to tighten their belts that times are tough but that there are good times around the corner. That is what Bill English told New Zealanders before the last election. Today in the House he said: “That promise is off the table now because now we have got low inflation in New Zealand and pay increases cannot be justified.” New Zealanders were promised before the last election an average pay increase of $6600 over the next 3 years and today Bill English wrote that off and said: “Only very moderate pay increases are going to happen.” So this piece of legislation tries to go about correcting a problem that is much deeper. It is a problem about the value of pay for New Zealanders.There was an interesting study by the Productivity Commission released in the last month that shows that over a 25-year period pay for New Zealanders has fallen 16 percent behind productivity increases. We are always told that as productivity increases so will wages because productivity will drive more efficient businesses. Well the reality is that that gap has been created. This is what we are now seeingglobally: the retention by capital of wealth away from those who earn salaries and wages. In New Zealand we now have the evidence and the proof from the Productivity Commission that pay is 16 percent below where it should be. So that is what lies behind the problems that we have experienced in the last few weeks on this issue because for those on high incomes they keep going up. Those on middle and low incomes in New Zealand are stuck and so when our pay is pegged to those on high incomes naturally New Zealanders will react and will say: “What is going on there? That is not the experience I am having in my community.” That is the issue that lies behind this and of course is not being addressed at all by the National Party’s side of the House across the economy.Related to that is a concern I have about the mechanism here. I do believe this is a step in the right direction but I think that by tagging this to public sector pay we reopen another can of worms on this issue and that is we are now tagging this to something that is in the control completely of politicians: public sector pay. It is all very well for Bill English to stand up and say: “Well we’ve got the teachers we’ve got the nurses and we’ve got the police this year. They’re going to have to accept modest pay increases.” Now it is all linked together. My view is that we are taking a step here the next step of which should be a proposal around something that looks across the economy. I know the Green Party has proposed the idea of a median income—that may well be where we should end up. But it needs to be something that looks at the economy as a whole because that is something the Government can influence positively but not control.I think we are getting ourselves back. We are going backwards and forwards if you look back over the decades on whether politicians should be responsible for setting their own pay. No we need to give that job to somebody else. We give that job to somebody else we set the criteria we do not like the criteria and we bring the job back to us again. This is not a sustainable solution. We need a sustainable solution that links this to something that reflects where ordinary everyday average median New Zealanders are—but fundamentally wage growth in New Zealand is unequal. Executive pay has been bounding ahead while those on real wages those on median wages have been struggling. That is the issue this country needs to get its head around. That is an issue the National Party is ignoring. We will support this legislation because it begins the process of more directly linking MPs’ pay with what ordinary New Zealanders are doing. But the process around this bill has been flawed and I predict unfortunately that this is not the last time this Parliament will need to address this issue.JOANNE HAYES (National): I am pleased to stand to take a short call on the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. I am pleased to see that our members across the way over there are supporting this bill because I can tell you that when I hear the member Robertson talk about executive salaries rising I worked in an industry—in the health sector actually—many moons ago and I saw that. We struggled away with the paltry sums that we got to pay our people. To be honest when I came here I did not expect any pay rise because that is not what I am here for. I am here to work for the people. I am here to represent the people. So when the Prime Minister made the statement that he made about stopping the pay rise of 3.56 percent for our MP salaries I was absolutely delighted.I want to thank Mr Woodhouse for leading this bill and for taking it through to its completion. I also want to commend my fellow speakers behind me who have articulated the appraisal of this particular bill and the work albeit fast that has gone into it to date. I can tell you that the results that we have had out there and the kōrero that is happening out there with the public—they are very pleased to see that this Government is actually listening to them and that we are a responsible Government and are managing the finances of this country with great vigour and responsibility which all people of this country would be looking forward to seeing. So without any further ado—there are a couple more stages to go on this—I commend the bill to the House.A party vote was called for on the question That the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill be now read a first 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 first time.Second 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 second time. I want to acknowledge and thank the members who have made what I believe are very considered contributions on the bill. Although we will in due course be in the Committee of the whole House where I can respond to some of the more technical questions that have been raised in the first reading speeches I do want to touch on a few of the less technical and background questions and challenges that have been raised.Starting with Mr Young I think who made a very salient point that today is St Patrick’s Day. Indeed he quipped that this was a rather Irish thing to do: for Parliament to be legislating for a pay drop relative to what was expected. But I think we all agree that in principle it is the right thing to do—it is just the method and the practice. I acknowledge Mr Hipkins’ point where he asked the very correct question: if it is OK for MPs to legislate to set aside a pay increase that they believe is too high what is to stop MPs legislating to set aside a pay increase they believe is too low? Well the short answer is nothing. Parliament is the architect of its own destiny. But I would say this: the National Party is a minority party in this Parliament and for this legislation to pass it requires the support of other parties which I am pleased to say it has with the exception of the Green Party—and I make no criticism about that because I do understand the principal basis upon which the Greens are opposing this legislation. I will come back and criticise some of the other comments that have been made by the Green Party but certainly not its reasons for not supporting this bill. But I would say to Mr Hipkins that it would be a very brave Parliament—and indeed a very brave Government—that did that. So what we are doing we are doing for I think a considerable period of time.I understand that it is incumbent on me as the Minister sponsoring the bill and on this House to make sure that we get the principles—as articulated by the Prime Minister’s wishes and Cabinet’s decision—clearly laid out in legislation. Mrs King asked me what was different about the bill from what was prepared last week and which necessitated a slight delay while what I described as a technical amendment was put through. The difference was twofold really. One was a minor mathematical change in the algebra which would have had the transfer of non-cash to cash benefit then subject to the quarterly employment survey uplift. I did not believe that was appropriate in the circumstances because indeed that was a current-year valuation of a change in a non-cash entitlement. So the algebra was changed to add that part of it—or subtract it as the case may be—back into the calculation of remuneration salary and superannuation after the quarterly employment survey was applied.The second difference was a transitional provision between the 2013 determination and the 2015 determination which would be an issue going forward but actually manifests in the authority’s determination of the calculation of the value of a self-drive vehicle for Ministers. Ministers have had for a very very long time access to self-drive vehicles—and we can argue and debate whether or not there is a personal benefit and how much of a personal benefit there is—but indeed the authority set a value on that in 2015 that was not included in the 2013 determination. It was therefore a tricky transitional provision.Indeed what we have done by addressing that as it was drafted in the first bill was to remove that altogether from the calculation and simply say this: if an MP is gaining what is perceived to be a personal benefit right now and the value of that benefit in the authority’s estimation is attributed to it or has changed—either because of inflation or something else—then that change would not form part of the calculation. On the other hand if as is the Speaker’s prerogative there has been a reduction in the actual entitlement which has a change in the value as was the case in the 2015 determination when constraints were put on spousal travel for example and there was a reduction in the value of the current perceived value of the benefit if that occurs—and there are very few times now where we have actually got non-cash benefits left—in the future then that will need to be taken into account. But there will be no other change in the value or perceived value of the existing bundle of so-called non-cash benefits because the authority has pointed out that there may be a private benefit—for example for cellphones internet at home those things that we see as tools to do our job. But the authority is actually talking about attributing a personal benefit value to that. My view is that while that is in existence now any attribution of future value should not reduce an MP’s salary. The formula does that—you can feel free to check that in the Committee of the whole House.The next issue—in fact it was raised by both Mrs King and Mrs Martin—is around the Prime Minister’s comments about talking a good game but not doing anything. Well actually the Prime Minister’s comments did have the effect on the authority of reducing the impact of the increases received through what were quite straightened times. It is not my usual practice to disagree with one of my colleagues but Ms Dowie did make a comment about an instance where the Remuneration Authority decided not to heed the advice or the request of the Prime Minister. I am going to partially defend the authority in that regard because indeed what it believed it was doing was applying the letter of sections 16 and 18 of the Remuneration Authority Act. Indeed when I first started thinking about this I misread the difference between prevailing economic circumstances and countervailing economic circumstances. What the authority has determined is that there are no countervailing economic circumstances that would warrant a more modest increase in MPs’ salaries.The authority’s other role as set out in that Act—I am quoting section 18 here—is “to achieve and maintain fair relativity with the levels of remuneration received elsewhere;”. And that is where it gets difficult. Where is there a relative role? What do we compare ourselves with? There have been criticisms of runaway rises in executive salaries in the public sector. Well I do not agree with that. I simply do not agree with that. I am not going to agree with that and we are not changing anything in respect of the Remuneration Authority’s determinative powers to set the salaries for about 80 senior public servants. Indeed Ms Fox talked about public sector pay being well above that of the Ministers. Well so what? The Commissioner of Police has 12000 staff a $1.5 billion budget an incredibly complex organisation to run—and I have got seven staff and I am the humble Minister. It is true. Is that a valid comparison? Because I do not think it is. I would say that the relativity—and this is a personal view not the Government’s view—but I do consider that the relativity is actually around seeing the Minister as the chairman of the board rather than as an executive. We do not do the job; nor should we. We should be nose and fingers out—as good chairs are—not chief executive officers because I am not the chief executive officer of the Police; Commissioner Bush is.I think that underscores the difficulty with the question of relativity—that the Government has said: “You know what? We are paid fairly for what we do now and the level of increase is inappropriate in the circumstances and this is the right thing to do.” I will in the Committee of the whole House address the technical questions around the quarterly employment survey—why we have it what its history is. And indeed Mr Farrar will now be in Hansard because I am going to address his specific blog because I think it is important to understand it in its broader context. In the meantime I do appreciate what I have considered to be very intelligent interventions and I look forward to that continuing.Hon ANNETTE KING (Deputy Leader—Labour): Thank you Mr Speaker and can I thank the Minister for taking seriously the issues raised by members during the debate on the first reading of this bill. It is probably a shame that there are not more people to hear it. Maybe there are many out there in radioland but other members would perhaps be interested in hearing this debate too because it is a very important one. This bill today is one that I believewill at the end of the day receive the majority support of this House. I take the points of the Green Party around process and around the fact that there is no select committee looking at this bill. I noted that New Zealand First also raised particularly the first part of this bill not going to a select committee. But we understand the haste because this bill will be a very very untidy mess if it does not pass all its stages over the next few hours because members of Parliament would then receive their remuneration as set out by the authority and then there would have to be a retrospective clawback of that—very untidy very messy.So I understand the haste but I do go back Minister Woodhouse to the fact that this is not a new issue and you know for the last 5 years as I said whenever this comes up there is a firestorm around it and comments are made about it by the leader the Prime Minister of New Zealand. And we all wear the odium of the fact that nothing has been done to make a fair way of setting parliamentary salaries. We all know that there is opposition to parliamentary salaries and it is one of those very very lively debates that happen whenever there is some determination made. So I think Minister that maybe this is something that as a new Minister last year you might have liked to have raised because we always know there is going to be a Remuneration Authority determination coming out at a particular time and to have got ahead of it and to have got it into a select committee to allow some public input into it would have made this process so much better. It would have also had proper scrutiny because let us face it the job that was donewas hurried—and I am not blaming you Minister. I realise that you had to bring forward a bill when the Prime Minister had made the announcement of what the formula would be. But then you had to make the formula fit his commentary and it did not work.We got an algebraic formula that when your own National Party blogger did the work that should have been done by the Prime Minister’s advisers and by the Minister’s advisers—when that work was not done we found that we would have ended up using that formula having got more money. What a lot of fools we would have looked if last week we had hurriedly gone through with what was—Hon Michael Woodhouse: That’s not true.Hon ANNETTE KING: So you are going to address David Farrar’s blog? That is good because I want to know where he got it wrong and others who have read that and have looked at the figures have supported it. So Minister when you get in the chair I want you to go through step by step how it was wrong last week but it is right now; and why if it was right last week it is not the same now. You see it was either right or wrong last week and we could have gone ahead with it. So there was something seriously wrong with it.So Minister the new part of this—and I am struggling to understand it but I would like you to give an explanation when we get to the Committee stage—is the new Part 2? You talked of it being a non-cash benefit versus a private benefit and of how that will be calculated in the future and I think we need to understand with better examples perhaps what you mean. You mentioned ministerial cars but this covers all members of Parliament not just Ministers. So Minister could you come back with examples of what you mean in terms of how this change would work—what could not be changed and what could be changed? I do not get this from the bill. I do not understand it from the bill. So I think we would be better informed if you could come back Minister with those answers.I do agree with the Minister that it is no good having the Prime Minister jawboning the Remuneration Authority. That just does not work. The authority was put there in good faith with an independent role and it was carrying out its role as it was asked to do. So it is not the villain of the piece; it was doing the job that was given to it. And jawboning over 5 years was not going to change what it was required to do by law. It did not change that. So it became a media exercise I think rather than a serious exercise by the Prime Minister.I do not believe Minister that your argument around chief executive officers and relativities is a fair one. You see I think that chief executive officers are paid too much. I cannot believe that we have got chief executive officers now being paid well over half a million dollars in salary. I do not care how big their department is or how small it is—and you could look at some pretty small Government departments that are getting very hefty salaries indeed. There has been no talk of doing anything about that and that is part of the overall picture that does need to be addressed.Minister you talked about being the Minister of Police and about how the Commissioner of Police has 10000 staff—men and women—working hard on the front line. I totally agree with you having been a Minister of Police but I also know that as the Minister of Police the buck stops with you. So the commissioner may well carry out the policy requirements and the operational requirements but the policy comes from the Government of the day. The policy comes from the Minister and the accountability as the Minister has found out comes right back to his plate at the end of the day. So it is not just a matter of being like the chairman of a board overseeing everything that happens around them: “Your turn to speak. Your turn to speak. What are your suggestions?”. As a Minister it is actually a matter of driving and leading. That is how I have always seen it. What has happened here is we have got a huge discrepancy now between the chief executive officers and their Ministers. But even worse there is a huge discrepancy between public and civil servants and their chief executive officers and a huge discrepancy between those in the workforce who are working in the private sector and those in the hierarchy of the Public Service. We need to address those issues.Today we are addressing this bill and will support it because I have yet to meet any members on our side of the House in the Labour Party who have said: “I want a pay increase. I asked for a pay increase. I advocated for a pay increase. I want more.” That is totally untrue. In fact we have had many discussions on how we wished there were not those levels of increase and on how we would rather be benchmarked or judged by what was going on perhaps in the public and private sectors rather than just in this formula that we have got. But what we have got is what we have got and Minister we will be holding you accountable for getting it right because none of us—not one not even members of your backbench—want to be back here again fixing up a mess that has not been properly thought through. So let us put it on record: the Minister is going to tell us in the Committee stage that he is absolutely certain he has got it right and that we will not have to fix this as a mess by next year when a determination is made.So we look forward to some really comprehensive answers from the Minister when he is in the chair and hopefully he is able to be in the chair for the whole debate because when you get a substitute Minister they cannot answer the questions that have been raised in this very good debate here today. So Labour supports the second reading of this bill.JONATHAN YOUNG (National—New Plymouth): Thank you to our two previous speakers—the Hon Michael Woodhouse and the Hon Annette King—for the comments that you have made. I think they are very important and I do concur with the Minister for Workplace Relations and Safety on what he has just shared regarding the level of responsibility—which is quite different from his responsibility—of chief executives of major Government departments who work very hard for the benefit of the public. We know that the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill has come to the House because the Remuneration Authority chair John Errington referred specifically to the criteria set out in legislation as the reason behind the increases. As the Hon Annette King just referred to the authority was doing its job as the legislation directed it to.There come times when the parameters and the requirements that have been set need to be reviewed. That is the job of Parliament. This is what has happened. The time has come. It is due season that we look at this because the resonance of that increase that the authority recommended be put in place in due diligence of its job was not perceived by the general population nor by members in this House to be appropriate. We live in a climate where the inflation rate is 0.8 percent. The authority by due determination of all the difference factors that it has considered says that the increase to come to members of Parliament to Ministers to the Prime Minister should be 3.6 percent when the Government itself is saying to our employers and certainly to the public sector that what we need to see are restrained increases over the years to come—not lacking generosity but being responsible being prudent knowing the situation of our recovery.As I said in my first reading speech it was not long ago when this country borrowed $300 million a week to continue the services that New Zealanders needed during that time. Since then we have come through to a modest surplus but we have built up debt. It is not just a matter of a surplus; it is also a matter of the solvency of our country which is incredibly important and so this country needs to be prudent in terms of its growth and its progress. It was deemed that the example being set by members of Parliament in terms of the remuneration they were about to receive was counter-culture and against every conventional wisdom that we have been articulating regarding wage increases in our economy at this present time. So this is how this bill came to pass. The chair John Errington and those who are supporting his decision made that decision specifically according to the criteria set out in the legislation as the reason behind those increases. So it is prudent and proper that if this Parliament wants to see a change—a change that we believe to be needed—then this Parliament needs to determine the criteria which is what this bill is about. Thank you.GRANT ROBERTSON (Labour—Wellington Central): I rise to speak on the second reading of this bill. This would normally be the point at which we would be reflecting upon the interesting and diverse submissions that had come to the select committee that would have been set up. I imagine a bill of this type would have attracted a lot of interest actually. There would have been a lot of hearings. There would have been the traditional argument between Opposition members and Government members about whether 5 minutes or 10 minutes is actually enough for a submitter to make their point. We would have jousted over that and got our way through. I predict that the select committee probably would have travelled on this bill and gone to Auckland and Christchurch and taken on board the views of people from right across the country.Hon Michael Woodhouse: It’s such a burning issue.GRANT ROBERTSON: Well the Minister for Workplace Relations and Safety interjects and says: “It’s such a burning issue.” Actually it is. It actually is something that worries and concerns New Zealanders and that is because I believe of the reasons I mentioned in my first reading speech. The concerns are not so much about what we as politicians are being paid but actually about what ordinary working New Zealanders are being paid and the fact that they have not had a pay increase. In the last year 40-odd percent of them have not had a pay increase. That is what drives the anger the concern—the fact that there is a greater disparity being created yet again by this. So I do want to make the point in all seriousness that clearly it is less than desirable to have now moved immediately to the second reading of this bill.I think everyone in the House would recognise that a piece of legislation like this would benefit from having a select committee process. Any time you see an algebraic equation show up in a piece of legislation it should go to a select committee and I think it is really important that when we are—Hon Michael Woodhouse: The member should’ve paid more attention at King’s High School in fourth form. He’d have got it right.GRANT ROBERTSON: Well no actually—things went wrong for me in maths when they started including letters with the numbers Mr Woodhouse. But no the fact is that when we get a piece of legislation like this with a formula-based approach it would be better if it was before a select committee. What we know—and the reason the Labour Party is supporting this piece of legislation as I said in my first reading contribution—is that we share the goal that the kind of pay increase that was put forward for us by the Remuneration Authority is not right. It is not acceptable. We want to see MP pay much more closely aligned with what average workers are getting in terms of pay increases and this bill takes us a step in that direction. It is not to my mind the end of this discussion but it is a step away from the kinds of pay increases that were proposed in recent weeks.I want to take a moment to talk about some of the issues that the Minister raised in his speech at the start of the second reading. The first of those is around the whole question of what has happened to chief executive pay. This is relevant because that is the relativity that is going on here—or with executive pay more broadly shall we say. That is the relativity that the Remuneration Authority looks at under section 18 of its Act.There is no doubt that we have seen massive pay increases for chief executives in the public sector and the private sector and the Minister is actually just plain wrong to assert that that is not what has happened in New Zealand. Actually my own view is that no Public Service chief executive should be paid more than the Prime Minister. I do not understand that. I think that that sends the wrong signals. I simply do not believe when we are getting up to the $400000 $500000 or $600000 area that we are in a situation where there is some kind of concern about recruitment of quality people for those roles. I think that is wrong. You know we have got the State Services Commissioner who got a 9 percent pay increase after a shocker of a year frankly. What kind of situation are we in when those kinds of pay increases are going on?As I said earlier when we get to the point in New Zealand workplaces where we have got a chief executive being paid 26 times the average worker’s pay we have got ourselves out of whack. I note that if you look at the ANZ with a $4.1 million salary for the ANZ chief executive the ANZ’s chief executive is paid 120 times what the lowest-paid worker within the ANZis paid. That is out of control. That is disproportionate.What we need in New Zealand is a sustained programme of lifting the wages of ordinary New Zealanders and that comes through a variety of means. It does come through productivity increases—there is no doubt about that—but the disjuncture that I mentioned in the first reading between productivity growth and wage increases in New Zealand in the last 25 years needs further exploration and that is around some questions about the bargaining power of workers and the real value of the minimum wage. Those are the real considerations around wages in New Zealand that are being ignored by this Government and now we have this piece of legislation to paper over the cracks that we have got here.The Minister did not in his contribution address to my satisfaction—and I hope we come back to it in the Committee stage of this debate—the question of the particular mechanism being chosen here the quarterly employment survey for public service workers as the best benchmark we can have. There are two concerns I have about that. The first of those is the fact that public sector pay is in the control of politicians in all sorts of ways. We had Bill English saying on the television on Sunday that 4 percent is out for teachers nurses and the police. We can certainly debate the merits of whether that is fair or not but that indicates the level of control a politician has about that. We all know that. We all know that when the Ministry of Education sits down with the teacher unions later this year what they negotiate will come back to the table of the Ministers.So the very thing that we are about to benchmark ourselves to is in the control of Ministers and that takes us back years in terms of whether or not we should be setting our own pay. As my colleague Chris Hipkins said earlier you know we can put it up or we can put it down. This provides me with my biggest issue with this bill and I want to hear from the Minister in the Committee stage why the quarterly employment survey for public sector workers is being used. Why not look across the whole economy? That takes that out of the equation because there are public servants all over New Zealand who are now thinking: “Well this is just going to mean an absolute certainty that we are down to 1 percent or lower in pay increases because the politicians will be too scared to put the pay up because it will lift their pay as well.”On the other side of the fence there are committees of Parliamentdebating these issues all the time. So the Officers of Parliament Committee is right now debating pay and salary around the Ombudsman and around other Officers of Parliament as well. As politicians we are constantly involved in what it is that makes up public sector pay and I think the Government needs to explain very carefully to us why it is limiting this to the public sector. If we looked across the economy more broadly then I would have more comfort. As I say I think it is a step in the right direction because it delinks us from the runaway executive salaries but it does not in my view provide a broad enough look across the economy at wage increases and I think we need to take another look at that. I think it is really important also that we go back to asking the Minister to describe in some more detail the difference between the quarterly employment survey as a measure and other measures of public sector pay as well and I am sure he will do that as those concerns have been raised online.So in the second reading of the bill once again we on the Labour Party side find ourselves in the position of supporting a piece of legislation that takes a step forward to ensure that we do not get silly disproportionate unrealistic pay increases like that proposed by the Remuneration Authority and that we are drawn closer to the experience of working New Zealanders in terms of the kinds of pay increases they have got. But it is highly suboptimal to be here today having not had this go to a select committee having had year after year of the Prime Minister telling us we must do something about this and then we have to rush this through because as my colleague Annette King said the shambles that would be created about that pay going into our accounts and then coming out again would be ridiculous. So we have to get this done but the fact is that the Government has dropped the ball around this issue consistently now and it now brings to us something where there are still many many questions outstanding which we will take up in the Committee stage.ANDREW BAYLY (National—Hunua): It is a pleasure to again talk to this bill at the second reading of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill. It is certainly interesting to hear the diverse submissions from a number of the members and particularly the revelation from the previous speaker Grant Robertson who is obviously the Opposition spokesperson on finance that he has trouble with algebraic equations. I would have thought that he would have revelled in those calculations and would be looking forward to running his calculator over the sums but obviously not.The argument seems to have been slightly diverted. This bill is actually about us as MPs and I think personally that the Prime Minister was particularly courageous in making this change which he announced on 2 March. It is all about showing restraint. It is also about members of Parliament showing leadership. It is about the Government continuing to live within its means. I also would like to reiterate that the Prime Minister has a number of times previously discussed this issue and it came as no surprise that he finally had to act on it. The aspersion that this is a sudden rushed response is not correct. The Prime Minister has been clear about his position on this over a number of years and ultimately we have got to a point today where we as MPs are doing what is right.As most people know the bill has three parts. The first bit is about changing the criteria in the Remuneration Authority Act 1977 to take away the authority’s discretion on MPs’ pay increases. Secondly it puts in place a sole criteria that when determining pay increases it will be the average of the ordinary-time weekly earnings for a fulltime-equivalent employee in the public sector using the quarterly employment survey. Thirdly the changes of course will be backdated to 1 July 2014.In essence the bill provides for the Remuneration Authority to fix the salary of MPs having regard for their salaries having regard for their superannuation subsidy and thirdly having regard for their personal benefits—a combination of all three—in line with public sector pay increases. The law will come into force immediately following Royal assent and as I noted before will be effective from 1 July last year. The result will be an increase of 1.5 percent versus the 3.56 percent that was proposed.Using the quarterly employment survey will mean that the authority no longer has to take into account other factors such as comparable positions and there has been a number of speakers talk on that about other industries. We are public servants and we are here to serve the public and it is probably appropriate in this case that we have a different perspective on what our salaries and remuneration should be.The Remuneration Authority will just need to apply the annual quarterly employment survey amount. This will give certainty. It will be clear to everyone what our remuneration is and how it has been based and of course it is referenced back to the public sector. The Remuneration Authority can still look at the elements of our pay whether it has cash or non-cash elements and the indexing will occur at the same time every year.I commend this bill to Parliament. Thank you.JAMES SHAW (Green): I just wanted to pick up on something that the member for Wellington Central Grant Robertson said in his comments a few moments ago which is that this is a burning issue that people do care about it and that it is therefore appropriate that we are dealing with it. I agree. I mean this is a burning issue and it has been a burning issue for years and years and years. So it seems strange that given that it has been a burning issue for all of this time we cannot take a few weeks—or as the Attorney-General likes to call it 6 months of chit-chat—to do this properly to actually consider this properly.Mr Robertson also referred to the problem of some of the links between public sector pay versus the whole economy. He talked about the income gaps between people who are earning—also between people who are earning versus earners and those who own capital. I wanted to just reflect on that a little bit at the moment because it does have implications for why this bill is the way it is—in fact why our pay has been organised the way that it is.Since the early 1970s the gains of productivity have accumulated more to capital than they have to labour. That is just a straight economic fact. It was about 1990 when that really took off in New Zealand. That was I think the last year that wages in New Zealand rose at the same rate that our productivity did and as a natural consequence of that as the proceeds from productivity have accumulated more and more to capital the gains from that have accumulated more and more to chief executives’ pay because they are awarded more and more on the shareholder returns.So how that is affecting us is that in order to get public sector chief executives they also have to get paid at a level that can compete with private sector chief executives. That has been behind this huge drive to pay chief executives more and more and more while everybody else has kind of largely flattened out. So this is one of the reasons we think that linking it in the way that it is linked is not a great one.I said that we are going to be introducing some Supplementary Order Papers later on. I thought I would just introduce them now to kind of warm everybody up to them. So the first would see MPs’ salary movements being indexed to movements in the nominal median individual income as determined by the New Zealand Income Survey published by Statistics New Zealand. So that means that if the median income of New Zealanders goes up then MPs’ salaries would go up by the same dollar amount. If the median income of New Zealanders goes down then MPs’ salaries would similarly go down. That then ties our interests to the economic interests of New Zealanders rather than having them bifurcated. It is a simple and transparent way for the Remuneration Authority to calculate MPs’ salaries and it would focus our minds. More important it is a fairer system. Percentage increases just widen the gap between top earners and everybody else. So since the 2007-08 financial year MPs would have received an increase of only $4276 under this Supplementary Order Paper as opposed to $29800 under the current system. So if we are serious about tackling this then we need to take some initiative.Our second Supplementary Order Paper does not go quite as far as that one but it is still better—we believe—than what the Government is proposing. So instead of tying MPs’ pay increase to the public sector pay increase as calculated in the quarterly employment survey we would be using the labour cost index. The labour market statistics are a truer measure of the actual rate of increase than the quarterly employment survey because they measure what people are actually paid by employers rather than income. Under that system since the 2007-08 financial year MPs would have received an extra $14514 rather than the $29800 that we have actually received since that year. So if the Government is determined to use a percentage-based system then that we believe is superior to the quarterly employment survey.I will just repeat those. Under the status quo under the current system since the 2007-08 financial year the increase has been a total of $29800. That is why the public are getting—we think rightfully—outraged about that; very few other people have had that kind of increase in that short a time. Under our Supplementary Order Paper in which we are linking the increase to the median income that would have been only $4276. So instead of $29800 it would have been $4276. Under our second Supplementary Order Paper it would have been $14514. So we have run the numbers on these and we are confident in them and we believe that the Government can be confident in them as well. The problem that we have got with the bill as it is presented of course is that we do not have anything that we can really compare it with because of the process as we said that has been rushed.Just to sum up as I was saying I just wanted to reflect on the points that have been raised by some of the other speakers about the widening gap in New Zealand that has been driven largely by the changes in which the rewards of productivity are accumulating to capital over labour and the effect that that is having on chief executive pay and the effect that that is having therefore on the benchmarks that we have historically been measured against and that is why we are kind of in the pickle that we are in. So we believe as Mr Robertson said that tying it to something that is going on in the broader economy—not just one sector of the economy but the broader economy—and tying it to the economic interests of all New Zealanders makes far more sense than the proposal as it is.We will be introducing both of those Supplementary Order Papers as soon as we can because as we have noted before we are struggling to keep up with this truncated and unfortunate process. Thank you.TRACEY MARTIN (Deputy Leader—NZ First):Kia ora. I rise on behalf of New Zealand First. Yes it is a very difficult thing to keep up with this legislation; it is quite truncated. I appreciate the contribution of the Green Party member James Shaw and also the contribution of the Labour Party members. This has been one of the more educational debates to take place in this House for quite some time. That is because it is a burning issue. If it was not a burning issue if the people of New Zealand did not care about it then believe me we would not be here talking about it. It is my understanding that the Government actually knew about the announcement before the announcement was going to be made. It had an opportunity to actually take advice prior to the Remuneration Authority coming forward with its recommendation but Christmas is not really a good time to actually make these announcements. So we end up where we are now.Again I think all of us have said how unfortunate it is that we are in this place and this moment without the true ability to even just give it full attention. It is around algebra. I mean I do not know how many people in this House who would stick their hand up and say they are brilliant mathematicians when it comes to algebra. I am looking; there is nobody. That is good.Hon Michael Woodhouse: I am now.TRACEY MARTIN: Mr Nash has put his hand up. We will be testing Mr Nash in the dinner hour. And the Minister has said that he has very quickly learnt an awful lot about algebra—so there you go. I have to admit that I have been upstairs working through it myself trying to figure out what those letters actually mean. I think what has been most valuable about the contributions for me anyway to date is one the contribution from the first Green Party spokesperson who asked why we do not consider splitting this out. Minister why do we not consider splitting this out? Let us put a stop to the 3.5 percent. We all agree that the 3.5 percent is just out of whack and is not acceptable. Why do we not consider actually splitting it out then and taking a moment? Let us just go back to what we had before. None of us that I can pick up was gagging for an increase in pay. None of us was lobbying. None of us was trying to actually get more money because all of us are very aware of people inside our areas who live on a heck of a lot less or who are trying to live on a heck of a lot less than what we get paid to do our job.There would be no argument. We would probably not even need to take any more calls if we actually split that bit out and said: “Stop the 3.5. Go back to what it was prior to the Remuneration Authority.” And then let us take the next year to put the new equation the new criteria through a select committee process. Let us take some time and allow this voice of New Zealand—the voice of New Zealand—which we know is out there to actually come and submit around a select committee process because then we would have an enduring solution and I think that has been what has been pointed out by previous speakers as well. We have no doubt that this will come back. We often get pieces of legislation that have been pushed through. Let us give the benefit of the doubt. You know the staff who write the legislation are doing their best under time pressures. There is an outcome that is being desired and it is algebra.The equation was not right last week so are we sure—are we sure are we sure—that the modelling done this week is right? Are we sure that the quarterly employment survey is the thing that we should be working on? Are we sure that when we say in the legislation that “the Quarterly Employment Survey for the public sector average ordinary time weekly earnings for fulltime-equivalent employees using the change for the average for the year to June compared with the average for the previous year to June.” that that is going to give us the outcome that we seek? And what is the outcome that we seek? What we seek is that we do not want to be treated—I believe this is what we seek—unduly better than any other New Zealand worker out there. We want to be treated fairly just as they wish to be treated fairly. I do think that Mr Robertson’s point reiterated by Mr Shaw around the inequality that has grown between the average worker’s salary or wage and that of chief executive officers has contributed to this issue and yet we are not addressing it. I do think that that is something that if we were able to take more time we could have a really good look at it. I think this has highlighted that major issue.It just struck me that when the National Party member for the Wairarapa spoke last week he spoke on a bill where he argued about the need for the capacity for employers in his area to bring in workers who would work for the dollars they were offering as opposed to the member for Wairarapa standing and arguing that the employers of the Wairarapa needed to be supported to be able to pay the dollars the workers required and the dollars they would take that work for. Too often we are hearing about this. Too often we are hearing that New Zealanders will not take the job; whereas in reality New Zealanders will not take the job for the pay and conditions that are offered. And then there is an argument often from the Government benches that we therefore must bring in people to fill those positions that New Zealanders will not take. So I think it is a valid statement a valid comment that the lower pay scales and the higher pay scales inside the public sector area of New Zealand have got completely out of kilter.Are we appropriately attaching our pay to the right criteria through this bill? I would say that there is some mood that perhaps we are not. New Zealand First is also working to try to get a Supplementary Order Paper into the House—I am not sure how successful we will be—to make this bill which is to amend the Remuneration Authority Act 1977 cover all the people whom the Remuneration Authority has to consider not just members of Parliament. We think that that recognises how out of kilter these payments have become.There have been a couple of contributions from the Government benches. They have given the impression that we are voting for a pay cut and that is not the case. The words “pay drop” were used by Mr Woodhouse and I believe by Ms Dowie and also by Mr Young in the first contribution if you go back. They gave the suggestion that we were voting to give back money or to have a pay cut. Actually we are not. We are voting against an increase that was inappropriate. I just want to be really clear. We are not being that magnanimous. We are voting against an increase that is inappropriate. I would not want anybody to think that there are all these shining halos all over the place. What we have found ourselves in is a situation that reflects a problem in the wider society. We are not addressing the problem in the wider society and we know that that problem affects the lower-paid workers in New Zealand. It affects every other area of their lives.New Zealand First is not confident that this bill is going to do anything about that. It is not part of the criteria. It is not part of the brief. We get it. But maybe just maybe if we could take the first part to select committee maybe just maybe we might be able to have a conversation about the wider issues. Kia ora.SARAH DOWIE (National—Invercargill): In this second reading of the Remuneration Authority (Members of Parliament Remuneration) Amendment Bill I just want to clarify a couple of points raised by me in the first reading. In doing so I agree with the member opposite the Hon Annette King that there is certainly no point in jawboning the authority. There certainly is not. But as part of this amendment I believe that the criteria not only needs to be clear but needs to be fair in the grand scheme of things when we look at the economy in New Zealand and obviously globally. As part of that I agree with what the Minister for Workplace Relations and Safety said. It is incredibly difficult to make comparisons between an MP’s role and other comparable roles. What is comparable when you take into account staffing levels accountability skills and results? That is not necessarily underselling us either but it is just incredibly hard to do when you look at the differences in the roles.I do believe that aligning us with the public sector the quarterly employment survey and the average salary movements and bracketing us with those hard-working individuals and officials who work for the Public Service is fair. We are experiencing 0.8 percent inflation. As has been mentioned by the Prime Minister if any increase is appropriate a 1 to 2 percent increase is appropriate in these times as we are asking our officials to live within their means and do more on less. With that I commend this bill to the House.Debate interrupted.