New Zealand in recession but MPs get pay rise
New Zealand Prime Minister Chris Luxon will donate an upcoming pay rise to charity.
The base salary of the New Zealand Prime Minister will grow beyond half a million dollars after the Remuneration Authority ticked off on a wage rise for Kiwi lawmakers.
The independent wage-setting agency will give MPs a 2.8 per cent bump next year, the first rise in six years, and a 10 per cent increase over the parliamentary term.
Politicians are paid on a graded scale in New Zealand from the base MP salary, increasing depending on the office.
At the top of the tree, Prime Minister Chris Luxon’s salary will grow from $NZ471,049 ($A420,000) currently to $NZ520,500 ($A474,000) when he seeks re-election in 2026.
Already wealthy after a pre-politics career as a corporate executive, a spokesperson for Mr Luxon said he would offload the bay bump.
“The prime minister has indicated he does not want or need an increase so any increase he received would be donated to charity,” he said.
MPs will enjoy the same percentage raise – from $NZ163,961 ($A149,000) to $NZ181,200 ($A165,000) in 2026.
Other office-holders in between MPs and prime minister – cabinet ministers, junior ministers, the opposition leader, minor party leaders, whips and parliamentary committee chairs – will enjoy similar lifts.
The pay rises on offer are below both headline inflation and wage cost inflation, making them a wage cut in real terms.
However, the increased pay comes with New Zealand in recession, and the government laying off thousands of public sector workers.
Remuneration Authority chair Geoff Summers said the wage rises “met the legislated need to achieve and maintain fair relativity with levels of remuneration being received elsewhere”.
In setting wages, Mr Summers assessed Kiwi MPs against other jurisdictions, including Australia’s federal and state parliamentarians, Canada, Ireland and the UK.
He found New Zealand’s MPs were the worst paid of them all – excepting Tasmania.
He also found the prime minister was paid less than some public sector bosses, including the Auckland Council and TVNZ chief executives.
Mr Luxon – who earned several million a year as Air New Zealand chief executive – is also paid less than half what private sector chief executives take home, according to the report.
The Remuneration Authority’s decisions are binding after a law change by Jacinda Ardern’s government.
Ms Ardern blocked pay rises as prime minister in 2018, and in 2020, during the COVID-19 lockdowns, asked her cabinet and key public officer holders to take a six-month pay cut of 20 per cent.
Waste watchdogs the Taxpayers Union demanded MPs reject the extra funds given New Zealand is in recession.
“While the average income of households is going backwards, MPs are locking in annual increases that don’t reflect the real world,” Jordan Williams said.
All MPs also enjoy generous tax-free allowances to cover costs associated with the job, including meals and donations, as well as free air travel.
Their main allowance will jump by 14 per cent over the next three years, from $NZ17,000 ($A15,500) to $NZ19,300 ($A17,500).