NZ POLITICS DAILY: MP pay – the 1% vs the 99%

“We are the 99%” is the rallying cry of the global anti-inequality movement, with the richest 1% viewed as the enemy of democracy and equality. Here in New Zealand, the top 1% of income earners now includes our representatives in Parliament. Hence when the annual hefty pay increases for MPs are made, there’s increasing revolt and outrage. For those who hang onto the ideals of equality in New Zealand, it seems that the symbolism of ‘our representatives’ becoming ‘our rulers’ is too much for many to bear.

The pay increase is best explained in Isaac Davison’s article, Ex-MP Mike Sabin included in salary payout. In response to their pay rise, some MPs are professing outrage, while are others pleading ignorance or innocence – see examples of these in TV3’s MPs get $8200 pay rise and TVNZ’s MPs get 5.5% pay rise against PM's wishes. 

Some politicians have expressed indifference: ‘Maori Affairs Minister Te Ururoa Flavell shrugged his shoulders when asked whether they deserve more money.  "I'm not too sure to be honest. I don't even know what my salary is. But what I do know is that we work hard."’ – see Dylan Moran’s Whopping raise for MPs confirmed.

The public’s strongly critical response can be seen in TVNZ’s 'What makes them so bloody special?' – outrage at MPs' 5.5% pay hike and Stuff’s Top five MP pay rise comments. 

For even more interesting debate and views about the pay increase, see my blog post Top tweets about the MP pay rise. Many of the best tweets expressed sarcasm – journalist Michael Field (‏@mjfield) said ‘All these MPs speaking in outraged terms over being forced to take their pay rises. Its so sad, new box of tissues stuff’; Marcus Cook (@MarcusDCook) pleaded: ‘Cmon guys, if we didn't pay our MPs well, we'd get 120 of the most useless, incompetent, out of touch, muppets going. *cough*’, and Dovil ‏(@Dovil) expressed mock support: ‘I think it's good MPs are getting a 10k pay rise. Must be hard juggling so many mortgages on so many lifestyle and investment properties’. Meanwhile a solution was posed by Giovanni Tiso ‏(@gtiso): ‘A populist move I want to see a left-wing party campaign for: linking increases in MPs' salaries to increases in the unemployment benefit’.

Is the public being scammed by the MPs?

Increasingly it appears that ‘independent pay setting’ is a ‘scam’ by the politicians in which they are able to deflect criticism by the mechanism of directing a separate body to set high pay. This ruse allows politicians the ability to safely express regret or even outrage about their hefty pay increases while claiming their own hands are tied over the matter. 

Blogger No Right Turn has been dealing with this issue for many years, and his post Pigs at the trough explains it well: ‘technically the Remuneration Commission giving them the pay rise. Which they set up for that purpose in an effort to hide what is really going on. But everyone knows its a scam to dodge blame, and no-one believes MPs' insincere claims that they are absolutely helpless to change the rules they wrote to give them endless huge pay-rises. They're not helpless here, they just choose to be so they can keep on raking in the cash).  Its obscene. Its hypocritical’.

So should we believe the politicians when they express their opposition to receiving large pay increases? No, according to No Right Turn. In his blog post, John Key on MPs' pay rises, he catalogs the annual utterances by the PM in supposedly opposing large MP pay rises, and the point is made that such statements ring hollow: ‘Forgive my scepticism, but I'll believe it when I see it. Every year, John Key says MPs' don't need a huge pay rise, and even threatens to change the law. But he never does, except to hide the setting of MPs' perks behind the Remuneration Authority blame-sink as well (which, surprise surprise, resulted in another big increase). Its amazing how powerless the Prime Minister is on this, when he can ram new spying powers through in less than a month and pass a law to pillage the conservation estate overnight. You'd almost get the impression that he didn't really care, and was just saying what his pollsters had told him we wanted to hear...’

Today, John Key has come out with a stronger statement than usual to convey that he would like to change the law – see Aimee Gulliver’s PM backs calls for rework of politicians' pay calculations. Key says, ‘I think the MPs have got to the point where they don't think it's justified, so I do support changing the law’.

No Right Turn says in response that this latest statement can simply be added ‘to all his other annual statements where he says the same thing, but does nothing.  Its time for Key to put his money where his mouth is. He has a Parliamentary majority. He has control of the legislative agenda. He can make this happen if he wants to. If it doesn't happen, then it will be obvious why: because he doesn't want to, and all those annual statements of disquiet are just crocodile tears’ – see: Crocodile tears from Key. 

Barry Soper expresses it differently: ‘Yeah well that'd be about as likely as turkeys voting for an early Christmas!’ – see: Mission creep and salary creep. 

For similar scepticism, see Greg Presland’s Politician salary rises and the minimum wage increase. 

TVNZ’s Heather du Plessis-Allan has also broadcast a challenge to MPs to change the law – see her 40-second item: Change the law if you don't want a pay-rise. 

Income injustice and the increasing political gap

For many opponents of the large pay rise, it's the injustice of the rich being made richer that grates with them. Today Gordon Campbell explains the incongruity of the pay rise occurring when others are struggling – see: On the wage hike for MPs. 

As Barry Soper puts it, ‘Even the lowest paid backbench MP's pay rises by more than eight grand a year, or eight times more than the lowest paid worker gets with his latest windfall’ – see: Mission creep and salary creep.

It’s public servants who might be the ones most upset, according to Andrea Vance – see: MPs' in line for a pay rise. According to Finance Minister Bill English has warned this group of workers not to expect large increases in pay.

The increase in pay also acts to further separate the politicians out from the realities of most people’s daily lives, according to No Right Turn: ‘its a perfect example of everything that is wrong with our political system. Like the bankers, our MPs get paid well regardless of their performance. Their incentive therefore to improve the lot of the rest of us is negligible. They're simply not in the same boat. And with taxpayer-subsidised mortgages (now with less transparency!) and taxpayer-funded sluch funds, they grow further and further apart from the people they purport to represent’ – see: Pigs at the trough.

Responses from the right

The political right can be expected to be more sympathetic towards politicians being further enriched, and today the NBR’s Nevil Gibson stands up for the right of MPs to receive their hefty pay increase, and condemns the ‘faux outrage’ over the issue. Gibson suggests the MPs deserve it: ‘Skilled and demanding jobs, of course, require higher salaries and it should not be news that, in a global market, that these are rising in line with prosperity.  After all, New Zealand’s highly performing economy is not an accident and politicians, particularly those at cabinet level, can share in the credit.  Why begrudge them some of the rewards?’ – see: Let politicians keep their pay rise (paywalled). 

But elsewhere on the right, the Taxpayers Union is far from happy with executive director Jordan Williams saying he’s ‘sickened’ by the increase – see TVNZ’s MPs get 5.5% pay rise against PM's wishes. 

What’s more blogger David Farrar also proposes reform: ‘The MPs only have themselves to blame though. On multiple occasions I have submitted that the law should be changed so that the Remuneration Authority sets salaries for an entire parliamentary term, rather than annually. There is no need for annual adjustments in a low inflation environment. They should be set three months before each election and apply for the whole term’ – see: MP salaries. 

But Farrar also puts forward the argument that the pay increase is less than the claimed 5.5% - it’s actually 3.6% (once supposedly reduced travel perks are taken into account). Apparently the increased costs of the MPs is $1.22m.

As expected, the Greens have publicly challenged the latest increase – see Peter Wilson’s Greens want MPs' salaries index linked  – although it needs to be pointed out that the Greens still want to keep the status quo in terms of the basic high pay for politicians. 

For more in depth information and debate about the ongoing issues of MP pay, see these older items: Anthony Hubbard’s MPs cling on to a free ride and my own blog post, 10 pertinent questions (and answers) about axing the MP international travel perk. 

Finally, to see how the cartoonists and media are portraying the issue – and how they’ve done so in the past – see my blog post, Cartoons and images of MP pay rises.