Herald on MPs pays and perks

July 5th, 2010 at 1:00 pm by David Farrar

The Herald editorial:

In straitened economic times, the renegotiation of contracts routinely results in employees losing allowances or other benefits. Rarely is the base salary raised in compensation.

This starts with a false premise. The triennial review is not something done due to the recession. It happens every three years.

The Herald also makes another false premise – that people do not get compensated for losing allowances. Most senior employees are on a total remuneration package. So if for example you get a company car for private use, then your salary drops to keep the total package the same.

The authors of the review, Sir Doug Kidd, a former Speaker of the House, and economist Philip Barry, are certainly right to bring the boom down on these perks. No one has ever mounted a coherent explanation for them being necessary for an MP’s job.

I agree, which is why they are deducted from their total remuneration, to give MPs a lower salary than would otherwise be the cause.

In practice, they furnish a generously subsidised pursuit of pleasure. They were introduced by Cabinet, not an independent commission, supposedly as compensation for parliamentarians accepting lower salaries.

But the independent Remuneration Authority does deduct them from their salary package. It has done so since 2003.

Yet there has never been a time when there was a shortage of people wishing to be MPs. Further, most pay little heed to the money on offer.

The review does not explain why MPs should be compensated for the loss of a benefit that bears no relationship to their work and should never have been granted. Nor does it say why parliamentarians should be treated differently to members of the public.

Again they are being treated no differently to any other employee on a total remuneration package. The Remuneration Authority will not be instructed to increase if the perks disappear – it will be obliged under the law to do so because they explicitly deduct them from the package to calculate salaries at the moment. And they can not deduct something if it no longer exists.

Think of an analogy. Say you have a contract with your employer that they will pay you a total package of $120,000 a year. Now they pay $10,000 into a superannuation fund on your behalf, so your actual salary if $110,000. The company decides that it no longer is appropriate to be offering a superannuation scheme so they scrap it. Well then they will automatically adjust your salary up to $120,000 to keep the total package the same.

I know this is not a popular position to take, but it is a principled position that MPs should not be treated differently to anyone else on a total remuneration package.

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26 Responses to “Herald on MPs pays and perks”

  1. davidp (3,540 comments) says:

    >I know this is not a popular position to take, but it is a principled position that MPs should not be treated differently to anyone else on a total remuneration package.

    The realistic position is that many people are suffering at the moment. Politicians need to be seen sharing the pain since they are amongst the highest paid, because they’re at least partly responsible for creating the current economic situation, and because a number have been shown to be taking the piss over their expenses.

    Taking a position that MPs are “entitled” to their high incomes no matter what is happening around them is just asking for a backlash. Is $10k a year of perks/income worth it if you end up creating a “throw the bums out” situation?

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  2. homepaddock (431 comments) says:

    You are right that this is an alteration of conditions of employment which would normally receive compensation.

    Unfortuately MPs are a special case and regardless of the facts any compensation they get will be seen as special treatment.

    “Yet there has never been a time when there was a shortage of people wishing to be MPs. Further, most pay little heed to the money on offer.” There is often a shortage of GOOD people wishing to be MPs and who knows how many look at the pay cut they’d have to take and decide against standing.

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  3. Nefarious (533 comments) says:

    Think of another analogy.

    You have a contract with your employer where they pay you a shit load to do fuck all really, they also allow you to spend their money willy nilly with little accountability.

    The company realises that you are actually a bit shit at your job and that their business is fucked and unsustainable, so they take a quick look at your expenses and realise you’re a bit of a crook.

    The company keeps borrowing money that it will eventually recoup from it’s captive customer base through increased revenue (there’s always a way to skim a bit more from the mugs, after all they got no where else to go), gives you a pay rise and allows you to continue being shit.

    Fucking parasites.

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  4. tvb (4,192 comments) says:

    I would like to know how much has been deducted from an MPs salary since 2003. I bet this figure is purely illusionary. And if this has been happening only since 2003 then people who have been an MP since then are the only ones entitled to SOMETHING. In reality I can see a small public benefit for an ex MP to travel overseas at public expense for up to 5 years upon leaving Parliament. This is so the ex MP can maintain overseas contacts which may be of some small benefit to this country. Something more generous can be allowed for ex Prime Ministers.

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  5. RKBee (1,344 comments) says:

    There are a shortage of good people wishing to be MPs… because they are labelled currupt dishonest bastards and the lowest scum on earth… who in their right mind would bring that image down on their wifes and families… plus expose them and their private lifes to the public and media… you would have to be a wanker… just like the one’s that are.

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  6. andrei (2,499 comments) says:

    There is often a shortage of GOOD people wishing to be MPs and who knows how many look at the pay cut they’d have to take and decide against standing.

    Indeed HP indeed – unfortunateluy as the current woe begotten bunch of troughers with their entitlement mentality goes to show throwing money at them is not the answer.

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  7. Redbaiter (13,197 comments) says:

    What I would like to know is how much parliamentary superannuation and pensions cost the taxpayer. How much from the annual taxation receipts goes into topping up superannuation schemes or paying pensions for retired MPs. Anyone out there got any data on this??

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  8. Ed Snack (1,733 comments) says:

    Would we other employees be so lucky as to be able to vote on our own remuneration, paid out of other peoples efforts ! Sadly David, you have been captured by their special pleading; MPs are different.

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  9. glubbster (351 comments) says:

    There is not much that can be done about the perks at this point other than ensuring transparency.
    Despite this, for the 2011 election onwards, salaries should be revised and particular travel subsidies reduced or eliminated.
    The renumeration authority should take into account the global recession and the public and private sector wage freezes (speaking generally) in making their determination.

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  10. petal (704 comments) says:

    “I know this is not a popular position to take, but it is a principled position that MPs should not be treated differently to anyone else on a total remuneration package.”

    That cuts both ways.

    Teachers are being offered 1% with inflation more than double that. So it seems possible to adjust state sector pays downwards in real terms over time.

    I understand your argument, but I see no problem with MPs taking a cut in entitlements and a pay freeze until they have to stop borrowing to pay themselves.

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  11. Lee C (4,516 comments) says:

    “I know this is not a popular position to take, but it is a principled position that MPs should not be treated differently to anyone else on a total remuneration package.”

    I don’t think this has anything to do with how popular or principled you consider your positon is.

    If the finance company goes kaput and takes all the money, we would expect them just to face the fact that they’ve been screwed, because there’s no one out there to fight their corner? If an employer tells them there will be no increase in pay in line with inflation, they simply accept that, like everyone else would have to (and have been asked to), or does it go to ‘independent’ review? Are they likely to lose their jobs, based on the premise that we can’t afford to pay them due to a ‘down-turn in trade’? Are they graded on performance or attendance like others would be? Of course not – their jobs are secure as long as they kiss party-ass for three years. Where else in the country would I be given a fat salary and perks, based on the fact that Bill down the road got a job (elected) so he gets to take a buddy along on full pay, as long as said Buddy scratches his back for three years, without question?

    The idea that you think we would swallow the idea MPs expect to be treated no differently to anyone else is so naive it is laughable.

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  12. A1kmm (91 comments) says:

    The real problem is that MPs are paid too much – whether it is in fringe benefits or salary is immaterial.

    We need MPs in this country who will work hard for the people – rather than career MPs who do what big business wants in exchange for campaign funding and another 3 years of big paychecks.

    Making the job one which pays enough to pay the bills, but not an extravagent amount, will both raise the public perception of MPs, and keep some of the more self-centred (i.e. right wing) MPs from running.

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  13. big bruv (13,200 comments) says:

    “Making the job one which pays enough to pay the bills, but not an extravagent amount, will both raise the public perception of MPs, and keep some of the more self-centred (i.e. right wing) MPs from running.”

    Ha ha, that is about the dumbest and least informed thing I have read on here.

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  14. wreck1080 (3,721 comments) says:

    They’re pigs at the trough.

    Please confirm, if an mp’s salary in the past was set at around level of a senior cop or teacher .

    This was to ensure they are in similar situations to the people whose lives their decisions affect. This is illustrated perfectly with John Key’s ETS – $5 /week is nothing to a rich person, but to someone on the breadline it will drive them into poverty.

    I understand that it is in DPF’s interest to have as many MP’s as possible, and them being paid as much as possible too. After all, DPF is in the ‘political’ industry.

    Why should kiwi mp’s be paid similarly to Aussie ones, when average wages across the tasman are higher? Maybe, if kiwi MP’s wages were linked to average incomes, then they’d be less likely to pass ETS schemes, and concetrate more on improving the average wages , which are really reallly low.

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  15. Right of way is Way of Right (1,129 comments) says:

    A little perspective is always good at a time like this.

    So here it is.

    The day before the policy proposal was announced that the MP’s COULD lose their travel perks for $10,000 a year compensation, the New Zealand Defence Force were told that as of 16 July, they would no longer accrue any entitlement to allowances granted for adverse or dirty working conditions, exposure to exceptional hazards, (such as bomb disposal), handling raw sewage if required, and so on.

    Their compensation for losing these entitlements (hardly perks after all, let’s call them entitlements shall we!)

    An annual salary increase of $156.00.

    And when these people are seperated from spouses, it’s not for some fancy overseas junket in overseas hotels with lavish banquets either.

    Can we have a bit of reality in Parliament please!

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  16. Redbaiter (13,197 comments) says:

    “Ha ha, that is about the dumbest and least informed thing I have read on here.”

    Damn right. Its actually black hole dumb.

    John Key and Steven Joyce reportedly gave up huge salaries in the private sector so they could become MPs and they’re as left wing as anyone in the Labour party.

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  17. bhudson (4,734 comments) says:

    Bloody hell. We may have too many MP’s now and the standard might be pretty low, but pay them less and all we will have is society’s rejects queueing up for the job. Oh shit, that IS what we have now.

    What a stupid idea. You do not improve the calibre of applicant by reducing the remuneration.

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  18. GJ (329 comments) says:

    Pay peanuts and you will get monkeys. I would like to see more MP’s with real hands on experience, unfortunatly most will currently be receiving pay packets far higher than your average MPs, so why would they want the job. Just look at what some of our top CEO’s are paid. Don’t you think the country deserves better?

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  19. wreck1080 (3,721 comments) says:

    @GJ – using your logic then maybe we should set an MP’s salary at $50 million a year. You’d attract the best talent in the world and we’d all be saved right?

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  20. GJ (329 comments) says:

    Yes wreck and if we employed one person at $50 million and they were successful in turning our country around they would be cheap!A great person would save far more than that in 5 minutes, we just don’t want to pay for the expertise to acheive it and suffer accordingly.

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  21. big bruv (13,200 comments) says:

    “Pay peanuts and you will get monkeys.”

    It does not matter what you pay them GJ, the Labour machine (and the Greens) will always reward union thugs and special interest groups with safe seats in the house, talent or ability has little to do with it.

    History shows us that so many Labour and Green MP’s earn far more in parliament than they could ever dream about earning in the private sector, do you really think anybody would pay Sue Bradford or Mad Delahunty over 100K a year?

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  22. Caleb (467 comments) says:

    then its settled.

    half the number of MPs, double the salary, more accountability.

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  23. flipper (3,532 comments) says:

    Well said DPF
    As a late afternoon contributor (due to other commitments) let me make a few points:
    1. The last NZ Herald Editor of note was Peter Julian Scherer. Ellis was a nonentity. The current Ed does not bare mentioning.
    2. NZ MPs and Ministers have always been underpaid.
    3. It is absolute rubbish to say that any NZ bureaucrat should be paid more than an MP or Minister.
    4. Look at the salary limitations imposed upon US Federal employees as opposed to Members of the House or Senate (no exceptions).
    5. Approx $US 200,000 is the US Federal ‘crat salary limit and is about the same as Nancy Pelosi receives as Speaker (Just a little less than Obama gets as Presi). Petraeus gets approx $US 180,000
    6. NZ MPs should receive a gross sum to run their office, in addition to a fixed and public salary.
    7. Ministerial office expenses (apart from Mins salary) should be subject a limit or specific appropriation.
    7. No free MP travel or expenses for any purpose unless it is via Air Force and on “officisazl” business.
    8. Only Ministers to get additional travel and expenses, but all such costs subject to appropriation and OIA scrutiny.
    9. I could go on ad …..
    but, finally

    10. Jurnos (Churns or repeaters as WO describes them ) should themselves give up tax free allowances.

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  24. Pongo (371 comments) says:

    Why should an opposition or list MP (Hawkins, Choudray, Robertson et al) on top of their huge salary get this perk in the first place, hardly value for money. Can the subsidised travel and if they dont like it they can try and find those perks in the private sector. If they want on the list then your work is now in Wellington and I see no reason why I should subsidise you living elsewhere.

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  25. kaya (1,360 comments) says:

    I find the idea that the “independent” remuneration authority forces the poor lads and lasses to take whatever rises they get every three years. That has to be one of the most nauseating things to ever have to listen to. “It’s nothing to do with us” the implication being they wouldn’t have paid themselves extra. Really…..
    Maybe MP’s salary should be tied to the same percentage increase as any change in the pension rates.

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  26. reid (15,904 comments) says:

    Are they graded on performance or attendance like others would be? Of course not – their jobs are secure as long as they kiss party-ass for three years.

    That’s one of the many major issues, Lee.

    The party is their vehicle to power and they owe their loyalty to it, not us. So why not require all parties to give us long-term accountability figures, averaged out over the long-term performance of all of their MPs, while they are in govt? For example, Ministers like George Hawkins and Max Bradford give us specific SMART KPIs by which we can measure their personal performance over the long term, long after they leave office. These are approved by their party and they are all held to it, collectively. That way, we can easily call bullshit on them and take away their pension if they fuck up, real bad. Not that they would do that. Of course, it’s not personal, because we’re also assessing the performance of everyone else in their Cabinet on their performances as well, according to their own, published, SMART KPIs. Emphasis is of course on the M part. And if none of them manage to make a M diff over the long term: i.e. some years after they’ve left office well then, no pensions for them, at all, I’m afraid. In fact, the taxpayer might come after them, since they owe us money and all, because THEY DIDN’T DELIVER. And what’s unfair about that?

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