Hon KATE WILKINSON (Minister of Labour) Link to this
I move, That the Remuneration Authority Amendment Bill be now read a second time. This bill will allow the Remuneration Authority to explicitly take account of economic conditions when making determinations. Earlier this month the authority sensibly ruled to hold salaries to current levels for those under its jurisdiction, including members of Parliament. This decision was widely welcomed and came after members of this House and others requested that they not receive any pay increase.
The Remuneration Authority is established under section 4 of the Remuneration Authority Act 1977. It is responsible for considering and determining the salaries and allowances of members of this House and the judiciary, the remuneration of principal allowances for specified statutory officers, and the remuneration allowances and expenses for chairpersons and members of local authorities and community boards. It also determines the annuities for other positions specified in the Civil List Act—for example, the Governor-General, former Governors-General, and former Prime Ministers.
It is important that the Remuneration Authority is able to maintain its independence when determining salary levels. By enabling the authority to explicitly take account of adverse economic conditions, this bill is intended to ensure that the authority can make appropriate decisions using its own discretion. This ensures the authority can prevent or reduce a salary or remuneration increase that otherwise might have occurred. The authority will be required to refer to evidence from a reliable, authoritative source containing standard economic indicators when taking account of adverse economic conditions. One such document that has been identified is the regular Economic and Fiscal Update provided by Treasury. It is preferred that the authority must take adverse conditions into account rather than that it may take them into account, as this will remove any doubt about whether economic factors were included in the decision-making process.
This bill will also make a number of timely minor and technical amendments. These amendments have been requested by the Remuneration Authority in discussion with my officials as part of the consultation for this bill.
The Remuneration Authority has asked that the Act be updated to ensure entities and position titles are accurate and up to date. Currently the Act contains a number of references to position titles and entities that no longer exist, including the chairs of the Broadcasting Corporation of New Zealand, the education board of the district of Auckland, the Tourist Hotel Corporation of New Zealand, and Waikato Carbonisation Ltd. Consequently, the bill removes these positions from the Act. Additionally, the bill updates the position of the Chief of Defence Staff to its correct title of Chief of Defence Force.
The Act currently requires the Remuneration Authority to provide the Minister of Labour with an annual report of its operations as soon as practicable after 31 March each year. The authority requested that the Act be amended to align the timing of its annual reporting requirements with that of the rest of the public and State sectors. Accordingly, the bill amends the Act to allow the authority to provide its annual report in the year ending 30 June.
In conclusion, this bill not only will allow the Remuneration Authority to explicitly take into account adverse economic conditions but also will make a number of very timely minor and technical amendments to the Remuneration Authority Act itself. I commend this bill to the House.
Hon DARREN HUGHES (Labour) Link to this
I rise to follow the Minister of Labour in supporting the Remuneration Authority Amendment Bill at its second reading. In a sense, events have overtaken this bill since the time that it was thought of by—[ Interruption] If any member deserves no pay rise, I am hearing from one right now: Tau Henare. He does not work hard enough even for the pay we currently get, let alone for any future increase in that particular respect. So, hopefully, we will hear no more from him during the rest of the non-partisan debate we are currently partaking in.
Hon Tau HenareHon DARREN HUGHES Link to this
Well, if it was non-partisan, the member should not have interjected, but it takes him a wee while to connect the logic of all his particular arguments in that respect.
Since the time that the need for this bill became clear, the Remuneration Authority has already recommended a zero pay increase for members of Parliament. That discussion began at the start of the year when the leaders of both major parties suggested that restraint be shown during the time of the economic recession, and during a period in which many New Zealanders have been losing their jobs. The suggestion was beefed up when the Leader of the Opposition, Mr Goff, suggested that an amendment to the Remuneration Authority Act might be required to ensure that the authority could recommend a determination that would give effect to what Parliament wanted. The current legislation that the authority has to rule under does not give it that tool to do so. This House passed a motion, but it was more of a signal rather than any decent legislative effect in terms of the authority’s work. However, the nature of this bill is a very simple amendment to encourage the authority to take adverse economic conditions into account. It does not bind the authority in any way at all, but it asks the authority to consider the state of the wider economy. We think that is a very important thing for it to do.
Members of Parliament receive salaries, as do the other positions that the Minister of Labour referred to that are under the purview of the authority, are much, much higher than those of many other ordinary New Zealanders. In fact, the average wage in our country is a little over a third of what members of Parliament receive, and it is important for us, during periods such as we are in at the present time, to be able to show some leadership. However, we would hate for it to be taken that absolutely everybody who works for the State sector should have to take that approach, because many people who are employed by the State receive very, very low wages. This bill affects people who are paid much higher than other members of the community.
This is a second reading debate; therefore, it is appropriate to reflect on the work of the Transport and Industrial Relations Committee. That will not take too long because it was a very brief select committee report, in part because of the few number of submissions that were received by the committee. In fact, I believe that it heard from only two submitters who spoke orally to their submissions, both of whom were in favour of the bill. Labour members will have one or two comments to make during the Committee stage, but the bill will proceed through because it enjoys wide support across the House.
Dr JACKIE BLUE (National) Link to this
I am pleased to speak to the second reading of the Remuneration Authority Amendment Bill. This bill has the support of all parties in the House, and that is because it is the right thing to do in the current economic climate. The bill was considered by the Transport and Industrial Relations Committee, and no changes were made. We invited submissions from all those individuals who would be affected; all supported the bill.
The purpose of this bill is to ensure that public salaries reflect the current economic situation. In January, when the depth of the recession was becoming evident, the Prime Minister urged the independent Remuneration Authority not to increase MPs’ salaries in the coming year. The Prime Minister wrote to the authority to express the Government’s view that the authority should exercise restraint when next considering salaries within its jurisdiction. This bill is responding to public concern that salaries have continued to rise, despite the difficult economic circumstances. I commend this bill to the House.