MPs' pay rise trimmed - Key warned not to curb public servants' increases

The Public Service Association says changes to MPs' pay announced today by Prime Minister John Key cannot be used to justify withholding "decent pay movement" for public servants.

MPs will no longer be receiving their widely criticised 5.5% pay increase this year. Source: 1 NEWS

After the Remuneration Authority last week awarded MPs an average 3.5% pay rise, and up to 5.5% with travel allowances, the Government will move a law change under urgency to take away the authority's discretionary powers on MPs' pay rises.

Under the law change, MPs' pay rises will be based on the average increase in pay in the public sector from the previous year. The legislation will be backdated to July last year, so MPs will now be getting 1% to 2%.

Mr Key says the 3.5% increase was neither necessary nor justified at a time when inflation is at 0.8%.

PSA national secretary Richard Wagstaff says while the Government's changes may stop the complaints about excessive pay rises, public servants will still feel aggrieved.

"A 1% pay rise on John Key's $400,000+ salary is a lot bigger than the same percentage on the salary of a hard-working hospital administrator paid below the living wage," Mr Wagstaff says.

"If Mr Key thinks that he can justify below inflation pay increases for the people who keep this country running by taking the same percentage, he's only kidding himself.

"The 40,000 PSA members in bargaining this year earn a lot less than Mr Key and his colleagues, and they will expect a fair deal from this year's budget," says Mr Wagstaff.

The Green Party says it's good the Government has listened to New Zealanders and announced a fairer way to set politicians' salaries.

"We've argued for MPs' salaries to be linked to the nominal median income, and we still think this is the best option, but linking them to public sector incomes is a definite improvement on the current system," says Metiria Turei, Green Party co-leader.

Mr Key says if last week's pay rise goes into their accounts next week, MPs will have to pay it back. He reckons his decision to make MPs' pay "more moderate" is unlikely to ever be changed by future governments.