MPs will get a pay rise of 5.5 per cent, the Remuneration Authority has confirmed, which translates to a $8200 pay rise for backbench MPs.
In its determination released this afternoon, the authority said that once a reduction in the travel entitlement was taken into account, MPs' pay packages would be increased by 3.5 per cent.
As a result of the determination, Prime Minister John Key's salary would rise by $23,800 to $452,500.
Cabinet Ministers would receive 283,400, up from $268,500.
The base salary for backbench MPs would rise from $147,800 to $156,000.
The pay rise would be backdated to July, meaning MPs would get an additional lump payment of at least $5000.
Leader of the Opposition Andrew Little's pay packet would increase from $268,500 to $283,400.
In its determination, the authority said the payline for ordinary members increased by 3.3 per cent in 2014.
However, tighter rules around MPs' travel meant their annual entitlement fell to $3200, compared to around $6500 last year.
"Taking into account the change in value of the travel entitlement, this produces a package increase of 3.56 percent and a salary increase for ordinary members of 5.5 per cent," the determination said.
Mr Key said this afternoon he was disappointed in the authority's decision, saying there was no justification for the increase given inflation of 0.8 per cent and average wage growth of around 2.5 per cent.
In last year's determination, the authority pegged the increase at 2.2 per cent, saying it acknowledged the need to restrain public sector spending in the wake of the global economic crisis.
However, authority chair John Errington added that the pay gap between ministers and executives in the private sector was growing and would have to be addressed.
The new salaries are usually announced in November or December, but last year the Remuneration Authority issued only its determination on the travel and accommodation entitlements of MPs, delaying the salary consideration.
The Speaker used to set those entitlements, but the bulk of it has since been put into the hands of the Remuneration Authority. That was to remove politicians from the calculation after sustained criticism and scrutiny over the 'perk' elements of their entitlements, such as international travel subsidies. Those subsidies can now only be used if the trip is at least partly work-related and has the Speaker's approval.
Earlier today, Mr Key said Parliament may change the law on how MPs' pay rates are set in the future, but he won't turn down today's pay rise.
He told reporters this morning that he wrote to the Remuneration Authority early this year urging it not to give MPs a pay rise at all this year, but the authority had given them a pay rise anyway.
