Authority to set pay not beyond influence

Down the years, one taxpayer-funded government entity has stood out from the rest of the Wellington-spawned shoal of commissions, boards and agencies in being secretive, obstructive, publicity-averse and downright unhelpful.

Given the Remuneration Authority usually succeeds in pleasing no-one bar the well-recompensed judiciary - the pull-up-the-drawbridge approach to the slings and arrows of the political world is understandable to some degree.

This week, the authority became the authority without authority, at least in terms of its most high-profile role - the setting of the salary levels for MPs.

Despite it being regarded as an entity which is strictly independent of the Government, the authority has effectively been rudely stripped of that task by what looked like prime ministerial fiat.

It might be that independence which stopped John Key tackling the authority head-on before now.

From his early days in power, the Prime Minister has regularly expressed ''disappointment'' with the large and plentiful number of upwards salary adjustments being issued by the authority, whose determinations also include the country's judges and local body mayors and councillors.

Such was Mr Key's seeming lack of follow-through that his opponents had accused him of crying wolf over salary increases.

That was not entirely accurate.

Amidst the economic uncertainty generated by the global financial crisis, the new National minority Government brought amending legislation before Parliament within months of taking office in 2008 which required the Remuneration Authority to take into account ''any adverse economic conditions'' in making its determinations based on evidence from an authoritative source, such as the regular Treasury-published economic and fiscal update.

That stipulation was weakened by an out-clause which meant the authority did not have to be persuaded by that advice, thereby preserving the authority's independence.

This week Mr Key took charge with such a vengeance that by the end of the week not a few groups who fall under the purview of the authority were similarly, astonishingly, demanding they too be subject to a real pay cut.

Mr Key humiliated the authority, effectively rubbishing the work that went into the latest determination of MPs' salaries released just days before he flagged an overhaul of the way they would be adjusted in future.

The authority's crime was that it did its job properly.

Too properly.

Its latest determination that the basic MP's salary be increased by 5.5%, a figure way above the level of inflation, was also way out of National's comfort zone, with the governing party bound to cop the likely public backlash for not doing something about it.

With his patience with the authority having finally run out Mr Key has done something about it.

The job of working out politicians' pay in future should take minutes once someone has worked out the average public sector pay rise for the previous 12 months.

That average will be the new and sole criterion for determining whether MPs get a pay rise and how big that increase will be.

But unless the State Services Commission decides to slam a similar brake on the salaries paid to public service chief executives, relative pay scales will get seriously out of whack.

It has long been not only unfair, but also patently absurd that the head honchos of some government departments and ministries get larger pay packets than the Prime Minister and the Minister of Finance.

It might be an honour to serve as an MP or as senior public servant.

But with some ministries having billion-dollar-plus budgets, this might be false economy offering only peanuts and thereby getting monkeys.

Such considerations underpin the near 30-year-old Remuneration Authority Act, the law which stipulates the criteria which the authority should apply in determining pay levels.

These include having regard for the need to achieve and maintain fair relativity with the levels of remuneration received elsewhere; being fair to the person whose salary package is being determined; being fair to the taxpayer or ratepayer; and having regard to the need to recruit and retain competent people.

It is the politicians who are responsible for the law, of course.

None rushed to the defence of the Remuneration Authority this week. When a subject like MPs' pay hits the headlines, every political party has one objective - staying on the right side of public opinion and not advocating a pay rise for MPs.

Yet Mr Key and the leaders of other parties in Parliament cannot say they did not know what was coming.

In its last annual report tabled in the House last year, the Remuneration Authority warned that based on current movements in remuneration for top level executive positions, it appeared that the gap between market remuneration and the remuneration of senior members of the Cabinet was now greater than in the past and the authority would be reviewing this increasing gap in the coming year.

The best that can be said for the Remuneration Authority - and its previous incarnation as the Higher Salaries Commission - is that it at least treats everyone equally, whether it be Prime Ministerial pleas that the authority deliver a nil increase, or journalists asking when the next, highly-anticipated but usually overdue pay determination will be published.

For many a year, the answer to the latter question would almost invariably be ''not today'' or, if you were really lucky ''not this week''.

But no further information would be offered, no matter how abject, tragic, pitiful or ridiculous the pleading.

Unlike journalists, Prime Ministers can only be fended off for so long before they lose patience.

 John Armstrong is The New Zealand Herald political correspondent.

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