Ministers' pay up by nearly 5 per cent

Last updated 10:58 20/11/2008
CRAIG SIMCOX/The Dominion Post
HOT SEAT: John Key talks to reporters before starting his first Cabinet meeting.

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Prime Minister John Key and his newly sworn ministers are getting a pay rise of nearly five per cent, in only their second day on the job.

The annual pay increase - decided by the Remuneration Authority - for all MPs and Ministers has been confirmed this afternoon.

Mr Key's salary will increase to $393,000 - the Prime Minister's salary was previously $375,000, while his deputy Bill English will receive $276,700, up from $264,500 previously.

Ministers in cabinet will receive $243,700, an increase from $233,000. While Ministers outside cabinet will receive $204,300 - up from $195,700.

In calculating the increase the authority takes into account public and private sector pay rises, along with those of the judiciary and looks set to raise salaries by around four per cent.

Mr Key's increase means he now earns more than Australian Prime Minister Kevin Rudd on NZ$388,000 a year.

The basic salary for backbench MPs has increased to $131,000 from $126,000 although many of them get more than that because they hold a variety of positions like select committee chairs or deputy chairs.

All MPs get a range of expenses and allowances. Ministers who are not resident in Wellington get free houses, and those who live in the capital get a housing allowance.

The Remuneration Authority said it had considered salary movements in the state sector when it made the determinations.

"It has long been accepted that it is not appropriate for remuneration of those in elected office to be closely tied to the private sector, or to state-owned entities operating in a commercial environment, notwithstanding the responsibilities of senior politicians in particular," it said.

"It has been recognised that there is a need to maintain some relativity across the salaries paid to the Executive and other Members of Parliament, the judiciary, and the public service."

It said maintaining those relativities had become increasingly challenging as salaries for senior state sector positions, the legal profession and related professions had outstripped the salary movements of other people.

"On balance, the Authority has looked to movements in salary and the Consumer Price Index in the broader economy in applying increases ranging between 3.8 per cent and 4.8 per cent to parliamentary salaries, again modestly recognising the size of the responsibilities placed on members of the Executive and party leaders."

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