Prime Minister Christopher Luxon has accused Labour of “outright lies” over claims from the opposition about changes the Government has made to the pay equity regime.

The Government is expected to face attacks from Opposition MPs on the issue this afternoon at Parliament’s Question Time (you can watch the debate on the livestream above).

“I just think it’s a terrible shame that Labour’s resorting to lies and misinformation,” Luxon said on his way into the National Party caucus meeting on Tuesday morning.

But Labour’s Chris Hipkins has denied scaremongering and accused the Government of “lying to New Zealanders” itself.

“They’ve misled New Zealanders repeatedly over the last year around issues around pay equity,” he said moments after Luxon’s allegations.

The tit-for-tat centres on allegations Labour has been making about the consequences of the Government raising the threshold for pay equity claims. The legislation announced and then quickly passed under urgency last week made it more difficult for claims to be made and also resulted in current claims being stopped.

The Government argued changes were necessary to ensure the workability of the regime, suggesting it was difficult to judge whether differences in groups’ pay were down to sex-based discrimination or other market factors.

Claims that meet the new threshold are still expected to be eventually settled – though that may take years - but the total amount of money paid out in settlements will be smaller.

With the announcement being so close to the upcoming Budget and an admission from ministers it will save billions of dollars, the Government’s been accused of making the changes to prop up the books. It won’t say exactly how much it’s saved until the Budget.

Prime Minister Christopher Luxon is accusing Labour of "outright lies" on the pay equity issue. Photo / Sylvie Whinray.

Labour has made several claims about the impact of the changes. For example, in a pre-Budget speech on Tuesday morning, Hipkins said they represented a cut to women’s pay.

“This Government is gaslighting all Kiwi women. Telling them they aren’t cutting women’s pay on one hand, while cancelling 33 active claims representing hundreds of thousands of women with no due process on the other,” he said.

“Claiming it wasn’t to pay for their Budget, then admitting their changes will see billions slashed from that same Budget.”

In a social media post last night, Hipkins said “Christopher Luxon is now taking money out of women’s pay packets”.

The Herald asked Luxon on Tuesday morning whether that claim was correct.

“Look, I just think it’s a terrible shame that Labour’s resorting to lies and misinformation, frankly, we’re not cutting equal pay,” he said.

On the suggestion that the Government saving billions of dollars from funding for pay equity settlements does represent a cut to women’s pay, Luxon said, “it’s wrong”.

“We’re not cutting women’s pay. We’re making changes because we’ve got an unworkable system that got really loose, unaffordable, frankly, but loose and really broad around pay equity,” he said.

Luxon said the Government expected there would still be pay equity settlements in the future and money was being put aside for them. It would also honour claims that have already been settled, he said.

The Prime Minister accused Labour of “outright lies”.

“That’s what they’re doing. It’s a shame that they’re actually not standing up and actually arguing for what they thought was so good about their system. It’s a very flawed system and we’re fixing it.”

He also highlighted a social media post shared by a member of Labour’s Whangaparāoa volunteer team that showed Brooke van Velden, the minister in charge of the pay equity changes, as a Nazi.

“You attack the issue, but don’t attack the person, and I think we’ve also seen a lot of gendered abuse,” Luxon said.

Hipkins said the post was “totally unacceptable” and was removed very quickly.

Hipkins not backing down 

Labour’s Hipkins didn’t back down from his accusations despite Luxon’s claim they were “lies”.

The Herald asked him about the accuracy of his social media post claiming Luxon was “now taking money out of women’s pay packets”.

“That money was otherwise going to be going into women’s pay packets, taking it away, means you’re taking it away,” he responded.

On the suggestion that some may interpret his social media comment as claiming Luxon is taking money out of women’s current pay packets, Hipkins responded: “Taking money away from what women were otherwise going to get is a cut”.

Hipkins denied he was scaremongering and said, “any obfuscation, any blame, any gaslighting should be seen for what it is”.

The Labour leader didn’t believe the criticisms “have been too strong all”.

He said the Government had “rammed this law change through under urgency” and highlighted that Finance Minister Nicola Willis had previously “thought the law was working well”.

“That was well into their time in government when they were already working on these law changes, she was saying that she thought the law as it stood was working well. So I think they’ve been lying to New Zealanders all along.”

Labour leader Chris Hipkins is not backing down. Photo/ Mark Mitchell

Hipkins is referencing comments Willis made in May last year as the Public Service Commission began consulting staff on disestablishing the pay equity taskforce, which had funding until the end of June last year.

At the time, she noted National had supported the changes to the pay equity regime made in 2020 and said there had been a “substantial number of public sector claims” settled.

“It is a sign of success that the process for settling pay equity claims has now matured to a point where the same level of governance support and facilitation from the taskforce is no longer required.”

Willis said last week that she learnt of the full forecast cost of pay equity claims upon entering Government in late 2023.

She was advised costs had in part escalated due to the previous Cabinet indicating they would meet the costs of claims from non-government employers, where those employers were government funded. Willis took a paper to Cabinet suggesting it look at how to address this.

It wasn’t until December that Cabinet considered changes to the pay equity regime.

Jamie Ensor is a political reporter in the NZ Herald Press Gallery team based at Parliament. He was previously a TV reporter and digital producer in the Newshub Press Gallery office.