The baubles of office: What's the salary for the new PM and Cabinet ministers?

Author: David Fisher,
Publish Date: Fri, 24 Nov 2023, 2:45PM

Now that Christopher Luxon is to be sworn in as the actual Prime Minister, his weekly pay packet will jump to $9058.63 before tax.

That’s a healthy bump from the pre-tax $5692.44 he picked up as Leader of the Opposition.

Either pay packet is a substantial hike from the New Zealand median wage - again before tax - of $1186.40.

If you’re looking for how that shakes out over the year - the Prime Minister’s salary is $471,049 plus $22,606 for expenses. For the median wage earner, it’s a more humble $61,692.80 (and good luck with those expenses).

Luxon’s weekly wage is a long way from the $4.2m annual salary he received as chief executive of Air NZ.

Prime Minister-elect Christopher Luxon's salary is salary is $471,049 plus $22,606 for expenses. Photo / Mark Mitchell

But stand by - Luxon and all other parliamentarians stand to get a pay rise within three months so the end of this story is yet to be written.

In that time, the independent, statute-bound Remuneration Authority will follow a set of guidelines to give politicians a pay rise.

It’s a pay bump frozen since 2018 when then-incoming Prime Minister Jacinda Ardern blocked the hike, saying it was “the right thing to do”. Ardern intervened again in 2020 to bring in a temporary pay cut of 10 per cent for MPs and 20 per cent for ministers as the Covid-19 pinch arrived.

Barrister Graeme Edgeler - a keen political watcher and expert in electoral law - said the Remuneration Body was an independent body that made decisions which went straight into the rule book for running the country without politicians casting a vote.

In that sense, it meant they were insulated from claims they set their own wage.

However, the general pay rates did not escape being buffeted by the winds of politicians with some casting an eye at politicians’ pay packets in times of austerity.

For some sectors of society, he said the difference between their own income and that earned by those elected to be their representatives would seem striking.

“I can imagine it would be bad for social cohesion for even a small minority of people to be so divorced from people they are asked to elect.”

The rates for Cabinet ministers - they earn $296,007 - was enough that they were elevated from most earners.

The new Government: New Zealand First leader Winston Peters, National leader and incoming Prime Minister Christopher Luxon and Act Party leader David Seymour. Photo / Mark Mitchell

For the Cabinet announced today, that amounts to $5,920,140 a year for the 20 people sitting around the most influential table in New Zealand.

Ministers outside Cabinet get $249,839 - there are eight of those - while the two Parliamentary Under-Secretaries will be paid $194,374.

Edgler said it was conceivable people would ask whether MPs had more in common with each other than the people they were elected to represent.

“Are the MPs in the 1 per cent? Ministers are certainly very much the 1 per cent.”

It was Deputy Prime Minister Winston Peters who brought into the political lexicon the idea of the “baubles of office”. It was these to which he said he was immune in 2005 when contemplating a coalition partner.

For the next 18 months, the straight Deputy Prime Minister “bauble” without any perks will work out at a cool $502,101 on the basis of an annual pay of $334,734.

But there are perks, for Peters and many others in Parliament. Some of these are set by the Remuneration Authority while others are ruled on by Parliament’s Speaker, now the freshly-appointed Gerry Brownlee.

Luxon, Peters and others around the Cabinet table have ministerial limousines on which they could call - or a car provided should they wish to drive themselves. The limo service was also available to the Leader of the Opposition, Speaker (Brownlee) and deputy speakers.

Like all other MPs, they get a phone and laptop allowance and a security system if wanted. Other allowances include a superannuation scheme into which the taxpayer banks almost $33,000 a year for each MP.

For even the vanilla backbench MP, there are few barriers to getting around the country to do their jobs with air travel, car rental, food and accommodation expenses available - as long as it was work-related. The taxpayer paid $2.1m for all MPs in the three months to the end of June this year.

If you’re after a gauge on how generous the expenses might be, consider that the Speaker and Leader of the Opposition are entitled to “the actual and reasonable costs of an evening meal” - of up to $80. Unlike many workplaces, that total includes alcohol.

Across the House, Labour leader Chris Hipkins will likely not be crying poverty as Leader of the Opposition with a pay packet of $296,007 (the same as a Cabinet minister).

The basic MP’s wage - for those other than the 30 people selected for higher paying jobs - remained well above the median national wage at $163,961 plus $16,980 expenses.

Edgeler said the broad thrust of argument around politicians’ pay was that they kept clear of an income level where they might be susceptible to influence around gifts or payments.

Also, though, he said: “You want some professionals. You want people to not have to sacrifice a massive amount to go and work in Parliament.”

The level of pay threw up quirks and questions, such as why the Prime Minister’s pay was elevated $175,000 above others who sat around a Cabinet table. Surely close to $300,000 would be enough for a Prime Minister, he asked.

“MPs are well remunerated - even backbench MPs, and we should remember that.”