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Incentive pay for MPs

  • July 14th, 2014

The moot for the New Zealand Initiative's youth debate semi-final this year in Wellington is a good one –

"Should New Zealand tie MPs' and Ministers' salaries to a multiple of the average national income?"

When the Remuneration Authority was asking MPs about reform of the system 10 years ago, I urged that parties be given a material amount they could distribute among their members according to their pre-Parliament incomes, to do three things:

  • reduce the income cut involved in going to Parliament for people for whom there is much more to lose, and
  • reduce the overpayment of the kind or people who would never be thought useful enough outside Parliament to get anywhere near their Parliamentary income, so they don't cling quite so desperately to their places; and
  • have the supplement reduce each year after entry to Parliament, to encourage turnover of people who have not progressed.

I also suggested a trailing commission, to induce longer term thinking among MPs. Exec incentive schemes that fail to add a trailing element or to defer vesting encourage manipulation of reporting and incentivise short term results. In politics that there is already more than enough incentive for false reporting and short-temism in the 3 year electoral cycle.

Accordingly MPs should have a material part of their remuneration deferred each year. If the MP demands immediate payment is should be substantially discounted. The deferred amount (say half) might be paid out say five years later, multiplied by 2 times or 5 times the GDP or average income growth in the five years. If it shifted MPs horizons, it would be money incredibly well spent even if they tripled or quadrupled their incomes.

For an even longer perspective, simply make the deferral period longer.




From memory Rodney’s idea was to only pay MPs if they reached an economic growth target; thereafter, paid a indexed amount.


Those are exceptionally good suggestions.

Can you imagine those in the second grouping you mention voting for this change?

The problem for Labour and the Greens, and for New Zealand is that choosing candidates on the basis of gender or identity grouping pushes meritocracy into the background. Consequently their ‘talent pool’ is reduced to a puddle.

This represents a very real risk when electing a left leaning Government for New Zeland. At least Helen Clark, and some of the key players in the Lange Government were intelligent and had some credible life achievements prior to entering parliament.

I have reviewed the biographies of the Greens on their website, and the kindest thing that can be said is that they are well intentioned idealists whose life experience has kept them at arms length from commercial reality.

  • Angry Tory
  • July 17th, 2014
  • 9:46 am

John Key takes no salary and is widely admired for it
Remind me again why we pay MPs in the first place?

The best way to ensure people of real value were MPs is not to pay them

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