The Remuneration Authority (COVID-19 Measures) Amendment Bill (the Bill) will, for a short period, permit the Remuneration Authority to reduce the remuneration for certain roles within certain limits.

The general purpose of the Bill is to allow leaders in the public sector to—

• show leadership in the public sector during the COVID-19 outbreak; and

• show solidarity with those in the private sector who are losing their jobs or facing significant pay reductions.

The Bill does so in such a manner as to respect the underlying policy behind the Remuneration Authority Act 1977.

The remuneration of certain individuals in senior positions in the public sector is set according to the Remuneration Authority Act 1977 and, in respect of local government members, the Local Government Act 2002. The underlying policy for the current arrangements is to de-politicise the setting of this remuneration.

Under the existing legislative regime,—

• the Remuneration Authority is not usually permitted to make a determination that reduces an individual’s pay; and

• the organisations making the payments must pay according to the Remuneration Authority’s determination.

The Bill overrides the current legislative regime by permitting a capped reduction of up to 20% of current remuneration for up to a 6-month period which must commence on or before 30 July 2020.

The Remuneration Authority will apply its existing criteria to determine whether a reduction is appropriate and, if so, how much it will be and for how long (up to the caps). The existing criteria include the prevailing adverse economic conditions (see section 18A of the Remuneration Authority Act 1977) and fairness to both the person whose remuneration is being determined and the taxpayer or ratepayer (see section 18 of the Remuneration Authority Act 1977 and clause 7 of Schedule 7 of the Local Government Act 2002).

The Remuneration Authority’s decision will be set out in a temporary reduction determination. The Bill permits the Remuneration Authority to amend an original determination on which the temporary reduction determination is based, provided it does so in accordance with the enactment under which it was made. The temporary reduction determination can also be consequentially amended.

Remuneration for some roles, including those of the Governor-General, the judiciary, and some semi-judicial roles, is not included in the Bill because of constitutional and fairness considerations.

These amendments are intended to have only short-term effect so as to limit the impact on individuals. The section inserted into the Remuneration Authority Act 1977 by the Bill will be repealed on 31 January 2021.

The State Services Commission is required to prepare a disclosure statement to assist with the scrutiny of this Bill. The disclosure statement provides access to information about the policy development of the Bill and identifies any significant or unusual legislative features of the Bill.

A copy of the statement can be found at http://legislation.govt.nz/disclosure.aspx?type=bill&subtype=government&year=2020&no=266

The Treasury has determined that this is a direct COVID-19 response and has suspended the RIA requirements (in accordance with CAB-20-MIN-0138).