General policy statement

This Bill is an omnibus Bill introduced under Standing Order 263(a) (dealing with an interrelated topic that can be regarded as implementing a single broad policy).

Part 1 amends the Remuneration Authority Act 1977 (the Act) to provide a sole criterion for the Remuneration Authority to consider when reviewing the remuneration of members of Parliament. This criterion is the Quarterly Employment Survey (QES) for the public sector average ordinary time weekly earnings for full-time equivalent employees (FTE) using the change for the average for the year to June compared with the average for the previous year to June. Using this measure means that the remuneration of members of Parliament will increase in line with the average public sector salary. The average annual percentage change will be applied to smooth any sudden increases or decreases due to fluctuations in employment movements. To ensure that this process works, the Bill provides that the indexing of the salaries of members of Parliament to the QES must be done on an annual basis. Currently, the Act requires the Authority to make determinations for each position within its jurisdiction at least every 3 years (section 19(5)). The Bill provides for the current Parliamentary Salaries and Allowances Determination 2015 to be revoked as far as it applies to salaries. To ensure that members of Parliament continue to receive their salary, the Bill reinstates the Parliamentary Salaries and Allowances Determination 2013 (as it relates to salaries) until such time as the Remuneration Authority is able to gazette a new determination using the new criterion under the amended Act.

Part 2 amends the Members of Parliament (Remuneration and Services) Act 2013 to make amendments to the basis on which assessments of personal benefit under section 16 of that Act are taken into account by the Remuneration Authority when reviewing the remuneration of members of Parliament.

Departmental disclosure statement

The Ministry of Business, Innovation, and Employment 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=2015&no=10

Clause by clause analysis

Clause 1 is the Title clause.

Clause 2 provides that the Bill comes into force on the day after the date on which it receives the Royal assent.

Clause 3 provides that Part 1 amends the Remuneration Authority Act 1977 (the principal Act).

Clause 4 inserts new section 3A into the principal Act, which gives effect to the transitional provisions set out in new Schedule 1AA.

Clause 5 amends section 18 of the principal Act, which sets out criteria for the Authority when determining remuneration. A new subsection (3) is inserted, which provides that these criteria apply when the Authority is determining the allowances of members of Parliament, but not when it is determining their salaries.

Clause 6 amends section 18A of the principal Act, which requires the Authority to take into account countervailing economic conditions. A new subsection (5) is inserted, which provides that this section applies when the Authority is determining the allowances of members of Parliament, but not when it is determining their salaries.

Clause 7 inserts new section 18B, which provides that, for the purpose of any determination under section 12(1)(a)(i) of the principal Act (which relates to determining the salaries and allowances of members of Parliament (which includes Ministers)), the Authority must fix the salaries in accordance with this section.

New section 18B(2) is a formula for fixing the salaries of members of Parliament so that the salaries and the superannuation subsidy as a combination can only move up in line with the movement in the average ordinary time weekly earnings for full-time equivalent employees in the public sector as shown by the Quarterly Employment Survey, and any change in the value of personal benefits of a member of Parliament, arising from changes in entitlements to services, is taken into account.

New section 18B(3) defines terms used in new section 18B(2). New section 18B(4) deals with rounding of certain numbers used in the calculation of the formula in new section 18B(2).

New section 18B(5) provides that if the change in the Quarterly Employment Survey index is a number less than 1, the Authority must fix salaries as if the change in the index were 1. The effect is that the Authority is still required to take any relevant amount in relation to personal benefit (as provided in section 16(2) of the Members of Parliament (Remuneration and Services) Act 2013) into account in the fixing of salaries. New section 18B(6) provides that new section 18B(5) does not limit section 24 of the principal Act, which sets out the circumstances in which the remuneration of existing holders cannot be reduced.

New section 18B(7) deals with the fixing of a salary for a new position where there will not be a salary rate from the previous 12-month period to index against.

Clause 8 amends section 19 of the principal Act, which deals with the frequency of adjustments. A new subsection (5) is substituted, which provides that the Authority must review and issue a determination in respect of the salaries of members of Parliament at intervals of 12 months (for each period ending on 30 June). For allowances, the existing minimum interval of 3 years is not changed.

Clause 9 provides for the content of the Schedule of the Bill (new Schedule 1AA) to be inserted into the principal Act.

Clause 10 provides that Part 2 amends the Members of Parliament (Remuneration and Services) Act 2013.

Clause 11 amends section 16 of the Members of Parliament (Remuneration and Services) Act 2013. The amendments have the effect that in fixing salaries of members of Parliament the Remuneration Authority is no longer required to take into account the valuation of the personal benefit or potential personal benefit of existing entitlements to services. However, if the entitlements change, the Authority is required to take into account the value of any change in personal benefit or potential personal benefit arising from that change in entitlements when fixing salaries. Currently the Authority is required to take into account when fixing salaries not only any change in personal benefit arising from changes to entitlements, but also any changes in the value of the personal benefit to members and their families of existing entitlements.

The Schedule inserts new Schedule 1AA into the Remuneration Authority Act 1977, which contains transitional, savings, and related provisions relating to this amendment Bill. Clause 1 provides that the provisions of the Parliamentary Salaries and Allowances Determination 2015 (the 2015 determination) that determine salaries have no effect and are revoked. Clause 2 provides that the provisions of the Parliamentary Salaries and Allowances Determination 2013 that determined salaries are deemed to continue in effect. Clause 3 provides that no act done in accordance with the 2015 determination before this Bill comes into force is unlawful solely because of its partial revocation by clause 1, and no omission to act in accordance with any provision of the determination before that revocation is unlawful. Clause 4 requires the Authority to make a determination of salary rates for members of Parliament for the period 1 July 2014 to 30 June 2015 in accordance with the amendments made by this Bill.