The Remuneration Authority (Members of Parliament Remuneration) Amendment Act 2019 (the Amendment Act) reversed the changes made in 2015 that established a formula for calculating the remuneration of members of Parliament (MPs). It also removed a spent provision that in 2018 was inserted into the Remuneration Authority Act 1977 (the Act) to freeze MPs’ remuneration for the period 1 July 2018 to 30 June 2019 at the levels determined in the Parliamentary Salaries and Allowances Determination 2017.

The Amendment Act also restored the criteria-based discretion of the Remuneration Authority (the Authority) to determine the salaries and allowances of MPs and equipped the Authority with the flexibility to take into account changing economic circumstances.

The Amendment Act requires that, as soon as practicable after its commencement, the Authority must issue a determination covering salaries and allowances of MPs for the period 1 July 2019 to polling date for the next general election.

The criteria that the Authority must have regard to when making a determination are listed in sections 18 and 18A of the Act and include the criterion that the Authority must take into account prevailing adverse economic conditions, which is important at this time.

COVID-19 has created a rapidly changing environment that is having an immediate and unprecedented impact on the New Zealand economy, but the impact is difficult to measure at this early stage. The Treasury recently published scenarios showing the possible economic impacts of COVID-19 on New Zealand under different circumstances. It is likely that economic and labour market figures and statistics published for the March 2020 quarter will largely reflect conditions before New Zealand went into the COVID-19 Level 4 lockdown, so the Authority will not know the extent of the downturn until the figures for the June 2020 quarter are published.

Therefore, the Authority has decided to maintain the salaries and allowances of MPs at their 2017 levels until the expiry of this determination at the next general election.

However, the recently enacted Remuneration Authority (COVID-19 Measures) Amendment Act 2020 has changed the Act to enable the Authority to reduce parliamentary remuneration by up to 20% for a defined period of time. As a result of this, the Authority will issue an amendment to this determination in the near future.

Since 2002, MPs have been entitled to a tax-free allowance intended to cover out-of-pocket expenses incurred in the pursuit of parliamentary business, which may include—

• the entertainment of visitors, staff, constituents, and officials; and

• memberships, sponsorships, and fees; and

• koha; and

• donations and raffle tickets; and

• gifts and prizes; and

• flowers (excluding wreaths for public commemorative events); and

• passport photos; and

• briefcases and luggage; and

• meals.

No change has been made to this allowance.

As required by section 17A of the Act, the Authority consulted the Speaker of the House of Representatives, the Minister responsible for Ministerial Services, and the Commissioner of Inland Revenue before finalising this determination.

This determination is effective from 1 July 2019 and expires at the end of polling day for the next general election.