MPs will receive pay rises this year, the independent remuneration authority has decided, after salaries were frozen at levels from over six years ago.
The Remuneration Authority released the findings of a wide-ranging “green-fields” review of pay for elected officials earlier this afternoon.
The decision delivers a backdated 2.8% rise that covers the period from October last year, since the election, then a 2.9% increase later this year from July 1, a 2.4% rise from July 2025, and a 2% increase in July 2026.
The authority must begin a review of MPs’ salaries within the three months after a general election. That review determines their pay for that term of Parliament.
It comes after the previous government froze salary rises during its first term and then over the Covid-19 pandemic, meaning MPs are paid the same as they were six years ago.
“Over the period June 2017 to June 2023, more-or-less corresponding to two election cycles, the labour cost index had increased by around 17%, average ordinary-time hourly earnings by over 30% and consumer price index by over 20%,” the authority wrote.
In the past few weeks, both Prime Minister Christopher Luxon and Labour leader Chris Hipkins have held their tongues on commenting on a potential pay rise, suggesting the authority needs to make an independent decision.
Luxon today revealed he would donate his own pay rise to charity.
A spokesperson for the PM said: “The prime minister has indicated he does not want or need an increase so any increase he received would be donated to charity.”
In its decision, the authority said it decided to “maintain the ratio between the salary of an ordinary MP with the salaries of the prime minister, ministers and most other roles with additional responsibilities as paid under previous determinations”.
“The only roles where different decisions were made was the leader of the opposition, party leaders, deputy leaders, co-leaders and party whips.”
For the first time, the authority also determined the official salary for a party co-leader.
Currently, backbench MPs receive an annual salary of $163,961.
That will rise to $168,600 this year and $181,200 by the end of their three-year term.
Any MP, who chairs a select committee, currently gets $179,713 annually, which will rise to $184,700 this year, and then $198,600 by the end of their term.
The prime minister’s salary is $471,049 annually, now rising to $484,200, and reaching $520,500 by the end of Christopher Luxon’s term.
The authority noted that the amount paid to the PM was in line with other leaders in Westminster democracies and “conservative in comparison to senior public officials”.
At the moment, Cabinet ministers are paid $296,007, as is the leader of the opposition.
That is set to change with the opposition leader – currently Chris Hipkins – receiving a smaller bump to $298,000 this year.
The reduced rise comes as the authority “believes MMP has caused the nature of this leadership role to change and that its salary relative to other party leaders is overstated.
“The authority thinks that the gap should narrow, possibly significantly.
“However, the extent of that change is not yet clear.
“Hence, at this time and as a first step, the authority has decided to increase the leader of the opposition’s salary by a lesser amount than other party leader positions.”
As for party co-leaders, the authority has made an official determination on the issue, where none existed before.
Co-leaders “should be paid half the sum of the applicable salaries for a party leader and a deputy leader, noting that there can only be two co-leaders per party – and a party may not pay both co-leaders and a deputy leader under the new system.
“This means that total leadership cost is the same for parties of a similar size irrespective of leadership structure and ensures that remuneration does not drive these structure decisions.”