Iain Lees-Galloway thinks new MP pay setting will be more acceptable to public

MPs will vote today on a new way to set their pay - it looks a lot like the old way and neither the Greens nor Act is happy about it.

Since 2015, the Remuneration Authority has been required to use a formula which was introduced with the aim of stopping pay rises that looked too generous.

But today, Workplace Relations Minister Iain Lees-Galloway will introduce a bill to Parliament that restores the authority's independence in determining MPs' pay.

Mr Lees-Galloway told Morning Report: "We are restoring the independence of the Remuneration Authority because history tells us when they were setting our salaries they tracked more in line with CPI, which I think is more acceptable to the public."

CPI stands for Consumer Price Index, which is a measure of inflation for New Zealand households.

Mr Lees-Galloway said a formula that has got no flexibility could result in unintended results.

"The whole point in introducing the formula was to suppress our pay increases, it actually had the opposite effect to the point where the increase that was proposed last year was so unacceptable to the government that we froze MPs' pay.

The Remuneration Authority had the ability to take into account economic conditions, the public's expectations and wage changes as well, Mr Lees-Galloway said.

"If you look back through time, the Remuneration Authority over time has generally ensured that our pay increases are in line with CPI.

"I think people expect us to work hard for them, we are working for the people of New Zealand and they expect us to be in touch with New Zealanders and the wages they get...

"It's always been a balancing act to ensure what we are paid is a reasonable amount that's acceptable to the public but also that the work that goes into being a Member of Parliament, everything that goes into being a Member of Parliament is appropriately recognised and that it's an attractive offer to people who we want to be working in that environment and representing New Zealand as well...

"Ultimately, what people are really concurred about is the money going into their back pocket."

Mr Lees-Galloway said changes to MPs' pay next year would be up to the Remuneration Authority.

This could "absolutely" give MPs a pay cut.

"If that's the decision that they make then MPs have to accept that and it is a possibility under the new settings that we are introducing."

Tie it to the average wage

Green Party co-leader Marama Davidson said changes were made in 2015 for a reason - and the Greens wanted to see a dollar amount increase in line with the median wage.

"It's not good enough for MPs' salaries to get further and further way from what the rest of the country and our citizens are earning, so we're going to be really loud about that," she said.

ACT Party leader David Seymour told Morning Report he thought it'd be better to tie MPs' pay directly to the average wage.

"If MPs' pay was linked to the average wage in New Zealand or at least the increases in it were, then I think we wouldn't have this problem and frankly it'd be a better set of incentives because to the extent MPs are motivated by their pay, they might be thinking about how we raise wages for the entire economy rather than just the public sector.

"What happened in 2015 it was made a formula, so it wasn't a political judgment, it just said whatever happens with this number, MPs pay will track it the same way.

"What the government is now proposing to go back to is something where yes there is a formula, but there are so many variables, there's perceptions about how hard the job is or isn't, there's economic conditions, there's what people are getting in other sectors but they don't say which ones...

"I think it'd be better, fairer and clearer for everybody if you just said 'look, MPs increases in pay will depend on what happens with everyone else, and if everyone else's goes up so will ours and if everyone else's goes down ours goes down, it seems fair'."