Do MPs Deserve $296,007 Per Year?

Green MP Julie Anne Genter stole the headlines this week by cycling from her home in the Auckland suburbs to Auckland City Hospital for the birth of her baby.

She and her partner cycled together and even had time to stop for an Instagram photo:

 

Instagram / julieannegenter

Source: Instagram / julieannegenter

[Click to open new window]

It shouldn’t come as a surprise; Genter is the Minister for Women as well as the Associate Minister for Transport and for Health.

Looks like she nailed all three roles on her way to the hospital. Good for her!

 

MP = More Pay?

Genter’s feat comes at an apt time. An article on Stuff.co.nz by Stacey Kirk addresses the fairness of MPs’ pay.

They make $175,000-plus. Is it deserved?

On one hand, many MPs make huge sacrifices to serve in a public capacity. They work long nights. Miss out on family time. Often, they give up lucrative opportunities in the private sector to work for the public.

And with Genter as a good example, many MPs wear multiple hats…serving in various ministries.

And on top of that, their high-profile jobs mean that their private lives and family can often be not-so-private.

Of course, some politicians aren’t in it for the money.

President Trump, for example, donates his entire combined salary of US$569,000 (NZ$850,000) to charity. Jacinda has confirmed that she will donate a portion of her salary for time spent during her maternity leave. Others like John Key also donated some of their public wages.

But as a question of economics, should our politicians earn what they earn?

According to the 2017 Parliamentary Salaries Determination, MPs earn between $163,961 and $296,007.

But as Simon Bridges recently revealed, auxiliary expense accounts can add hundreds of thousands of dollars to a politician’s spending.

So where should we draw the line? When do we cut them off?

Well, Jacinda seems to think that now is the time. She’s frozen MPs’ wages for the year…as she sorts out pay increases for other public servants like teachers.

And it’s for a good reason.

MP pay has exponentially outstripped the teacher wage over the past several decades. Documentarian Bryan Bruce did the math:

In 1979, teachers and MPs made about the same amount — $17,360 and $18,000 respectively.

In 2017, your most tenured teacher made $78,000…while your most junior MP made $160,024.

That’s 350% and 790% wage growth respectively.

As the son of two teachers, maybe I’m a bit biased…but it seems to me that there’s no reason for the separation. It’s not like teachers are half as productive as MPs…or that MPs are now doing double the amount of work. [openx slug=inpost]

 

A celebrity’s world

I believe this a symptom of a worldwide phenomenon — the celebritisation of politics.

That theory references how politicians have become celebrities…and their work, behaviour and pay have morphed to reflect that.

In the US, celebrity politicians aren’t new — Ronald Reagan was an actor. Can’t forget Governuh Schwarzenegger. Now President Trump.

For a long time, celebrities have used their popularity to secure political positions…but now, that celebrity lifestyle tends to continue into office.

Today, we have leaders using Facebook Live, Twitter and Instagram. They ride around in limousines. They take ‘selfies’ with fans and sign autographs.

They act like rock stars and think they deserve a rock star’s salary.

Frankly, I think a pay cut could do them good. Bring them down to earth. Deflate those egos.

Maybe we could peg their pay back to teacher pay.

And make them share a break room like the teachers do…

Or work side-by-side in cubicles like police officers…

Or bunk together like firefighters…

Wouldn’t that be a healthy dose of reality?

Because there are those like MP Genter who truly practice what they preach… and others who see elected office as the final frontier for the powerful elite.

Our country could benefit from more folks in charge that understand our plight, what a five-digit income feels like, what earning a living means…

Because otherwise, we’ll end up with an plutocracy…a ruling class disconnected from the rest of us.

I know because I’ve seen ‘elite capture’  firsthand.

The Huffington Post put it nicely (emphasis mine):

‘The elite capture of politics is when economic and business interests dominate the staffing of key government agencies and create policies that directly benefit their firms and financial interests at the expense of everyone else. Government policy is created and used to increase the wealth of the elite, to the detriment of the average person and the U.S. economy as whole.

‘The ability of a small elite to capture the political process has been made possible by the growth in income inequality since 1980, which led to a sharp rise in the wealth owned by the richest 1%. The rise in economic power was used to increase the political power of the elite by investing in politicians through campaign contributions and lobbying efforts, further increasing the elite’s wealth and economic power, creating a feedback loop. American democracy has been replaced with an oligarchic plutocracy—rule by the rich.

Now I’m not claiming that this is what we’re experiencing in New Zealand, but lavish salaries and bottomless expense accounts are a step in that direction.

Maybe it’s high time our MPs rejoin us back on Earth.

Best,
Taylor Kee
Editor, Money Morning New Zealand


Taylor Kee is the lead Editor at Money Morning NZ. With a background in the financial publishing industry, Taylor knows how simple, yet difficult investing can be. He has worked with a range of assets classes, and with some of the world’s most thought-provoking financial writers, including Bill Bonner, Dan Denning, Doug Casey, and more. But he’s found his niche in macroeconomics and the excitement of technology investments. And Taylor is looking forward to the opportunity to share his thoughts on where New Zealand’s economy is going next and the opportunities it presents. Taylor shares these ideas with Money Morning NZ readers each day.


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