MPs' pay hikes 'ripping off taxpayers'

MPs don't choose how much they're paid, but they're being accused of ripping off the taxpayer nonetheless.

The latest round of payrises saw MPs get a 2.5 percent increase - an extra $11,670 for the Prime Minister, and almost $4000 for backbenchers.

Since 2015, MPs' pay boosts have been linked to increases in the wider public service. Before that, the Remuneration Authority had complete discretion to increase MPs' pay. Then-Prime Minister John Key changed the rules after MPs were given a 3.5 percent payrise, while inflation was only 0.8 percent.

He said at the time, pay packets would increase only "in the range of 1 - 2 percent" from then on. But the Taxpayers' Union says the new system is still failing.

"The pay packets of the public sector have grown much more in the last 12 months, compared to wages in the private sector," said executive director Jordan Williams.

"Public sector wages are growing at 2.5 percent, while the private sector is stalling at 1.6 percent. This means that taxpayers have seen more taken from their pockets, and incredibly, MPs now being paid even more for it."

Instead, Mr Williams suggests linking MPs' pay to the "opportunity cost of each MP giving up their previous jobs - so someone like Sir John would be paid a lot more to do the job than say, you or I.

"Some countries pay very little or nothing... so that generally it is semi-retired people and no 'career politicians' who stand.

"Other countries, such as Singapore, pay CEO-type salaries to attract the best and brightest to the roles," Mr Williams told Newshub.

"New Zealand has the worst of both worlds. We pay around $180,000 - not enough to attract the genuine superstars, but more than enough to attract career politicians who could never hope to earn that amount in the private sector."

He said it would be fair to pay MPs from lower-income backgrounds less because "you shouldn't be an MP if you're motivated by the money"

"If you don't have the skills to attract a reasonable paying job outside of Parliament, why should taxpayers fork out even if you're hopeless?"

Other suggestions from the Taxpayers' Union include linking pay to economic indicators, such as GDP or average wage growth across both the public and private sectors.

"Linking it to public sector pay, which MPs effectively determine, rips off the taxpayer, and sees the fox guarding the henhouse."