State pay rises may be curbed

Press, 24 February 1987, Page 1

State pay rises may be curbed

By

BRENDON BURNS

in Wellington

Legislation aimed at limiting all State servants’ pay increases will be introduced to Parliament this week.

Speaking after yesterday’s Cabinet meeting, the Prime Minister, Mr Lange, said a bill would be brought before Parliament to intervene before a Higher Salaries Commission announcement expected next month. But Mr Lange said the legislation would have a restraining effect on State salaries beyond members of Parliament, senior public servants and judges covered by the commission’s determination. He said while the bill would specifically limit higher salaries, it would also reduce the relative flow-on increases that

other public servants would have received.

“It’s not going to be a way of holding back State pay increases. It’s going to be the way of holding back State pay increases,” said Mr Lange.

While some estimates put the Higher Salaries Commission ruling at about 20 per cent, the Prime Minister said he had heard calculations of 30 per cent and above.

But Mr Lange said he had not sought nor received any advice from the commission itself on the increase to be announced.

This meant there was no question arising of retrospective legislation which Mr Lange said was the only way the Government could have dealt

with the commission’s 1985 ruling which gave huge salary rises on the eve of the wage round.

“In 1985 it was announced, and to set it aside when it had become law would have been retrospective. There is no determination in 1987, but we will deal with the matter before there is one,” he said. Salary rises of the order of 30 per cent were completely unacceptable, said Mr Lange, particularly after recent tax cuts.

The legislation to be introduced this week would merely set a limit on salary rises this year for members of Parliament, senior public servants and judges. Mr Lange indicated that this would be about 10 per cent.

Later, further legislation would be brought in to change the way higher salaries were adjusted every two years.

Asked about the effect of imposing the limit on salaries, Mr Lange said, “I imagine permanent heads and the like will be nursing a sense of grievance. The judiciary will preserve a judicial demeanour."

The president of the Public Service Association, Mr Colin Hicks, forecast industrial action or an election-backlash to the legislation.

“It’s a very grave and direct intervention in the State pay round. It’s an interference in the due process of the Higher Salaries Commission. It must signal the official end of the Higher Salaries

Commission as a State body with independence,” said Mr Hicks.

The legislation was going against the Government’s own policies by allowing the market to set private sector wage rates, but intervening when these threatened to .flow on into State salaries.

Mr Hicks said the announced move was undoubtedly influenced by the approaching election and a desire to avoid a further blow-out in Government spending.

Recruitment and retention problems in some departments such as the Treasury would be exacerbated. All State servants were affected because if there was no real movement for those covered . by the Higher Salaries Commis-

sion, it would be harder to win increases for all other staff.

Mr Hicks said most State servants expected a minimum rise in wages this year of 7 per cent But he said they would have to fight for this if senior staff were to be limited to a 10 per cent increase for a two-year period.

“The Government could unleash a tremendous force either in industrial action or at election time.”

The Leader of the Opposition, Mr Bolger, said members of Parliament and senior public servants had a duty to be responsible when accepting salary increases, but they were entitled to a more structured approach to salary determination.