Balancing Fair Parliamentary Salaries and the Need for Quality Leadership

Opinion by Crosbie Walsh

I'm still scratching my head over the announced parliamentary salaries, wondering why they were decreed before Parliament sat, how they were determined, and how they can be explained or justified. Price Waterhouse may have made the recommendations but an elected Government is under no obligation to accept them unamended. 

The Parliamentary Remuneration Decree fixes salaries until they are changed by a parliamentary resolution that must take into account prevailing economic conditions based on evidence from an authoritative source and may set a lower remuneration level. But couldn't the old rates have been paid until, as NFP party leader Dr Biman Prasad, asked, a parliamentary select committee decided on appropriate new rates?

Prior to the election, Government said it intended to attract high quality candidates by paying attractive MP salaries. More generally, it talked of the need to reduce income inequalities and leading by example. The parliamentary salary situation does not seem to reflect these sentiments.

Relative to the higher salaries in parliament and comparable to "equivalent" salaries outside parliament, the salary of ordinary MPs is insufficient to attract high quality candidates, unless they are motivated by idealism alone. And relative to the wages on which most Fijians live, the higher salaries are an obscenity.

The Parliamentary salaries compared

The PM's salary package ($328,750) is 20 times the country's average wage of $17,394 in 2011 when the median wage, a more accurate measure, was $12,200. For a wider comparison, his NZ counterpart's basic salary ($NZ428,500) is "only" ten times the NZ average wage of $NZ45,000.

The PM's package is six times the basic salary of an ordinary MP ($50,000). The NZ equivalent where MPs earn $NZ147,800 is half that.

There are three levels of ministerial salaries in Fiji: The Minister of Finance earns $235,000, Ministers of Health, Education and Infrastructure and Transport, $200,000, and other ministers $185,000. The Speaker earns $150,000 and the Leader of the Opposition $120,000. In NZ, all Ministers, the Speaker and the Leader of the Opposition are paid the same salary, $268,500.

I know the comparisons with NZ are only crude. No allowance is made for different values of the respective dollars or the allowances paid and non-monetary assistance to members of parliament, but my main concern is in Fiji relativities, between the top and bottom salaries in the Fiji Parliament, and the higher parliamentary salaries compared with the incomes of ordinary Fijians, the people who elected them to office.

Balancing Fairness and Quality
It is not easy to balance principles of equality and fairness with the need to attract the best people to govern the country, but I think the range of parliamentary salaries need to be greatly compressed, with  lower salaries at the top (before the appropriate allowances are added) and higher salaries at the bottom.

There are, I think, three requirements if the balance between perceived fairness and quality leadership is to be achieved:

1. The top (and bottom) end of the salaries need to be in line with approximately comparable positions outside Parliament.

2. Salary differences within the House should reflect the roles and responsibilities of members on BOTH sides of the House.

3. The basic MP salary should be sufficient to attract quality election candidates.

Why only comparisons with the private sector?
A justification for the top salaries is that they compare with those paid to CEO's in the private sector. Why this should be the only comparison I do not know. Few MPs came from or will return to the private sector, and there are other and possibly more appropriate models such as those paid by the University of the South Pacific.

The basic USP salary (without allowances) paid to assistant lecturers ranges between $54- $65,000; lecturers from $66- to $88,000, senior lecturers $91- to $105,000, associate professors from $111- to $125,000, and professors from $129- to $140,000.

Using this model, an ordinary MP would earn a basic salary comparable to a Lecturer (say, $65,000); Ministers, the Speaker and the Leader of the Opposition basic salaries equivalent to those of an Associate Professor or Professor (say $120,000) and the PM a basic salary of $140,000. Allowances for travel, living costs for those normally living outside Suva and superannuation would be added to these basic salaries, and extra payments could be paid for ministers with more than one portfolio.

Two extreme overseas examples

There are, of course, many other models that could be adopted. Using Fiji's choice of a comparison with private sector CEO's, for example, ANZ's CEO David Hisco earned a A$3.26m remuneration package last year, equal to NZ$4.1m at the time, making him the country's highest-paid executive. That's 120 times more than the lowest paid bank worker. Or $80,000 a week, more than most bank workers earn in a year. It is little wonder than ANZ bank tellers in New Zealand are presently on strike!

Evo Morales

At the other extreme is the example of of Evo Morales, Bolivia's first indigenous president. When he took office in 2006 he did not move into the Presidential Palace. He stayed in his old house, wore his same old clothes, and cut his salary by 57%. 

He then set out to improve the conditions of the poor, curb the power of the elite, and nationalise some US and foreign businesses. He is, for a reason his opponents fail to fathom, immensely popular and has been returned with over 60% of votes three times as president. 

Of course, he's a left wing president, part of the "pink revolution" that has improved the living standards of the poor and thwarted American big business interests in several Latin American countries.

We can hardly expect such idealism in Fiji where there's nothing even vaguely "pink" about Government — or the Opposition parties, for that matter. Such as "pink" was, it went out of the window with the election collapse of the FLP and PDP.

Conclusions

But, surely, after all the hyperbole about basic human rights, poverty alleviation and equal citizenship, we could expect a parliamentary salary structure that showed it was designed in the same country —or at least on the same planet. 

A structure, as the remuneration decree requires, that recognizes the "prevailing economic conditions","fair relativity", that "reflect(s) the ethos of political service which entails making sacrifices", that recognizes "the need to be fair to the taxpayer" and that, in the setting of allowances and benefits, recognizes "the need for public understanding" of the "extra" work done by parliamentarians.

If PM Bainimarama wishes to be re-elected, or elected three times like Evo Morales, I'd bet a fistful of his surplus  dollars that he needs to be much closer to Morales's “moral” example than to that of the ANZ CEO.