Economics starts with the assumption that incentives explain the choices of individuals. But would a carrot and stick approach work in parliament, an institution not always prone to making rational choices?

That’s the question that will be answered next week at the Wellington semi-final of this year’s Next Generation Debates, where the moot will be “Should New Zealand tie MPs and Ministers’ salaries to a multiple of the average national income?”

As it stands, backbench MPs earn a base salary of $147,800 a year, more than three times the national median salary, which is set to rise by 2.2 per cent, well above consumer price inflation (1.6 percent).

The mooted idea already has some support.

Earlier this year, the Green Party proposed linking MPs salaries to the median income. Party co-leader Dr Russel Norman argued that increasing, or indeed, decreasing MPs' annual salaries by the equal dollar amount change in the median income, might incentivise politicians to support policies that would raise the income of all Kiwis. This, Norman argued, might also allow those at the very bottom to better share in the gains received by the top.

The capacity for remunerative and financial incentives to influence individual behaviour are a powerful force, and MPs are certainly no exception.

The affirmative team might argue that directly linking pay to that of middle New Zealander’s would give MPs a stronger incentive to look for measures most likely to raise the median income. Knowing that if the median salary decreases due to a lacklustre economy may better motivate MPs to rectify economic problems.

The negative team could contend that such a rule is too rigid and might have undesirable consequences. Adequate remuneration is fundamental to ensuring the most competent and experienced people are employed as MPs. That many politicians accept a lower salary upon entering politics is perhaps indication enough of their pledge to serve the greater public. The differences are most pronounced between political and corporate leaders. Reducing politicians pay will hardly attract, much less retain, the crème de la crème to stand for parliament.

Whichever side one takes, it will be fascinating to hear the opinions of four young champion debaters and observe the battle of wits they go head-to-head on this issue.

Please join us at this Wellington semi-final to be held at Mac’s Brewbar on Wednesday, 13 August.
Register here for the Wellington semi-final: “Should New Zealand tie MP’s and Ministers’ salaries to a multiple of the average national income?” or here for the Auckland semi-final: ‘Progressive tax rates are unfair.’