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“The Fiji Prime Minister’s Salary and Perks” (ed. in FT 17/7/2020) 

17/07/2020

The Fiji Prime Minister’s salary and perks (ed. in FT 17/7/2020).

Most ordinary taxpayers in Fiji would be astonished if they were told that the Prime Minister of Fiji last year (2019) had a combined salary and perks in excess of $700,000 per year.

His official salary (headlined by another newspaper earlier this week with no detailed discussion of the real value of the allowances and perks) is $328,750 (at the moment he is taking a 20% cut).

But that is not all he gets. Housing, staff, cars, travel allowances – it all adds up to a lot more whose dollar value, not surprisingly, has never been revealed by the intrepid journalists (or should I say cheer leaders) of another newspaper.

You can read about these dollar values later in this article.

Ordinary taxpayers, whose average income in 2019 was less than $20,000, may be surprised to know that the services of their Prime Minister is considered to be worth more than 30 times worth what they are paid (in contrast to the factor of 7  for the great NZ Prime Minister, Jacinta Ardern)..

But Fiji Times readers must ask themselves, two fundamental questions if there is to be any hope of reform of the parliamentary emoluments in the future:

(a) was the process by which these salaries decided a credible and fair one?

(b) are the salaries and specific allowances justified, given the requirements of the positions and the calibre of the incumbents?

Let me first of all deal with all important process of setting remuneration (i.e. salaries plus allowances) for public officers like the Prime Minister, Ministers and Members of Parliament (or the President and Speaker of the House).

Given that there is no “market” as such that can give taxpayers any signals about desirable remuneration for its top public officials, decent civilised countries have qualified and credible committees or commissions to set public sector salaries and allowances

I give the example of NZ which is small enough in population to enable us to make a reasonable comparison, and it is larger than us in terms of the size of the economy and private sector with top executives paid far more than what the politicians get.

Fiji Parliamentary Remunerations Decree 2014 (No. 29)

This Decree which sets the remuneration package for parliamentarians was “signed into law” by the President of Fiji then, Ratu Epeli Nailatikau.

This Decree astonishing stated (paragraph 3) that Parliament itself, would set the remuneration for members of parliament.

Can you imagine what the shareholders of Westpac would say, if the senior managers of Westpac (all employees of course) decided to set up a committee of their own members, and set their own salaries and allowances, including that of the CEO himself or herself?

But that is pretty well what happened in Fiji in  2014, the year that election supposedly took us from the military government that had prevailed from 2006 to the 2104 Elections and a government “elected” according to a constitution and electoral system written by the military government itself.

Great words and principles in the 2014 Decree but…

On the surface of it, sections 5, 6 and 7 of the 2014 Decree gave great advice on how the remuneration of the MPs must be set by Parliament.

The wording is terribly verbose and repetitive (read it for yourself on the parliamentary website here).

http://www.parliament.gov.fj/wp-content/uploads/2017/03/Parliamentary-Remunerations-Act.pdf

I simplify the principles and clauses to seven so that the ordinary Fiji Times reader (and not just someone with a PhD) can not just understand but judge for themselves, whether the principles have been followed.

According to the 2014 Decree, the salaries and allowances must:

  1. be transparent in the use of public money, with no hidden perks;
  1. be competitive with both the private and public sectors so as to attract persons of the right calibre to lead the country;
  1. be fair to the person or incumbent for the work they do;
  1. be fair to taxpayers and take account of prevailing economic conditions;
  1. reflect the ethos of political service which entails making sacrifices;
  1. maintains the confidence in and integrity of Parliament;
  1. set the remuneration at a rate lower if necessary (HA HA HA- you can forget this principle).

The Decree noted that Parliament may obtain advice from qualified outside persons, including the CEO of FRCA (now FRCS).

Parliament could also appoint a committee to advise Parliament on these salaries and allowances.

No decent person would disagree with these principles. But were these principles put in practice?

The 2104 Decree simply published a Schedule, in which the salaries were set out, which I will compare below just for the Prime Minister, Leader of the Opposition and an ordinary MP.

There are no prizes for Fiji Times readers to guess who might be the person(s) “consulted” by the Committee before increasing the allowances.

What NZ does:  the Remuneration Authority

NZ has a Remuneration Authority which was once called the Higher Salaries Commission (as also once existed in Fiji).

Fiji Times readers might wish to visit this website which shows how transparent NZ is, in setting the salaries and allowances of Members of Parliament, including the Prime Minister and Leader of Opposition.

https://www.remauthority.govt.nz/clients-remuneration/remuneration-for-members-of-parliament-including-the-prime-minister-and-ministers/

The three members of the NZRA are highly competent in their own rights, themselves personally at or above the levels of the persons whose salaries they are setting.

The Chair (Hon Dame Fran Wilde) is a former Minister in the NZ Government, former Mayor of Wellington, and CEO of the NZ Trade Development Board, an experienced company director in both the private and public sectors.

The second member was the owner, director and Principal Consultant for a company that specialised in advising private and public sector companies in setting salaries and remuneration for their top executives.

The third member was a massively qualified person as he had been the National Statistician of UK and NZ itself, and a past President of NZ’s Institute of Public Administration.

No one in the public could ever question the credentials of these three persons in setting fair and equitable remuneration for all the top positions in NZ, including that of the Prime Minister, Government Ministers and Members of Parliament.

And their Remuneration Authority has a long history going back decades.

Comparing some Fiji and NZ parliamentary salaries

A wonderful webpage on the NZ website compares the parliamentary salaries with the national Average Wages in NZ, and the stable ratio that they have attempted to maintain between the two over the years.

I remind that “Average Wages” in NZ is what we call “Average Wages and Salaries” in Fiji.

[Fiji makes this distinction because “wage earners” in Fiji are paid so little compared to “salary earners”, unlike NZ].

Readers should note that by publicly measuring this ratio between parliamentary salaries and average wages in the country, NZ Remuneration Authority makes sure in a very transparent way that the NZ parliamentary salaries satisfy the conditions 1, 2, 3 and 4 that I have listed above from the principles in Fiji’s 2014 Decree: i.e. being open and transparent, ensuring salaries are competitive, fair to incumbents, and fair to taxpayers who have to pay the parliamentarians’ salaries.

Of course, as the NZ national Average Wage rises, then so also do the taxes and government revenues, and so also should parliamentary salaries, but in proportion.

Let me just compare the NZ and Fiji salaries for the Prime Minister, the Leader of the Opposition, and an ordinary Member of Parliament (but curious students and academics can compare the others).

Table 1 here shows how (in Row 2) the salaries of the NZ Prime Minister, the Leader of the Opposition, and the Ordinary Member of Parliament, compares with the National NZ Average Wage (Row 2, Column A).

Table 1

Of course, NZ parliamentary salaries are higher than Fiji’s because their economy is much richer than Fiji.

But in this table, the salaries of the PM, the Leader of the Opposition, and the ordinary MP, are all multiples of the NZ Average Wage by the factors in Row 1.

Of course the factors are higher for the Prime Minister (7.2) than for the Leader of the Opposition (4.5) than for the ordinary MP (2.5), giving you all the NZ salaries in Row 2.

Row 2 shows in Column A a generous estimate of the 2019 Average Wages and Salaries in Fiji.  I am sure that FRCS will confirm that the real average taxable income for Fiji Wages and Salaries persons was probably around F$18,000.

Row 3 therefore gives what should be Fiji’s Parliamentary salaries if we were to maintain the same relativity with Fiji Average Wages and Salary as have been maintained in NZ, using the factors in Row 1.

Prime Minister: $143,729.

Leader of Opposition $90.329.

Ordinary MP: $50,034.

Column 5 then gives you the percentage by which the Actual Fiji salaries exceed those determined by the NZ standard.

Interestingly and a coincidence, there is no difference (0%) for ordinary MPs.

But there is a 33% excess for the Leader of the Opposition.

AND a massive 129% in excess in Base Salary for the Fiji Prime Minister.

Note that the 2014 Decree did not increase the base salary of either the Leader of the Opposition or the ordinary MPs by the same percentage that it increased that of the Prime Minister.

What was the logic of that? Who in the Bainimarama Government made that decision? No prizes for guessing who.

Note that these Fiji salaries were all set by a “Decree” (designed no doubt by he WHO MUST NOT BE NAMED) not by any independent Higher Salaries Commission.

But the far great concern has to be in Fiji’s massive and  patently unjustifiable and excessive increases in Allowances and Perks which renders any comparison of Fiji salaries with NZ salaries totally meaningless.

The 2016 Report of Fiji’s Parliament Emoluments Committee

This Committee was set up by Parliament itself and consisted of five members who were ALL  Members of Parliament, effectively deciding on the pay and perks of their Leader (the Prime Minister and Leader of Opposition), their superiors (Cabinet Ministers) and Members of Parliament (themselves).

It should be noted that the majority of the five member committee were members of the ruling Fiji First Party: Dr Brij Lal, Jone Usamate, and Alvick Maharaj.

SODELPA had one member, Miakaele Leawere, who apparently made no objection to the recommendations.

Of the one NFP member (Hon Prem Singh), the Report stated he “did not attend any of the Committee sittings and has not provided any input or arranged alternative attendance in his absence”. But NFP voted against the Allowance increases in Parliament, while SODEPA supported it.

Absolutely incredible were the massive increases in allowances granted to all those holding high offices with virtually no discussion whatsoever on why such increases were justified.

I focus here on just the Per Diems paid for Overseas Travel (Table 2).

Table 2

Note that the UNDP per diems are extremely generous, and here I assume about $500 per day, more than enough to pay for accommodation and food.

Before this Remunerations Committee made its recommendations, there was even a 50% margin on top of the already generous UNDP rate that (taking it to $750 per day), and yet another $300 to make it $1050 per day- BEFORE the increases.

This rate was already way too generous.  But apparently, these Committee Members thought it was not generous enough.

But then this 2016 Remuneration Committee added 250% of the UNDP per diem AND another $600 per day, taking the daily total to $2,350 per day, a 123% increase.  This must surely be unheard of even in the developed country world.

The public should think about the massive painful battles that our union leaders like Rajeshwar Singh and Felix Anthony or sacked Chairman of Wages Councils (Father Kevin Barr) have to wage, to win even a 5% increase in wages or salaries for their lowly paid real workers of Fiji.

And for the Prime Minister, this committee of mere parliamentarians awarded him a 123% increase on an already generous per diem.

If one assumed that the Prime Minister was travelling overseas for 90 days, he would receive a total per diem of $$211,500, which is about $166,500 more than what the generous UNDP rates would have given him.

Always keep in mind that many times, the Prime Minister is hosted by international organizations or host countries where he is travelling, with food and entertainment thrown in.

Keep in mind that if there were any legitimate costs that the PM had to bear while fulfilling his international duties, his office could always charge the Ministry of Finance, and such excess expenditure would be approved by the Auditor General.  This is what happens in well governed countries.

But there is more: Other allowances

Unlike the average Fiji taxpayer, the Decree and the Fiji Parliament have given all kinds of other allowances to the Prime Minister, rarely if ever, spelt out in dollar terms (unlike the NZ Prime Minister’s measly Allowance of $22,000)

The Fiji Times reader can put his own estimates on what these allowances are probably worth in dollar terms. I given my rough conservative figures here (I leave out the FNPF contribution as that is a legal requirement for all workers):

[In hindsight,  I should have also included the huge increase in FNPF contribution because of the increase in base salary of the PM, which would amount to an additional $38,000 per year. Multiply that by ten years you get an extra $380,000 of FNPF balance which can be taken as a lump sum or pension].

Housing allowance                     (120,00)

Services and staff in the house     (100,000)

Telephone                                 (10,000)

Internet                                      (5,000)

These perks alone add up to $235,000 (not including the additional FNPF contribution)

Compare this to the Allowance of $22,000 given so parsimoniously by the NZ Remuneration Authority to the NZ PM Jacinta Ardern.

If we add to that the Excessive per diems ($166,500) AND the base salary of $235,000, then the Fiji Prime Minister’s total remuneration comes to $729,750.

This is way above that paid to the NZ Prime Minister of a much larger and richer country, with a history of wonderful governance by any standard.

How on earth can poor developing country like Fiji pay its Prime Minister more than a relatively rich country like NZ pays its Prime Minister?

You can bet your bottom dollar that NZ PM Jacinta Ardern will not be enjoying all the servants and guards etc. that are thought so necessary for Fiji’ Prime Minister, and neither would her expenditures be as free of scrutiny.

If Fiji thinks it is OK to appoint foreigners as Permanent Secretaries and CEOs of public enterprises, perhaps it is time that we also advertised internationally, the position of Prime Minister, with all the perks etc., including being able to rewrite the constitution as he pleases.

But the sorry saga of generous Fiji allowances does not end there.

The incredible jump in Prime Ministers’ pensions

Hardly anyone in Fiji will be thinking about the pensions that Fiji’s taxpayers are going to pay in future for the pensions of former Prime Ministers, compared to what they are paying currently (for Rabuka) and eventually paid ever so reluctantly for the late Mr. Qarase before he died.

On the surface of it, there appears to have been a fair formula for determining the pension that should be paid to former Prime Ministers.

The pension is determined as a percentage of the base salary of the Prime Minister when he “stops” being Prime Minister.

The percentage rises from 20% for 1 completed year, to 50% for five completed years (Mr. Qarase) and then rises gradually to 75% after 10 years (as Bainimarama may qualify currently).

BUT note that while these percentages may apply fairly to all Prime Ministers, it is the Base Salary that counts.

Table 3

It is the massive jump in base salary that has created an immense unfairness between the current Prime Minister and all former Prime Ministers (apart from the coups by military personnel).

For instance, on the late Mr Qarase’s Base Salary of $117,600 per year (2006), the late Mr. Qarase was entitled to a pension of $58,800 per year, after he was removed from office by Bainimarama’s 2006 coup.

Had he been allowed to serve his full ten years, he would by 2011 have been entitled to $88,200 per year.

BUT when the Base Salary for Bainimarama was increased by the 2014 Parliamentary Decree to a massive $328,750, this inevitably also exploded the pensions payable to him in the future, to a massive $246,00 for the rest of his life, four times that of the late Qarase.

Other thorny pension questions

The current Prime Minister Bainimarama may have been entitled to an annual pension of $246,563 from 2016.

I say “may have been” because a legitimate question can be asked: in the number of years as Prime Minister, should Parliament only count the years when he was an “elected” Prime Minister.?

Should Parliament exclude all those years (2006 to 2014) when he was a self-appointed Prime Minister after the 2006 military coup?

Or does Parliament given the message to future generations and military personnel, that you can appoint yourself to any position through an illegal military coup and be entitled to taxpayer funds?

This parliamentary pension of course, will be in addition to any FNPF pension should he choose to take that instead of a lump sum.

Please note that Mr Mahendra Chaudhry was denied his full pension because of the 1987 coup and then again because of the 2000 coup.

The Fiji Times readers should note that Parliamentary pensions have also been denied to dozens of legitimately elected parliamentarians who were denied the opportunity to serve their full terms, by the military coups of 1987 (led by Rabuka), 2000 (led by yet to be identified leaders) and 2006 (led by Bainimarama).

What an irony that the current Prime Minister (and his Cabinet Ministers whose salaries have also been inflated) will collect the biggest payout in pensions in the 50 year history of Fiji, has himself denied fair pensions for other former Prime Ministers (like Mr. Chaudhry who was  not returned to office by Bainimarama after the 2000 coup when he took control) and the late Mr. Qarase (who was removed in the 2006 coup by Bainimarama himself).

What a tragically forgotten irony that it was the military government of Bainimarama and Khaiyum which cut the FNPF pensions of a large number of pensioners in 2012 and whose legitimate legal case (the Burness/Shameem case) was thrown out of court by an illegal military decree, and Mr David Burness died without his case being heard in court.

Where is the justice?

A sad non-transparent process in Fiji

Fiji taxpayers must ask why it is that there has been no independent commission and a proper transparent process to determine the remuneration of the parliamentarians and the top office holders.

What the public can see are relatively junior parliamentarians, with a Government majority, setting the salaries and allowances of their Prime Minister, their Cabinet Ministers and themselves.

Of course, the Prime Minister wields absolute power over them in deciding who becomes Cabinet Ministers (with incomes and allowances in excess of $200,000)  and who remains as ordinary MPs (with base salary of $50,000).

Every taxpayer knows that it would be silly to appoint a Westpac bank teller to determine the salary of the Westpac CEO.

But that is effectively what happens in Fiji Parliament.

The market value of Military Prime Ministers

Some Fiji Times readers will remember that when Commodore Bainimarama did the coup in 2006, he promised that no military officer would benefit from the coup and that no military officer would ever stand for elections.

Well those two promises were thrown out the window.

This can be seen in all the public positions occupied not just by Bainimarama and his relatives, but also many former senior army officers, such as former Commander Epeli Nailatikau, who emerged as President signing Bainimarama’s decrees before the 2014 Elections and as Speaker of the House recently, “managing” the Opposition.

It can also be seen in the very generous improvements in salary and perks of military officers and personnel (including a virtual doubling of the salary of the Commander) that have come so readily under the Bainimarama Governments, for obvious reasons.

One could engage in a long and fruitless discussion of the “market value” of military commanders or senior officers who leave the army, as opposed to those who do military coups and appoint themselves Prime Ministers or Cabinet Ministers or Heads of the Police or Heads of the Prisons.

Keep in mind also that over the last fourteen years, Prime Ministers (and probably a few other Cabinet Ministers) have not had to rely on their own talents to give public speeches locally or internationally, as a famous (or rather infamous) American propaganda company- Qorvis, has been more than willing to do so, for a fee of more than a million dollars per year. Which I suspect is more than the cost of the entire Ministry of Information who probably now have no work to do.

I suspect that the Fiji public would struggle to identify any former military officers who are employed gainfully at any comparable salary in the private sector.

What of the “sacrifice principle”?

Totally forgotten by the 2016 Remunerations Committee was principle 7 (that remunerations could be reduced HA HA HA) or Principle 6 (maintaining the confidence in and integrity of Parliament).

But interestingly also forgotten was Principle 5, that remunerations of parliamentarians should remember that these public positions should involve some “sacrifice” by the incumbents, if necessary.

Over the years there have been many parliamentarians who have indeed sacrificed much personally in order to serve the public by standing for elections and serving the public if elected.

There have been many prominent lawyers (like Jai Ram Reddy), doctors, businessmen, etc. who could have earned far more in private practice than as Cabinet Ministers or as parliamentarians, for much less stress and more family time in their lives.

That tradition has been carried on today by a Professor of Economics (Professor Biman Prasad) who, like one of his predecessors, genuinely  took a massive pay cut to go into parliament, with far great headaches than his former USP job.

Professor Prasad and his NFP colleagues have indeed sacrificed further by taking a pay cut from their miserly MP salaries after cyclone Winston, as also have some SODEPA MPs.

During this pandemic crisis, while many Fiji Times readers apparently have a lot of time on their hands, they can go through all the Members of Parliament, and especially the Cabinet Ministers, and roughly estimate what they are taking home as parliamentarians, and what they would have been earning otherwise.

Suffice to say, it would be fairly difficult to establish any of the prominent Government ministers are making any great sacrifice.

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