Alberta's opposition Wildrose Party is rejecting a pay hike given to all MLAs late last year, saying it will instead give the money to charity.

The total contribution amounts to just over $60,000 a year, made up of each of the 17 Wildrose MLAs' after-tax increase – which was passed by a committee in November in the form of a higher, taxpayer-funded RRSP contribution.

The new Wildrose Caucus Foundation, announced Monday, was set up under the guidance of The Calgary Foundation. Money can be directed only to registered charities, which a committee of Wildrose MLAs will choose. The party is expected to announce its first recipient later this week. Wildrose Leader Danielle Smith pledged to roll back the pay increase and shut down the foundation if her Official Opposition party ever forms government. In the meantime, "we hope other MLAs will follow our lead" in rejecting the raise, she said.

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"We believe this money was never rightfully ours," she said.

The largely symbolic move is the latest in a long-simmering battle over MLA pay in the province. MLA pay exploded into a major issue just before last year's spring election, when it was revealed some MLAs, from all parties, were being paid for a committee that hadn't actually met for several years. At the time, Premier Alison Redford's Progressive Conservatives had earlier struck up a review of MLA pay. That review was used as the basis for a new pay structure, passed just after the election, that saw committee pay and lucrative "transition bonuses" – golden parachutes totaling, in some cases, over $1-million – eliminated. MLAs were now to be paid about $145,000, including RRSP contributions, with bonuses for cabinet ministers and other roles. The system was much clearer. "If it had ended there, the issue of MLA pay might never have been raised again," Ms. Smith said Monday.

Then, in November, taxpayer-funded RRSP contributions were increased. Total pay now stands at $156,000, including RRSP contributions, with bonuses for cabinet positions unchanged. Government MLAs argued it was still less generous than other provinces' pension plans (Alberta MLAs don't get a pension). But it meant MLAs were being paid eight per cent more than after the changes in May, just after the election, which the government publicized regularly.

All this leaves the PCs and Wildrose arguing. Veteran MLAs, particularly those who sat on committees and have built up a large transition allowance that they will still collect, earn less today than they did just over a year ago. The PCs point to this in arguing that they cut pay overall.

But there were two acts. All MLAs now make more than they did in May. "There's no other way to describe it. If you get paid more in December than you were getting paid in May, June, July, August, September, October and November, you've received a pay increase. We got a pay increase," Ms. Smith said.

Further complicating matters, Ms. Redford announced a pay freeze – no cost-of-living increases – before this month's budget. Wildrose argues a pay freeze, months after an eight per cent hike, is meaningless.

"We think an actual freeze is not taking this money," Ms. Smith said Monday morning. Ms. Redford, meanwhile, just struck a deal with teachers that freezes pay for three years, and remains locked in a contract battle with doctors. "You cannot expect your public sector workers to sacrifice if you've got politicians who are not prepared to do the same. The fact of the matter is freezing pay after you've given yourself a pay increase, is not a pay freeze," Ms. Smith said.

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She criticized the former system as overly lucrative, particularly the transition allowances. But two Wildrose MLAs – Rob Anderson and Heather Forsyth – are entitled to collect what they accrued in transition allowances before the May, 2012, changes. Ms. Smith didn't say whether the two MLAs would contribute that money to charity. "As far as I know, they're going to run for me in the next election," Ms. Smith said, adding: "Ask them once they decide to leave office."

Under the old, convoluted system, brought in by former premier Ed Stelmach shortly after the 2008 election, Alberta's MLAs were paid generously. Cabinet ministers, in particular, averaged over $250,000 each. Including pension contributions, only one province – Quebec – paid cabinet ministers more.

Speaking in Ottawa Monday, Ms. Redford brushed aside Ms. Smith's announcement, and gave no signal PCs would forego the November increase.

"We've made choices with respect to tightening our belts on budget. We've cut MLA salaries. We're going to continue to do everything we've promised Albertans that we can do," Ms. Redford told reporters. "If the Wildrose caucus wants to put all their money in a pot together, and contribute it to something, that's fine."

With a report from Shawn McCarthy in Ottawa