The pace of increase has to be algorithmic, driven by market forces and advances of technology, not cenral planning or cartels.
The algorithm we have now, that fits above, is that of the difficulty adjustment.
This was also my first preference. I'd add that if it was up to me, the hard limit would be removed altogether, and it would be up to miners to create a soft limit. As long as over 50 percent of the network hashrate enforces a particular rule on the block size, it will be as binding as a protocol rule.
Perhaps the 40% per year hard limit increase can co-exist with a dynamic soft limit that tracks difficulty. That way the hard limit acts as a failsafe, while the soft limit imposes the real size constraints.