VIP Transport
February 26th, 2010 at 1:00 pm by David FarrarThe Dom Post reports:
Labour leader Phil Goff will cut back his use of chauffeur-driven Crown cars in favour of much cheaper taxis after he ran up a $70,000 bill in three months.
But he is questioning the cost of the ministerial BMW limousines.
Mr Goff, who as Opposition leader has the use of the cars, said he would write to Prime Minister John Key and Internal Affairs, which runs the VIP Transport Service, challenging the service’s fees, which rose significantly last year.
The latest publication of MPs’ expenses shows Mr Goff spent $69,657 for the cars in the last three months of last year, although almost all of it was incurred in July, August and September. It showed up in the returns for the last quarter of 2009 because of a delay in Internal Affairs billing the Parliamentary Service, which pays MPs’ travel and accommodation expenses.
Having access to VIP Transport is a bit of a mixed blessing with these expense disclosures.
Ministers (and others like Phil Goff) get charged a per hour rate of $90 and a per km rate of $1.25 by VIP Transport, as a book-keeping exercise. The charge covers the capital costs of the fleet of cars and score of drivers.
Now the actual marginal cost of using VIP Transport is very small – almost just petrol. It would cost the taxpayer more if a Minister takes a taxi (which results in an external charge) than using VIP Transport (where the driver is on full salary regardless of whether or not they are driving at that moment in time).
If a Minister (or other person entitled) said they will never ever use VIP Transport, then they would be able to reduce their fleet size and number of drivers. But just using taxis some of the time will reduce the cost apportioned to a Minister internally, but probably not reduce the overall cost to the taxpayer.
It is a bit unfair on Phil Goff that he gets shown to have such a large expense against his name. For the reality is that his use of VIP Transport doesn’t really cost the taxpayer the amount shown. Most of those costs would be incurred regardless of how frequently he uses them, as their costs are mainly fixed, rather than marginal.
Related posts:
- Goff on Public Transport
- Wellington Public Transport Survey
- Guest Post: Fiscal prudence and transport priorities
- MPs expenses
February 26th, 2010 at 1:08 pm
In my personal opinion It is essential for Ministers of the Crown to have access to VIP vehicles however they should only of course be used for directly Ministerial work, I Have to wonder how much of the Ministerial VIP travel was incurred as a part of their daily regimen of MP life.
Vote:February 26th, 2010 at 1:19 pm
Phil risks kicking himself repeatedly in the head if his knee jerks continue before his brain engages. If he was serious he would have written to John Key first and waited for the answer before going public.
Vote:February 26th, 2010 at 1:20 pm
didn’t the Labour troughers use the beemers to be drive 100m to attend a bunker session near the end of their reign?
Vote:February 26th, 2010 at 1:21 pm
Hmm, it almost sounds as if there are going to be some high profile labour casualties of expense abuse coming to the fore.
Vote:February 26th, 2010 at 1:28 pm
Jaba,
Do you mean:
Bunker session a la Blair Witch Project
OR
Bunker Session a la latex, leather, pounding german techno and glow sticks
Vote:February 26th, 2010 at 1:29 pm
jaba, yes I am sure it was Labour who decided on these cars over having eco-friendly ones.
Vote:February 26th, 2010 at 1:33 pm
Nice break down of Fixed and Variable costs.
Now if Goff would just be driven all day, everyday, then economies of scale would be met
Vote:February 26th, 2010 at 1:33 pm
DPF, I agree with you on this, the way the expenses are structured (and reported) the incentive is there for Goff (and probably others) to use other forms of transport. These don’t really cost less as the fixed costs of the VIP fleet would still have to be met.
There must be a better way to report these costs, maybe ‘cost’ based on alternative costs (say equivalent taxi rates) or allow a certain ‘fixed’ allocation and look at use over and above this when reporting ‘costs’.
Vote:February 26th, 2010 at 1:34 pm
In fact, DPF has a post on it here –
So, let me get this straight – Phil Goff is going to write to John Key to complain about the cost of running the BMWs that Goff’s own government brought in?
*shakes head*
Vote:February 26th, 2010 at 1:35 pm
Who decided that Phil Goff is a VIP?
Vote:February 26th, 2010 at 1:38 pm
Fletch – This was a consideration, but AFAIK there are no ‘hibrid’ type limos yet. A minister needs to be capable of resting or working in the limo. A Prius or similar car does not fulfil this need. Moreover the Government does need a number of suitable limos for foreign guests, as far as I know the handful of Rollers and Bentleys the Government used to have, have all been sold. Mr Giltrap purchased a Roller cheap from the Government a few years ago and made a killing exporting it to UK. The Government would probably have been better to have donated it to Southwards on condition it could be retrieved for Royal visits (as it is the Government borrowed a early 1950′s Roller from Southwards a few years ago for a Royal visit.
Vote:February 26th, 2010 at 1:40 pm
Inventory2: The good people of Mt Roskill I’d say…
Vote:February 26th, 2010 at 1:41 pm
People who think they are VIPs decide they are VIPs. I guess it sounds better than PWFTP.
(people working for the people)
Actually neither Key or Goff shout VIPness. Key exudes a fair amount of “working for the people”, but Goff tends a bit more to “working for the party”.
Vote:Some MPs imagine VIP, as do more than a few working behind the scenes.
February 26th, 2010 at 1:42 pm
IIRC they got the BMW 745D’s. If so they are probably more efficient than the Lexus 600h that would have been the other option when both Ford and Holden dropped their long wheelbase limos (Fairlane and Statesman)
Vote:February 26th, 2010 at 1:44 pm
@Dirty Rat – oh phil is driven all right. By what and to where remains a mystery though!
Vote:February 26th, 2010 at 1:45 pm
The VIP cars do seem to be very expensive. Perhaps Mr Goff should ahve thought about this when he was in the Cabinet that approved their purchase.
Secondly Mr Goff has made much of going on the Labour Party bus tours over the last few months. I have to wonder whether he really was sitting on the bus, or following in the ministerial BMW.
Vote:February 26th, 2010 at 1:45 pm
Fletch
No, the Crown BMWs are FAR more “eco-friendly” than the other usual suspects:
(Or have far lower running costs, if you prefer)
BMW 730 Diesel 38.7 MPG = 7.3 L/100km
Holden Statesman (V6) 27.4 MPG =10.3L/100km
Vote:Ford Fairlane LTD 18.8 MPG = 15L/100km
February 26th, 2010 at 1:46 pm
1. Stupid BMWs are very expensive cars. That wasn’t good economics by the Labour govt
Vote:2. If the apportioned cost of the BMWs is much higher than taxies, then doesn’t it follow that if we got rid of them entirely, we could use taxis instead, and it would be cheaper?
3. Is there really business that goes on in VIP transport that is so secret that a taxi driver couldn’t hear it? Quite possibly there is, but then the question is how many cars do we need to cover that? Is it as many as we have?
February 26th, 2010 at 1:46 pm
‘So, let me get this straight – Phil Goff is going to write to John Key to complain about the cost of running the BMWs that Goff’s own government brought in?’
The ‘costs’ (for accounting purposes) for these vehicles has been increased from $65 per hour for the driver to $90 per hour and the per km rate from around $0.62/km to $1.25/km, this is not Goff’s fault and really all he can do about it is complain to the PM.
There seems little point to me for the government to have a VIP fleet but people are reluctant to use it because of the ‘costs’.
Vote:February 26th, 2010 at 1:49 pm
Random Question of the day: If the PS drivers went out and had a demonstration for higher pay, would the red-box clutching MPs support them? It must be an incredibly antisocial job, hanging around waiting until the function is over, meeting aeroplane departure and arrival deadlines, overnighting in out-of-the-way-places, being expected to be able to react instantly in counter-terrorism manoevres, polishing the paintwork, making sure no cigars have been dropped in the aircon, listentng to all the bullshit spouted by the person in the back. IMVHO it takes a special person to do that.
Vote:February 26th, 2010 at 1:50 pm
Most of the expense will be “waiting time” – driver delivers Goff to meeting, hangs around outside for a meeting that lasts a couple of hours and then takes him away.
In this respect using taxis would be cheaper, provided the driver is dismissed at the completion of each journey and not asked to wait – but of course that’s not so hot for the ego – nothing like having a chauffeur waiting outside for you, rather than having to call up and wait for a cab to arrive.
Is there any disclosure about non-parliamentarians use of the limo’s? For example, how much are our esteemed Judges charging up in VIP travel?
Vote:February 26th, 2010 at 1:50 pm
Let me guess, there was a large increase in drivers and cars during the Clark governments.
Vote:February 26th, 2010 at 1:52 pm
YWD are you saying that the car recharges were not previously covering the costs or are you suggesting that Internal Affairs are now making a profit?
Vote:February 26th, 2010 at 1:57 pm
Isn’t it wonderful how the chickens are now coming home to roost – at long, long, last. Squirm Phillip, squirm, along with all your grasping friends – just don’t be man enough to actually take responsibility (or pay what you and ‘The Party’ actually owe). You’re socialists after all, and to do such a thing will never do.
(BTW – do you think that you should actually do anything before you ask Helen for her advice? A trip to New York perhaps? Just checking)>
Vote:February 26th, 2010 at 1:57 pm
@expat, well I understand that the count of ministers was considerably higher in 2008 than in 1999.
HC ensured that she held a majority of Caucus inside the Cabinet and thus made certain that those dependant on her support for their enhanced housing, salary and allowance levels would outvote any challenge. (keep your friends close and your enemies closer in a way)
Vote:February 26th, 2010 at 2:02 pm
Back to the original Post. I wondr if phil will claim back all these taxi rides. If so will Parliamentary services need to question the validity of evey trip and refuse to pay if a Crown Limo was available? Hope he uses the right credit card.
Vote:February 26th, 2010 at 2:03 pm
‘YWD are you saying that the car recharges were not previously covering the costs or are you suggesting that Internal Affairs are now making a profit?’
The new costs are probably a fair reflection of the total costs of running the fleet, I doubt anyone is making a ‘profit’.
Vote:February 26th, 2010 at 2:18 pm
Good post David, I’d never really thought much about how VIP transport works.
Vote:February 26th, 2010 at 2:20 pm
if you paid me $150k a year I’d be more then happy to lease the latest model BMW and sit around all day waiting for Phil Goff to go somewhere. I’d even pay for petrol. Lease costs and petrol would be less then $60k, I’d halve the taxpayer expenditure and still walk away with 90K in my pocket. Better than being a taxi driver.
If they opened up a tender for the contracts you’d do way better then what VIP are currently costing. In political and real terms.
Vote:February 26th, 2010 at 2:26 pm
Dirty stinking rat – BAHAHAHA
Vote:February 26th, 2010 at 2:30 pm
to get rid of or even reduce the use of the VIP cars will have a big affect on the drivers. I thought Labour were pro worker.
Vote:February 26th, 2010 at 2:35 pm
But spector – can you be trusted? Would you pass an SIS check? Would you sign the Official Secrets Act? Can you do a 180handbrake turn at 60kph in reverse?
Vote:February 26th, 2010 at 2:41 pm
I agree with you DPF re the marginal costs etc. Frankly I want to live in a country where Ministers (and the LOO) have a certain gravitas and use things like VIP limousines. It is what confident, proud countries do. I also think our PM should get a plane like every other OECD Head of Govt. And I wouldn’t like to see a visiting Minister from say Australia picked up by Capital Cabs (no offense Capital Cabs).
I am sure I have banged on about this before, but why when the Govt spends more in 3 days on health, education and social welfare then the rest of the public sector put together in a year are we so focused on the chump change of VIP cars.
Vote:February 26th, 2010 at 2:45 pm
Rubbish. Marginal cost is almost meaningless because the fixed costs (car depreciation, financing costs, salaries etc) are directly related to the demands made on the service. If all those MPs you see driving along Oriental Parade were to take a taxi to the airport, there would be less cars and drivers required and the fixed costs would reduce.
Marginal costs are only relevant for small changes. By your reasoning, if no MPs used the service we would only save the cost of petrol.
Vote:February 26th, 2010 at 2:53 pm
macolm
rubbish
Fixed costs are those costs that occur even though the car is doing nothing.
Variable (not marginal DPF) costs are those costs that occur when the car is moving.
Marginal cost, is the cost of the next kilometre. Marginal costs will always reduce because of the reducing cost per kilometre of fixed costs.
Say a vehicle has a fixed cost of $10,000 and has a variable cost (gas etc) of $1.50 and it does one kilometre, then the cost is $10,001.50, and the marginal cost is $10,001.50 per kilometre.
If the vehicle does 100 kilometres, then the cost is $10,150 and the marginal cost is $101.50 per kilometre.
If the vehicle does 10,000 kilometres then the cost is $25,000 and the marginal cost is $2.50 per kilometre.
We have gone from a marginal cost of $10,000.50 per kilometre to a marginal cost of $2.50 per kilometre
And that was Farrars point about the figures being reported.
Vote:February 26th, 2010 at 2:54 pm
cost you lot $120 for that advice
Vote:February 26th, 2010 at 2:57 pm
“But spector – can you be trusted? Would you pass an SIS check? Would you sign the Official Secrets Act? Can you do a 180handbrake turn at 60kph in reverse?”
No, but if I got the contract I could lease a fleet of BMWs, hire a team of ex SAS guys to drive them – lets say I pay them $120k to drive and bodyguard and charge the cars out at $190k a year. Even if I am only making 10K off each car I still walk away with over $300k in pocket and the taxpayer cost is reduced by at least a third plus all the MP’s get a bodyguard.
Vote:February 26th, 2010 at 2:58 pm
hey rat – we need to sit down. i dont want to pay tax next year.
Vote:February 26th, 2010 at 3:03 pm
DR, I understand the concepts. DPF was suggesting that MPs should only attract the marginal cost of the service. Which is missing the point that there is also a relationship between using the service and the need for the fixed costs in the first place.
If Phil stops using the BMWs and takes a taxis instead, then the service could get by with (say) 1/2 less car and driver. So if two MPs did this then the fixed cost could reduce by the cost of one car and one driver. By the same token if MPs make increasing use of the service, then at some point another car and driver would be required.
Taking just about marginal cost is ignoring that there is also a relationship between the use and the fixed cost.
Vote:February 26th, 2010 at 3:08 pm
“cost you lot $120 for that advice”
Or a case of Ranfurly beer.
Vote:February 26th, 2010 at 3:09 pm
The big unknown as spector has so graphically illustrated, is the degree to which this car fleet is expected to absorb (contribute to might be more accurate) some of DIA’s general corporate overheads as every activity of the Department is presumably required to do. You know, toilet paper in the executive toilet, flowers in the reception, hired artworks on the wall all cost. In his example, spector has assumed the role of DIA corporate.
BTW, spector you would struggle to get ex-SAS guys as they are generally in Iraq earning circa USD$500k doing exactly the job you descibe but that doesn’t change the example.
Vote:February 26th, 2010 at 3:13 pm
I thought the government was trying to promote bus transport. Labour seem especially keen, and surely the Greens too.
# dime (1869) at 2:58 pm
i dont want to pay tax next year.
No one wants to, it’s about need. But isn’t that exactly the sort of attitude that needs to end?
Vote:February 26th, 2010 at 3:21 pm
Pete, if you’re ever up in Wellington, go for a stroll along Evans Bay Parade in the arvo and count how many sole-passenger crown BMW 7-series you see going past to the airport. You can run out of fingers sometimes.
Vote:February 26th, 2010 at 3:24 pm
Pete
“No one wants to, it’s about need. But isn’t that exactly the sort of attitude that needs to end?”
When you have two governments (Labour then National) who continually take more than they need from us what other response do you expect from the middle class? (us supposed Rich Pricks)
Vote:February 26th, 2010 at 3:38 pm
That’s called a vicious circle bruv, one we have twirling round for a decade or three. I guess most people are inherently selfish and greedy.
Vote:February 26th, 2010 at 4:04 pm
Dimebag.
You pay tax ?, what an idiot. You dont need a funny money political ideology based on an MMP elected party to not pay tax.
Brendan Dugan
Vote:Get fucked
February 26th, 2010 at 4:07 pm
Malcolm
The movement in Marginal cost IS the relationship between fixed costs and use
Vote:February 26th, 2010 at 4:08 pm
The cost of running a Ministerial Fleet should of course be disclosed. However to charge Ministers an hourly rate is simply ridiculous. If it shows that it is cheaper on their budget in theory to take a taxi we are starting to lose the plot!
Vote:Let them get on with their job and of course they should have limousines available to them. We are not yet a third world country!
When the way your expenses are calculated becomes more important than the job you are employed to do, we are heading down the wrong path.
February 26th, 2010 at 4:13 pm
Rat
You don’t like Ranfurly any more?
Vote:February 26th, 2010 at 4:19 pm
BD
I live in Parnell now and work for a Big Four firm on the viaduct.
What do you think ?
Vote:February 26th, 2010 at 4:24 pm
Brendan Dugan- surely you jest Dirty Rat?
Vote:February 26th, 2010 at 4:29 pm
what do you mean dad ?
Vote:February 26th, 2010 at 4:34 pm
Rat
How the fuck would I know, I am a country boy.
We don’t drink them fancy lager things like you guys do, I suppose you have taken to wearing deodorant as well now.
Vote:February 26th, 2010 at 4:35 pm
Dirty Rat; Brendan Dugan cannot possibly be big bruv?
Vote:February 26th, 2010 at 6:20 pm
dad4justice
That is his name
he is an arsehole
Vote:February 26th, 2010 at 6:27 pm
Topic went ——> that way peeps
Vote:February 26th, 2010 at 7:20 pm
No. The marginal cost is the *change* in total cost for an extra unit of the service. However the fixed costs in this case have a step-wise progression, so the marginal cost of most additional km’s bears no relationship whatsoever with the underlying fixed cost.
E.g. If the VIP service had 1 car and 1 driver and supplied 100,000 km of travel in one year and 100,001 km in the next year. That extra 1 km wouldn’t necessitate an extra car or driver etc and so the marginal cost of that extra 1 km would be very small (petrol plus a small amount of depreciation etc). At some point (say the 110,000th km) an extra car and driver would be required. The step change in fixed costs for that additional 1 km would result in an enormous marginal cost for that 1 km. Subsequent km’s would be very cheap again until the next step change in fixed costs.
That is the context in which DPF was using the term ‘marginal cost’. He was suggesting that MPs should only be charged the marginal cost of the extra fuel etc. That is completely unrepresentative of the cost of the providing the service (which is mostly fixed costs). And ignores the fact that ultimately it is use which necessitates the fixed costs in the first place.
Vote:February 26th, 2010 at 7:33 pm
phew………..
Your first paragraph agrees with me then goes off to completely ignore fixed costs, but yet you state that fixed costs have no bearing on marginal costs.
Step changes in fixed costs have no bearing on an extra kilometre unless you get to the level of production where you have to buy another car.
There are no step changes in fixed costs unless you increase the assets.
You have obviously mixed up marginal costs with variable costs.
Vote:February 26th, 2010 at 7:46 pm
Much more important topics anyway.
@Pete George:
Vote:“No one wants to, it’s about need.”
What’s about need? Paying tax?
February 26th, 2010 at 9:09 pm
Goff is entitled to a crown car. He should bloody well use it. I don’t see what the problem is. I can’t stand Labour, but I can understand why the leader of the opposition should have a car ready for his use.
Vote:February 26th, 2010 at 10:51 pm
Surely Corporate cabs or similar would do for nearly everything. I say sell the cars to the drivers and make them self employed like taxi drivers rather than have a government department run a very expensive taxi service!
Vote:February 26th, 2010 at 11:39 pm
Whatever the costs and how they are calculated Goff ‘s use of this transport is huge compared with others who are entitled to use this form of transport.
Vote:February 27th, 2010 at 12:24 am
Phil-in Goff will just have to slip back into his “Village People” leather outfit and jump on his big macho motorbike – problem solved!
Vote:February 27th, 2010 at 2:19 am
Phil Goff should be made to use a Toyota Prius. A pre-recall model preferably.
Vote:February 27th, 2010 at 7:28 am
Yes, if we want to live in a modern society we need to pay tax.
Communism (from small scale communes to countries) proved unworkable because too many freeloaders learnt to use and abuse the system.
Democracies are more sustainable but also have serious problems with freeloaders, and also with the many who think that avoiding contributing their fair share is fair game.
Vote: