Dom Post on MPs perks

The Dom Post has an editorial and a story on MPs perks today, and both rather over-state their case in my opinion.

The editorial is on transparency over the MPs travel perks. Now my position is actually the same as the Dom Post’s – that the perk should be abolished. But the editorial goes too far when it says:

Dr Smith argues that the subsidy, which cost $432,989 last year, is actually paid for by MPs collectively forgoing part of their salary entitlement.

It is an argument that bears a passing acquaintance with the facts. The Remuneration Authority takes account of the cost of the subsidy when setting MPs’ pay.

That is not a passing acquaintance with the facts. It is 100% correct, even if the Dom Post does not like it.

The travel subsidy, like many other MPs’ perks, was initially introduced in lieu of a pay rise. However, when responsibility for setting MPs’ pay was transferred from Parliament to the Remuneration Authority’s predecessor, the Higher Salaries Commission, it ignored many of the entitlements MPs had voted themselves.

It did – up until 2003. In 2003 the Remuneration Authority moved to a total remuneration calculation where it calculates what should be the total remuneration for an MP, and deducts off the super subsidy and the travel perks.

Hence MPs receive what an independent body thinks their jobs are worth plus the value of the extras they have voted themselves over the years

No this is absolutely wrong. The independent body works out what their jobs are worth and deducts the value of the extras off the remuneration to calculate a base salary.

extras that inflate the base salary of today’s MPs from $131,000 to more than $180,000.

Not quite. The Herald calculates it as:

  • Salary $131,000
  • Super Subsidy $26,200
  • Domestic Travel $1,176
  • Partner Travel $3,449
  • International Travel $9,646

That is around $170,000 as the value of an MPs remuneration package.

That gives even the meanest MP an income higher than 99 per cent of his fellow citizens. Whether it is too much is a matter of judgment, but it is not a matter of judgment that should be exercised by those who stand to benefit from it.

Eight years ago Parliament was advised to set up an independent body to determine MPs’ pay and entitlements, but when the legislation reached Parliament’s standing orders committee – a body every bit as powerful and self-interested as any trade union – it was gutted.

The ongoing furore over MPs’ travel expenses is the price MPs pay for refusing to surrender control of their pay and perks. It is a price successive Speakers have been happy to pay, but it is not one the public should tolerate.

MPs’ pay and perks should be set by an independent body that takes account of comparable pay rates here and overseas, the state of the economy and workloads.

I agree they should all be set by the Remuneration Authority, but I don’t think it would reduce the “furore” over pay and perks.

Now in this article we read:

Members of Parliament are secretly planning to change the rules around their $24,000-a-year accommodation allowance to make it easier for those who make Wellington their home to still be counted as out-of-towners.

Under the new rules, MPs will be able to nominate a “home base” where they normally live when not doing parliamentary business in Wellington. If that is outside Wellington, they will qualify for the accommodation allowance.

I have not got a copy of the new rules, but from what I can glean the change is around wording, not substance. The old rules referred to primary residence and the new rules refer to a “home base”. The Auditor-general herself said the term “primary residence” was not a useful one as the test has never been where an MP spends most of their time. If that was the test, then no Minister would ever be found to live outside Wellington.

One has to approach this from a principled approach, in relation to the fact the job of an MP requires them to live in Wellington some of the time, and when in Wellington they need to be have a place to live. The principle is that an MP should not be out of pocket for what is a work related expense, but neither should they gain from it.

If an MP, before they became an MP, resided outside of Wellington then their Wellington accommodation expenses get met (up to a limit) by the taxpayer. The exception to this is if the MP abandons their out of Wellington residence – either by selling it or renting it out. If they do that, then they are gaining at taxpayer expense.

The Auditor-General ruled (as did Speakers Hunt and Wilson) that Bill English was entitled to a Wellington accommodation allowance because he still maintained his Dipton property. If he had sold it or was leasing it out, then they would have found differently.

The one change I would make is I would bar MPs from having a direct or indirect interest in the Wellington accommodation they claim the allowance for. The Greens had their super scheme own several as a way to maximise income for themselves – and in fact were even claiming twice for the same property. Other MPs have owned the places they rented.

So the change in the rules is fine – the only potential for abuse is:

But one MP agreed yesterday that under the new definition it might be possible for an MP to maintain a small empty apartment out of Wellington and nominate it as a “home base”, when it would not have fitted within the definition of a primary residence as most people understood it.

In theory yes it is possible an Minister could move their family to Wellington, and sell their five bedroom house in the electorate and designate a small apartment as their home base. But there is always a way for venal people to rort the rules – and if any tried to do that, I would hope the media will expose that.

You could try and have a rule that an MP does not downgrade their home residence while they are an MP, but frankly it is unworkable – what if their kids move out of home etc.

So no problems with the change, but I do think it would be desirable to do a further change – to ban MPs from claiming the allowance for a property they have a direct or indirect interest in.

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