Office rented from partner

March 15th, 2012 at 9:54 am by David Farrar

Andrea Vance reports:

Labour list MP is using taxpayer money to rent her Manurewa electorate office – from her civil-union partner.

Although within the rules, the loophole has previously sparked debate about who should benefit from parliamentary funding arrangements.

Three years ago it was revealed seven MPs – including Prime Minister John Key and current Cabinet ministers Phil Heatley, Gerry Brownlee and Amy Adams – had bought their offices and then billed the taxpayer for the rent.

MPs are given a capped allowance to cover the cost of running offices outside Wellington. They must declare if they have a pecuniary interest.

Ms Wall says Prue Kapua bought the Manurewa office in December after she won her safe seat.

The former Silver and Black Fern insists the Great South Rd property is being rented at below market value and she is not benefiting financially. She could not say how much the rent was.

said it does not discuss individual MPs. However, a spokeswoman said if “a partner/significant other/member owns a property, a market valuation is taken and the rental payment by the service is based on that valuation”.

This story was broken by Whale Oil, and I am surprised that the Stuff story doesn’t reflect he (or at least someone other than them) broke this story.

As to the substance, my views are:

  • It is desirable for electorate offices not to be owned by anyone associated with the MP, so it is an arms length transaction
  • Sometimes there may be compelling grounds for an MP to own their electorate office, so they have security of tenure, and can modify the building as they see fit.
  • In the case where an MP (or family member) owns the building, the rent should be set well below market level – say 50% of market, so there is no suggestion that the MP owning the building is profiting from it.
  • Also in the case where the MP (or family member) owns the building, the level of rent should automatically be publicly disclosed

I don’t think the status quo is good enough, when an MPs or their partner can get paid market rental for their building. They are still benefiting from having the MP able to guarantee them as a tenant for three years. Any rental in this situation should be well below market levels, and should be public.

Records show the property was sold on November 9 to a company called TKL. Ms Kapua, a lawyer, is the sole shareholder and director. It was bought for $405,000, $25,000 less than the July rateable value.

“There is a list of MPs who own their own offices … so your question to me is what?” Ms Wall said.

It was incorrect to say the property was bought before the election. But she added: “I don’t know when it was bought, but it was bought after the general election.

Louisa is incorrect here. The property was purchased by her partner around three weeks before the election.

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19 Responses to “Office rented from partner”

  1. thomasbeagle (78 comments) says:

    “a partner/significant other/member owns a property, a market valuation is taken and the rental payment by the service is based on that valuation”

    Oh no, how terrible! She’s paying an independently calculated market rent!

    As for your suggestion that “In the case where an MP (or family member) owns the building, the rent should be set well below market level – say 50% of market…”, I bet you’d be the first one to start claiming that this preferential treatment would qualify as a donation that must be reported and should count as part of their spending limits in the election period.

    [DPF: No, it is the opposite of a donation. Note I have advocated this stance for some years.

    Your reliance on independent market rent suggests that this is objective, not subjective. ]

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  2. Innocent bystander (163 comments) says:

    How plausible is it that she doesn’t know her partner’s financial affairs? Particularly when we are talking about a $400,000 property purchase that just happens to relate to her job as an MP. That just doesn’t stack up. This sort of troughing would not be acceptable for any other public employee but for some reason Members of Parliament (and lets not forget Double Dipton) get away with it.

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  3. berend (1,599 comments) says:

    DPF: This story was broken by Whale Oil, and I am surprised that the Stuff story doesn’t reflect he (or at least someone other than them) broke this story.

    The layers and layers of fact checkers removed this fact!

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  4. Brian Smaller (3,915 comments) says:

    I am not at all surprised that this story was run without accreditation to the person who broke it. The MSM are hopeless hacks who couldn’t find a story unless they manufacture one.

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  5. tristanb (1,133 comments) says:

    This is terrible. She’s actively swindling the NZ taxpayer.

    Getting her partner to buy a property, then using her allowance to pay for it is disgusting.

    It’s not as bad as Philip Field or Darren Hughes, but it’s terrible. At least Bill English and Phil Goff did it when “everybody’s doing it” was an excuse – and I believe English paid the money back, and think Goff has sold that apartment. For Wall to do this now is inexcusable – she’s learnt nothing from the previous scandal.

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  6. Innocent bystander (163 comments) says:

    @tristanb It would be a shame if this became the story of the day given Shearer’s excellent speech earlier but Walls’ behaviour and excuse when busted smacks of a massive sense of entitlement. You expect this from MPs who have been around a while but its worrying that the freshly minted MPs are just as bad.

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  7. Manolo (12,618 comments) says:

    Troughers of all politicals colours, unite!

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  8. Paulus (2,294 comments) says:

    Looks as though Wall has learned quickly to be a Labour hack – “terminally inexact with the truth”
    Should be good for Labour up to scratch.

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  9. RRM (8,988 comments) says:

    it’s terrible. At least Bill English…. …did it when “everybody’s doing it” was an excuse

    Bahahaha!

    You’ll get airborne if you spin any harder!

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  10. RRM (8,988 comments) says:

    I don’t think the status quo is good enough, when an MPs or their partner can get paid market rental for their building. They are still benefiting from having the MP able to guarantee them as a tenant for three years. Any rental in this situation should be well below market levels, and should be public.

    So it’s perfectly reasonable for the spouses and sisters-in-law of National Party officials and MPs to be appointed to top CEO type positions of crown entities, and command the full market rate salaries and packages for these positions.

    But Spouses of Labour MPs should either let their rental properties to Labour MPs at a substantial discount, or else step aside so that someone else can lease the Labour MP office space at the market rates.

    I’m trying to get my head around this DPF, perhaps you can help me?

    Surely you aren’t saying friends of the Nats are entitled to full market rates, friends of Labour should give discounts or get out out of the industry?

    [DPF: Jesus you twist things to a slanderous level. My comments on electorate offices apply to all MPs, and if you stopped slandering me and did some effing research you'd find they include several National MPs.]

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  11. orewa1 (425 comments) says:

    Am I missing something, but why should the taxpayer cough up for “electorate offices” for list MPs who by definition, don’t have electorates? Just another expensive rort. But never mind, it’s only public money.

    [DPF: Electorate MPs get a budget of around $65K and List Mps around $45K reflecting their different needs. Some List MPs spend a portion of it on offices, but not all]

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  12. Colville (1,770 comments) says:

    So lets assume the lease was up for renewal but not confirmed (as the election was still a while away) when the property was put to market the soon to be MP says to partner “we wont confirm the lease no matter what” so then building is sold as “going vacant” so any new landlord would expect a risk premium on the cap rate. Partner of MP buys building at “vacant” rate and then has newly minted 3x3x3 lease from govt tennant and gets a nice bump in value because of the secure tennant.
    $405K could go up to $520K with a tennent ? 11% yeild untennanted and 8.5% tennanted? That is $115K tax free gain for a nice bit of insider info.
    Wish I could do that every week!

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  13. RRM (8,988 comments) says:

    [DPF: Jesus you twist things to a slanderous level. My comments on electorate offices apply to all MPs, and if you stopped slandering me and did some effing research you'd find they include several National MPs.]

    Oh come off it DPF! Slander? This is a post about Louisa Wall and her partner.

    Why should property investors offer their services to the State at a discount, if there is no expectation that senior executives executives should?

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  14. RF (1,128 comments) says:

    Labour snouts in the trough. Why aren’t I surprised.

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  15. RF (1,128 comments) says:

    After reading Whales Blog this little trougher is also very casual with the truth or else has a bloody poor memory when it comes to the date she shifted into her office Pre election.

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  16. Brian (Shadowfoot) (78 comments) says:

    It looks like the purchase agreement was made 2.5 weeks before the general election, but settlement was 2.5 weeks after the election. Many people consider the date they bought a property to be the date they settled and gained possession.

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  17. Colville (1,770 comments) says:

    I would think the agreement was dated 2.5 weeks before with 4 week due dilligance which was satisfied after election and settlement was a week or so later. Easy.

    and profitable!

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  18. PaulP (126 comments) says:

    So Louisa says it is below market value and Parliamentary Services says it is at a market value.

    If it is indeed below market value I assume her partner would not be claiming any rental loss on her tax return and would instead be adjusting the rent up to market value for tax purposes – yeah right!

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  19. pk (1 comment) says:

    Given the comment made that Louisa is incorrect, as the director of TKL Ltd I can assure you that the settlement date for the sale of the property was 9 December. Clearly Cameron Slater had not searched the Land Information title as he stated because that clearly records the actual registration as 13 December – ie a couple of days after the settlement. Mr Slater has presumably seen the QV record compiled on property movement and it is clear on that that the settlement date is 9 December. For reasons best known to himself he chose instead to refer to the agreement date which is shown on the QV statement as 7 November. An agreement does not constitute a sale as a large number of agreements are conditional, as was the case here. The agreement went unconditional on 30 November 2011 – after the election – and the sale took place on 9 December with the transfer and mortgage being registered with LINZ on 13 December. It is a shame both Cameron Slater and Andrea Vance made the same error and that it has been carried over into this column. Louisa is right – TKL purchased the property after the election.

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