MPs and Accomodation

November 11th, 2013 at 11:00 am by David Farrar

Jared Savage reports:

A Herald investigation of property records for all 121 members of Parliament has discovered that six National MPs use their private superannuation schemes to own property that does not need to be disclosed – unlike assets held in trusts. This is because of an exception in the rules of the Register of Pecuniary Interests.

This is similiar to what the Greens did in 2009. However the Greens were actually double dipping by having two MPs both claim for the same property.

My long standing view is that for MPs (Ministers are separate – will come to that), they should not rent Wellington homes they themselves own (either directly or indirectly). While Parliamentary Service does get independent rental assessments for the homes, I think the best way to make sure there is a fair rental is a landlord who wants the rent to be as high as possible and a tenant who who wants it to be as low as possible. When the same person is effectively landlord and tenant, you don’t have that price tension.

I said in 2009:

It has all been within the rules, but as I have said many times before I think that there should be a transition to a system where no MP can be paid for renting as Wellington accommodation a house they own either directly or indirectly.

Back to this story:

As well as the six MPs with Wellington properties in Super funds, a further 26 MPs who get accommodation allowances also have properties in Wellington which are disclosed on the register. Nineteen are National MPs and four are from Labour. The others are the two Maori Party co-leaders and NZ First’s Denis O’Rourke.

So there are 32 MPs possibly in this situation. Note that with some of them, the property they own in Wellington may not be the one they live in. And they can of course own investment properties elsewhere.

Of the six with undisclosed properties held in their Super schemes, Mr Bridges, Mr Sabin and Mr Auchinvole all said they would have no problem with disclosing the properties, but had been advised by the Registrar for Pecuniary Interests not to do so.

Mr Bridges said the properties were in his Super fund because of genuine investment reasons, not to hide them away. He had listed both the Wellington and Parnell properties in his initial return, but was given clear advice to take them out.

So the issue is whether the rules should change.

Mr Sabin said he set his up because he did not have KiwiSaver, and a personal scheme gave him greater flexibility. He had bought an apartment rather than staying in hotels because he had to spend four nights a week in Wellington due to the travelling time from his Northland home.

He said the Registrar of Pecuniary Interests had instructed them not to disclose properties in Super schemes.

“I have no problem declaring it for what it is. I’m happy to comply with any determination of the authority, but they set the requirements, not I.”

I do sometimes wonder if it would be easier for the Parliamentary Service to buy a block of apartments such as Kelvin Chambers and just provide them to backbench MPs as accommodation.

Important to note that there is a difference between how accommodation is done for Ministers and MPs, Ministers get paid a flat allowance of $37,500 (or sometimes $30,000) a year to cover the costs of accommodation to them and their family in Wellington. That is an allowance, not an expense reimbursement. They get that no matter where they live or what their actual expenses are. They could live in a $800 a week rental or bunk down with a friend – the taxpayer pays them $37,500 regardless.

For non-Ministers, it is a reimbursement of actual expenses up to a maximum of (off memory) $460 a week. So it is with MPs, more than Ministers, that you get a conflict of interest if they own the property they are renting. Because as the owner they would like to get as much rental income as possible.

One could make the case that Ministers and MPs should operate under the same regime. Maybe just give them all a flat allowance for accomodation, and leave it to them where and how they want to live while in Wellington?

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30 Responses to “MPs and Accomodation”

  1. Redbaiter (6,478 comments) says:

    “I do sometimes wonder if it would be easier for the Parliamentary Service to buy a block of apartments such as Kelvin Chambers and just provide them to backbench MPs as accommodation.”

    I would prefer it if they just bought a camping ground with tents or caravans.

    Bunch of slugs from the government class enriching themselves while they tax and regulate and enslave the working class.

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  2. Manolo (12,624 comments) says:

    Some parasitical MPs we have!

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  3. nickb (3,629 comments) says:

    I wonder if their super schemes are claiming tax deductions in respect of the properties?

    I am sure IRD would be interested in that.

    Is it analogous to this case?

    http://www.nzlii.org/nz/cases/NZTRA/2009/16.html

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  4. thedavincimode (6,119 comments) says:

    Shocker.

    After all the negative publicity around this and the underlying issue of public confidence and dissatisfaction with parliamentary perks generally, these people still do it. Whether it can be justified under the rules or not, it’s just dumb, dumb, dumb. They clearly have either no notion at all of what it takes to be seen to be above reproach or they have absolutely no interest.

    There can be a point in business, the professions and in public life where the necessity to behave in a fashion sympathetic to the perceptions of others can outweigh your own beliefs about what you’re entitled to do. The fact that it can impact your pocket is just part of the price for being in that game. The people in this small community of ours who don’t get that bit right are the ones who have the dodgy reputations amongst those in the know. That these idiots have failed that test despite the publicity that has gone before is a shocker but sadly predictable given the quality of most of the people in our Parliament.

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  5. flipper (3,270 comments) says:

    Well David, what you say is very interesting.

    But in relation to the Herald garbage it is difficult to avoid the conclusion that the “non story” evident from the content, has been blown into a “story” because it mentions only National MPs. And the piece makes it plain that the claims are proper, and were not “hidden”. And then David, the paw prints of a certain Mr Ng are prominent, are they not? G,S & M!

    The fact is that paying accommodation for out of town MPs in Wellington is right and proper. I don’t care how it is done.
    We cannot have MPs from waikickamoocow staying in tents, so all must be treated equally. Their Wellington housing is not a “perk” it is a proper and necessary allowance. If the MP is smart enough to structure the normal allowance and do so to their advantage, why worry. If it is within the rules, fine. But all the gobbledogook about owning homes, and pecuniary interests, is just that.

    No need to change any rules.

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  6. Nigel Kearney (747 comments) says:

    Of course there should be a flat allowance. The whole issue goes away if you do that.

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  7. Colville (1,774 comments) says:

    I do sometimes wonder if it would be easier for the Parliamentary Service to buy a block of apartments such as Kelvin Chambers and just provide them to backbench MPs as accommodation.

    Such an obvious and simple solution. Supply a mid range one bedroom appartment at subsidised rental within easy walk to work.

    Make it easy for the churnalists to stake them out to see who is doing who :-)

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  8. Redbaiter (6,478 comments) says:

    Davaselinemode (in typical govt class manner) gives us all a patronising lecture on how important it is to be seen to be honest, rather than actually just being honest.

    Progs typically suffer from moral dysfunction and never understand what it means to be true to yourself.

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  9. Harriet (4,010 comments) says:

    “….I do sometimes wonder if it would be easier for the Parliamentary Service to buy a block of apartments such as Kelvin Chambers and just provide them to backbench MPs as accommodation….”

    It is probably a good idea.

    Tony Abbott has decided to live with his Federal police minders – in their flat- in federal police accomodation barracks while renovations are carried out on Government House! It is apparently for a few months!

    He rufused hotels or renting other accomodation as a waste of taxpayers funds.

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  10. Colville (1,774 comments) says:

    <Some parasitical MPs we have!

    Manolo.

    So you pay for your own flights, accomodation and meals when you travel away for work?

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  11. Redbaiter (6,478 comments) says:

    Demolish the beehive and build a virtual parliament.

    MPs could stay in their electorate.

    If Question Time is any indication its all just the most frightful waste of time anyway.

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  12. Graeme Edgeler (3,216 comments) says:

    I do sometimes wonder if it would be easier for the Parliamentary Service to buy a block of apartments such as Kelvin Chambers and just provide them to backbench MPs as accommodation.

    Yep.

    I understand this building is going cheap:

    http://www.stuff.co.nz/business/industries/9256886/Owner-offers-historic-building-for-1-dollar

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  13. MikeG (359 comments) says:

    What does the Taxpayers Union have to say about this?

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  14. BeaB (1,948 comments) says:

    Blogger- exposes the disgraceful behaviour of the mayor of Auckland.

    THe Herald – reveals MPs have followed the rules. And has two more episodes to go!

    Whoopdedo.

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  15. gazzmaniac (2,269 comments) says:

    Oh for fuck’s sake. I would have thought that $460 per week was good value for executive accommodation. It is certainly cheaper than staying in a hotel. Make it an allowance and if MPs want to own the property they live in then so be it.

    Personally if it was me I’d set up a caravan on the front lawn of Parliament and pocket the cash.

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  16. thedavincimode (6,119 comments) says:

    Silly Russell.

    The point is that sometimes it just isn’t enough to be honest. Often you have to be seen to be honest as well and that can come at personal cost. There is no suggestion here that these clowns were dishonest. Clearly, your background isn’t one in which you needed any sort of business or professional reputation.

    For example, it isn’t a pre-requisite to repairing your inflatable Palin doll, your puerile day dreaming about going down in a hail of lead whilst fighting off the knuckle-dragging commie/prog/raghead/homo hordes, or beating your keyboard in the delusional belief that your 20 year master plan will achieve anything other than subject you to the ridicule here of which you are so deserving.

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  17. goldnkiwi (649 comments) says:

    Is accommodation one of the most frequently misspelled words in the English language?

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  18. PaulL (5,775 comments) says:

    The problem here is a philosophical one. At one end, we (the taxpayer) are paying for our employees to live away from home so as to discharge their duties. A simple analysis would suggest we want to pay the minimum possible, so we wouldn’t want to pay the same for someone married with 4 children as for someone who is single. So we run an expense claim process and we vet their claims to see whether their need is appropriate. And that creates incentives to game the system one way or another.

    With a bit more thinking, we come to the conclusion that we’re creating bizarre incentives over what is (in the scheme of things) a relatively small amount of money. Particularly compared to how much money it costs us as taxpayers when we drive away competent representatives. So it would be easier to just make it a flat $37K allowance per annum allowance, and we don’t care about your personal circumstances, your family etc etc. And if you want to spend that allowance on renting from yourself or your superannuation fund, that’s not a problem either – more luck to you.

    We went through this about 5 years ago at my work, we used to have allowances for everything under the sun, apartments that the company rented and provided to our staff when out of town, cars, the whole deal. We had an army of HR people who administered it all, and we’d have fun with questions like what to do when someone vacated an apartment, someone else came to town but didn’t want that apartment (maybe it wasn’t near schools, or near bars, or near restaurants, depending on their family situation), and then our HR people got into fights with our staff about whether their request was appropriate. Everyone wasted time, and everyone was unhappy. So we moved to a flat $200 per night when you’re away from home, if you want to stay in a hotel do so, if you want to get an apartment do so, not the company’s problem.

    I think we should be doing the same with parliament. It’s not an issue we should waste time on when we could be talking about whether our elected representatives are wasting millions of dollars of our money on stupid policies, rather than peeping into their back yards to see whether they’re claiming $300 in allowances they might not be entitled to.

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  19. burt (7,085 comments) says:

    DPF

    So are you saying National MPs are ‘technically’ abusing the system but it’s OK because others are doing it too ?

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  20. Nigel Kearney (747 comments) says:

    If you disregard technical details such as legality, then Len Brown did exactly the same as John Banks, i.e. accept campaign donations from wealth individuals and groups and fail to declare them on his election return. The point is that acting in your own best interests, honestly and legally, may or may not be good enough for the Herald depending on who does it.

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  21. martinh (830 comments) says:

    MikeG
    the taxpayers union seems pissed off. http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11154765http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11154765

    I cant see how Key can say its ok as they did nothing illegal, they used all kind of smoke and mirrors to make sure they could do it

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  22. MikeG (359 comments) says:

    martinh – thanks, I missed that article.

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  23. MikeG (359 comments) says:

    Nigel K – you’re implying that Len Brown knew where his donations came from. Got any proof of that? Both mayoral candidates received donations from Sky City, but only onr declared it as anonymous, even though he knew where it came from.

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  24. alwyn (359 comments) says:

    A number of commentators here seem to think that we should treat all MPs the same, and just have a flat allowance. Indeed there a a couple who seem to think it should be the same for everyone, both those in the Executive and those who are not.
    Backbench MPs are in fact only required to be in Wellington for two nights per week for about 30 weeks per year. The House only really sits from Tuesday afternoon till Thursday dinner time. If you are an MP living in Auckland or Christchurch you can come to Wellington on Tuesday and return on Thursday evening for about 60 nights/year. For this the maximum allowance is $24,000/year or around $400/night.
    Most of them choose to rent or buy a property. Buying it through the Super fund is only a means of boosting the Super fund, and incidentally getting a tenant who is, at least in their eyes, reliable and unlikely to provide much in the way of wear and tear. A lot of the Herald artilcle seemed to be rather confused. The allowance is not money they contribute to their Super, and therefore attracting the 2.5 times contribution from the state. It can only be regarded as a recompense of expenses and they still have to contribute from their salary to get the Super bonus.
    Cabinet Ministers, and the Executive generally, are in quite different circumstances. With the exception of the PM and a few senior ministers they are required to be in Wellington from Monday to Friday for almost the entire year. Even if they are not in Wellington they are unlikely to actually be at home but are likely to be somewhere else in New Zealand. Their needs should not be confused with a bankbencher.
    In my opinion all list MPs should be considered to be living in Wellington and not be eligible for any Residential allowance to come to Wellington. They claim they live elsewhere so they can represent the population throughout New Zealand. If that was the case why do we need TWO Green MPs who are supposedly representing Waiheke Island?

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  25. GPT1 (2,042 comments) says:

    I read that article and it basically said that a number of MPs had followed the rules but no one likes politicians getting money off the public so we’ll run it anyway.

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  26. Warren Murray (238 comments) says:

    I see a few gaps in your understanding of the situation. A payment to meet Wellington accommodation costs should be designed to meet costs up to a specified limit. It should not be structured in such a way that enables the MP or minister to derive a pecuniary advantage.

    I disagree with your conclusion that MPs have a conflict of interest where-as ministers have none. The Ministers are actually able to retain any amount of their allowance that is not spent on used for their accommodation costs. In my opinion this is wrong, the payment is not meant to be a tax-exempt top-up on the salary.

    “When the same person is effectively landlord and tenant, you don’t have that price tension” – MPs are not incentivised to find accommodation at less than $460 per week and the only way to do that is to pay an allowance so they can end up pocketing what they don’t spend on accommodation.

    Whether they can afford to buy a Wellington property is not going to change their approach to ensure they claim the maximum available. As the Herald article points out “Under the previous rules, MPs who owned Wellington apartments could claim only for the interest on a mortgage, while those renting could claim their total rent. To maximise the allowance, many put their apartments into a trust or Super scheme which then acted as a landlord renting the property to the MP. Under the new rules, MPs who qualify for the Wellington accommodation allowance are treated the same, regardless of whether they rent or own.” If you put rules in place to stop MPs from claiming the payment for property that they directly or indirectly own, it wouldn’t save the tax-payer any money because Member A would rent from Member B and vice versa.

    However as the rules for Members’ accommodation support will soon be set by the Remuneration Authority, you could put raise your 2009 suggestion there. As others have said, a per diem for MPs for each night Parliament sits might change behaviours.

    The Herald article is not only about the Wellington accommodation payment, it is about the private superannuation schemes that some MPs have set up.

    Overall I don’t see any rules broken nor even any ethical breaches. The MPs named took advice, which at face value seems logical – If MPs had to disclose their interest in assets held by their superannuation funds, it could be hard to do for those who are in a public scheme. However, I think where they have effective control, they should make that disclosure, but to be fair they acted in reliance upon the advice given.

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  27. itstricky (1,139 comments) says:

    Thanks for posting the 2009 reference. Makes it easier to see the obvious difference in opinion. Was then ‘delighted to crash the greenies party’, snouts in trough, outrage, manipulated the system, detailed analysis of public money lost, manipulated the law etc

    Now it is quiet, circumspect analysis and justification.

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  28. Graeme Edgeler (3,216 comments) says:

    GPT: “I read that article and it basically said that a number of MPs had followed the rules but no one likes politicians getting money off the public so we’ll run it anyway.”

    The article isn’t mostly about how they’re getting money, but about how MPs are supposed to declare their assets.

    MPs didn’t used to have to declare assets held by trusts. Then that seemed dodgy, so the disclosure obligation was expanded, so MPs started hiding assets in “personal superannuation funds”.

    It’s also a story about how MPs wrote rules to give the appearance of being open about their assets and potential conflicts of interest, but wrote loopholes into those rules to enable them to not have to disclose this anyway.

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  29. boredboy (246 comments) says:

    Yep. It’s not the fact they’re channeling funds which are supposed to be used for accommodation into their superannuation funds, it’s how this fresh crop are trying to make it sound like they had no choice.

    “We were told not to disclose.”

    By the sounds of things, they could have if they wanted to but chose not to. It’s this chicanery that gets me.

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  30. Duxton (546 comments) says:

    I’m comfortable paying an accommodation allowance for electorate MPs, but can’t see why we need to pay for List MPs. They are no different from any other public servant who transfers to a new job in Wellington, and has to find/pay for their own accommodation as a result.

    Pay them a house removal allowance when they become an MP, and that’s it.

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