Ministerial staff costs

August 17th, 2015 at 7:00 am by David Farrar

The SST has a big story on how more ministerial staff warn over $100,000 than in 2008. It has gone from 17 to 53, representing around a third of the staff. This means that in each ministerial office, there are on average two people earning over $100,000.

Now it is newsworthy that ministerial staff are being paid more on average. However the story lacked some context, when you consider the paragraphs that say:

Since coming to Government, National has pledged restraint in the public sector.

However a public sector representative questioned whether the same message was being felt by those doing the bidding of National ministers.

There is a difference between a freeze on how much individuals get paid, and a freeze on total funding for salaries.

What I’m interested in, as a taxpayer, is how much more, if any, we are paying for the running of ministerial office. This would have been useful, even vital, information for the story. And it took around 15 minutes to find out from Treasury documents.

The 2015 budget allocated $25.842 million for ministerial support services. In 2008/09 the cost of ministerial support services was $30.375 million. So in fact spending on ministerial offices has dropped 14.9% in seven years. That is what I call restraint.

Also the cost of VIP transport has stayed constant – in fact down 0.1% from 2008/09.

And ministerial travel has gone up just 3.1% over seven years. Well under inflation.

So actually overall, pretty good spending restraint.

Kris Faafoi, Labour’s state services spokesman said the main responsibility of the staff in the Beehive was simply to make their minister look good.

So Kris is saying the main job of Grant Robertson and Jacinda Ardern and Chris Hipkins was to make Helen Clark look good? I wonder if they agree with his characterisation.

But as we have gone onto Labour, what happened to ministerial spending between 2000/2001 and 2008/09?

  • Ministerial support services increased 45.3% (down 14.9% under National)
  • VIP transport increased 43.3% (down 0.1% under National)
  • Ministerial travel increased 30.7% (up 3.1% under National)

Andrew McConnell said the approach of the Government was consistent with “the Government’s aim to reduce the number of public sector numbers, and to have fewer but higher skilled people”.

Indeed. National ministerial staff are being paid more, but there are fewer of them – hence the overall cost of running ministerial offices has dropped, not increased.

Own goal by Mallard

August 29th, 2013 at 3:00 pm by David Farrar

Barry Soper reports at NewstalkZB:

Over the next three weeks the spotlight will be on Labour and in particular the three wannabes. 

But it’s a party that can’t help tripping over itself as it did yesterday when Trevor Mallard flew into the bear pit, accusing the pedantic Nick Smith of bludging off the taxpayer after he tearfully relieved himself of his ministry last year when his Bronwyn Pullar conflict of interest became an embarrassment. 

Of course he’s repented and is now back in the fold. Mallard claimed he’d stayed on in his taxpayer supplied ministerial home when he wasn’t entitled to. 

Smith tells us he stayed on for a couple of weeks so that his kids could finish their school term which would seem reasonable in the circumstances. 

But big Gezza Brownlee wasn’t going to let them get away with that. He ruffled Mallard’s feathers, saying what’s good for the goose is good for the gander. 

If he expected Smith to cough up some cash then what about Dithering David doing the decent thing? 

Since making the dramatic announcement last Thursday, and then refusing to take any questions about it, Shearer got on the next plane out of the capital and will be lying low for the next three weeks. 

He’s still picking up his leader’s salary and the perks that go with the job, which Gezza says is a bit rich given Labour’s view of Smith’s indiscretion. 

More points on the Tory board then as Labour again scores an own goal!

As far as I can tell Trevor Mallard seems to be claiming that if you lose a job which has accomodation as part of it, you should be evicted from that house the same day.

Presumably he thinks if a Police officer resigns, they should be evicted from their Police accomodation immediately. Likewise Railways use to have many homes for staff. Again Labour now seems to say there should be no grace period at all – you should have your furniture thrown out that afternoon.

Presumably Trevor has written a refund cheque for staying on in his ministerial house after the 2008 election, rather than moving out that night.

As this Herald story pointed out, outgoing Ministers were given a dignified time:

Prime Minister John Key pointed out that when National entered Government he encouraged outgoing Prime Minister Helen Clark to remain in Premier House in Wellington as long as she wanted, at no cost.

Leader of the House Gerry Brownlee suggested that outgoing Labour leader David Shearer should have his privileges stripped because he had stepped down and was absent from Parliament.

This is the all too common problem in Labour – go for the easy hit, and not worry about consistency.

UPDATE: Trevor would not have had a Ministerial house as he is a Wellington MP. But his colleagues of course did, and I am sure did not pay rent for staying on for a few weeks after they lost in 2008. Unless they had already packed up before the election!

A historic home

February 20th, 2013 at 7:00 am by David Farrar

Hank Schouten at Stuff reports:

A Wellington home steeped in political history is being sold by the Government.

The red-brick house at 41 Pipitea St, Thorndon, was the home of prime ministers Sir Sidney Holland, Sir Walter Nash, Sir Keith Holyoake and Sir Geoffrey Palmer, as well as a string of Cabinet ministers, including Jim Sutton and most recently Nick Smith.

Tommy’s agent Steve Wagg said it was a huge 450-square-metre house with a large foyer and reception area, and six bedrooms.

About 10 interested parties went to an open home on Sunday, though he guessed its days as a family home were numbered because of its size and location in the heart of Thorndon.

That would be a pity. I’ve been to the house a few times, and it is a lovely home.  It would be a shame to see it demolished and turned into apartments or converted to an office.

It is in a superb location. I suspect it will go for a big price.

Auditor-General on Ministerial Services

December 14th, 2010 at 8:53 pm by David Farrar

The full report by the Auditor-General is a big read at 124 pages. Their summary says:

Overall, we have concluded that the current system for providing support to Ministers has flaws at each of the levels we examined. The system functions but, cumulatively, the problems are significant.

At an operational level, our testing of transactions did not show any pattern of major spending irregularities. We found only occasional examples of transactions that we considered were arguably or clearly outside the rules. We also concluded that the basic design of the financial management processes is sound, and the finance team within Ministerial Services is regarded as responsive and helpful.

So what are the problems, if the process is okay and the transactions are basically okay?

The legal status and purpose of the rules (which are set out in a document that we refer to as the Executive Determination) are confused and create ambiguity. The rules have a number of technical deficiencies, and the rule on travel expenses is unworkable in practice.

Their most important recommendation is:

On occasion, Ministers have challenged the role of the Department’s officials and whether they should be questioning Ministerial spending. In my view, the responsibility of the Department for the proper administration of Vote Ministerial Services needs to be put beyond doubt. This is an important first step, if major improvements are to be achieved.

Given the political context of the Department’s work, this has the potential to be a fraught question. That is why I have taken the unusual step of making a recommendation directly to the responsible Minister, in this case the Minister responsible for Ministerial Services. I am recommending that the Minister formally confirm to the Department and all Ministers that he expects the Department to play this role, and that Ministers should support the Department’s officials as they carry out their responsibilities. The end result should be a stronger system that better supports and protects Ministers, by enabling officials to catch and correct mistakes early and as a matter of routine.

I’ve worked both directly for Ministerial Services, and in a ministerial office. The problem highlgihted by the AG is that if a Minister and their SPS both insist something should be paid for, it is a brave official who queries it strongly. Ministerial Services is rated on how well it keeps Ministers happy, which can conflict with their role as rule keepers also.

What the AG is saying is that the PM has to give his political support to Ministerial Services, and back them to do their job, even if it means upsetting a Minister and/or staff.

The AG is pretty scathing (but in polite diplomatic ways) of the Ministerial Services handbook. She says it does not clearly set out what is a legal obligation, and what is just preferred practice etc. Also not enough practical advice and examples are given to senior private secretaries for running ministerial offices.

The AG also refers to the overlap between parliamentary and ministerial entitlements and spending. I have long advocated that some of the parliamentary agencies shoudl be merged together – the Parliamentary Service and Ministerial Services at a minimum. Arguably the PCO, Office of the Clerk and DPMC could all also be included in a super-parliamentary agency.

I am sure there would be huge cost savings from merging Parl Serv and Min Servs together. But even more importantly there would be better decision making, more consistency, IT systems that don’t have to learn to work with each other etc etc.

The Heatley Report

March 30th, 2010 at 2:40 pm by David Farrar

The Auditor-General has published her 20 page report into spending from Phil Heatley’s Ministerial Office.

We found that a total of $1,402 of Mr Heatley’s expenditure – $608 in Vote Ministerial Services and $794 in Vote Parliamentary Service – was outside the rules. In all cases, Mr Heatley thought that the expenditure was within the rules, but he did not understand the rules correctly. In the case of the expenditure in Vote Parliamentary Service, the Parliamentary Service was also administering a rule incorrectly for members of Parliament, and Mr Heatley is not the only member who will have been affected.

That is significant. There may be a few more reimbursements to come.

We found that Mr Heatley generally took care to account for his expenditure appropriately. His Senior Private Secretary took her responsibilities seriously in managing the ministerial office expenditure. On occasion, Mr Heatley’s ministerial office received a reminder from Ministerial Services to submit a late reconciliation of his expenses or invoices or receipts; these were standard reminders that are sent by Ministerial Services to many ministerial offices. The problematic expenditure that we discuss in this report was approved by the relevant officials and was never queried with Mr Heatley or his Senior Private Secretary. For some items of expenditure, it was not clear from the supporting documentation provided that it was outside the
rules, but it was for others.

As in the UK, there has been a culture of parliamentary officials not questioning claims.

We accept that the expenditure outside the rules was not deliberate on the part of Mr Heatley or his ministerial office, and that he had repaid a sum of money before we started our inquiry. He has also personally paid for expenses that are allowed under the rules.

And to be fair to MPs, many of them pay for stuff they could claim, but do not bother to.

Heatley has repaid $2,852, and the AG has ruled that only $1,402 was outside the rules. But

Notwithstanding deficiencies in rules or the systems for administering them, everyone spending public money – in this case Mr Heatley – has a personal responsibility to manage their expenditure appropriately with good judgement. In our view, even though Mr Heatley was sometimes operating under an incorrect understanding of the rules – for example, when his wife and family accompanied him on ministerial business – a more conservative approach that took greater account of how others might perceive his use of public money would have served him better.

I think that is a fair point.

They found five instances of spending outside the rules:

  1. $287 out of $929 spent travelling to Auckland And Queenstown accompanied by family
  2. $251 out of $2,677 spent travelling to Picton and Kaikoura
  3. $70 for wine out of $425 spent attending the National Party Conference
  4. $692 for a child’s travel between Wgtn and Queenstown
  5. $102 for a child’s train and ferry travel between Wellington and Kaikoura

This is a total of $1,402. Note a total of $2,852 has been repaid.

The OAG has clarified that a spouse’s meal and accommodation expenses should only be paid for, if they are attending official functions or meetings with the Minister, but not if they are just accompanying him. This soudns reasonable to me.

For the National Party conference, they ruled that accommodation and meal costs are legitimate expenses as that is part of the parliamentary role of an MP. There was no need to refund the meal. The wine explanation is:

He later wrote “food and beverage” on the eftpos receipt. This was his usual practice when it was not lunch or dinner – it was not necessarily a payment for food and beverage; merely his way of categorising food and beverage-related costs that were not technically lunch or dinner. His Senior Private Secretary assumed that the costs were for dinner and wrote “Minister and spouse – dinner” on the credit card reconciliation form. Mr Heatley certified this form as the card-holder. His Senior Private Secretary told us that there was no intention to misrepresent the situation on the reconciliation form – she had assumed that it was for dinner from what he had written and she did not check it with him. Mr Heatley told us that hedid not read the form carefully before he signed it and that it was a careless rather than dishonest act. …

From our review of Mr Heatley’s expenditure documentation, we can confirm his practice of categorising expenditure on his receipts as “food and beverage” when they were only for beverages such as coffee. However, in our view, Mr Heatley should have taken greater care in ensuring that the description of his expenditure was accurate.

The conclusion seems to be the description was inaccurate but not designed to be misleading.

As for the wine itself:

In our view, the two bottles of wine that Mr Heatley purchased for his table were more in the nature of entertainment costs incurred in the course of parliamentary business. We therefore concluded that the cost of the wine should not have been charged to Vote Ministerial Services. It would have been better to regard it as covered by the expense allowance.

Again I think this is a reasonable approach. This is partly what the expense allowance is for.

Notwithstanding deficiencies in rules or the systems for administering them, everyone spending public money – in this case, Mr Heatley – has a personal responsibility to manage their expenditure appropriately with good judgement. In our view, even though Mr Heatley was operating under an incorrect understanding of the rules when his wife and family accompanied him on ministerial business, a more conservative approach that took greater account of how others might perceive his use of public money would have served him better.

And that sentence is why it is unlikely, in my opinion, Phil will return to Cabinet immediately, or indeed probably this term.

UPDATE: I was wrong. Phil has been reappointed. While I am pleased for him personally, I actually think it is the wrong decision. The thing people hated about Labour was the revolving door nature of Ministerial stand downs.

New Ministerial Housing Rules

September 7th, 2009 at 5:10 pm by David Farrar

The Herald reports on the new simplified rules for Ministerial Housing.

The review looked at four options, being:

  1. The status quo
  2. Treat Ministers no different to MPs. Rejected as this does not recognise the extra time they spend in Wellington, and probability some of theri family may live down here also while Ministers.
  3. Use same expense reimbursement regime as for MPs, but lift cap from $24,000 to $48,295 (around $930 a week) being the assessed market value of suitable accommodation.
  4. An accommodation payment of a set level, being $37,500 ($720) a week. This is regardless of actual expenses incurred, but is set for less than the market estimate by around 25%. This is the option selected.

With option (4) the payment reduces to $30,000, if a Minister stays in the same house as they had as a backbench MP. This is equal to around $575 a week.

Option 4 overall reduces the cost to the taxpayer of the accommodation services provided. It will probably also lead to a staffing reduction in DIA, as the Department will expire the leases on the 14 leased properties and sell every property they own except Premier House.

Vogel House and the Bolton Street house were gifted with conditions, so will be interesting to see how they will be dealt with. Personally I would be sorry to see Vogel House go as it has significant history.

The total annual cost is $2.37 million. The cost of the payments in future will be around $900,000 based on 20 x $37,500, 5 x $30,000 and 3 x $0. There seem to be $500,000 of other costs (mainly Premier House) on top of that but overall it is estimated costs will drop to $1.48m. That is a 38% cost saving. If you exclude Premier House, then the costs are dropping 45%.

The PSA should be very very worried about the next pay round!

Min Accom Review TOR out and to be done by Sep

August 5th, 2009 at 1:38 pm by David Farrar

Well John Key is not wasting time. The Govt has just announced the terms of reference of the review of Ministerial accommodation, and the review will identify:

  • how to ensure criteria for ministerial accommodation were simple, easy to understand, transparent and cost effective to administer;

  • how to ensure value for taxpayer money;

  • ensure ministers and their families get suitable accommodation in Wellington.

It will consider

  • keeping the current model

  • amending the current model giving options;

  • replacing it all together or in part;

I can think of several possible models off the top of my head

  1. Ministers just get an accommodation allowance (as MPs get an expense allowance) of $xx,000 a year and totally up to them where they stay or live in Wellington. That is one extreme option.
  2. Ministerial Services increases it housing stock to 25 houses, owning them all. Ministers have a choice of a Ministerial Services owned house or they stay privately at their own expense. The PM gets 1st choice of Ministerial House, DPM 2nd and so down until the bottom ranked Ministers get the one left over. This is another extreme. No more renting.
  3. You allow Ministers to lived in a rented house, as is the case currently, but the house can not be associated with any Minister or MP in any way – including superannuation funds and trusts.  This will not save money (may in fact cost more) but would mean any perception of “gain” from having a Ministerial House provided is removed. This is my preferred option (at this stage).
  4. If a Ministers own a house in Wellington and rents it out, that rent is credited against the cost of their Ministerial House. That makes little sense to me as Ministers with money to invest will simply invest in properties in Auckland or Christchurch. It is worth remembering a house is simply a form of investment if you are not living in it.
  5. DIA converts the basement of the Beehive from a carpark into a dormitory for Ministers, where all 28 Ministers and their families can live in a big commune. This is the cheapest option and would probably win a public referenda.
  6. You have a mixture of maximum rent levels for Ministerial accommodation, based on family size. So for example a Minister with no partner or dependent children may only qualify for $550 a week place, while a Minister with a partner and six dependent children could qualify for say $750 a week.

One complicating factor will be what happens to MPs accommodation allowances. If my option (3) is adopted, then that should also apply to MPs. So that means the Greens Super Fund would no longer be able to rent its houses out to Green MPs etc. I think many MPs would be affected by such a change.

The Herald praises Key for his quick action:

The Prime Minister is commendably quick to order a review of ministers’ accommodation grants after the disclosure that some have gone to unseemly trouble to maximise their income. …

These arrangements have probably been common practice for as long as anyone in Parliament can remember. They have come to light now because the recent expenses scandal in Britain has forced greater disclosure from other parliaments. It is a pity it should have taken public exposure to awaken the Prime Minister and his Cabinet to the hypocrisy of their private arrangements. …

John Key has many more important problems on his plate but this one needs to be fixed. Good example matters.

Another Herald story talks of there being a rule change that lets Bill English claim more than previously. I tend to follow these things quite closely and this was news to me, so I have made some inquiries.

My understanding is that there was no rule change in May 2008 that changed the level of entitlement. There was a clarification that if a Minister did live in a home owned by themselves (limiting them to the $24,000 a year) that expense was still an expense paid for out of Ministerial Services, not The Parliamentary Services, despite being at the level for an MP. This was already the practice, but it was not explicit.

I have asked for copies of the old and new determinations, and will blog copies of them if I get them. Until I have seen the actual determinations I can’t say for sure whether the clarification did in any way affect entitlements.

I welcome feedback on the options for reform I have outlined above, plus any other options people identify. I’m not sure if the DIA review will take public submissions, but if I have the time I’ll make an unsolicited submission anyway.

UPDATE: I now have the two determinations – the 2003 and 2009 ones. Executive Travel, Accommodation, Attendance, and Communications Services Determination 2009 and Executive Travel, Accommodation, Attendance, and Communications Services Determination 2003.

My reading of the documents is the Herald has misunderstood the change. All the new clause 4.3 says is i you do not take up a Ministerial Residence, you are still entitled to an MPs accommodation supplement but it will be paid for by Ministerial Services. The implication that this change in any way allowed Bill English to claim more money is quite wrong.

UPDATE2: All academic now anyway as Bill English has announced he is going to reduce his accommodation allowance from the level he is entitled as a Minister, to that of an MP. This means he will repay around $12,000 and receive around $25,000 less contribution towards his Wellington accommodation. NZPA quotes him:

“The fact is that no amount of detail will change the perception that in some way I am gaining a bigger allowance than other members of Parliament.

“So I have decided to deal with that perception. I’m a minister of Finance. It is my job to lead by example so I will be getting in touch with Ministerial Services to pay back the difference between the rate I am on and the other rate going back to the election.”

I wonder what hurt more – this decision or having to fund the cycleway 🙂

I do hope that the review of the rules is covered in a less sensationalistic fashion now.

More common sense law

June 19th, 2008 at 11:12 am by David Farrar

Read this about what Ministerial Services had to do, just to check if it could put a Minister’s press release up on the Beehive website:

Brendan Boyle, Secretary of Internal Affairs, revealed that his department had sought legal advice on how to handle press statements put out by ministers’ offices since the new law.

He said an in-house legal team had provided the advice, with involvement from Crown Law, the Parliamentary Service and the State Services Commission.

That good old law of common sense strikes again. I mean seriously lawyers from four agencies to set up guidelines on press releases going on a website!