Kiwiblog

The Herald reports:

Government staff are not yet halfway through the “mammoth task” of compiling the previous Government’s credit card records for release to the media and public, an exercise which is expected to cost about $50,000 and take a further two months.

The Department of Internal Affairs is compiling about 7000 documents detailing spending by Helen Clark’s ministers on their taxpayer-funded credit cards after receiving more than a dozen requests from media for the information under the Official Information Act.

Oh this will be interesting.

Former ministers, including those who are no longer MPs, will get to see the information before it is released to the media, but they have no ability to have content removed. “There’s no get-out clause.”

I suspect we will see some voluntary disclosures once that happens, to try and lessen the impact of the official disclosures.

A spokesman for Labour leader Phil Goff said he “has made it clear that if there are any cases of inappropriate spending he expects it to be repaid”.

Hey, this might even help reduce the $240 million a week we are borrowing

The Herald reports:

Labour’s “Axe the Tax” bus trip protesting GST increases is costing the taxpayer about $30,000 – but Labour leader Phil Goff has defended it as the cheapest way to get around the country on an issue that affects everybody. …

The bus features a red “skin” with Axe the Tax signage and Labour logos.

A spokesman for Mr Goff said the costs were expected to be about $30,000, including for the bus charter, the signage and other material such as signs and balloons.

It was funded out of Mr Goff’s parliamentary leader’s office fund.

He said it was a fraction of the $200,000 bill to the taxpayer for brochures Prime Minister John Key sent out to households last month to defend his party’s new national standards policy for schools.

Now Goff is quite correct that the bus is within the rules for spending from the leader’s fund. Just as the $200,000 on national standards brochures was within the rules.

But there is a danger that the public don’t care much about whether or not it is within the rules, and will judge the spending on the basis of whether it is providing information, or a series of photo ops.

I suspect most voters don’t mind parliamentary budgets being spent on a pamphlet which is sent to individual households, setting out a policy area, and why they are doing it. They may see that as useful communications.

With a bus tour, it is open to a very different perception. Voters know that it is not about communicating with voters – because if it was, it is hugely inefficient. It is about a series of photo ops, and desire to get media coverage.

Now again, this is all within the rules. But as I said, don’t be surprised if the public take a different view of parliamentary funds being spent on a bus tour, compared to direct mailing of pamphlets.

It would cost significantly more for him to use Crown cars to travel around in and for other MPs to use individual forms of transport. The signage was attention-grabbing and ensured people knew exactly what the MPs were there to talk about.

In my experience with bus tours, they cost massively more than the cost fo the bus. You see what they do not tell you is the fact that MPs normally fly in and off the bus to meet up with it.

As for the signage ensuring people know exactly what the MPs were there o talk about, this is not quite the case. Labour are not promising to axe the tax, and in fact they are not even promising to axe any increase in GST. As far as I know their policy is simply we will promise to do something different to whatever National announces, even though we do not know what National will announce.

It would be hilarious, if not rather tragic.

One of the unusual things about the Heatley affair was that the detail of credit card use were supplied to the media in the first place. Under Labour, all attempts to gain this info had been rebuffed, as Tracy Watkins explains:

The shame is that any of this happened. It is not much of a reward for the Government remaining absolutely true to its promise of greater openness and transparency.

Requests under the Official Information Act for ministers’ credit card expenses have been made before. But what was new about this week’s release was the manner in which the information was provided. Minister’s credit card statements were supplied in their unvarnished form. Identical requests under the former government garnered nothing like the same level of disclosure; the information was supplied in table form, with totals ascribed to each minister and little more. The only checks that could be made were phone calls to individual ministers, asking them for an explanation as to why they had run up a particularly large bill in comparison to others.

The explanation from Internal Affairs was the way this particular request from The Dominion Post was worded. The more likely explanation is that ministerial credit card OIA’s, like most other skerricks of information relating to the last Labour government, had to pass through chief of staff Heather Simpson first. Ms Simpson’s iron fisted control and ability to spot a political bushfire from 100 miles away are legendary – she was so successful, National has adopted many of Labour’s strategies for political management. But in the case of this week’s OIA there was either a conscious decision made to set a new benchmark or National lacks anyone with the same powerful oversight and ruthless attention to detail as Ms Simpson.

But now the benchmark has been set, there is no going back. It opens the door to OIA’s for the unvarnished records of Labour ministers. But it would be surprising if it didn’t also make ministers think twice before they run up expenses on their credit card.

Perhaps the Dominion Post could reveal the exact wording they used, so that others can use it as a template!

The 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.

Many people liked Jeanette Fitzsimons because she rarely did snide attacks on other MPs. The Greens boast about how they don’t do personal attacks. However Russel Norman can’t resist a small amount of putting the boot in:

An interesting aside to the Phil Heatley saga.

I have been calling on central govt to consider sewerage systems as important infrastructure and financially support communities like Whangarei to upgrade them. There were 45 raw sewerage discharges last year in Whangarei, many of them in the Harbour. Yuk.

Phil Heatley, the local member, dismissed my suggestion that central government should help Whangarei clean up its harbour with the comment that:

“Russel Norman’s got plenty of reasons to spend other people’s money” (Whangarei Leader 16-2-10).

It turns out that Phil too has plenty of reasons to spend other people’s money. But it seems we have different priorities.

People in glasshouses should not throw stones. Maybe someone should remind Russel about how two of his MPs were illegally both claiming an accommodation allowance for the same house – which happened to be owned by the Greens Super Fund.

Let alone how the whole system of having the Greens Super Fund own the Houses that taxpayers paid for, was designed to maximise their entitlements to the accommodation allowance.

John Armstrong writes:

It isn’t the amount of money that is at issue; it is that the declaration was inaccurate. Its inaccuracy raises questions of honesty and trust that should never have to be asked of a Cabinet minister.

Rather than immediately sacking him, the Prime Minister intended temporarily standing Heatley down from his portfolio responsibilities. This was a compromise position which made allowances for human fallibility on Heatley’s part, while at the same time calling in the Audit Office to run a fine tooth-comb through all the expenses he had claimed in the 15 months or so that he was a minister.

But John Key was seemingly gazumped by Heatley’s desire to resign altogether. That is the unusual feature of this resignation. Usually the minister is pleading with the Prime Minister to stay in the job.

Key urged Heatley to “sleep on it” before handing in his ministerial warrant. Significantly, that gesture did not extend to refusing to accept Heatley’s resignation. That is telling. It suggests although the Prime Minister is not ruling out Heatley’s return to the Cabinet, there is not much optimism that the Audit Office probe will not reveal further shortcomings with the ex-minister’s expenses.

Heatley’s route back to the Cabinet will require that everything is squeaky clean. It also presumes he wants his job back. Heatley’s statement about needing to spend a long time on National’s backbenches suggests he realises that is not going to happen.

I have commented at NBR along similiar lines;

For Heatley to return to Cabinet after resigning, he would need to have the Auditor-General provide an unqualified report with no finding of any fault at all. It is difficult to believe that the public sector watchdog will find that it is okay to describe a purchase of alcohol only, as a food or a meal.

Claire Trevett observes:

So it is that National finds the full truth of the maxim that “wine and women bring misery”.

Former minister Richard Worth resigned over rumours about women. Now Phil Heatley resigns over two bottles of wine. It was not a pretty sight. …

Small and Watkins in the Dom Post reveal:

But documents issued yesterday show Mr Heatley was warned on several occasions about providing all the paperwork needed.

In July and September, Mr Heatley was told by a Ministerial Services manager: “Due to the scrutiny that credit cards attract we would like to remind you that all records are open to review and should comply with the five expenditure principles … of the Ministerial Office handbook.”

While this was not about the two bottles of wine, it should have still served as a warning to the Minister and his staff, that one had to be very careful in this area.

Colin Espiner blogs:

I don’t think Heatley deliberately tried to mislead anyone, for the record. I think he genuinely didn’t understand the rules, or the political consequences of breaking them. But that’s still his responsibility, and proffering his resignation was the right course of action.

Key will be annoyed and embarrassed by this, but not overly concerned. Heatley was by all accounts a competent and hard-working minister, but there are others in National’s ranks who will do an equally competent job.

My money’s on Chris Tremain, the hard-working and capable Napier MP and chief whip to replace Heatley and take his housing portfolio. I’d leave fisheries with David Carter, since it’s a good fit with agriculture.

The issue of who will be the new Minister is an interesting one. It is possible no appointments will be for a while, but there are three possible courses of actions:

1. No new Minister is appointed, and portfolios just reallocated. Carter is an obvious choice for fisheries. Housing is a tougher fit, as it is a quite time intensive portfolio.
2. A Minister outside Cabinet is promoted to Cabinet (almost certainly Nathan Guy) and an MP is promoted to be a Minister outside Cabinet. If this happens, it is possible Guy could pick up Housing (so it is represented within Cabinet) and the new Minister picks up Internal Affairs.
3. A backbench MP is promoted directly into Cabinet, possibly taking both of Heatley’s portfolios.

It is possible Key will use the vacancy to do a minor reallocation of portfolios also. The main interest however will be on which backbench MP gets made a Minister.

The consensus is it will be one of the two Hawke’s Bay MPs – Napier’s Chris Tremain and Tukituki’s Craig Foss. I think that is quite correct. They both hold one of the twp jobs which almost inevitably leads to becoming a Minister – Chief Government Whip and Chairman of the Finance and Expenditure Select Committee.

There isn’t anything much between the two MPs, and friends. And whichever one doesn’t make it this time, is pretty certain to be the next one through the time after. They are both judged to be “Minister ready”.

If iPredict does a stock on who it will be, I’d probably put a small bit of money on Foss, purely because Tremain’s role as Chief Whip is quite integral to the smooth running of the Government, and his promotion means you need a new Chief Whip, and if Jo Goodhew moves into that role then you need a new Junior Whip, and if they are a Select Committee Chair, a new Select Committee Chair.

A promotion for Foss is less disruptive. The Deputy Chair of the F&E Select Committee is Amy Adams, and she would be more than capable of steping up to be Chair, with Pesata Sam Lotu-Iiga a likely replacement Deputy Chair.

As I said though, it could easily be either one of them.

I’m amazed. It seems that Phil Heatley’s resignation is a genuine resignation, not a sacking. This is incredibly rare, and I cynically assumed this was the case.

Let me explain what is normally the case. 95% of Ministerial departures are “officially” resignations, but are de facto sackings. Richard Worth in an official sense merely resigned, but in an unofficial sense he was sacked.

A resignation is almost always at the request of the PM. Maybe not directly, but because the Chief of Staff or PM has advised the Minister their situation is probably untenable.

Alastair Campbell in the UK was often the person who negotiated resignations on behalf of the PM.

But in this case, it does appear to be the very rare beast, that a Minister voluntarily went, while the PM was still willing to keep him on. The Herald reports:

Prime Minister John Key says he hasn’t lost confidence in resigning Housing Minister Phil Heatley and wouldn’t have asked him to quit had he not insisted on resigning.

Mr Heatley resigned from his housing and fisheries portfolios this morning over an error in his expense accounts.

Mr Key says he has accepted Mr Heatley’s resignation “with regret”.

“I wouldn’t have asked him to resign. It would have been my preferred pathway that he chose to stand down [during the Auditor-General's investigation] because I think that’s important, but I wouldn’t have asked for his resignation. It was the minister himself who offered his resignation and I have respectfully had to accept that.”

This also means that Heatley’s exile may not be as permament as I assumed. However Phil himself said that he is not expecting a quick return.

Mr Key did not rule out bringing Mr Heatley back into Cabinet and returning his ministerial portfolios in the future. But he said he would wait for the Auditor-General’s report.

The sad reality for Phil is that unlike the previous Government, there is a fairly talented backbench who are eagerly waiting for their chance to have Ministerial responsibilities.

Last night Mr Heatley told Mr Key that he wanted to resign and hand over his accounts to the scrutiny of the Auditor-General, but Mr Key told him he would prefer that he stand down during the Auditor-General process.

He told Mr Heatley to sleep on it, and he would accept whatever decision he came to in the morning.

Mr Heatley called to offer his resignation this morning, and it was accepted.

While Phil’s actions with the expenses were wrong and not acceptable, his decision to resign, rather than wait for the Auditor-General’s report, does him credit.

Other Ministers will be somewhat nervous, as this effectively lowers the barrier to what one should resign over. I suspect more than two Ministerial credit cards are heading towards the scissors.

The Herald editorial is on mobile termination rates:

New Zealand’s “light-handed” regulation of markets is sometimes astonishingly tolerant. Never more so than in the long-awaited final report of the Commerce Commission on the amount telephone companies charge for admission to their mobile networks. …

But the commission’s majority view is probably the right one. Regulators have to be fair to suppliers as well as customers and potential competitors. Networks are costly to build and maintain and newcomers that want to sell services into them must expect to pay a fair price. The price must maintain the network owner’s incentive to invest in it.

Clearly, the termination rates in this country were much higher than they needed to be to maintain the investment. Telecom and Vodafone have been using them to subsidise their subscribers and protect their equal market shares.

But their latest undertakings will more than halve their charges by 2014 and give a newcomer a fighting chance. Their undertakings can be policed by keeping the regulatory alternative in reserve.

Heavy-handed regulation usually has unintended consequences that are not in the interests of competition or consumers. Persistent shepherding and constant monitoring are best.

So the Herald favours giving the benefit of the doubt to the telcos. As I said previously, a tough decision for Steven Joyce.

The Press focuses on what it calls the XT debacle:

When members of the public dial 111 they have the legitimate expectation that their call will be answered promptly and emergency services quickly dispatched.

But on Monday, when a Christchurch man attempted to alert the police to an attack on a Japanese man outside a suburban mall by four skinhead thugs, who were accompanied by two pitbull dogs, the failure of Telecom’s troubled XT cellphone network prevented him from doing so. …

It is utterly unacceptable that its much-vaunted $574 million XT network, which lured customers to join with claims that it was state-of-the-art technology, could have failed four times in recent months. On one occasion some customers were cut off from XT for three days. …

But it is even more serious that in parts of the country, including Christchurch, a switching process which is supposed to have allowed XT phones to use other networks did not work and, as a result, 111 calls could not be made.

The unavailability of the 111 number could create dangerous situations. It means that crimes, accidents and fires could not be reported to emergency services, unless a landline was within immediate access, and conceivably lives could be put at risk by the problem.

If the faults with the XT network cannot be swiftly resolved, and there is no guarantee that this will occur, the Government will have little choice but to regulate to ensure that 111 calls can get through when networks become unstable.

The failure of 111 calls is the most serious aspect.

The Dom Post also focuses on XT:

If you believe the ads, Telecom’s new XT network provides unmatchable cellphone service in the Mt Victoria Tunnel, on remote farm tracks and in shipping containers floating off the coast of the North Island.

Sadly, its record is not so good in living rooms and city streets. The technical fault that prevented 220,000 Telecom customers from making calls on Monday was the fourth major outage in the past 10 weeks. It is not often that an advertising campaign blows up so spectacularly. …

In the wake of the latest outage, there have been calls for the Government to further regulate the industry.

That isn’t necessary, although ministers would be wise to bear in mind the gap between Telecom’s rhetoric and performance when they consider the phone company’s offer to host the Government’s proposed $1.5 billion ultra-fast broadband network. This is an occasion on which the market is actually working. There are two other mobile network providers in New Zealand – Vodafone and 2degrees – and mobile phone users have options.

The fibre to the home network build is significant. I have never thought Telecom would get to win the tender in all 33 regions, but if they failed to win any region, it might lead to a perception of unfairness. However it is a political reality, that these XT outages makes it less of an issue if Telecom do not get any major aspects of the FTTH rollout.

The ODT editorial is on ministerial credit cards:

Credit cards and politicians go together like oil and water: which is why there will be much gnashing of teeth at the latest folly concerning our Parliamentarians and their inability to follow the most simple of rules relating to expenditure.

The present matter involves ministerial credit cards, a facility granted to MPs of such rank, to give them access to money should they be required to spend it in the course of their official duties. …

In this context, Housing Minister Phil Heatley must have used up about as much rope as Mr Key will lay out to him. …

For his part, Mr Key may need, sooner rather than later, to put away his smiling Mr Reasonable personage and show at least a glimmer of the inner steel that all successful leaders must possess.

Anyone who thinks the PM doesn’t have inner steel, will not enjoy finding out that they are wrong.

The latest quarter of expenses are up. MPs are here and Ministers here.

Amongst MPs, some ones that look interesting:

• Several mainly Labour MPs have Wellington accommodation expenses of more than $6,000. This is unusual as the annual limit is $24,000 so normally only expect $6,000 a quarter. Maybe there were some old costs unprocessed?
• The two highest out of Wellington accommodation spends are Parekura Horomia at $2,514 and Shane Jones at $2,254. This is for hotels etc when not in Wellington.
• The highest overall spender was Phil Goff (which is expected with his role) at $89,454 – however that is almost $7,000 a week which is quite high for domestic travel. $70,000 of it is domestic surface travel – I presume VIP Transport. His domestic travel bill is even higher than the PM’s which is unsual.
• . Next three were Hone Harawira, Lockwood Smith and Shane Jones – all from Northland, so no surprise again.

For Ministers:

• John Key has has the highest domestic costs at $66,248 followed by Gerogina te Heuheu on $63,179 and Bill English at $60,448.
• For international travel the big three are no surprise – Murray McCully at $231,000, Tim Groser at $221,000 and John Key on $164,000

On a macro level, total Ministerial expenses for the quarter was $2.18 million.The previous quarter it was $2.01 million.

For MPs total expenses were $1.89 million. The previous quarter it was $2.09 million.

So overall expenses were $4.10 million last quarter and $4.07 million this quarter.

As a final note could I repeat my request to the Parliamentary Service to provide the same level of service as Ministerial Services do, and make the expenses available in spreadsheet format also. This enhances transparency as it allows for much easier analysis. If Ministerial Services can do it, no reason the Parliamentary Service can not. Especially as the spreadsheet already exists – it is just a matter of adding it to the website.

The NZ Herald wants a diplomatic end to whaling:

The diplomacy has been described by his Government as “unprecedented”, and hopes have been high that a breakthrough would be made within a few months.

Most logically, this would involve Japan abandoning or drastically scaling back its annual whaling in the Southern Ocean in exchange for a few carrots, including, perhaps, the resumption of commercial whaling in its own waters.

The diplomatic endeavours are clearly finely balanced. New Zealand Prime Minister John Key indicated as much when he suggested this week that the outcome of the diplomacy would be either a stunning success or a stunning failure.

But if the whaling ends, then Sea Shepherd will have to find new ships to ram!

Not surprisingly the Dom Post talks ministerial credit cards:

More importantly, Mr Key must now explain how the payments were approved by officials who are supposed to act as the watchdogs in the system, but have instead assumed the role of rubber stamp.

If ministers should be aware of the rules – and they should – then so should the officials whose job it is to administer them. Either they were not, or they felt unable to reject a ministerial claim. Whichever was the case, those bureaucrats have seriously failed the public by being incompetent or meek to the point of surrender.

It is up to Mr Key, as the minister in charge of Ministerial Services, to investigate what happened, and to make the staff involved answerable for their decisions. Then he needs to make it crystal clear that nothing outside the rules should ever be agreed to, no matter who’s asking.

I agree the rules must be applied without fear or favour.

The Press weighs in on the same theme:

Cabinet ministers should by now be well aware how damaging the perception is that they have used their position to claim unjustified perks. It is therefore incumbent upon them to familiarise themselves with the rules pertaining to their various allowances and, if they have one, their ministerial credit card.

The rules regarding credit cards emphasise that they cannot be used for personal spending, regardless of whether they do so with the intention of making a reimbursement. In other words, the cards must be used for spending associated with their ministerial work. …

Ministers must always remember that when using their credit cards they are spending public money. It is not like a private-sector operation where the money spent is that of the company rather than the taxpayer.

And in the private sector the norm is for credit card receipts to be rigorously inspected, which has clearly not always occurred when officials approved illegitimate ministerial credit card use, or allowed Heatley to reimburse Ministerial Services.

To their credit, neither Heatley nor Brownlee has attempted to argue the toss. They have immediately apologised and repaid their spending which was outside the rules.

Unlike the saga in the UK.

And the ODT talks protecting police:

Whenever a police officer is bashed or abused, we all take a hit.

That is because the police are community proxies.

They are our protectors and law enforcers.

They are an integral and essential part of what makes a peaceful and effectively functioning society.

As such, we all have a fundamental interest in them, their work and their safety.

Hear hear.

The Dom Post reports:

At least one Government minister has been forced to pay back expenses wrongly billed to his taxpayer-funded credit card and others are scrambling to check their spending.

Housing Minister Phil Heatley will repay Ministerial Services today for the $70 cost of two bottles of wine that he bought for National Party members at AMI Stadium in Christchurch last year and billed to his ministerial credit card.

An embarrassed Mr Heatley admitted, after checking with officials following questions raised by The Dominion Post, that he should never have paid for the wine with his ministerial card.

It suggests officials have been rubberstamping ministerial expenses.

The wine purchase was one of hundreds of transactions by ministers revealed by the release of credit card details in response to an Official Information Act request.

Mr Heatley has also run foul of the rules for running up expenses on his card and later reimbursing Ministerial Services – a practice he acknowledged was against the rules, though he was not aware of that till yesterday.

This is basically unacceptable, no ifs, no buts.

The rules about credit card use are set out in the Ministerial Services handbook. Now yes it is a huge document, but one new Ministers should read upon taking office – and as importantly, one their senior office staff should be aware of.

A Ministerial credit card should be used very sparingly in New Zealand. It is generally on overseas trips that they are needed.

It is a concern that Ministerial Services did not query some of the purchases at time of processing. We’ve seen in the UK what can happen when there is no push back from the authorities on expenses.

I suspect it may have already happened, but the PM needs to remind all Ministers of the need to be like Caesar’s wife when it comes to credit cards and expenses. Otherwise they may share the fate of Pompeia!

The media had a field day reporting and condemning the travel subsidy for MPs. For weeks on end we had story after story. But there was one story the media forgot to cover. It was the one about their massive travel subsidy to attend CHOGM in Trinidad and Tobago.

You see seven journalists flew to this lovely resort location on the PMs RNZAF aircraft. APN had one person attend, Fairfax one person, TVNZ and TV3 had two each and Getty Images also had one person. And they only had to pay $100 each.

Now if these media companies had to pay themselves to send their journalists, it would costs at least $4,000 economy to get there (including stop over). So this is a 97.5% subsidy for their travel costs. Or a savings of around $27,000 for the owners of those media companies.

If it is reprehensible that MPs get a 10% to 90% travel subsidy, then where has been the media outrage at this 97.5% travel subsidy?

What if a blogger decided he would like to attend a CHOGM in Trinidad and Tobago and got a lift over there with the PM for $100? Would that suddenly become a media story? You bet it would.

Now I am not saying that the media should not be allowed to travel on board the RNZAF plane if there is capacity. I’m not even saying that there shouldn’t be some cost saving for them (mind you 97.5% seems extreme). I am saying that it would be nice if they were as transparent about their own travel subsidies, as they were over those of the MPs.

The Herald reports:

Lindsay Tisch’s arrangement meant the $410 a week he has been claiming from the public purse for his Wellington accommodation was paid to his own property investment company.

This made him landlord and tenant – with the taxpayer picking up the bill.

By using the company, Mr Tisch has been able to claim close to the maximum $24,000 a year in expenses that MPs from outside Wellington are entitled to for accommodation.

This is basically what the Greens also were doing, through their Super Fund. It is legal and within the rules, but it means an MP maximises the amount they can claim, rather than be restricted to interest only.

Other MPs are using similar arrangements to Mr Tisch, but Parliament’s Speaker Lockwood Smith last night denied it was a loophole and said he was happy for the practice to continue as long as the rent they claimed was based on an independent market valuation.

With respect, I disagree. Perception is all important, and I just think it is a bad look if an MP has any interest in a property that the taxpayer pays for – directly or indirectly.

I think the rules should change so that you can only claim rental expenses on Wellington accommodation you have no interest in.

He now has the apartment rented out privately.

Which is the best thing to do.

In my weekly Dispatch from St Johnnysburg at NBR, I look at the various air travel perks for MPs, and rate how justified each one is. The summary is:

• Domestic Air Travel for MPs 9/10
• Domestic Air Travel for Partners 8/10
• International Travel for Parliamentary Purposes 10/10
• Private International Travel for MPs 3/10
• Private International Travel for Partners 1/10
• Domestic Air Travel for Children 8/10
• Former MPs (and partners) Travel – 0/10

Feedback and comments can be made at NBR.

Having worked in Parliament, and seen how shitty most of an MPs job is, I’ve always been pretty moderate on the issue of MPs expenses – supporting transparency, but not a major overhaul.

However I think that the international travel perk has now had its day, and is so toxic for an MP to use it, they should move to abolish it. I’ll come to that later. Lots of articles to quote first.

The Herald yesterday reported the Speaker:

Speaker Lockwood Smith went on the front foot yesterday over MPs’ international travel perks, saying the subsidies are a well-established part of an MP’s salary package and that he feels partly responsible for the opprobrium attached to them at present.

“They have been deducted from their salaries. If it wasn’t for this, their salaries would be higher.”

I’m glad to see Lockwood making that point, as it is often overlooked. In fact I think I was the first to cover the fact, back in June, that the 2003 determination actually deducted $5,800 off each MPs salary – representing the average private benefit of the international travel perk. The 2003 determination wasn’t in fact even online – so I got a copy sent to me and uploaded it.

Dr Smith believes the perks, and others, should be itemised in the MPs’ pay decisions.

He said he had asked the Remuneration Authority to present its decisions on MPs’ salaries differently to explain how the travel perks fit in but it did not do so in its latest one.

“I have written to them again because I think it is helpful because it does help people to see.

In fact they have not detailed this since 2003, and I’ve also previously said it would be beneficial for them to do so.

Dr Smith said he did not believe that the public or even most MPs realised that the travel subsidy had been counted when calculating MPs’ pay and he wanted to make sure the facts were know.

The travel subsidy was a “subtle way” of recognising and rewarding experience.

MPs generally get paid the same, so it is the one thing that rewards an MP purely on the basis of longevity. However to counter that, longer serving MPs are more likely to be Ministers or Select Committee Chairs.

Regardless of the original rationale for it, I think Parliament should move to abolish the perk. This will mean an increase in salaries – but it also means costs are more certain.

In a related issue Trevor Mallard (wisely) has blogged he is heading to London using the perk to meet some undisclosed people to chat to on education policy, and to watch some rugby.

This sums up quite well the case for and against subsidised travel. I personally do think that MPs using international travel to discuss policies and programmes is worthwhile. Most new policies will come from overseas experience, rather than getting dreamed up fresh in a department.

On the other hand, we don’t know how much of the trip is policy, and how much is rugby. It is pretty easy to arrange to meet some mates for a chat, to justify a trip. Not saying this is the case here – but that the problem is no-one really approves the trips – it is a “right” that sits with that MP.

So here is what I would do.

1. Abolish eligibility for subsidised international travel for MPs from 1 July 2010
2. Increase funding for each parliamentary party by up to say $5,000 an MP, allowing MPs to apply to the party leadership for a partial or full international travel subsidy. As it will come out of a limited budget for the party (what you do not spend on travel you can spend on communications, staff etc) the leadership will want to be sure there is genuine parliamentary and/or political value from the travel.
3. Have the Remuneration Authority recalculate MPs salaries, without the deduction for subsidised international travel.

There’s an old saying – when it rains, it pours. Rodney Hide will will it has poured all week. The SST sums up the week:

Hide is under assault on all fronts – voters, the media and now his government colleagues – after one of his worst weeks in politics.

Hide’s horror seven days has been entirely self-inflicted. First he was publicly exposed as a hypocrite for taking advantage of a perk he once campaigned strongly to abolish: taking his girlfriend, Louise Crome, on a round-the-world trip, visiting London, Toronto, Portland and Los Angeles. He defended it on the grounds that he did not spend as much time as he would like with Crome and that he had to work with the system, even though he disagreed with it.

They cover the jibe about Key, the Hawaii trip etc etc.

Rodney will be kicking himself. There can be little doubt there has been damage to both Rodney’s brand and ACT’s brand.

But when you fuck up, there’s only one response. Learn from the fuck up, buckle down, and get back to work.

I think the National-led Government is all the stronger for the inclusion of both ACT and the Maori Party, despite the tensions that arise from varied personalities, policies and priorities.

The Herald reports:

Maori Party MP Hone Harawira is being investigated after skipping a European parliamentary delegation meeting to make a 300km dash from Brussels to go sightseeing in Paris. …

“How many times in my lifetime am I going to get to Europe? So I thought, ‘F*** it, I’m off. I’m off to Paris’,” he said yesterday.

Mr Harawira, whose wife, Hilda, accompanied him on the trip, paid for the extra travel himself and said many of the issues that were due to be discussed at the missed meeting had been broached at a dinner the night before.

That is of course not the issue. I don’t have a problem with MPs staying on after an official trip, for a private holiday. Hell I try to do that myself whenever I have a conference or work related travel somewhere. Silly not to, if already on the other side of the world.

But it is quite different to take a holiday in the middle of your official business, let alone actually miss meetings that are the reason you are funded to be there. Hone has made the same error of judgement that Richard Worth made years ago in Egypt.

A Parliamentary Service spokesman yesterday said the Office of the Clerk was looking into Mr Harawira’s Paris trip and it was possible he could be asked to repay a portion of his travel costs if he had missed official business.

That would be appropriate.

Mr Harawira effectively dobbed himself in by writing about the Paris trip in his column in the Kaitaia-based Northland Age newspaper.

You have to give Hone credit at least for that – he outed himself, and is willing to let his constituents judge if they approve.

The case for and against Rodney Hide over using the international travel subsidy for long serving MPs to have his girlfriend accompany him.

The case for the defence:

• He has already paid for the perk through a lower salary. The Remuneration Authority deducts 100% of the average value of the international travel perk (around $6,900 per MP) from their salary. The Authority also deducts around $4,000 from MPs salary to cover the 45% of spouses domestic travel deemed of personal benefit.
• Up until 2009, it was almost automatic that Ministers would have their partners travel with them. This has only become an issue because John Key has changed the rules.
• It is not hypocritical to oppose something but take benefit from it. Many people think the pension should be means tested, but they don’t turn it down when the reach 65 all the same.
• Most men, if they had a girlfriend like Louise, wouldn’t leave her at home alone while they were overseas in case she changes her mind while you are gone
• Rodney, like most Ministers, works 70+ hour weeks, and gets very little family time as it is. This is why traditionally Ministers get to have partners travel with them, and we should not begrudge it
• Two weeks is a long time to go without sex
• One overseas trip a year, with a partner, for a Minister is hardly troughing
• The trip was approved by the PM, and within the rules.

The case for the prosecution:

• Any other year it would not be such an issue, but this was done during a recession when Ministers are campaigning for spending restraint
• The PM had made it clear he did not think the taxpayer should generally fund partners on overseas trips. It didn’t matter that he approved the trip – that was because he can’t set policy for how MPs use their parliamentary entitlement.
• You used to be known as the perk buster – that means yes you do have to be a martyr.
• The public hate hearing “It was approved and within the rules” when MPs write the rules.
• After the fuss over Roger Douglas, one should have known that the ACT Party Leader, of all people, needed to be like Caesar’s Wife – beyond suspicion.
• No one is saying your partner shouldn’t travel with you – it is a matter of who pays for it.

I think I have covered all the major arguments for and against. I would point out that most of the media have not really mentioned the aspect about the average cost of the international travel perk being deducted from an MPs salary.

There was some suggestion on other blogs, and linked here, that the amount of travel credited to partners may be wrong. I don’t think the Herald did have it wrong, and I’ll explain.

If an MP is a Minister, then Ministerial Services basically pays all his or her travel expenses as an MP. They don’t try and work out are you travelling as a Minister or an MP, because that would be a nightmare administratively.

But Ministers also do show travel expenses from Parliamentary Service. That is not the cost of their parliamentary travel, but generally the costs of their family’s travel and/or any use of the subsidy for long serving MPs on private travel.

The PM and the Speaker have released summaries of expenses for the third quarter of this year.

I’ve put them into Excel so I can analyse them at some length. Some tidbits for now for MPs:

• Highest Wgtn Accom – Maryan Street $8,703 for quarter
• Highest Out of Wgtn Accom – Hone Harawira – $3,978
• Highest Air Travel – Phil Goff on $29,166 and Ross Robertson on $25,742. That is $2,000 a week for Robertson so must include some international travel
• Highest Surface Travel – Hone Harawira $19,942

And for Ministers

• Highest Wgtn Accom – Georgina te Heuheu – $12,833
• Highest Out of Wgtn Accom – John Carter – $5,661
• Highest Domestic Air Travel – Kate Wilkinson – $16,420
• Highest Surface Travel – John Key- $81,079 (that is an apportionment of VIP Transport costs – most of which are fixed not marginal)
• Highest International Travel – Tim Groser – $120,235

Average expenses per Party (excludes Ministers)

1. ACT $15,501
2. Green $18,358
3. National $18,954
4. Labour $20,422
5. Progressive $27,533
6. Maori $35,549

More analysis to come.

Am reading full report. The summary says:

The current parliamentary system is designed to establish whether a member of Parliament (MP) maintains a current residence (other than a holiday home) outside Wellington rather than to decide where an MP “lives” in an everyday sense. Traditionally, that residence was in the MP’s electorate.

Yes, this is the essence of it.

Mr English correctly completed the declarations he was required to as an MP, and provided other information on his accommodation arrangements, in order to claim Wellington accommodation costs.

And:

For at least 15 years, the parliamentary rules for claiming accommodation costs have specifically provided for MPs to claim their costs when they buy or rent a property in Wellington. This has enabled a range of practices to arise, including renting from family trusts. The administrative system now includes protections such as a market evaluation of rent and a cap on the total that can be claimed to manage the associated risks. The fact that Mr English was being reimbursed for the cost of renting a house owned by his family trust was not exceptional.

So there is now no doubt that Bill retained eligibility for Wellington accommodation assistance over the years 2000 – 2008.

There is an issue over the Ministerial assistance:

Ministerial Services asked Mr English to sign a declaration that he did not have a pecuniary interest in the family trust. He did so, and attached a copy of the advice he had received about what amounted to a beneficial interest in a trust for the purposes of Standing Orders. Having received that declaration, Ministerial Services got a market evaluation of the rent, took over the existing rental agreement, and provided the house as a ministerial residence.

In our view, the advice that Mr English relied on to make his declaration was not applicable to this situation and was based on too narrow a test for the Ministerial Services’ situation. We consider that Mr English does have an indirect financial interest in the trust.

This issue arose because of Ministerial Services’ evolving practice of renting properties for Ministers combined with the parliamentary rules that enable MPs to rent from family trusts or similar. The two systems do not fit well together.

At Mr English’s request, the rental agreement between Ministerial Services and the trust has now ended. Mr English has reimbursed the rent and other costs that had been paid.

What this basically says is the advice that the house could be leased as a Ministerial House was not correct. This means however that he would still be eligible for the normal parliamentary level assistance of $24,000 a year – however he has confirmed he will not be taking up any assistance.

This reinforces my position that it is much better if MPs do not directly on indirectly own the house they get assistance for. If Bill had moved into Vogel House, or Bolton Street, these issues would haver have occurred I suspect.

The Prime Minister has announced that a new policy is being implemented under which Ministerial Services will no longer provide accommodation directly for Ministers. Instead, Ministerial Services will simply provide a fixed level of financial assistance to Ministers, who will make their own accommodation arrangements. This approach will mean that the question of whether a Minister has a personal financial interest in a property will no longer be relevant, and may help to smooth the interface between the parliamentary and ministerial accommodation entitlements systems.

The news system does sort out any conflict of interest issues.

UPDATE: The full report has more details on the trust issue, and where the advice came from:

He sought advice from the Registrar of the Pecuniary Interests of Members of Parliament on what amounted to a pecuniary interest in a family trust. The Registrar responded with advice that discussed generally what is a beneficial interest in a trust for the purposes of the Standing Orders requirements. …

The Registrar’s advice was based on the definition in Standing Orders of when a beneficial interest in a trust should be declared for the Register of the Pecuniary Interests of Members of Parliament. We have concluded that this was not the right test to apply in this situation, as it is a narrow definition of pecuniary interest for a particular purpose. In general, it is usual to regard an interest held by a spouse or close family member (such as a dependent child) as creating an indirect financial interest. In our view, Mr English has an indirect financial interest in his family trust, because of his relationship with the likely beneficiaries.

So he sought advice from the Registrar for Pecuniary Interests, but that advice was not applicable to the accommodation issue.

The result was that the Crown was renting a property for Mr English from a trust in which he had an interest, and the arrangement was explicitly based on a view that he did not have an interest. Clearly, this was unfortunate. We emphasise that the Minister’s declaration was based on advice. However, in our view, the advice was not directly relevant to this situation. We consider that Ministerial Services should have raised this with the Minister.

Again this is my point about both Bill’s situation, and the Greens Super Fund. Even an indirect relationship is undesirable.

This issue illustrates the different starting points of the two accommodation entitlement systems and that they do not fit well together. Having an interest in a property is not a barrier in the parliamentary system, and protections are in place to manage the risks created by the conflict of interest. The issue has only arisen in the ministerial system because Ministerial Services has moved to rent properties rather than own them and has worked to tailor the housing support it provides to the needs of individual Ministers, including sometimes taking over existing rental arrangements.

The upshot is that the owning the home through your trust was okay for parliamentary rules, but not for Ministerial rules. This really shows why the the two systems need to be streamlined.

The fallout spreads:

The speaker of Ireland’s parliament resigned Tuesday after his years of lavish expenses and foreign travel were exposed. …

O’Donoghue’s ouster was inspired both by Ireland’s sudden nosedive into recession and debt — fueling public anger at lawmakers still living large at taxpayer expense — and by the lawmaker-expenses furor in neighboring Britain. Irish broadcasters RTE, unusually, showed O’Donoghue’s parting shots live.

So what were his expenses:

The biggest headline-grabbers included hotel rooms exceeding euro900 ($1,400) a night in Liverpool, Paris and Venice; euro472 ($700) for travel by car between two terminals of the same airport; and trips to horse races from England to Australia, usually accompanied by his wife, with a limousine standing by 24 hours a day, all at taxpayer expense.

How does a hotel room in Liverpool cost more than 900 Euros a night??

Nick Smith hits back at media criticism over his owning of his electorate office. When I said last week that MPs often owned their electorate office not to make money, but to better serve the community, I was thinking very much of Nick.

The Dom Post reports:

A senior Cabinet minister has hit out at criticism of MPs over their allowances and says the media have got it “completely wrong”.

The Dominion Post has revealed a money-go-round that allows MPs to use their $65,000-a-year electorate allowance to buy up office space and rent it to themselves.

Seven MPs are using the allowance in that way, including Nelson MP and Environment Minister Nick Smith.

Dr Smith yesterday rejected claims that he had made a tidy sum from the property, which he brought in 1996 for $165,000 and is now worth $310,000. “I had to spend $152,000 to make it usable … I spent a total of over $317,000.”

And that is one reason an MP may seek to own an office – so they can restructure it as they want.

In 1996 he had brought a church hall and church manse next door and converted the two-storey hall into an electorate office and community hall upstairs.

The hall was used several times a week by community groups.

“You would find it has been a source of community charity, far from your accusation of me trying to make a quick buck.”

I’ve worked/visited there several times, and it is often in use.

A commenter spotted this on RNZ:

The Green Party is about to announce it will stop taxpayer-funded accommodation allowances being channelled into its superannuation fund. …

The party’s superannuation owns two properties in Wellington, in which three of its MPs live, and the taxpayer picks up the rent. …

It’s understood Green Party co-leader Metiria Turei will shortly announce plans to sell both properties, ending the practice of funnelling the accommodation allowance into the fund.

Radio New Zealand’s political staff say the arrangement is within the rules but has increasingly become a political embarrassment for the Greens, a party which has tried to take the moral high ground over MPs allowances.

The fund itself, which has other assets including shares, will continue to operate.

A sensible decision from the Greens and all credit to them for it. Now there are other MPs who probably have an indirect ownership of the apartment they rent. 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. My suggestion would be to put in place new rules to start after the next election.

Electorate offices are a somewhat different issue as they come out of a limited budget for the MP, and there can be legitimate non-financial reasons an MP wants to own their electorate office. However even in that case I would advocate setting a maximum rent at 66% to 75% of market.

Vernon Small writes:

The Green Party needed a mini-scandal about its accommodation allowances like it needed to lose a senior MP with thwarted ambitions or have its kuia head for the hills before the next election.

Challenging times indeed. Despite that I think the Greens are fairly well positioned to grow their vote at the next election. They can point to successfully advocating the home insulation scheme to both Labour and National, and make a case that while they are a left wing party, they can “green” the Government, regardless of who it is.

As the party making all the noise about reviewing parliamentary perks, it has exposed itself badly with the revelation that two of its MPs were essentially – if accidentally – double-dipping on rent for the Thorndon house owned by the party’s superannuation fund.

At this stage, just how the information came to light is unclear.

The Greens are sure they spotted it when they did an annual market rent review on the property in May or June and were preparing their disclosure of expenditure before the general release of MPs’ spending by Speaker Lockwood Smith in July. That was an attempt at a public relations coup that now looks hollow.

This is easy to resolve. The Greens simply need provide the e-mail or correspondence to The Parliamentary Service advising them of the “error” they discovered.

Ms Turei does concede that if they had provided a rent review of the house in February, as Parliamentary Service requested, the mistake would probably have been avoided.

So why was it not done?

But the failure to pay back the extra $6000 when it was discovered in June – even if that required a special meeting of the superannuation fund trustees – ceded a lot of the moral high ground. (More so, because when asked about it weeks ago by The Dominion Post after a tip-off from within Parliament, the Greens said there had been only a minor adjustment – not, as it turned out, an overcharging of $500 a week – and implied it was at the Greens’ own initiative.)

This is the part that spells very bad judgement to me. If I was advising the Greens, I would have insisted that it be paid back within days, and then do a press release advising of the error. That would have been a minor minor story.

From Parliamentary Service’s perspective, general manager Geoff Thorn could not be clearer.

“The double payment was identified when the service was reviewing processes for dealing with claims for Wellington accommodation in May of this year.

This is quite contradictory to what the Greens say. Now again, there is an easy way to resolve this. The Greens merely need provide the e-mail or correspondence where they alerted The Parliamentary Service to the error.

It is an important distinction. The party that found a mistake, corrected it and paid back the difference? Or the party that was caught out and reluctantly handed over the cash three months later?

Indeed, and in fact there is a lot of murkiness now. We have:

1. How did the error occur in the first place?
2. Who decided the level of rent to charge for Delahnuty after she moved in with Fitzsimons?
3. Why was a market valuation not done in February, when the Parliamentary Service asked for it?
4. Is there any proof of the assertion by the Greens they spotted the error, rather than the Parliamentary Service tell them about it?
5. If not, why did they assert they found the error?
6. Why did they tell the Dominion Post it was a minor adjustment, when it was almost $500 a week?
7. Why did they not reveal the error, at the time they were trumpeting their commitment to transparency?
8. Why did they wait three months to pay the money back – in fact only paying it back when TVNZ started asking about it?

Now I am not suggesting foul motives for the above, but it does suggest incredibly poor and sloppy management – both political, but also administratively.

Either way, the news has turned the spotlight back on the Green MPs’ pension scheme which buys houses and flats for its MPs and charges Parliamentary Service for their rent.

It is within the rules, and Mr Donald made sure of that when he set it up in 1998. (Ever aware of perceptions, he went around the press gallery to tell reporters what he had done, so there could be no accusations of underhand dealings.)

Rod was a very smart man.

But the scheme was always a ticking time bomb of bad perceptions, especially when, in the wake of the Bill English accommodation furore, the public is attuned to MPs using the perks of office to build up their own nest eggs.

It is a nest egg for the Greens that has already been depleted from four houses to two, as retiring MPs have withdrawn their entitlement.

It will take another big hit when MP Sue Bradford leaves later this month and an even bigger one when former party co- leader Jeanette Fitzsimons quits before the 2011 election.

Not necessarily. The new MPs may move into the houses used by the retiring MPs.

Whale Oil blogs on all the electorate offices owned by a Labour Party company, and rented to MPs, with Parliamentary Service paying the rent, and has a number of good questions.

This is a situation worth exploring, but it is more complex that it may appear, and isn’t quite the same as the issue of Wellington accommodation.

An MPs Wellington accommodation expenses are paid for out of a general parliamentary fund. If they do not spend the maximum $24,000 then they can’t spent the underspend in other areas.

An out of parliament office is a charge against the “individual members’ support budget”. This is $64,260 for electorate MPs and $40,932 for list MPs. That budget also has to cover all the communication expenses for an MP with their electorate such as postage, newsletters, advertisements etc. So the more that is spent on rent, the less they have to spend on communicating with constituents. This does provide some incentive for the rent to be reasonable.

There are incidentally some issues with this arrangement, as the cost of renting an office is much much higher in central city seats, than suburban and provincial areas.  This can disadvantage certain urban MPs. But that is a debate for another day.

Now it is not just political parties than sometimes own the building rented to the MP. Sometimes the MP will own the building themselves. This can lead to an assumption that the MP has done so, as an income generating activity.

However there are other reasons an MP will want to own their electorate office. The main reason I know of, is that it means they have a permanent office – no worries about having to shift location every so often. Also it means they can make any changes to the building they want to make it functional, which can be difficult for buildings you do not own.

Now I am pretty sure that Parliamentary Service do require a market valuation for an electorate office, in approving any rent. And especially so if a party or MP has an interest in the office.

However this does still leave open the possibility of perception that it is an easy money making activity for an MP – buy a building and rent it to yourself. Maybe there is a return on capital greater than you would get by having it in a term deposit.

My solution would not be to ban ownership of electorate offices by MPs (I am not quite so sure about the party owning it) as ownership often allows an MP to provide a bigger and more effective office to service constituents than would otherwise be the case.

But what I would do is have a rule where any rental paid by The Parliamentary Service can only be say 75% of an independent market valuation. This would mean that the MP or party would not be perceived as making money on the property. Maybe even set it at 66% – basically i would aim for a lvel where any income would be slightly less than the return on capital you could get in a risk free investment (ie money in a bank). This would protect the MP from being seen to benefit from it, and in my experience the MPs who have purchased an electorate office have done so for practical, not commercial reasons – especially as any rent paid comes out of their budget.

Possibly this notion of setting the maximum rent at say 66% or 75% of the market rate, could also be applied to MPs Wellington accommodation. If your super fund owns your house, then you are not eligible for $24,000 a year but instead $16,000 or $18,000.