MPs' pay and perks - at our expense

Cartoon / Rod Emmerson

Last weekend Bill English was defiant. "This isn't about the money," he told reporters as news broke that he was claiming more than $900 a week to live in his own Wellington home.

"This is about the support I get - which I appreciate - which enables our family to be together under the pressures of politics."

By Wednesday the Deputy Prime Minister had reluctantly thrown in the towel. "I understand that this does not look good," he admitted, revealing that he had paid back half the amount so that he was claiming the same as other MPs.

"It doesn't really matter what the technicalities are."

Officially English was within the rules. He had moved his family of eight into a $1.2 million house in Karori, which was owned by a family trust. The trust leased the house back to the Government, which made it an official ministerial residence. This allowed English to claim an allowance of $47,000 a year, almost twice the amount out-of-town MPs can usually claim for a house in Wellington.

English has still not explained why he and his wife Mary put the house into a trust soon after the election, allowing him to claim the maximum subsidy. He says it was for unrelated personal and financial reasons, which he has not made public.

But even if he could come up with a convincing explanation, the battle - as he belatedly acknowledged this week - was already lost.

For most New Zealanders, however the message was simple; English is paid $276,700 a year to be Deputy Prime Minister but was happy to let taxpayers contribute a further $913 a week to help with the bills.

Even worse, a Minister of Finance who led a personal crusade to make everyone tighten their belts in the recession was seen to be taking as much as he could from the public purse. The timing was particularly bad in a week when the Government, fresh from cutting night classes and training allowances for DPB mums, faced more flak for axing therapists for severely disabled children.

His catchcry to public servants earlier this year - "Restraint is permanent" - could come back to haunt him.

English can probably blame his embarrassment on the excesses of British MPs, who fiddled their expenses to pay for personal items such as duck houses and moat cleaning. The outrage caused by these revelations rippled round the world, prompting the Greens, Act and the Maori Party to promise they would disclose their MPs' expenses each year.

At first it looked as if National and Labour would close ranks on the issue as usual. But unexpectedly Prime Minister John Key announced in June that all MPs' expenses would be made public on a regular basis.

Many crucial details are still missing from the sanitised accounts, such a breakdown of the $11 million spent by current and former MPs and their partners on international travel.

Last week the accounts showed that when the arch-critic of Government spending, Sir Roger Douglas, and his wife went to see their son and grandchildren in London, taxpayers paid 90 per cent of their airfares.

This week more news tumbled out. Many National ministers who own apartments in Wellington are renting them to other MPs while they claim allowances on other properties - effectively claiming two taxpayer subsidies. Former Labour minister Chris Carter had claimed $200,000 in travel-related expenses in six months, twice as much as his colleagues.

Eventually the uproar over English's accommodation claims prompted Key to declare a limited review into the subsidies paid for ministerial accommodation.

It could be argued that the whole system of pay and expenses for MPs and ministers - a messy labyrinth of often conflicting detail, which has resisted reform in the past because MPs control it- needs an overhaul.

But some observers warn that if we are serious about reform, the public may be in for as much of a shock as the politicians.

To see how the system could be changed if we started from scratch, the Weekend Herald approached George Brooks, chief executive officer of recruitment firm OCG, and Jonathan Boston, director of the Institute of Policy Studies at Victoria University in Wellington.

Both suggested several long-standing perks should go but defended others, including the accommodation allowances at the centre of this week's row. And though they acknowledged it would be controversial, both felt the starting point was to pay politicians more.

PAY

Brooks, whose work revolves around appropriate pay rates for senior managers, says the first question is whether a basic MP's salary of $131,000 is enough.

"You're going to live away from home most of the year. You're going to travel every week. You're going to work long hours when necessary. You're going to have to maintain two households, not see your wife and family, be under public scrutiny and have your job tenure at most for three years.

"This will piss off half the population but I don't think that's a reasonable salary to attract the best and the brightest and reward them for all the effort and the stress."

He recommends a starting salary of $150,000, rising to between $175,000 and $250,000 as MPs take on extra responsibilities. He also suggests simplifying the list of 28 different pay rates, which range from $393,000 for the Prime Minister to $154,100 for an opposition party whip with eight MPs (adjustments are made for each extra MP).

The cost of administering such a complex system must be almost as much as the allowances involved, says Brooks. He advocates a streamlined approach, concentrating on key responsibilities at three or four levels, such as select committee chairmanships.

Boston thinks MPs should be paid more but says the nature of the job makes it hard to find any right answer.

"From a taxpayer point of view you want to ensure your MPs are not so lavishly provided for that they lose touch with the struggles of most of those who vote for them. On the other hand you do want to ensure they're paid sufficiently well to encourage very good people to stand.

"I personally don't regard $131,000 a year for an MP as an excessively large salary in this day and age and I think a good case could be made for paying more - but it would depend on the allowances you have on top of that."

SUPERANNUATION

Politicians have a generous superannuation scheme, under which taxpayers provide $2.50 for every $1 they contribute, up to a maximum of 8 per cent of their salary. A few MPs are still on an even more lucrative scheme, which was phased out in 1992.

Brooks describes MPs' super arrangements as an extraordinary burden for the country to carry.

He believes the scheme should be scrapped for future politicians after an agreed date, coinciding with higher pay rates.

Boston is more sympathetic, arguing MPs could be missing out on other super schemes by going into politics. He agrees it could be dropped if MPs were paid about $180,000 to $200,000 a year.

ACCOMMODATION

An Internal Affairs review is expected to fine-tune the inconsistencies in accommodation allowances which allowed English to claim double the usual amount and let other ministers double dip by renting their flats to MPs.

But both Brooks and Boston argue that perk-busting should not interfere with basic principles of employee remuneration.

"It shouldn't cost you money to do the job," says Brooks. Leaving aside the amount English claimed, the long-serving MP was within his rights to get a taxpayer subsidy for living in his own home, especially as he had spent years previously shifting his family from one rented house to another.

The same goes for ministers who rent their apartments to fellow MPs, he says. In both cases, the taxpayer is not paying any extra - it's simply a bad look that two rental subsidies end up in the hands of the same politician.

You also have to be careful about what the apartments are for, he argues. A one-bedroom flat may be suitable for an Opposition MP but not for the Minister of Foreign Affairs entertaining international guests. Some MPs may never have intended to move in themselves.

"If they've bought it as an investment would you punish them even more by saying you've got to live in it?

"I don't want to be mean to Wellingtonians but it's not as if there's a rush of people wanting to go and live there."

Boston points out that although English has virtually settled his family in Wellington, he still has obligations as a Clutha-Southland MP, which probably require him to maintain a large family home there - an expensive arrangement, which is the direct result of his job.

TRAVEL AND EX-MPS

Politicians and their partners get unlimited free air travel within New Zealand and up to 90 per cent off private international air travel, depending on their years in Parliament. Their children get four free return trips to Wellington to see them each year, with unlimited visits for under-fives. They have unlimited use of taxis for "parliamentary purposes", which can sometimes be extended to partners.

Former MPs elected before 1999 also get these big subsidies on their own and their partner's airfares - the perk which provided Sir Roger Douglas' London trip. Current and former MPs and their partners also get free train, bus and ferry trips within New Zealand.

The travel perks for former MPs will gradually disappear as they don't apply to politicians elected in or after 1999. But Brooks says the private travel perks for both current and former MPs, which he compares with top bankers' bonuses during the global credit crisis, cannot be justified.

He defends any taxpayer-funded travel on parliamentary business, including the frequently high costs run up by MPs in remote areas such as the Far North.

Boston says ministers have every right to their chauffeur-driven cars, even though he's disappointed they chose "lavish BMWs" over something more environmentally friendly.

He also thinks the travel perks for ex-MPs should go for ordinary backbenchers and probably ministers. But he puts in a plea for former Prime Ministers, who are asked to make frequent public appearances for many years after they leave Parliament.

EXPENSES

Back in May John Key told his ministers that they would not be claiming expenses for hair cuts and gym memberships on his watch. They also had to pay for their own family meals, gifts for staff and lunch at cabinet meetings, although they could keep the Sky subscription, weekly house cleaning and free firewood.

No such scrutiny has so far been applied to the $14,800 expense allowance that goes to all MPs. They do not have to produce any receipts for a broadly defined list of duties which includes entertaining, memberships, koha, donations and meals (plus clothing and grooming for the Prime Minister, who gets $19,700).

Brooks thinks there is not much point in trying to define legitimate expenses. The important thing, he argues, is that all spending should scrutinised and approved - otherwise you might just as well lump this money into MPs' salaries.

Boston agrees but adds that some expenses may be more legitimate than they look. He remembers going to New Plymouth for his elderly father's birthday and finding that the local MP had delivered flowers.

"I imagine that MP buys flowers for lots of people - and buying flowers is expensive."

JUNKETS

Top of the list would be the annual Speaker's tour, which takes a cross-party group of MPs on an overseas trip, supposedly in the name of parliamentary relationship-building. The rationale took a pounding last year when all four MPs chosen for a trip to Eastern Europe were about to retire at the election.

Boston thinks this example actually shows the system works.

"The good thing was that was publicly disclosed. If people are doing things which the public regard as unacceptable they can criticise and ridicule them publicly, quite rightly, and vote against them."

Until there is any sign of serious reform - unlikely as politicians control the process which sets most of their own pay conditions - this may be the best the public can hope for, starting with full publication of MPs' expenses in future instead of the controlled release last week.

As Key told his ministers a few months ago, the guiding principle should now be that any spending is "able to withstand taxpayers' scrutiny".

Or as Bill English found out this week, if you don't want to have to explain it in public, don't do it.