Speaker to scrap perks for MPs who break law

Lockwood Smith. Photo / Mark Mitchell

Speaker Lockwood Smith will act soon to ensure MPs and former MPs who are convicted of serious crimes or corruption cannot continue to use perks they qualified for while in Parliament.

Dr Smith sought advice on how to cut any perks following the conviction of former Government minister Taito Phillip Field.

Mr Field was convicted on bribery and corruption charges this month but he and his wife remain entitled to 90 per cent discounts on international travel.

Dr Smith said he had now received advice on the process he had to follow to prevent that continuing.

He is expected to introduce a blanket provision that would use the same threshold as the one that allows MPs to be ejected from Parliament or bars people from standing for election.

That happens if they are convicted for corrupt practices or any crime which is punishable by more than two years' imprisonment.

Dr Smith said any MPs with serious convictions should be stripped of their privileges. "I will be trying to achieve the outcome New Zealanders would want to see in place. I want to deal with it reasonably quickly and will start work consulting on it immediately."

The Parliamentary Services Commission is due to meet next week and the travel perks for MPs elected before 1999 are expected to be up for discussion.

They have come under fire recently, with calls for the life-long entitlements to be revoked. A 2005 "freeze" to ensure members still in Parliament did not continue to ratchet up travel-discount levels was reversed a week before the 2008 election. Dr Smith has said he is now considering reinstating the freeze.

Green MP Metiria Turei has said she will ask Dr Smith to review the entitlements for former MPs, which cost taxpayers more than $1 million a year. Both the Greens and Act believe they should be abolished.

The subsidy, based on the number of terms an MP served, can reach 90 per cent.

TRIPLE WHAMMY FOR TAXPAYERS

Tax expert Jo Doolan says one of the anachronisms in MPs' perks is that as well as paying for the perk itself, the taxpayers are footing the bill for fringe benefit tax on it.

Ms Doolan, from Ernst & Young, said although MPs pay tax on their salaries, they escaped it for many of their allowances and perks, which were not simple reimbursements for actual costs.

But the Parliamentary Service would be liable for fringe benefit tax - which was paid by the employer rather than the employee.

It amounted to a "triple whammy" on the taxpayers, who paid the perk and the tax and also lost out because the MPs' allowances were tax-free.

Ms Doolan said the basic salaries of MPs were not overly generous. But when non-taxable allowances were added in, "they're some of the best-paid people in New Zealand. It means taxpayers aren't really aware of the real amount MPs and ex-MPs are being paid."

She said Inland Revenue had argued in 2002 that MPs' allowances should be taxed on the same basis as those of other workers,

But instead the law was changed to maintain the non-taxable status of such allowances for the politicians.