More on Expenses

So many stories and issues to respond to. First we have:

The Green Party has renewed its call for travel allowances for former MPs to be cut. …

Act MP Sir Roger Douglas, who took his wife on an overseas holiday, put 90 per cent of the air fares on taxpayers. …

Present and former MPs elected before 1999 receive a 60 per cent discount on travel after nine years of service, after 12 years they get 75 per cent and after 15 they get 90 per cent off.

There is no compelling public policy rationale to have subsidised for former MPs. A case could be made for former PMs and GGs (as they get so many speaking offers and charity requests) but there is none for former MPs as a group.

Hence it was a good move that in 1999, Parliament changed the rules and that any MPs elected from 1999 onwards do not qualify for the subsidy.

Despite the popularity of such a move though, I do not support the Greens position which is to apply the change retrospectively to those elected before 1999. The subsidy was part of the terms and conditions they got elected to Parliament on. Now sure removing the subsidy from them would be hugely popular, but it sets a precedent that it is okay to change the rules retrospectively on other issues.

I do think it was politically unwise of Sir Roger to use the perk, once he was back in Parliament. When you are a former MP you don’t have to worry about what the public think, but having re-entered Parliament you do. In fact if he had not re-entered Parliament we would not even know of the trip.

There is a fairly strong case that now MPs expenses get broken down to each MP, so should the subsidies for former MPs. Either way though, as the subsidies have now been stopped for future MPs, the cost of this perk will only reduce over time.

The Press editorial welcomes the new transparency and says generally most expenses are justified. The do say:

It was revealed that Key had run up $172,000 using Crown cars. The Prime Minister’s astonishment at this figure, itself another positive feature of opening the books, and the overall cost of the limousines should cause a rethink of whether they are the most cost-effective way for ministers to travel. Key’s own high car cost is influenced by the reality that, for security reasons, he must travel with two cars, although even this is more modest than the lengthy motorcades of other world leaders. But it might be a better use of resources for more junior ministers to use taxis more often.

Actually it would probably cost taxpayers more if they did this. It all comes down to the difference between fixed and marginal costs. VIP Transport has a number of cars and drivers available. If a Ministers needs to use them, the marginal cost is minimal – petrol and wear & tear. Definitely cheaper than the $2.50/km a taxi charges.

However the DIA have a book keeping charge of $90 per hour or so, for use of VIP Transport, to reflect the capital costs of the cars and the staff drivers.

The problem is that demand for transport by Ministers is uneven. During the working day there may be little use, while Monday morning and Thursday evening there could be 20 cars in use all at once.

So there is no cost saving in using a taxi when a VIP car is sitting in the Beehive basement with a driver being paid regardless of whether he is driving or not. That will cost the taxpayer more money.

To reduce the costs, you would have to reduce the number of cars and drivers in the fleet, and that would mean a decision that some Ministers would not be able to access VIP Transport at times of high demand. And maybe that is what will happen one day, but it will also mean that those Ministers will not be able to have secure conversations while being transported, and in my experience many Ministers do spend most of their trips returning calls on the phone or discussing issues with staff. No easy answer here.

Talking of VIP Transport, Whale Oil has blogged about the mystery of Darren Hughes seen using Ministerial BMWs recently.

Now we have the story around Bill English’s accommodation, which a witty sub-editor captioned “An English Man’s Home is Our Castle”.  Before I talk about this seriously, I should mention that as Bill was being interviewed by the Herald about this, I was with a group of media and press secretaries an we noted Bill was doing his normal arm gestures. I decided to translate these and started a running commentary “And the swimming pool is going to go here, and over here will be the tennis court, and up here the golf putting range and finally we plan to replace the road with a moat. Heh.

Bill, as Deputy Prime Minister, would in fact normally live in Vogel House – currently valued at $4.7 million on Woburn Road. But the Governor-General is squatting there at the moment. If it were not for that, this issue would not even have arisen.

Here is how I see it. Bill is the MP for Clutha-Southland. He has a home on his farm in Dipton. At some stage after he became an MP (I can’t recall when), Bill’s wife and six kids moved to Wellington so they had more time together as a family.This does not make him a Wellington based MP. In fact the law is explicit on this – s72(6)(b) of the Electoral Act states the place of residence shall not change because a person “is absent from that place for any period because of his or her service or that of his or her spouse, civil union partner, or de facto partner as a member of Parliament”.

The backbench MPs Wellington accommodation expense limit of $460 a week is designed to allow an MP to have a small apartment in Wellington, or stay three nights a week in a hotel room. It does not cover having a family home in Wellington, let alone one for a family of eight. So Bill and Mary have been paying rent and/or mortgage costs on having a Wellington home on top of their Dipton home (and yes they do still spend time there).

Now as I said the MPs Welington expense limit of $460 a week is not meant to cover an MP living in Wellington. It is to give them a place to sleep during the week when the House is sitting.

Ministers are different. Many, if not most, Ministers are required effectively to be in Wellington most of the year, and unless they like getting divorced, their families often move to Wellington also. That is why they get Ministerial Houses.

MPs spend three days a week in Wellington around 30 weeks a year (and select committees sometimes on top). Ministers spend close to five days a week, 46 weeks a year. Again that is why they get Ministerial Houses.

Now Ministerial Services owns some properties, and rents others. John Key has, I believe, introduced a rent cap of $700 a week for renting properties for Ministers. AFAIK there was no cap previously.

Now ideally Bill English should rent out the home he owns, in Wellington (for which he paid most of the cost) and move into a Ministerial Services provided home. As I said, he would normally be offered Vogel House (valued at four times his current residence).  This would avoid any hint of him being seen to gain money from being a Minister by having Ministerial Services rent a property he owns back to him.

But his explanation of why he did not want to move house again is pretty good. Having previously rented, they had moved house four times in the last two years and so they decided to purchase it (through their family trust) and he isn’t keen on putting the family through another move.

Bill actually could make more money if he moved into a Ministerial Services home, and rented his Wellington property out as it is quite possible he could rent it for more than $700 a week. Seven bedroom properties tend to cost a lot. So he is not financially benefiting from staying put.