The most interesting and bizarre part of the Auditor-General’s report on Phil Heatley’s crooked expenditure of public money has been the declaration that the public should pay for politicians to attend and drink at political party conferences. This is a significant line in the sand being crossed – that the costs of parliamentarians attending extra-parliamentary party events should be funded by the public. This shows just how dodgy the parliamentary rules are. And more than this, the rules have been shown that they are so lax that they can be legitimately interpreted to say that the public should pay the bill when politicians buy fellow party members bottles of alcohol. The only problem that the Auditor-General seemed to have with public money spent on such activity is that Heatley paid for it with the wrong account. [Read more below]
Stretching the boundaries of what taxpayers fund
It’s always been an unspoken – or at least, unpublicised – convention that MPs are able to make use of their taxpayer-funded parliamentary resources to attend their political party conferences. Although it’s clearly not parliamentary activity – after all, by definition party conferences are extra-parliamentary activity – MPs charge the taxpayer for their travel and accommodation expenses in attending these events (much in the same way they do when campaigning in by-elections). The Auditor-General has given the green light for such political expenditure.
What’s more the Auditor-General has said that the purchase of alcohol for other party members is also a legitimate parliamentary or ministerial expenditure. John Armstrong has also picked up on this in his New Zealand Herald story on what he calls ‘the mind-boggling 20-page report by Auditor-General Lyn Provost’:
The report effectively gives MPs licence to use the expenses allowance to splash out on wine for their mates at their party's annual conference - in fact, at any party meeting.…. But purchasing bottles of wine for electorate delegates during the Saturday night social at the National Party's annual conference stretches the definition of "parliamentary duties" to a point well beyond public comprehension and tolerance.
- $201 for accommodation
- $154 for meals
- $70 for alcohol
Although the Auditor-General determined that $175 needed to be repaid, the remaining $250 of conference expenditure was unfortunately deemed legitimate.
Further examples are given in the Auditor-General’s report of Phil Heatley’s ministerial extravagance and sense of entitlement. Here’s a section found right at the end of the report that details Heatley’s amazing use of the Internal Affairs VIP transport service:
Mr Heatley’s wife and family travelled from Wellington to Picton by ferry with Mr Heatley’s “self-drive” car. Mr Heatley had initially planned to travel with them but had to fly to Blenheim to join them because of some unexpected business. Mr Heatley used the VIP Transport Service for his travel between Blenheim, Picton, and Waikawa. After the conference, he and his family travelled by train to Kaikoura. VIP Transport Service provided a driver to drive Mr Heatley’s car to Kaikoura. A VIP Transport Service car was also sent to Kaikoura to provide return transport for the driver of Mr Heatley’s car.
Such an example is partly why John Armstrong rightly declares the Auditor-General’s report to be ‘gob-smacking, jaw-dropping stuff’.
Heatley merely charged booze to the wrong taxpayer account
The Auditor-General has ruled that there is no problem with politicians charging their political boozing to the taxpayer, but that they should pay for it out of the correct – albeit limited – MP expense allowance of $15,000 per year. Thus, the Auditor-General makes it sound as if Heatley merely charged the incorrect account. John Armstrong also comments:
Heatley's mistake, it seems, was to use his ministerial credit card when he could have justified the purchase under the guise of "parliamentary business" and dipped into his MP's expenses allowance to pay for the wine.
Yet, by charging the cost of the National Party conference booze to Ministerial Services instead of using his parliamentary expense allowance, Heatley was effectively rorting ‘additional’ money out of the taxpayer. The MP expense allowances are paid automatically, in full, into the MP’s salary, so there was effectively a pecuniary gain to be made by Heatley in using the ‘wrong account’.
Armstrong also elaborates on this point, dealing with the relatively false concept that the MP expenses allowance is an account separate from an MP’s salary:
Of course, had Heatley done so, no one would have been the wiser. It would have been impossible to tell whether he was using money from his base salary or from the expenses allowance. No one would have asked. And Heatley would not have had to resign from the Cabinet. In doing so, however, he has shone light on something which is pretty murky. The hefty expenses allowance is paid as a component of MPs' salaries to ensure they are not out of pocket from carrying out official or parliamentary duties.
This system of MP allowances is clearly becoming untenable, and a major reform is surely probable.
It has to be remembered that Auditor General Lyn Provost (pictured on the right) is not making these rules or even commenting on the correctness or value of these rules, but is just interpreting and helping apply the rules. The rules are written, of course, by the politicians themselves.
The criteria and parameters of how parliamentary resources can be used by the parties are made by the Parliamentary Services Commission (PSC), which is the cross-party parliamentary body that controls the Parliamentary Service and Ministerial Services. It is therefore a case of the recipients of the resources devising the rules on how they themselves can use them, something which might usually be viewed as a conflict of interest. As MP Jim Anderton has pointed out to Parliament, ‘It is not a good look for political parties to design schemes for party funding to get around the laws that they themselves are responsible for making’ (quoted in Sunday Star-Times, 6 May 2001: p.A2). This ‘poacher as gamekeeper’ situation appears to have led to a lax and dubious regime where parties are easily able to convert the lucrative resources into political tools and personal gain.
Whenever you leave the politicians to decide the rules about their own access to resources, they are strongly inclined to write those rules in a way that is rather opaque and general, thus providing themselves with the ability to maximize their own personal or political advantage. This is what political finance scholars refer to as the general rule of political finance regulation: that is, politicians design the rules in their own favour, which normally means making the rules as vague and open to different interpretation as possible.
If this whole area of rules about party spending seems incredibly disorganised and muddy, it’s because it has been purposefully designed to be so. All of the mess is not due to oversight or incompetence, as some politicians and commentators maintain, but due to the fact that the parties in Parliament have consciously designed these scheme under their control to allow them to milk the state to carry out party political functions without ever making rules that clarify this covert funding. It is telling that the parties have made the Parliament Service exempt from the Official Information Act.
You have to wonder what the previous Auditor-General, Kevin Brady (pictured on the right), would have made of MP expenses being made available for funding party conferences and the drinking of booze at them. Somehow he might have managed to interpret the rules in a way that was less favourable to the politicians, or at least recommended significant change. It’s a pity that we no longer have him in the position, otherwise this latest Auditor-General report might have been just as significant as Brady’s 2006 report that led to nearly all the parliamentary parties paying back hundreds of thousands of dollars on electioneering expenditure such as Labour’s pledge card.