With salary packages of between $180,000 and $500,000, New Zealand Members of Parliament currently earn more than 99% of their constituents. This gross economic inequality between voters and their representatives is due to a combination of factors, but mostly it reflects the belief of MPs that they are ‘professional politicians’ rather than ‘public servants’ and that they therefore should be compensated with a market-based remuneration in line with those in other professional careers.
A large part of their salary package comes from their many opaque allowances and expenses, which have been surreptitiously added to their incomes over recent decades. The holiday travel subsidy that MPs legislated for themselves – in which they have received up to 90% off international flights, and for which National MP Pansy Wong has just resigned her Cabinet post over – has been one of the most contentious, illogical and flagrant ways in which MPs have attempted to inflate their personal affluence. Yet with the mounting public awareness of the rorts and misuse of taxpayer-funded parliamentary resources, together with recent increasing awareness and concern about economic inequality in New Zealand, there has never been a better time for the public to demand the rollback of MP salaries and perks. And the abolition of the international holiday travel subsidy has been a good place to start, although the devil is very much in the detail of how the perk is axed and how these supposedly minor details are sorted out.
This blog post outlines why the perk had to be axed, but more importantly it highlights the many crucial issues that are involved in the process of reforming the MP perks system. It does so by putting forward “10 pertinent questions” that the public and politicians need to consider, and also attempts to provide some detailed answers to them. In brief, this extensive blog post argues for the holiday perk to be totally axed without compensation, exemptions, or bureaucratic reviews. Former MPs need to be stripped of their entitlement, no new travel scheme should be re-established to replace the rort being axed, and we should avoid falling for the populist proposal that so-called ‘independent bodies’ (such as the Remuneration Authority) should determine MP pay, allowances and perks. [Read more below]
Crucial questions about axing the perk
After profiting from the perk for many years and refusing to allow MP international travel to be questioned or even to allow the details of such holidays to be made public, party leaders such as Metiria Turei, Phil Goff, Rodney Hide and John Key seem to have suddenly had a ‘democratic epiphany’, and they now pretend to be leading the debate as they scramble to catch up with the public’s desire to roll back the runaway MP pay, allowances and perks. So, now the whole ‘political class’ (i.e. the MPs, former MPs, their staff, and their associates and cheerleaders) seem to have come up with a cozy agreement to supposedly ‘get rid of the perk’ but in reality retain some of its worst elements. Thus we should remain skeptical about the decisions currently being made and watch out for the rather large fishhooks involved.
Therefore while this new political consensus amongst the elite should definitely be seen as progress (and thus be celebrated), the devil is very much in the detail, and there needs to be an awareness that the particulars of how the perk is axed could have very different outcomes for the MPs and parliamentary democracy. The system of MP remuneration is a complex one, due to the many elements involved and because of the highly opaque way that the politicians have designed the system. And so its now vital to examine exactly how the politicians plan to axe the perk. Yet perhaps not surprisingly, few politicians seem to want to deal with any of these salient issues in any real detail. Instead, they seem to want to just make rather populist pronouncements in which they pusillanimously ‘kick the issue for touch’ by calling for independent reviews and other equally mealy-mouthed approaches to score political points. Essentially many of the politicians are grandstanding on the topic without actually offering any real substance on the issue of the travel perk.
Question 1: What are the origins of the holiday perk?
Answer: The perk was an illegitimate rort set up in the 1970s to surreptitiously inflate politicians’ income – it was not really ‘in lieu of a pay rise’ at all. In fact although there was indeed no pay increase for MPs in 1972 when the perk was introduced, in the previous year there had been a 12% increase, and in the following year there was a 45% increase.
Question 2: For what purpose was the perk established and maintained?
Answer: The purpose of the perk was never very clear – but it has since been used for a mixture of the following purposes: 1) private holidays, 2) parliamentary business, 3) non-parliamentary partisan activity (such as learning election campaign techniques in foreign elections, and 4) pursuing private business interests.
Question 3: Have MPs really been paying for their own perk?
Answer: The notion that the perk is self-funded is a myth. MPs have never paid for it, but the Remuneration Authority invented this abstract logic in 2003. No system has ever been set up to actually ‘deduct’ any money from MPs’ salary payments. The notion that the perk is ‘not actually a perk’ is a very recently developed myth.
Question 4: Should MPs be compensated for losing their perk?
Answer: There should be no compensatory pay rise for MPs – if this were done it would suggest that the perk was legitimate in the first place. (If anything, MPs and ex-MPs should have to pay back the rebates that they have previously personally benefitted from under this scheme!).
Question 5: Are MPs already paid too much?
Answer: MPs currently receive remuneration packages of at least three times the average wage. Before the various additional perks were created in the 1970s, MPs received only twice the average wage. An effort now needs to be made to roll back the excessive remuneration packages so that parliamentary representatives are not afforded lifestyles out of kilter with their constituents.
Question 6: Should ‘legitimate’ parliamentary international work travel be exempted from the abolition of the perk?
Answer: MPs currently have other very generous budgets for which to use for legitimate international parliamentary travel. The Office of the Clerk already pays for official inter-parliamentary trips, and the Parliamentary Service currently provides all the parties with a total budget of $38.3m to spend on things like international travel. No further scheme is necessary, and establishing yet another dedicated international travel fund is likely to lead to further rorting.
Question 7: Should ex-MP travel be exempted from the abolition?
Answer: There should be a total abolition of the holiday perk for all MPs (including those elected prior to 1999) and there is no credible justification – legal or otherwise – for maintaining this rort for any MP elected prior to 1999. MPs are not actually ‘employees’ and it is a fiction that ex-MPs have any contractual entitlement to the perk.
Question 8: Who should determine MP pay and allowances?
Answer: The most democratic and effective mechanism for deciding MP pay and allowances would be to have elected MPs determine their own remuneration, via a select committee. Of course this should be done with total transparency, accountability, and with full public debate. Although it may be counterintuitive, a large part of the problem with the MP remuneration and perks system is due to the involvement of the Remuneration Authority. In general, handing over the responsibility to a bureaucratic review or body is a cop-out on behalf of MPs and is designed to favour their own financial interests by producing higher remuneration that the MPs can weakly claim to have played no role in.
Question 9: How much transparency should there be for MP travel?
Answer: There needs to be total transparency in all politician travel when it involves parliamentary funding. For example, all taxpayer-funded (domestic and international) flights should be publicly declared, just as it occurs in other countries. A public internet-based register should be established to make the details available. But most importantly, Parliament’s exemption from the Official Information Act needs to be abolished, because despite the very limited increases in transparency in the last year, the details of the vast majority of parliamentary expenses and resources remain shrouded in secrecy.
Question 10: Why are MPs suddenly in favour of abolishing their own perk?
Answer: MPs from across the political spectrum have suddenly become champions of change because of the pressure from the public. A whole range of reasons has contributed to the change. But more than anything, self-interest has suddenly turned to self-preservation in guiding politician pontification on the perk. Certainly the changes that are currently occurring seem to involve many myths and self-justifications being spread by everyone from Lockwood Smith through to Metiria Turei.
The following sections elaborate upon these ten questions and answers.
1) What are the origins of the holiday perk?
In order to evaluate the international holiday perk and form an opinion on what reform is necessary, it’s worth looking at the origin of the perk in order to understand its real nature. The NZ Herald’s Claire Trevett has provided an excellent summary of the perk’s origins in this Q and A on MPs' perks. She says that ‘Cabinet approved it in 1972 after a request from a committee of cross-party MPs which got the idea from Australia, whose MPs had subsidised travel to New Zealand’.
It’s important to note that initially the scheme was much less generous, but was constantly expanded by self-interested MPs:
The initial scheme - for both sitting and former MPs - was less generous than its modern equivalent. It did not include spouses and an MP had to have served for at least three terms (now one term for a 25 per cent discount) to get any discount at all. Only those who had served more than seven terms got the highest 90 per cent discount (now available after four terms.) It changed in the mid-1970s and 1980s to become more generous and flexible - spouses were included and discounts were provided at an earlier stage of MPs' careers.
So is it true that the perk was introduced in lieu of a pay rise? Yes, perhaps it was initially. But more importantly, all the so-called MP refusals of big pay increases were actually only ‘delays’ rather than ‘denials’:
There were Government-imposed wage freezes and restraints throughout much of the 1970s. Although MPs' own wage increases were not technically covered by these, in 1971 they took a 12 per cent increase instead of the 19 per cent they were entitled to. They also took a lesser amount in 1972, the year the travel allowance came into being. In 1973 - a wage freeze year - a big show was made of refusing a large pay increase of 45 per cent for backbenchers and 30 per cent for ministers, recommended by a royal commission. However, it was quietly put through in March 1974, before the wage freeze ended, and was backdated a year. Until the mid-1970s, MPs' salaries and allowances were reviewed every three years by a royal commission. In the intervening years, cost-of-living adjustments applied. In 1974, MPs turned down a 9 per cent adjustment for the cost of living but further significant increases were given by the royal commission in 1976 to help catch up.
So in the end, did this substantial and illogical perk really make up for a lower rate of pay, as claimed by the MPs? The verdict on this question, according to Trevett is ‘no’:
Although MPs did take smaller increases in some years, these were subsequently compensated for in "catch-up" increases. That also does not account for subsequent Governments retaining the perk through better economic times and higher pay rises and also broadening it to apply to more MPs.
Therefore it is clear that the establishment of the cheap foreign holiday flights was essentially a disingenuous pay rise for the MPs - they granted it to themselves in lieu of a pay-rise that they knew wouldn’t be seen as legitimate by the public. Thus, the origin of the travel perk is very instructive – it was always part of an underhand maneuver to artificially enrich MPs. And whenever the public has been allowed just a glimpse of how the perk is used they’ve been able to get a sense of the flagrant misuse and abuse.
2) For what purpose was the perk established and maintained?
The surreptitious way in which the perk was introduced and then expanded has meant that it was never very clear what the purpose of the subsidy has been for. Was it purely for recreational purposes? Or was the rebate supposed to be used for parliamentary or party-related purposes? And to what extent have MPs and their spouses made subsidized trips that involve furthering their own private business interests? It appears that MPs have been using the perk for a combination of these purposes. Blogger David Farrar has said that ‘Some MPs do use their travel perk for a mixture of work and play – such as travelling to meet colleagues in other countries’.
The politicians themselves have been incredibly ambiguous – or maybe just confused – about the purposes of the perk, sometimes sticking to the line that it has been used for holidays, and sometimes defending it as being used for parliamentary or party-related work. In fact even Parliament’s Speaker has had a confused line on whether the MP holiday perk pays for political purposes (and hence is parliamentary and legitimate) or private holiday travel (and thus of no interest to taxpayers). He has essentially and inconsistently said that it has been for both. For example he has lamented the declining use of the perk, saying, according to one news report, that this reduction is ‘detrimental to democracy because overseas travel was good for Parliament’. In fact Lockwood Smith actually altered his official Parliamentary Directives so as to broaden the purposes of the perk.
Similarly, the Green Party has recently claimed to have a caucus rule not to use the subsidy for personal holidays but only for trips related to their job. Such stances go against the argument that the travel perk is for private use and that it is not funded by the public.
There is also the rule that the trips are not to be used for private business purposes – and that, of course, is why MP Pansy Wong has had to resign from Cabinet. Yet although the opposition MPs have emphasised the clarity and simplicity of the rule – mainly in an attempt to attack Wong – this probably overstates the case. In reality, the MPs have normally designed rules about using taxpayer resources that are as ambiguous as possible, and it is likely that all sorts of private business occurs on such international trips. So what Pansy Wong has been caught out for – perhaps almost randomly – is possibly what a lot of other MPs and their partners have also been guilty of. In this regard, Cameron Slater on Whale Oil has astutely pointed out that ‘plenty of other MPs and ex-MPs will be quietly hoping that interested media and bloggers don’t start going over their ravel expenses and matching them to meetings or document signings or photos in social media’ – see his post, A lot of nervous MPs. Slater also points out that – rightly or wrongly – Labour’s campaign against Wong has had the effect of determining that the criteria for determining that an MP’s international trip was fraudulent actually now just entails finding out that an element of personal business occurred in the trip:
Are they really saying that when Peter Davis travelled on his spouses perk that he never, not once, ever con ducted any business or research or even held a 10 minute meeting in the Koru Club related to his line work? Or any number of the MPs who hold directorships, trustee ships or interets out side of parliament never took a call on their phone that took 5 minutes while they were on holiday and discussed business or otherwise. Pete Hodgson did us all a favour by attacking Pansy Wong, he ensured that every other MP in parliament is now looking over their shoulders, as well they should.
3) Have MPs really been paying for their own perk?
In the recent controversy over whether taxpayer-funded MP overseas holidays should be made public and then whether to abolish the perk, there has been a rather disingenuous argument put forward by MPs to say that the subsidy is not really ‘a perk’ because it is factored into the MPs salary. The MPs say that rather than being a taxpayer-funded rebate, the subsidy actually comes from the politicians privately pooling their own money together to collectively fund the airline ticket subsidy.
The Speaker of Parliament, Lockwood Smith – echoed by nearly every MP that has commented on this issue – has defended the existence and privacy of the perk by saying that a figure of $9646 is ‘deducted’ annually from the pay packets of each MP. This argument is made on the basis that when the Remuneration Authority increased MP pay back in 2003, it refrained from giving an even higher increase on the basis of this obscure accounting notion relating to perks. In this regard, Prime Minister John Key has made the following (rather vague and convoluted) statement: ‘Compensation is effectively reduced by the private component and therefore when an MP uses that private component they're not actually taking a benefit because they fundamentally paid for it’. And summing up the situation, ‘Dr Smith said he disagreed with suggestions the travel rebate was a perk, as it was something MPs had paid for themselves’
Smith’s argument has been that therefore because the MPs fund the subsidy with their own private money this means that the matter of the holiday subsidy is a private one, and that the public has no right to know any of the details about its use: ‘It's interfering in their privacy ... and by the time they can use it significantly, they have contributed so much to it’.
In line with this, the Speaker has used the example of the scandal that broke out over Rodney Hide’s use of the holiday perk to take his girlfriend on a trip to Hawaii, London, Canada and Los Angeles, saying that Hide’s use of the perk was actually right and proper, and that the public should in fact never have even been allowed to know about it. This is why the Speaker (in consultation, it must be emphasized, with all the parliamentary parties) recently announced that he would no longer allow any of the details of the perk’s use to be made public.
In misjudging the public mood in favour of greater transparency, Smith’s announcement went down like a lead balloon. Few people accept his arguments that the holiday subsidy is not a perk paid for by the MPs themselves. Therefore, Smith had to quickly instigate an embarrassing U-turn and agree to release the figures.
Incidentally, the Speaker’s line that the holiday subsidy should not be labeled as ‘a perk’ seems to be a very recent invention on Smith’s part. After all, just three months ago Smith went on TVNZ’s Q+A politics programme and very clearly admitted that the international travel subsidy was indeed a ‘perk’. Here’s the transcript from his interview with Paul Holmes:
DR SMITH The one privilege, the one privilege members get after years of service is that travel subsidy, and I think actually they deserve it.
PAUL Right, so it is a perk.
DR SMITH It's a perk, but the cost's small compared to salary increments, small.
This whole argument that MPs pay for their own perk is incredibly disingenuous – as a recent Dominion Post editorial has opined, ‘It is an argument that bears a passing acquaintance with the facts’ (See: MPs shortsighted on pay and perks). The Dominion Post also says that ‘In reality, it is a perk that has been brought into existence under the radar by MPs trying to artificially increase their remuneration’. Likewise, an Otago Daily Times editorial has argued that the perk is a public subsidy, and that ‘It is mere sophistry to suggest otherwise’.
In fact, if the international holiday perk really is self-funded (and thus truly paid out of part of MPs' income), then we would expect the holiday scheme to have the following aspects:
- The alleged deduction of $9646 would be taken out of MPs’ after-tax earned income – but this is not the case.
- The deductions would be transferred into a separate consolidated account – but no such account exists within the government or with any credit union.
- The annually unused portions (which Lockwood Smith keeps referring to) would be retained in the holiday fund – instead, to the extent that such amounts actually exist, they are essentially returned to the state’s consolidated account to be used by the government as it sees fit
- There would be some sort of proportionality in what MPs put into the fund and what they draw out – but there isn’t. Instead, supposedly a lump sum is ‘deducted’ from MPs pay and they draw on this in wildly different amounts, with no apparent reconciliation.
So, no, MPs do not actually have $9646 ‘deducted’ from their salaries each year as Lockwood Smith and the political class have suggested. If such a process really happened then a thorough accounting system would exist for this separate pool of money.
4) Should MPs be compensated for losing their perk?
The political class has been quick to put forward a unified political line that ‘logically’ politicians should receive some sort of compensation for losing their entitlement to subsidised foreign holidays. Those pushing this line the hardest have been the Speaker Lockwood Smith and MP Rodney Hide. They have advocated that an on-going cash payment be made to MPs in lieu of taking the holidays. David Farrar has also been upfront in his belief in compensation via an increase in MP pay: ‘the solution is to abolish the travel perk and increase the salary – not to try and keep the details secret.’ This was also the recommendation put forward by the recent so-called ‘independent’ (4th) Triennial Parliamentary Appropriations Review that came out in June that was headed by ex-Speaker Doug Kidd.
Even John Key has – until very recently – been upfront in suggesting that a salary rise is the likely result of getting rid of the perk. Some time ago the Prime Minister also suggested that he favours the perk being monetised. One newspaper reported his view by saying: ‘The government had tried to move to a system that coverts more compensations to cash, he said. ''I actually think that's fundamentally the right way to go.''’ More recently, of course, Key has backpedaled on this, stating his preference for only a ‘modest increase’ or for no increase at all. He has stressed that this is his personal opinion.
Interestingly, however, the Prime Minister appears to be about the only parliamentarian that has even vaguely dissented from the strong political elite consensus that favours leaving the Remuneration Authority to provide compensation for the axing of the perk. Notably, even the Greens have been rather silent or vague on whether compensation should be provided. In fact Metiria Turei has even admonished the Prime Minister for suggesting that no – or very little – compensation should be given. Turei wants the Remuneration Authority to be left free to decide whether to compensation should be given (which everyone knows they will be in favour of).
No doubt the public sees the issue very differently to the political class and surely there will soon be a public opinion poll that will indicate this. In fact there will be significant public resistance to the idea that there should be a pay rise deal done to soften the blow to MPs of their perk being axed. And the public would certainly be correct in such a view, because if compensation was given this would send a signal that the perk was a legitimate one to start with (when in fact it was, as shown earlier, purely a rort).
The New Zealand Herald is correct when it says in its recent editorial – see: Secrecy about MPs' travel invites disgust – that ‘MPs are adequately paid as it is. They should give up the holiday travel perk without compensation’.
So while it is good that MPs have finally come round to seeing the need for abolition, all of them need to be asked if they are also advocating a corresponding increase in MPs salaries. So far the politicians are conveniently vague or silent on this central question about the perk. Of course it’s very easy – and maybe even rather disingenuous – for MPs like Phil Goff or Metiria Turei to pontificate on the need to abolish the perk but then to avoid the issue of whether they believe that MPs should get a pay rise or not. Such MPs are essentially playing a devious game because although they are seeking to ride the bandwagon of popular sentiment, in reality their statements lack much substance at all.
Furthermore, even if there was to be compensation of an increased salary for MPs, the 10% increase that has been widely proposed is rather dodgy. Where is the evidence that a whole 10% increase would be required? The figures for the last financial year put the perk at $433,000 – rather than the $1.176 million quoted by the Remuneration Authority – which, divided by 122 MPs works out at $3549 per MP. This suggests that the Remuneration Authority is rather wrong in their calculations - it looks like a compensatory increase would be more like about 4%.
5) Are MPs already paid too much?
In determining issues such as what to do with the many MP expenses and perks it is crucial to contextualise the discussion in terms of how much New Zealand politicians are already paid. While undoubtedly MPs are paid far in excess of the average worker – and that the differentiate has constantly been increasing in recent decades - at the moment it is very difficult to determine exactly how much a regular MP earns. This is because the MPs in conjunction with the so-called independent Remuneration Authority have created a remuneration system that is based around a number of archaic and opaque payments and perks. And so although some media reports cite backbench MPs as earning $131,000 per year, it is very important to recognize that this is only their basic salary, and on top of this they have the following entitlements of which some could be considered remuneration:
- $26,200 of Superannuation contributions
- $1176 of personal domestic travel (calculated as 5% of their total domestic travel expenditure)
- $3449 of spouses' domestic travel (calculated as 45% of total spousal domestic travel expenditure)
- $9646 of international holiday travel
- $14,800 cash MP expenses payment
- $24,000 accommodation allowance for those ‘not from Wellington’
MPs might argue that some of these payments are not part of their remuneration – such as the accommodation allowance – but this is a problematic argument to sustain as the public has clearly seen that the accommodation supplement is often used to pay off a mortgage on their own house in Wellington, which is a very lucrative business for the MPs. And sometimes the MP has essentially shifted to Wellington (moving their families there) and thus the accommodation payments are actually therefore subsidizing their core ’home-base’ accommodation rather than their ‘work expenses’. Likewise, the almost-$15,000 MP Expenses payment is often claimed to be a recompense payment for work costs, but there appears to be little evidence for this. What’s more it’s also a cash payment that is made as part of MP fortnightly salary payments without any real directive or accountability about what it is spent on, and it therefore essentially becomes remuneration for the MP. (For an alternative view, see David Farrar’s blog post here).
Depending on which of these allowances you include in the remuneration package, MPs earn something like $180,000 to 200,000. This is, of course, only the lowest parliamentary salary currently drawn upon – most MPs receive a lot more due to the many other financial add-ons that are supposed to reward them for additional parliamentary responsibilities. For example, the following responsibilities involve additional payments that range significantly in size:
- Party whips
- Select committee chairs
- Party leaders and deputies
- The Leader of the Opposition
- Cabinet ministers
- Ministers outside of Cabinet
- And the Prime Minister
In New Zealand, because of the large size of the Executive together with all these other numerous paid responsibilities that have been created means that the vast majority of those that enter Parliament end up earning well over $200,000 (depending on which allowances you include).
In contrast to the MP salary packages of $180,000 to $500,000, the average income is xxx. As I’ve argued in the blog post entitled ‘Politicians should be paid to represent not become careerists’, this makes the politicians quite out of touch with those that they claim to represent. As a Dominion Post editorial has said, when current MP salaries are compared to the average wage, ‘That gives even the meanest MP an income higher than 99 per cent of his fellow citizens’.
In fact for the last four decades, MP remuneration packages have been skyrocketing when measured against the average wage. Historically, MP salaries have tended to be about twice the average wage. Back in the 1921 (which is the earliest MP salary details that I can find) the average wage was £453 per annum, while MPs had salaries of £1000. By 1972, when the international travel perk was introduced, this relativity had been retained: the average wage was $3,518 and the salary of MPs was $7,604. From this point onwards there was an attempt to professionalise politics, which included inflating MP salaries, introducing the Remuneration Authority, and so now in 2010 the embourgeoisement of politicians means that even the lowest paid MP earns something like at least three times the average wage.
It is interesting therefore to see some of the political class advocate even higher salaries for politicians. Interestingly, Mike Williams has come out in favour of paying MPs much more. Williams was the Labour Party president until 2008 and was responsible for recruiting candidates for Labour. It is surely quite an indictment on his party that Williams now says he had great difficulty finding potential candidates because the people that Labour wanted to go into Parliament often weren’t willing to accept such significant pay cuts to take up such a career. It suggests that the type of people Labour wishes to recruit tend to be both extremely rich but also extremely self-interested if they’re not willing to go into politics for only $180,000 to $500,000 per year. This nicely sums up the problem of contemporary parliamentary politics – it’s all about self-interested careerists.
6) Should MPs’ ‘legitimate’ international work travel be exempted from abolition?
One objection to the abolition of the international holiday perk has been that the subsidy has made parliamentary-related travel possible. And that is why the MPs have now decided to retain the international travel perk for so-called ‘legitimate parliamentary’ trips. Certainly many politicians have recently been going to some lengths to justify their overseas trips on the basis that they are meeting up with other politicians (and are thus on parliamentary-related business). For example, recently Trevor Mallard travelled to the UK to watch the All Blacks play and he specifically drew attention to the fact that he had also set up some political appointments in the UK.
Using these so-called work purposes as a justification, many MPs are saying that although they have wanted the travel perk, they argue to retain a discount for work trips. This is especially the case for Labour and National MPs.
So how should MPs be funded when they travel overseas for legitimate parliamentary activities? The reality is that the rebate is not actually required for parliamentary trips to take place – budgets already exist for this purpose. First, the Office of the Clerk fund all inter-parliamentary trips. These are the trips that we often hear about – with cross-party delegations travelling to visit other parliaments, or Hone Harawira visiting Brussels (but taking a side-trip to Paris). Even some of that travel is probably unnecessary (as it often seems to amount to either junketing or pointless official engagements), but at least it is partially transparent.
Second, all parliamentary parties have incredibly generous taxpayer-funded budgets that go under the title of ‘Party and Member Support’ (which include subcategories of ‘Leaders Budgets’ etc). These budgets fund parliamentary activities and are already supposed to pay for work-related international travel. The budgets are rather considerable – for example in the year ended 30 June 2010, Labour MPs had a parliamentary budget of $6.1m, National's backbench MPs had a budget of $7m, the Greens had $1.2m, the Maori Party $0.8m, and Act had $0.6m. (Of course, on top of these budgets, Parliamentary Services provides a range of other expensive ‘Services to MPs’ such as staff and communications, and in the year ending 30 June 2010 these budgets amounted to an additional $17m).
There are also many other sources of funding for overseas trips for MPs. Foreign governments, in particular, often fund politicians to travel to their countries. For example in 2009 Green Party co-leader Russel Norman accepted a political donation from the US State Department to fund his educational trip to the United States. While accepting such political funding might be unwise or unprincipled, it certainly seems to be used by MPs from across the political spectrum.
Therefore the MPs have absolutely no need for additional travel budgets. In fact they probably should not have been using the (now axed) international travel perk for parliamentary purposes anyhow. For example when the Green Party had a caucus rule to use the (uncapped) international holiday perk for trips related to their MPs’ jobs, arguably they were essentially rorting the system in order to save money in their (capped) parliamentary budget.
Furthermore, the so-called legitimate parliamentary travel is often actually partisan-political travel and should not really be funded by the taxpayer. As David Farrar has said, much of the current travel falls into this category. And when MPs travel overseas to learn the latest election campaigning techniques then surely it's pretty hard to see how this should be funded by *any* parliamentary budget. What’s more, by having a separate ring-fenced budget for parliamentary travel you leave such travel open to abuse. In this regard, David Farrar sensibly argues that ‘it is vital that any money for travel not be ring-fenced’.
7) Should ex-MP travel be exempted from the abolition?
There appears to be little public support for what one writer has described as ‘a group of superannuated Kiwi MPs endlessly jet-setting around the world at the expense of the taxpayer’. Yet the political elite have so far decided to continue to allow this rort to continue. Currently any MP who was elected prior to 1999 can qualify for having discounted international travel, depending on how many parliamentary terms they have served.
Currently there is something like 120 former MPs using the perk. There are also 32 current MPs that have retained the travel perk via the exemption.
In terms of its origins, according to Claire Trevett, the travel perk was also brought into being at the same time as the general perk for serving MPs. It was initially more generous but had to be wound back due to its abuse: ‘The scheme for former MPs was initially uncapped but two ex-MPs made such excessive use of it that in 1977 it was restricted to the cost of a return first-class airfare to London and 12 domestic trips each year. In the mid-1980s it was reduced to a business-class return trip ticket’.
There seems to be no good justification for this perk to continue for ex-MPs. Association of Former Members of Parliament have lobbied for it to stay.
Association president Graham Kelly said, ‘They were given in lieu of pay increases and they were given also because MPs did not have electorate support and their spouse and themselves had to deal with constituents unpaid, in their own home’. In this same manner, the Speaker Lockwood Smith has also pushed this line very strongly – so strongly in fact that Gordon Campbell has been able to nicely satirise it like this:
On RNZ this morning, Speaker of the House Lockwood Smith took us back down memory lane to a bygone era when MPs lived in log cabins and traveled by horse and buggy around their vast domains, while members of their extended family licked the stamps and ran errands through the snow on their behalf, to keep the family’s political enterprise ticking over… And in return, a grateful nation compensated MPs with heavily subsidized business class travel to overseas holiday destinations of their choice. Or something like that. Given their early hardship out on the political frontier, should such individuals now have their travel perks wrenched from their grasp, while in their dotage? Smith thought not. I’m exaggerating what Smith actually said, but not by much
But for the moment the politicians seem intent to retain it. The Prime Minister has said, ‘Those people have now left Parliament and it would be very difficult for us to go back and rewrite history’. He has also sought to justify it’s continuation strangely saying, ‘Submissions have supported the view that they should keep existing rights’. It’s not clear what submissions the Prime Minister is referring to – but it could be the upcoming publication from the Law Commission review which apparently will also recommend that the holiday perk not be axed for ex-MPs.
8) Who should determine MP pay and allowances?
Who is best placed to decide on MP pay, expenses and perks? Parliament’s Speaker, an ‘independent’ professional bureaucracy, or democratically by the public (via the political parties and MPs in Parliament)? The last option may initially appear to be the least desirable solution to pay and perks, and certainly it is not a proposal that anyone seems to be currently considering. Yet what is actually required in order to reform the system is to see it democratized and opened up to full view – and that can only really be done via our actual elected representatives. After all the main problem with the current system is not actually that MPs are involved in establishing remuneration and perks, it’s that the whole decision-making process and the use of the resources is kept firmly behind closed doors. The best solution, therefore is to have a select committee take charge of these issues. This would allow public input and a full public discussion to occur. What’s more all the political parties and MPs would have to justify their own stances on the level of MP pay and perks to the public at election time.
Instead, at the moment there is a mania amongst politicians to call for an independent body to review or oversee MP pay and expenses. Green Party co-leader Metiria Turei has put out countless media releases and given countless speeches and interviews in which she repeats her mantra of the need for an ‘independent’ this or that in regards to MP expenses and perks. Now Phil Goff and John Key have caught on, and also speak on high about the need for an independent review or body to look after perks.
Of course it’s always suspicious when all the political parties are singing in unison about a solution to their own funding and remuneration. In this case it’s because the concept of an ‘independent body’ is the latest ‘magic’ populist trick that politicians invoke whenever they need to sound fair minded and magnanimously ready to put rational logic ahead of their own self interest. It’s a con-trick of course. More often than not it’s really about trying to remove the issue from the public arena and put it again behind closed doors where it can be more carefully managed. Thus the ‘cult of independence’ in parliamentary politics is really a devious tool to take power away from the public.
The tactic of establishing independent bodies, taskforces, reviews and so on is not just fashionable in terms of political finance problems, but is generally the way that contemporary public policy is made in our ideologically-timid era. While the Green Party are probably the loudest proponents of outsourcing all political problems to so-called experts, the last Labour Government also did so extensively, and the current National Government has probably put more such mechanisms into practice than anyone else. This has especially been the case with the Government’s remarkable cluster of policy working groups, which has included the Tax Working Group, the Welfare Working Group, the Housing Shareholders’ Advisory Group, and the Savings Working Group. There’s also been a huge number of other lesser bureaucratic reviews set up by National in lieu of political leadership. As Deputy Labour Leader Annette King has recently pointed out in a media release entitled Government Struck Down By Reviewitis in which she points out that ‘The National-led government has become a government of endless meetings, reviews, taskforces, action groups and pilot studies’ and ‘In fact, in the two years National has been in office it has undertaken 87 reviews at last count’.
This preponderance for reviews and independent bodies reflects the techno-managerial nature of contemporary politics. Because our politicians and political parties no longer have their own visions, strong ideologies and principles – or are at least afraid to speak them – they rather cowardly turn to technocrats to solve problems. But it is simply not the case that such supposed experts appointed to supposedly ‘independent’ bodies really do constitute any sort of neutral or independent advice. In this regard, research done by Sarah Martin has shown how the Government’s policy working group process reflects the decline of stated ideology amongst politicians:
It is interesting to note that the National Government was elected without a strong policy framework of its own; in essence the use of working groups has filled a vacuum between public service policy provision and policy developed by the National Party itself. Ultimately therefore, National Government policy in areas of significant public interest will not necessarily reflect a pre-election manifesto, nor will it necessarily reflect the best of free and frank advice offered by a neutral public service. Importantly, Bill English welcomed the way that the process took the political sting out of the tax policies that arose from the TWG’s work; a package of tax reforms was implemented ‘without causing a public backlash’ (English 2010a). English obviously considers this as one of the key achievements of the working group model: the de-politicisation of highly political decisions. Using working groups to lead policy development in areas of critical public interest has enabled the National Government to mask the ideological nature of the reforms with the technocratic credentials of the working group members.
The Remuneration Authority scam
To be added to later….
9) How much transparency should there be for MP travel?
To be added to later….
10) Why are MPs suddenly against their own perk?
To be added to later….
To be added to later….
NOTE: the blog post above is only a first draft, and will soon be altered and/or extended. And because of the deliberately opaque and confused nature of much of what is being examined here, and also because it’s a quickly evolving subject, there will be all sorts of inaccuracies, mistakes, and questionable analysis. But I am very happy to be corrected on any thing in this blog post and I welcome constructive criticism.