MPs cling on to a free ride

THOSE IN POWER: Promises of perk-busting seem like a distant memory.
THOSE IN POWER: Promises of perk-busting seem like a distant memory.

John Key promised a new era of openness over MPs' perks, saying they would be set by an independent body instead of by the MPs themselves. Now a select committee has gutted the bill and returned the control of perks to Parliament. Anthony Hubbard reports.

John Key promised a new deal over MPs' perks nearly three years ago. No longer would MPs decide the perks themselves. Instead, an independent body would do it.

The perks have long caused scandal and outrage, especially the travel allowance. MPs fly free in New Zealand, even if they go to Queenstown on a skiing holiday.

Mr Key said in late 2010 that the system needed to be reformed.

The Law Commission had recommended the independent Remuneration Authority should set travel and accommodation expenses for MPs. At present they are set by the Speaker of Parliament, an MP himself.

Critics said MPs determining their own perks broke the rule that nobody should be judge in their own case.

Public criticism of the system has been bitter. Cartoons regularly showed MPs as pigs with their snouts in the public trough.

"We just can't go on like this," Law Commission head and former prime minister Sir Geoffrey Palmer said in December 2010.

The Government introduced a bill into the House last year to make these and other changes, hailing it as "a significant improvement in modernising the law".

MPs from all sides of the House praised the bill. "We must never forget where we come from and whose money it is that we are spending," said National MP Chris Auchinvole.

Now a select committee has gutted the bill, sending the control of the perks back to the Speaker.

Political scientist Bryce Edwards says he was very surprised by the U-turn, because MPs had made "a big deal" of the switch from the Speaker to the Remuneration Authority.

"It's bizarre, isn't it?" he told The Dominion Post. "I thought it was universally agreed upon, everyone thought it was a very sensible thing to do . . .

"It's a bad look for it to be coming back to the MPs."

Sir Geoffrey, now retired from the commission, says he was "sad" that its recommendations have not been followed.

Mr Key, however, has backed the about-turn. "The prime minister and Cabinet accept the recommendation of the select committee, and Government MPs will vote for it in the House," a spokeswoman for the PM says.

So what is going on?


Some MPs had long argued that the ability to travel was an essential part of their job, and control of it should not be entrusted to a body outside Parliament.

It seems that this argument has won out once again, although it has been repeatedly rejected by many bodies that have reviewed the system, including the Law Commission.

Labour MP Ruth Dyson, chairwoman of the government administration select committee that changed the bill, says: "Travel to and from Parliament is part of your job, and the allocation of resources to perform your job is something that the Speaker authorises."

Asked if she sees a problem with MPs deciding their own entitlements, she says: "No, I don't."

Would the public see it the same way? "I hope so. I hope they understand that we travel to Wellington because we're elected to Parliament, not because being in Wellington three days a week is where we would like to be.

"It's just where Parliament happens to be."

The committee had spent quite a long time taking submissions and had decided that the office of the Speaker was the "appropriate" place for the allowances to be set.

Did she mean that the Remuneration Authority might put at risk the ability of MPs to travel to Parliament?

"It's not a case of putting it at risk. It's who is the appropriate body to determine that travel.

"It's whether you see it as part of the remuneration, or whether you see it as part of your job responsibility."

Ms Dyson says the committee has decided, however, that the authority should set travel allowances for MPs' family members, since those are not essential to an MP's role.

Mr Auchinvole, deputy chairman of the committee, told the House when the bill was introduced that it ensured the allowances "will actually not be set by the same people who could be said to be the beneficiaries". This week he was reluctant to say too much about the changes "till they are debated in the House".

The committee has discussed the travel allowances at length and has had discussions with the Remuneration Authority about them, he says.

"I wouldn't want you to think that the committee said, 'Oh, we're not doing that, get stuffed!' "

Aren't the MPs once again judges in their own case? "It's a conundrum. But if there was a suggestion that things were being inappropriately transacted, I'd have real concern.

"My experience would be that they're not inappropriately transacted, but that's a matter of opinion."

Greens co-leader Metiria Turei says her party believes the allowances should be set by the authority, not the Speaker, but it has decided to back the changes by the committee because, overall, the bill represents progress. The Greens might propose amendments when the bill is again debated in the House, but have not yet decided.

The prime minister's spokewoman says the committee's decisions were made on a cross-party basis, an important achievement "considering the nature of the legislation".

"The prime minister has consistently been an advocate for the principle that an independent body should set these entitlements," she says. "This bill makes further steps in that direction and the prime minister is confident it will be seen as a positive development."


Ms Dyson makes it sound as though the travel perk is just about getting MPs from home to Parliament and back again. But in fact it allows MPs to travel anywhere in New Zealand at any time for any reason.

There is a story, perhaps a political myth, that a new caucus of Labour MPs was told by a senior parliamentarian: "You could join the Invercargill Library and fly down there every week to renew your books."

The Speaker's directions on domestic air travel say simply: "A member may travel [free] by air at any time on scheduled air services throughout New Zealand."

An MP who flew free to Queenstown for a skiing holiday would not be breaking any rules.

How much of this free-riding goes on?

Nobody knows, but Inland Revenue has decided that 5 per cent of MPs' domestic travel is a personal benefit. This ruling, says Remuneration Authority chairman John Errington, was based on IRD surveys of MPs.

The authority deducts from the MPs' total pay package an amount reflecting the 5 per cent finding. But this amount is averaged out over all MPs. It does not reflect the actual amount of personal jaunting done by any individual.

An MP who regularly flew to Queenstown to go skiing would lose the same amount of salary as one who only ever flew on parliamentary business.

Is this fair?

"It could be classified as being unfair for someone who doesn't use it for personal benefit at all," Mr Errington says. "The problem we face is that there is no better way we've found yet of actually taking that into account."

Other countries allow an independent body to set MPs' perks as well as their pay. In Britain, the huge parliamentary scandals of 2009, when it was revealed that MPs spent allowance money on cleaning moats and expensive houses for ducks, led to a drastic change in the system.

Now, the Independent Parliamentary Standards Authority (IPSA) sets all MPs' salaries and perks. Under the new system, MPs must seek reimbursement for the actual sums they spend on travel and other entitlements. What's more, the details of every item of an MP's spending is published on IPSA's website.

Australia, like Britain, finds no problem with the idea of an independent body deciding MPs' perks and salary. Its Remuneration Tribunal decides both.

The Australian system allows MPs to fly free of charge within Australia "on parliamentary, electorate or official business", the tribunal's website says.

However, MPs may not fly free of charge on party business "other than [for] meetings of a parliamentary political party, or of its executive, or of its committees, and the national conference of a political party".


One way to make travel spending more transparent would be to bring the Parliamentary Service under the Official Information Act. That way the details of any trip made by an MP could be revealed by a request under the law.

The Law Commission recommended this approach, and so have other bodies that have reviewed the perks system. But so far the Government has not taken up the idea.

Ms Turei says the rules should simply say that MPs' free travel is only for parliamentary business, and details of any travel should be open to the OIA.

"That would be the most transparent system," she says, and it would also protect MPs from false allegations of extravagance.

At present, each MP's total travel spending is revealed every three months. However, the public is not told the details of individual trips, nor the reason for them. "The system is still relatively opaque," says political scientist Bryce Edwards.

Otago University law professor Andrew Geddis says it would be easy to change the system so the OIA applied to MPs' spending, and MPs had to reveal the purpose of each trip.

However, this would not necessarily stop them abusing the system.

"What I suspect would then happen is that MPs would start finding quite spurious reasons to be in places at a particular time.

"For instance, if the All Blacks happened to be playing a test in Auckland, all of a sudden someone might find it necessary to turn up to a primary school in Auckland to talk about the role of an MP."

However, "these are all arguments for down the track". In the meantime, the change was, in principle, a good one.

Clearly any system that sets the rules independently, and allows for detailed checking of spending in practice, is likely to make life more difficult for free-riding MPs.

But Dr Edwards questions the idea that giving the decision to an independent body would necessarily make the system better.

The independent body operates a private sector-style system, mandated by the MPs, which often turns out to be as generous in setting perks and payments as the MPs were when they decided for themselves.

IPSA, for instance, caused uproar in Britain in July when it proposed that MPs should get a 10 per cent salary increase, although with curbs on pensions and some parliamentary perks.

British Prime Minister David Cameron, whose government is running a fierce austerity drive with public pay increases capped at 1 per cent, warned IPSA to "live in the real world. You cannot have one rule for other people and another rule for MPs".

Dr Edwards argues that a system where MPs set their own pay and perks actually provides more accountability, "because the voters can punish them" for their decisions.

Sometimes, however, it has taken the MPs a long time to reform their ways, however loud and constant the public outrage.

MPs kept their fiercely criticised international travel perk, which allowed a discount of up to 90 per cent on overseas trips, for decades until it was finally abolished.

But Ms Turei says the public should make it clear what it thinks about the latest changes.

"We have not gone far enough yet," she says, "and if the public do send us that message I think that would be very helpful."

The Dominion Post