Ministers to get $37,500 for housing

A simpler, cheaper system for housing Ministers will save thousands but still cost at least $1.5 million a year.

Prime Minister John Key today announced changes based on a review of the ministerial housing system prompted by a controversy last month.

The current system costs $2.4 million a year – an average of $83,000 per minister.

Savings under the changes announced today were estimated at $893,640, but that included no longer having to maintain Crown-owned properties – Mr Key has put off a decision on selling them for now.

The cost of maintenance, rates, insurance and other costs for Crown-owned house was $1.3m a year.

The review was sparked after details of housing claims released last month raised concern about how allowances were being used.

Some MPs rented properties to colleagues who then used their allowance to pay for them while the owner lived in another taxpayer-funded residence.

Also Deputy Prime Minister Bill English was targeted for claiming almost $1000 a week in expenses, including $700 a week in rent, to live in his own house which has been leased to the Government as an official residence.

Mr English paid back the difference – of about $12,000 – between what he had been claiming as a minister and what he would have been able to claim as an MP.

Under the changes ministers who stayed in the same home they were already claiming the $24,000 parliamentary allowance for would get a maximum $30,000 per year. The payment replaced the parliamentary allowance.

Other ministers would make their own arrangements and pay for it out of a fixed payment of $37,500 a year – equivalent to a market-based estimate of rent and a small contribution to other costs. Only one payment would be made per property.

Ministers who chose to live in a hotel would be reimbursed up to $37,500 a year.

Properties leased by ministerial services would be retained until leases expired to avoid penalties.

"The crown got a multi-hundred-thousand dollar saving today," Mr Key told reporters.

"This isn't a system designed around one minister. This is a system designed to give greater value for taxpayers and greater clarity."

Mr Key said some ministers would be out of pocket by as much as $10,000 a year.

"The review notes that if ministers purchased the equivalent services for their accommodation directly, the average cost is $48,295 per year, so the new rates do not, in most cases, cover the full cost. . . My view is they can make do with less."

He said higher allowances for ministers recognised the amount of time they had to spend in Wellington.

Mr Key did not think ministers had been double dipping, even those who rented out properties they owned while living elsewhere funded by the taxpayer.

"(It's not common sense) to say you can't own a rental property in Wellington, but you can own a rental property in another part of New Zealand."

He said outgoings had to match up with allowances paid.

"There's no evidence to me that they are making money by renting that property out."

The review recommended selling or divesting all ministerial housing except Premier House and its cottage. The capital value of all the properties was $21.84m.

"However I have decided that these houses will be retained for the remainder of the parliamentary term to avoid disruption to ministers and their families," Mr Key said.

That would also give time to consider whether to follow the recommendation or not.

Administration and support costs for the current system were $222,250 and estimated at $89,750 under the changes if the sales went ahead.

Mr Key said the revised figure seemed high and was likely to be cut back.

Ministerial Services would report a detailed plan to implement the changes next month.

The proposal chosen was cheaper than one option in the review report but more expensive than another. The cheapest option of a flat $24,000 allowance was not recommended as ministers would struggle to meet their own and family needs. The more expensive option of an allowance of nearly $50,000 per MP was rejected as too expensive.