In the last two weeks there have been many more stories about the lucrative pay and perks of Members of Parliament. Mostly, it’s stories about MPs’ housing allowances and superannuation entitlements. But will these revelations result in any reform?
Without reform, we can expect the issues will continue to fester. It’s not unconnected, that throughout the world there has been a rising anger with MPs and the political class. Voters are increasingly intolerant of their representatives “rorting” the taxpayer. The perks and high pay are helping fuel all sorts of populism and revolt everywhere.
Today in the Herald on Sunday, Heather du Plessis-Allan sums up the MP entitlements as “outrageous”, but argues that it isn’t actually in the interests of politicians to continue to receive them. She asks: “Someone in Parliament should have the courage to sort out these MP perks. It’s in the interests of all of them to end the largesse. It makes them all look bad.”
Here’s her conclusion: “they should reflect on what is happening in politics around the world. The popularity of Donald Trump, One Nation, Reform is in part a revolt against the ruling class. A class of people who do little for voters but protect themselves and their mates. Nothing says ‘ruling class’ more than perks that would never fly in the real world.”
The gravy plane
Yesterday, The Post’s Charlie Mitchell reported that taxpayers have spent around $6 million over the past decade subsidising travel for retired politicians and their spouses, including overseas business-class flights claimed years, sometimes decades, after the recipients left public office.
The scheme works like this. Any MP who entered Parliament before 1999 can claim lifetime rebates on travel: up to 12 domestic return flights a year, plus one international return airfare capped at the value of Air New Zealand’s cheapest business-class return between Auckland and London. Serve three terms and the taxpayer covers 60% of the cost; serve five and it rises to 90%. For those who use it fully, Mitchell reports, the subsidy is typically worth $10,000 to $20,000 a year.
Who benefits? Disproportionately, the people who need it least. The largest identified claimants are former National cabinet minister Philip Burdon and his wife Rosalind, who have claimed more than $200,000 since 2014. Burdon remains a director of Meadow Mushrooms, the company he co-founded, and the NBR estimated his family’s wealth at $95 million in 2019.
Former Speaker Sir Lockwood Smith and his wife have claimed about $175,000; former Labour minister Chris Carter and his husband more than $165,000; former Act leader Richard Prebble and his partner at least $150,000. Sixteen couples have each claimed over $100,000 in a decade — together accounting for more than a third of everything the scheme pays out.
There is a particular historical irony in the list of prolific users. Among them are the architects of the 1980s and 1990s market reforms: Roger Douglas, Michael Bassett, Ken Shirley. The politicians who taught a generation that subsidies distort behaviour and that the state should not feather private nests have proven reliable claimants of a non-market subsidy that runs for life. The recipients span Labour and National alike.
Stranger still, the scheme outlives its beneficiaries. Spouses keep claiming after the MP dies. Noeline Colman, widow of former Labour MP Fraser Colman, has claimed at least $80,000 in travel rebates since 2014; her husband left Parliament in 1987 and died in 2008. Lady Sandra Arthur claimed through the service of a husband who died in 1985.
The cost is increasing for these perks. Last month’s Budget — the one that raised state-house rents, lifted the threshold low-income homeowners must reach before getting housing help, and cut roughly $200 million from hardship grants — quietly increased the funding for former MPs’ travel to $1.6 million for the coming year.
“Part of the package”
The defence, when Mitchell put the numbers to Burdon, was candid. Burdon conceded the entitlement was “generous”, but said it had formed part of the remuneration package of his era. He warned that refusing to claim it could involve “a certain amount of moral arrogance” towards colleagues who did. Any change, he added, should be left to the independent body that sets parliamentary pay.
This is the deferred-compensation argument, which is the claim that MPs of an earlier era had accepted lower pay in exchange for lifetime travel for themselves and their spouses.
In a normal workplace, deferred pay is written into a contract and capped at a known figure. This entitlement is neither. Its value is open-ended and indexed to business-class airfares, so it balloons unpredictably. It was never disclosed as remuneration to the voters supposedly party to the bargain. And it extends to spouses and survivors who were never employed by anyone. The arrangement has no settled value and no end date, and it reaches people who were never employed by Parliament at all. Calling it deferred pay dignifies it.
There was once a democratic case for paying politicians properly. In Thomas Coughlan’s opinion column on perks, he outlines that the old Chartist demand for payment of MPs was meant to stop Parliament being reserved for gentlemen of independent means. New Zealand’s version of that principle remains sound: MPs should be paid enough that ordinary people can stand for office without private wealth.
But that democratic principle has curdled into something else. What began as compensation for an unusual job has become a set of legacy privileges whose original justification has long since expired. The old travel scheme appears to date back at least to the 1970s; by the early 1980s even ministers reportedly struggled to say exactly when it began. In 2014 it was supposedly closed to future MPs, but protected for those already inside the system. That is the familiar pattern: reform at the margins, grandfathering for insiders, and another decade of public money.
It should be pointed out that Burdon’s worry about “moral arrogance” is not shared across the old guard of former MPs. Peter Dunne has called for reasonable standards to be applied to MP perks; Laila Harré has said former MPs do not deserve free air travel; and Harré and Tau Henare have both called for an end to travel perks for ex-MPs and their partners. When a centrist, a figure of the left, and a former New Zealand First and National MP all agree the perk is indefensible, the claim that declining it would insult one’s colleagues looks thin.
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