Perk blinds MPs to political risk

Saturday, 2 March 2024

Vernon Small is a journalist and was an adviser to the former Labour government

OPINION: Every leader’s superpower is the ability to distinguish between what you can do and what you should do.

“Can” is what you have the power or authority to do, “should” is what is right or politically wise.

But for about six hours on Friday, Prime Minister Christopher Luxon lost sight of the “should” and jumped into the “can” as he defended taking a $52,000 annual accommodation supplement, on top of his $471,000 salary, to live in the Wellington apartment he already owned outright.

Worse, he couched his right to receive the subsidy, available to all out-of-Wellington MPs, as being “entitled to the entitlement”.

His spin doctors and more media-savvy colleagues must have wept into their lattes. Saying you are entitled to a taxpayer-funded perk is Kryptonite to any politician.

It also sounded tin-eared. Operating within the rules and having an entitlement to something doesn’t mean you have to take it.

There are several additional strands to the web in Luxon’s case.

Having two houses available in Wellington and choosing not to live in the Premier House mansion provided for prime ministers at no cost is very different from MPs accessing the allowance to pay for accommodation in a city miles away from home.

His wealth, and the fact he owns seven properties – none with a mortgage, including his flat in the Kate Sheppard building opposite Parliament – doesn’t help his case. Getting roughly twice as much money as superannuitants or beneficiaries that he clearly doesn’t need, simply because he can, looks like chronic entitle-itis.

It also looks like hypocrisy - restraint for others, but not for me – especially when set against cost-cutting (and inevitable job losses) in the public sector, the promise to get the most from every tax dollar and the thundering pledge to no longer treat taxpayers as a “bottomless ATM”. Then there is his government’s “tough love” on the work-ready, and the move to curb future benefit increases.

Do as I say, not do as I do.

It didn’t help that Conservation Minister Tama Potaka on the same day used the right’s political taboo word – austerity – to explain the Government’s approach.

Also, the higher allowance for the PM - a hulking $52,000 instead of the $30,000-odd for ordinary MPs – surely reflects the expectation that senior ministers secure a pile commensurate with their status, including the facilities for entertaining.

But Luxon uses Premier House for hosting major events, such as the reception this week for the New Zealand and Australian cricket teams, featuring a few friendly overs on the back lawn.

To his credit, Luxon quickly realised – perhaps after an appeal from his inner circle - that all these factors added up to an untenable position. By early Friday evening he had promised to pay back $13,000 he had received since becoming prime minister, and take no more.

His description of it as “a distraction” stopped short of an admission of fault, but it was the same spin former prime minister John Key used in a parallel case involving then finance minister Bill (now Sir Bill) English in 2009.

In that case, English had nominated his house in Dipton, Southland, as his primary residence even though his wife worked as a GP in Wellington and his children went to school there, and deemed his long-owned family house in Karori a ministerial house. That entitled him to an allowance of more than $900 a week.

The English family had turned down a chance to move into a Crown-owned house in Bolton St, near Parliament.

After some to-ing and fro-ing and revelations about changes to the trust the house was held by, English released a legal opinion concluding he had not broken any rules.

Nevertheless, he saw the writing on the Beehive wall and a few months after the story broke he paid back $32,000 and stopped taking the allowance.

Key said at the time that it had become a “distraction”. English went slightly further, saying it had taken his attention away from running the economy.

“I understand that this does not look good … it doesn’t really matter what the technicalities are and from my point of view particularly as the minister of finance, that is not a sustainable position,” he said.

A One News survey at the time found that 62% believed the accommodation question had damaged English’s credibility.

That ought to have been a warning for Luxon, although perhaps he and his staff either didn’t know about the English saga or had forgotten it.

There was never going to be much public sympathy for Luxon’s claim that he couldn’t live in Premier House because it needs renovating - on top of the $3 million spent doing it up in 2018.

At the backyard cricket match Australian Usman Khawaja recalled Luxon saying Premier House was “condemned”, though Luxon denied that. There is no evidence it is uninhabitable. Unless that is you insist your digs are flasher than the faded beauty of Premier House and its tired and leaky apartment accepted by a succession of prime ministers including Key and then Jacinda Ardern, with her partner and young daughter.

Turning to the bigger picture, many MPs use the accommodation allowance to pay the mortgage on houses they buy in Wellington, letting them establish a stable base but also farm a bit of capital gain.

Some, including Luxon, also buy a property in their electorates and use it as an office, collecting a rent subsidy from Parliamentary Services along the way.

It would be tidier and more transparent if they instead rented their Wellington digs or electorate offices from a third party, though the net effect is probably neutral for taxpayers. (For the benefit of Labour and the Greens, a political party or private superannuation fund are not third parties.)

In the interests of public confidence, it is a change our parliamentarians should have made long ago.

Instead, that self-interested can has been continually kicked down the road. Because they can.