Opinion: New Zealand MPs are, by the standards of the average worker, extraordinarily well compensated.
At $177,600 for a backbencher, $320,600 for a Cabinet minister and $510,300 for the Prime Minister, they earn something like two to six times the average wage. They also get a 20 percent superannuation scheme or Kiwisaver contribution if they contribute at least 8 percent of their salary.
That’s the state of affairs after three successive annual pay rises, with another 2 percent increase due in July – which in turn followed many years of pay being frozen due to a decision by Jacinda Ardern when she was Prime Minister.
Although the rises come at a time of fiscal belt-tightening, they were determined by the independent remuneration authority.
Accepting the pay increases makes sense. It won’t be sustainable forever for MPs’ pay to remain frozen. Rates should be competitive with what talented people might otherwise earn in the private sector.
But with such bountiful compensation, it’s hard to understand why so many MPs go out of their way to seek more.
They go after it through overly generous accommodation allowances and dubious contracting structures in which they rent buildings they own to their own electorate offices, qualifying for extra funding from the Parliamentary Service.
This has lately come to light with the case of Louise Upston, who is claiming the full $1000 a week ministerial housing allowance, designed to support MPs based outside Wellington with the costs of maintaining two homes.
The only problem? It’s not clear what costs Upston actually faces. She owns an apartment in Wellington and has no mortgage, suggesting she owns it outright. Asked about those costs on Tuesday, she refused to answer.
It’s the same set of circumstances that landed the Prime Minister in hot water in his first months in the job, when he moved to claim the $52,000 a year payment (greater than a year of full-time work at the minimum wage) to live in an apartment he owns mortgage-free in Wellington while works were ongoing at Premier House.
Memorably, Luxon defended the decision at the time, saying “It’s an entitlement. I’m well within the rules…. I’m just entitled to the entitlements that everyone else has.” After listening to how it was received on Newstalk ZB, he walked it back and repaid the money.
Later that year, a poll found most Kiwis believed Luxon was out of touch.
Arguably, Upston’s case is even more egregious, as it comes just a week after she reduced the eligibility of homeowners to claim the accommodation supplement payment.
With apparently no sense of irony, she said, “We want to target support for the accommodation supplement to those who need it most, and they are renters; they are not people who are using taxpayer support to increase their own asset”.
This behaviour cuts across party lines. Kieran McAnulty, Jan Tinetti and Jenny Salesa are among the Labour MPs claiming the accommodation allowance while owning property in Wellington, although it’s not clear they own the properties without a mortgage. Act’s Todd Stephenson is in the same boat.
From New Zealand First, Andy Foster is among those claiming the payment for MPs based outside Wellington. Foster, of course, is a former mayor of Wellington, now seeking $750 a week from the taxpayer to help with the costs of living in the city he once governed – and with no mortgage reported on the pecuniary interest register.
Then there are the MPs, including Luxon and Labour’s Chris Hipkins, who own commercial property which they rent to the Parliamentary Service to operate as their own electorate offices. This is defended on the basis that the offices are rented at below market rates
In Luxon’s case, the building is rented for $3750 rather than the market rate of $3833 a month, saving the taxpayer a full $996 a year – enough to pay almost a week of Upston’s housing allowance.
Labour’s Ginny Andersen got in trouble in 2020 for a similar scheme, in which the Labour Party rented space from a commercial landlord for $1500 and then sublet it to the Parliamentary Service to serve as her electorate office for $6000. In 2021, she ended the arrangement.
Although these rorts are cross-partisan, they are particularly galling from the parties which as incumbents in government pride themselves on fiscal restraint. National in particular, and its coalition partners to a lesser extent, are tainted with the air of “Good enough for me, but not for thee” when they lecture public servants about wasteful spending, deride beneficiaries as bottom feeders and then maximise whatever they can from the Parliamentary Service budget.
It’s an entitlement, they say, while cutting entitlements from those earning far less than even $52,000 a year.
This isn’t the first time we’ve had this conversation. It’s not the second or the third. Before Upston it was Luxon, before him, it was Andersen and Labour. Way back when the change was first made to the current system, Bill English landed in hot water for claiming the entitlement while living in the Wellington suburb of Karori. Like Luxon, he paid it back – but as soon as the spotlight faded, other MPs crept out of the woodwork to do the same.
MPs should be compensated for the hard work and long hours they put in, but that should be through their salary. They shouldn’t have to manipulate the system through elaborate ownership and contracting structures to get paid for using their own offices, or receive an allowance for living in their own homes.
If the $177,000-plus salary isn’t enough for them to lead quality lives, what does that mean for the 96 percent percent of Kiwi workers earning far less?
It is not corruption, as it is all within the letter if not the spirit of the rules. But it is rotten behaviour that defaces basic tenets of public service.
As trust in government, and in politicians in particular, declines in New Zealand, MPs increasingly have some of their own number to blame.
