Is Parliament’s housing allowance system fit-for-purpose?

MPs’ perks are back in the spotlight after a series of stories from The Post drawing attention to Parliament’s housing allowance system.

While there is no suggestion any MPs have broken the rules, political parties are now facing questions over whether the settings are fair and fit-for-purpose.

What are MPs currently eligible for?

RNZ’s Susan Edmunds has spelled out a bunch of the allowances and perks available here, but in short, all MPs are entitled to claim an accommodation payment as long as they are not not typically based in Wellington.

Ministers can claim up to $52,000 a year, while a regular MP can claim a maximum of just over $36,000.

Why do they get this? And why are Wellington-based MPs excluded?

MPs are required to be on Parliament’s premises in Wellington on Tuesdays, Wednesdays, and Thursdays of designated “sitting weeks”, of which there are roughly 30. That works out to about 90 days a year.

The accommodation payment is designed to cover their costs while they are away from home.

Remuneration Authority chairperson Geoff Summers says MPs are effectively treated the same as any other employee would be if they were required to travel for work purposes.

“If I needed to go to Auckland on Remuneration Authority business and stay there for a couple of days, I would expect the Remuneration Authority to pay my airfares and to pay my accommodation.”

MPs who live in the “Wellington commuting area” are excluded as they do not face the same inconvenience as out-of-towners.

That area is defined as the districts of the Wellington City Council, Hutt City Council, Upper Hutt City Council, and Porirua City Council.

National’s Ōtaki MP Tim Costley was highlighted by The Post this week for claiming the allowance to stay in his Wellington flat despite his primary residence being in Waikanae – just 58km from Parliament.

Prime Minister Christopher Luxon this week defended his MP, saying it was unreasonable to expect Costley to make that commute in-and-out of Parliament given the long hours he worked.

And rules are rules: Waikanae falls in the Kāpiti Coast District which does not come within that “Wellington commuting area”.

But hang on – what about these MPs who use the allowance to pay down their own mortgages? How is that fair?

The rules governing the allowance are fairly neutral about what type of accommodation the payment can be used for.

Some MPs secure a long-term arrangement with hotels nearby Parliament. Others rent apartments, while others effectively rent their own homes back to themselves.

All of that is within the rules.

The Post this week published a list of the 23 MPs who stay in their own properties in Wellington and claim the allowance as well. The list named 14 National MPs, seven Labour MPs and two ACT MPs.

Additional to that is Labour MP Kieran McAnulty who is claiming the housing payment while staying in his wife’s Petone apartment.

The question of fairness is a subjective one, but the argument goes that these MPs would otherwise be able to rent their own property out if they weren’t staying there themselves.

The allowance therefore effectively covers the forgone rent.

This is what got the PM in trouble, right?

Sort of. In early March, Luxon faced a massive public backlash – which he called “pretty full on” – after revelations he had claimed the $52,000 payment to stay in his mortgage-free Wellington apartment.

He initially defended the decision, saying he was entitled to the subsidy, but soon after paid it back due to the “distraction”.

The reasons behind the outcry will vary from person-to-person.

But Luxon’s situation was unique as he also had the option of staying in the taxpayer-funded Premier House in Thorndon.

Luxon claimed that was not possible due to long-standing maintenance issues – though that was disputed by his predecessor, Labour leader Chris Hipkins.

Who set these rules?

In 2009, former prime minister Sir John Key announced a revamped ministerial housing system following a controversy over the expenses being claimed.

His deputy Bill English was at the centre of the furore after he designated his primary residence as Dipton, Southland, allowing him to claim the housing allowance while in Wellington.

That was despite his entire family having lived in their Karori home for many years.

Under the previous approach, the rules were complex and the amounts claimed by different ministers varied wildly.

Key said the old system also created “perverse incentives” whereby MPs would rent their own property to colleagues rather than live in them themselves.

What other options are there?

There are always other options, but they all carry their own complications.

The rules could be changed to prevent MPs from renting their own properties back to themselves.

That, though, could incentivise some bizarre outcomes where MPs simply rent their properties to one another instead.

Some commentators have suggested scrapping the allowances altogether and instead increasing their base salary – though the public rarely look kindly on MP pay bumps.

Speaking on Midday Report on Tuesday, political commentator Bryce Edwards floated the idea of setting up a sort-of taxpayer-funded hotel where MPs could stay during Parliament’s sitting weeks.

Perhaps a hostel for MPs?

Is it likely the rules will change again?

Unless there is some sort of concerted campaign driven by public outrage, probably not.

Speaking to reporters on Wednesday, Luxon said the rules were set by the independent Remuneration Authority and so any changes would be up to it.

The authority’s chairperson Geoff Summers told RNZ that any major changes – including preventing MPs from renting to themselves – would require a change in the law.

Hipkins earlier told Morning Report he was “open” to reviewing the rules and suggested they could be reverted to the pre-2009 settings.

Even so, Hipkins said that would be unlikely to save much public money.

ACT has previously defended the rules and the Greens declined to be drawn on the matter, saying only that the allowance was a matter for individual MPs and their parties to discuss with the Parliamentary Service.

Neither NZ First, nor Te Pāti Māori, responded to RNZ’s queries.