MP's "travel perks"

Managers can do anything they wanted, provided they would be happy to see the decision reported in the next day’s newspaper, and would be comfortable explaining their decision to their mothers.
NZ businessman as quoted in Human Resources Management in New Zealand (Rudman, R)

Dr Lockwood Smith

Speaker of the House Dr Lockwood Smith seemed to be quite comfortable with his decision to keep “travel perks” for MPs secret, although many people won’t necessarily agree with it.  We may feel uncomfortable with it on a gut level, but does the decision not just fail the smell test but also a more thorough analysis as well?

MPs' pay rates and benefits are set by the Remuneration Authority, which tries to determine the appropriate level of remuneration for senior civil servants, the Judiciary and MP's.  Most private companies use similar services to find the “market rate” when negotiating pay rates for their senior executives.  Usually this involves finding a total dollar value for the position - the total remuneration - and allowing the employee to choose the cash and benefit mix, up to that value; this commonly includes private use motor vehicles, superannuation and medical insurance.  These salary options often have a direct benefit to the employees family as well as the employee. 

For MP's $9600 per year of their total remuneration package goes towards reimbursement for international travel.  Although this commences from their start, the benefit isn't available until they have served 3 years.  Adding to the complexity, the proportion of international travel that is reimbursed is determined by the length of service, starting at 25% after three years and rising to 90% after 12, and there is no 'total pool' of all the contributions over the years – essential it is a pay as you go scheme with new members subsidising longer serving MP's.

Dr Smith argues that taxpayers actually gain from this scheme; because less money is reimbursed from the scheme that would have be paid directly to them as salary  (in 2009/10 it was $432,989 paid from $1,176,812 salary sacrificed), and as the balance isn't carried over each year, there is a direct saving in salary costs.

Other than it's complexity, the benefit isn't that different from those available from private companies; there's swings and roundabouts with some people benefiting more than they put in a particular year and some less (you see this often with private use vehicles – some people thrash the privilege, and you wonder based on their usage why some bother with the benefit), there is some private benefit to members families, and it forms part of the total remuneration.

MPs' have a very high rate of marriage failure - although whether this entirely due to the stress, long hours and public exposure of the job or partly a correlation due to the personality of someone who chooses to enter Parliament; so allowing their families to use this benefit may be a good thing.  Dr Smith suggesting that it's good for Parliament seems rather a generalisation and much harder to demonstrate.

So if it saves money, is good for MP's, and doesn't differ from common private practice, what's the issue?

Part of the blame must lie with the news media who insist on reporting it as a “travel perk”, when in fact it isn't free, but has been paid for.  This description is both emotive and untrue.

One of Dr Smiths arguments is based on the principle that if it was paid as cash we wouldn't know (or care) how it was spent, so MP's have the right to keep it private, but that somewhat misses the point.  The scheme does have the potential for abuse and based on the occasional previous misuse of public money, MPs' are difficult to trust - and for Dr Smith to suggest he will police it on our behalf is a who watches the Watchman argument, especially as he also benefits from the scheme.  The argument that since it is taken from total remuneration it not therefore paid by the taxpayer is also misleading – all MP's salaries are paid by the taxpayer however they are made up, making us not just stakeholders but shareholders in the system – and with a feeling that we have a right to know how our money is spent, whether that belief is correct or not.

MP's also sometimes bring it upon themselves by their representation of themselves as being just like us when seeking election – an everyman for everybody.  In many respects New Zealand is a very egalitarian country; our power distance - the amount we accept an unequal distribution of power - is very low.  Our inbuilt sense of distributive justice means we feel they should receive similar benefits as ourselves based on that similarity – and this isn't a similar benefit to what most of us receive.  In reality the burden, the workload, and the consequences of their actions are hugely dissimilar to our jobs, and their compensation should reflect that.

We are a very ethical country – in fact we top the world rankings for being corruption free.  This is the crux of the matter, our gut feeling that the secrecy is an ethical issue.  It can be hard to judge MP's job performance, but we can judge whether they do the right thing.  For all the benefits of the scheme and the logic of Dr Smith's arguments, ethics isn't just about doing the right thing, it’s also about being seen to do the right thing.