Taxpayer support for Bill English’s home and happinessAugust 4th, 2009
In recent days, there has been an odd symmetry between Graham Henry’s response to the All Blacks defeat in Durban and John Key’s rationale for the equally lamentable hole his deputy Bill English has dug himself into with his ministerial housing expenses. In both cases, basic mistakes in handling have been made, and reputations damaged – but the coach has kept saying there was nothing really wrong with the basic approach taken by his team. The only problem? The awful result.
Undoubtedly, the highlight of the Prime Minister’s brief press conference yesterday was this classic exchange between Key and the Dom-Post’s Vernon Small.
Small: When you said he [English] changed the trust arrangement [ with regard to his family home] after the election, and that was the thing that qualified him for the Ministerial Services allowance, and yet he didn’t do it to qualify for the allowance, it was just a co-incidence?
Key: That’s my understanding.
English receives $276,700 in his annual salary as deputy Prime Minister. What is at issue here is the extra $914 a week accommodation allowance he is now claiming for the Karori house he bought in 2003 and has lived in with his family for some years – while claiming his other home in Dipton as his actual family home. The Karori home is owned by a family trust. In March, title was transferred to his wife, Mary. Reportedly, the Karori home has been recently valued at $1.2 million.
During the whole of 2008, English got around $24,000 a year as a taxpayer top-up for his housing costs. At a time when hundreds of ordinary New Zealanders are losing their jobs each week – the amount he now pockets from the taxpayer for living in the same house has virtually doubled over the past 12 months, even as his annual salary has also virtually doubled. You may be wondering if the income of his spouse – who is a GP – is treated as relevant to his eligibility for assistance from the state. No, it doesn’t – such factors seem to apply only to the unemployed.
Though it is lawful and within the current rules on ministerial expenses, this arrangement, is to say the least, a very bad look. True, other ministers in the past have profited from similar arrangements – but what makes the English case seem worse is that reportedly, we are in the midst of the worst recession in decades. More to the point, English has been the government’s main advocate of financial restraint, and has been urging thrift and self sacrifice on everyone else. This has included asking for compulsory savings of five and ten per cent in the budgets of government departments that provide services to the taxpayer.
As Russell Brown has suggested – if the house in Dipton is so crucial to English’s activities as a constituency MP, perhaps it could be treated as English’s secondary home and be the recipient of state assistance, instead of the Karori home. It would probably be cheaper to do so. Meaning : surely, before the money is paid out, shouldn’t there be some occupancy test of what is, or isn’t, the main family home ?
Overall, there is karmic justice to the fact that English and Sir Roger Douglas have been the most glaring examples of working the system. Douglas’ defence of his entitlements was impossible to satirise.
Can we now expect the Act Party to cease beating up on the welfare system and the alleged culture of dependence – given that just like Sir Roger, people on benefits are merely accessing their due entitlements under the law? Perhaps when and if Sir Roger can forego his own culture of dependence on the taxpayer for his travel subsidies, we can start to take his political philosophy more seriously. Libertarianism starts at home – or in this case, at the airport.
Key has now promised an independent review of the rules on ministerial expenses. Currently, Tim Groser, Murray McCully, and Housing Minister Phil Heatley for instance, are receiving ministerial accommodation expenses while owning investment property in Wellington. In the wake of the review that Key has promised, such ministers could well be asked to make offsetting payments in future for the housing expenses they claim, despite choosing not to live in such properties.
The current rules, Key says, are ‘arcane’ and ‘don’t necessarily drive the best outcomes for either the taxpayer or the Minister.’ ( No kidding about the first one – a bit harder to see how the Ministers are suffering.) Given the long hours that Cabinet Ministers work, Key was certain the public would understand: “Most New Zealanders, I believe, would support me in my desire to see the marriages of my Cabinet Ministers and the happiness of their families remain intact.”
Hello? Is Key suggesting that when Ministers are already on an annual salary of $243,700, that foregoing the extra cash for their housing subsidies would put their happiness and marriages at risk? Many families are working two jobs, raising families and putting their marriages and happiness at risk on one fifth of Bill English’s basic income. Even so, they are being taxed on that income – apparently, in order to help provide English with his extra $914 a week in housing assistance to live in his own home. Even Graham Henry would struggle to justify this standard of second phase play.