Scoop Election 08: edited by Gordon Campbell

On a solution for the Ministerial spending scandal, and for child poverty

June 11th, 2010

The litmus test in the Ministerial expenses scandal is what would happen to an ordinary employee who repeatedly misused the company or departmental credit card in the fashion exposed in the last couple of days. Repaying the money would not be enough – dismissal would usually follow, especially if there was repeated abuse of the privilege. Incidentally, do the repayments that have been made include an interest charge – to cover the real cost of the loss, and the opportunity cost to the public of not having this public money at their disposal in the years concerned? I would be willing to bet that it doesn’t, looking at Chris Carter’s tally of what he thinks are his obligations.

Point being, despite having preached for decades about how the country needs to accept the bracing disciplines of the private sector, there is still plainly a bipartisan expectation among a few senior MPs in both Labour and National ranks that they can flout the rules, or plead ignorance of them, again and again – without any real consequences, beyond briefly having to adopt a posture of penitence when the news gets out.

Just as plainly, this system cannot continue. Besides the initial theft of public money, it costs further taxpayer money to monitor and detect these transgressions and to go through the rigmarole of reimbursement. How can the rules be changed? Obviously a zero tolerance policy needs to be promoted by party leaders, and directed (especially) at the serial offenders in their ranks. If Ministers infringe the rules on spending, they should face the salutary prospect of suspension, or firing. Perhaps a Three Strikes (And You’re Out) policy could be instituted when it comes to the Ministerial card. Rodney Hide should be keen enough to support that notion.

There is an additional safeguard. To prevent misuse of company cards in the private sector, US firms routinely use a service that Visa and some other card holders have offered for years – namely, Merchant Category Codes (or MCC).

These codes entail a four digit number that automatically refuses to accept certain categories of spending, or spending in certain locations.

The first step in preventing unauthorized purchases means checking with your credit card issuer to find out which protections can be built into the credit card network. These Merchant Category Codes, also known as MCC codes, can prevent corporate credit cards from being used for gaming, at certain nightclubs or with other specific types of merchants…..

Business owners can also work with credit card issuers to determine spending limits by user, per transaction or per day. Larger expenditures must be approved on a case-by-case basis by a supervisor or the business owner, thereby avoiding any nasty sticker shock come statement time.

Consider a corporate credit card that includes free employee credit cards with spending limits the business owner controls, monthly employee spending reports and Employee Misuse Insurance Protection. Some cards offer reporting tools that provide spending summaries according to merchant, cardholder, and a variety of dates, allowing you to receive alerts of “unusual spending,” and catch discrepancies or unusual spending patterns.

It would be interesting to know which of these ‘early warning’ systems – if any – Ministerial Services now have in place to detect wrongful spending, when it happens. What is also needed is a category of merchants and/or an agreed list of items that can be pro-actively barred from purchase on a Ministerial card. If grey areas or contexts emerge when such items are on rare occasions deemed to be justified, the initial payment can still be made on the Minister’s own personal card, and reimbursement sought from Ministerial Services, on the presentation of receipts. Ministers are hardly likely to be caught short – they are, after all, on salaries and perks packages that are worth at least four times (or more) the average wage.

Someone such as Russel Norman or Pita Sharples should be offering to convene a meeting of party leaders with the Speaker with a view to devising a system of MCC codes – covering items and locations – that should be barred from purchase on the Ministerial card. The beauty of the MCC system is that a party leader could then personalize the four digit code (after consultation with the erring Minister) to counter the peccadilloes of particular Ministers. So, no more alcohol purchases on the Ministerial card for Tim Groser, and no more blue movies for Shane Jones, or anyone else.

Footnote : the big ticket item in TV3’s recent expose of $10 million spending by the Ministry of Foreign Affairs and Trade turns out to have been the $459,000 on “ chillers” at our Embassy in Saudi Arabia. Chillers are of course, air conditioners. I have no way of knowing whether $459,000 is an excessive amount for the purchase and installation of air conditioners in an embassy of the size we occupy in Riyadh – there are eight staff listed on the MFAT website – but surely, having some level of air conditioning in one of the hottest places on earth does count as essential spending. On the other hand, while it is hot in Tonga, the $78,000 for the swimming pool refurbishment for MFAT staff should have been foregone, in the spirit of public service belt tightening.

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Confronting child poverty

From the outset, the government’s actions on welfare reform have looked more like an indoctrination process than a genuine, open minded consultation. All the more reason to applaud the recent comments made to the Welfare Working Group (WPG) by Dr Monika Queisser. Unlike the right wing fruit loops who have been urged on the WPG by Social Development Minister Paula Bennett – I’m talking about the likes of Dr Peter Saunders – Queisser is a genuine heavyweight. She is the current head of social policy for the Organisation for Economic Cooperation and Development (OECD).

Queisser pointed out the striking generational difference in how New Zealand tackles the issues of poverty – the old are relatively well protected here, but children are not. As a remedy, she advocated a universal child allowance.

She said New Zealand could be proud of having one of the OECD’s lowest poverty rates for the elderly, with only 2 per cent of over-65s living on less than half the median after-tax income here compared with an OECD average of almost 14 per cent.

But 15 per cent of Kiwi children lived in families with less than half the median income, compared with an OECD average of 12 per cent. “The gap between material deprivation of children and older people is biggest in New Zealand out of 27 countries,” she said. She said the Labour Government’s Working for Families package had stemmed the rise in child poverty but “has not reduced the high child poverty rate”.

“More needs to be done on that front,” she said “An integrated approach to reviewing the tax/benefit system is important. The countries in the OECD that have achieved low child poverty (the Nordic countries and France) often have universal child benefits, and that might be also an avenue that New Zealand might want to explore in more detail.”

It would be nice to think that the WPG, will take Queisser seriously. That’s unlikely. Bennett made her mind up long ago to tighten access to welfare support, not to extend the safety net. On her watch, child poverty will continue to be treated as an individual failing, and not as a responsibility of the state.

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    1. 8 Responses to “On a solution for the Ministerial spending scandal, and for child poverty”

    2. By Jum on Jun 11, 2010 | Reply

      I am underwhelmed by the saturation by media over the credit card usage for private requirements.

      John Key helped a client with a speculative run on the NZ $ and not a dicky-bird, media-wise. He could have(did)damaged New Zealand financially and obviously has little loyalty to NZ, but media are only interested in credit card use.

      Incidentally, Jim Anderton made it quite clear and so should you have that when Ministers go overseas it is not as in private businesses with the businessman/woman fronting up to pay the bill themselves. With Ministers hotel bills are paid by assistants while Ministers do what we pay them to do, which is to meet with overseas Ministers, and then any private expenses are repaid by the Minister. If the expenses rules say otherwise then as Jim Anderton pointed out he and other Ministers should have been told about that then. This is just a ridiculous media beatup engineered by this government to cover up the secretive business of ramming through bills New Zealanders don’t need or want.

      So 2% of the Aged are under the poverty line; I look forward with interest to the next OECD report since the addition of GST and ETS polluters’ costs to the Aged’s grocery bills.

      Child poverty – it’s not going to get any better with this government cutting out adult community education, increasing GST costs, cutting back on tertiary entries, unless you’re a foreign student, borrowing for tax cuts (stupid or what!), refusing to allow our skilled workers to build rail coaches and selling our assets along with our future homegrown profits.

    3. By Chris on Jun 11, 2010 | Reply

      People in public life set the gold standard for others to follow. That is why it is double important that when prominent public figures transgress the law, that they need to be punished, otherwise the whole of society goes off thinking that it can get away with bending the rules and in general being selfish and immoral.

      Dismissal of the worst offenders in this expense scandal is called for, and is demanded by the public in order to punish and more importantly set the standards expected to be followed in both public and private life.

    4. By Isaiah on Jun 11, 2010 | Reply

      Please try to put your outrage in perspective Chris:
      NZ has had damning reports into the health of NZ children and the strongest risk factor is poverty.
      Yet still money and public attention is being spent to REDUCE the quality of life for most of middle and low income NZ.
      Is that a standard you want set?

      I think it is selfish, immoral and ugly.

    5. By Chris on Jun 22, 2010 | Reply

      People in public life are the shining lights that others follow, and if the colour of the light that they shine is tainted it tarnishes the whole of society, up and down, rich and poor.

      Honesty is Truth, and Truth is Honesty.

      Fiddling expenses is neither truthful or honest. Being dishonesty in one sphere is a good indication of dishonesty in another. i.e. a dishonest politician is less likely to do their honest best for us or our children.

      Like Private Public Pillage (PPP) marketed as Public Private Partnership. I would hardly trust a fiddler in expenses to be totally honest in seeing to their duty when selling off access to our family silver.

      A high level perspective that sees lack of duty, trust, truth, and honesty at the top can follow the flow of infection all the way down as it collects in the drains and the sewers, and ends up as effulgence pouring over the heads of the poor unhealthy children suffering from poverty at the bottom.

      We must be lift our fight up the chain and our own standards upwards if we wish to truly help our fellow citizens.

    6. By Reid on Jun 22, 2010 | Reply

      Chris as you say there is growing distrust,viewed failed public duty and dishonesty.

      So the reality really is that we should not be “looking up” for any behavior cues.

      Even babies at 6 months can understand the concept of morality (and unlike rugby it really is in our DNA).
      Maybe you should suggest that it is up to the public official -they need to raise their standards to an acceptable level.

      Simply put the lowly worm behavioral standards displayed by these people with duty to the public were not, are not and never would be our accepted standards.

    7. By Chris on Jun 24, 2010 | Reply

      Why wait for evolution to improve our morality, as morals are not set in DNA, e.g. Māori stopped cannibalism from the examples set by Pakeha society and culture. The Romans stopped gladiatorial fighting by the bravery of a priest to stand betwixt the opponents and forfeit his life.

      If the politicians are not displaying expectable moral standards then there is an urgency and an imperative to demand that they do because we give them a mandate to lead on our behalf and the appellation “Leaders” because they lead and most simply follow.
      Being complacent and letting worms to stay in power will allow them to eat, borrow, digest, regurgitate our society, as they set our laws, make policy, and TAX and spend our money.

      There is no end of talented people out there, and some of them should be given a chance to shine by replacing those that cast discrediting shadows over the fertile lands of New Zealand.

      Those with public duty, simply must have standards that are higher than the average. We must demand it, and expect it. Equally it must be unacceptable and condemnable if they have standard lower than average, which is what has been witnessed recently. And are like to see more of if Private Public Pillage (PPP) takes hold.

    8. By Reid on Jun 24, 2010 | Reply

      Chris I never said your morality was set by your DNA I said “Even babies at 6 months can understand the concept of morality” .

      All human societies at one time in their histories practiced cannibalism. While some Whites may think themselves superior in this regard, it’s worth noting the practice didn’t stop among Europeans as far back in time as they like to think.

      http://latemiddleages.suite101.com/article.cfm/cannibalism_in_pre_modern_europe

      For what you want there would have to be a move away from the economic model for all our policy and law in order for positive evolution to occur.

      RE the Current Economic Cannibalism(or the PPP).
      You are right we have got the talent for change and could generate an appetite suppressant for the private public pillaging.

    9. By chris on Jun 28, 2010 | Reply

      “White” bashing needs to stop.

      Cause: … “Māori stopped cannibalism from the examples set by Pakeha society and culture.” …

      Result: … “While some Whites may think themselves superior”…

      Effect: Today whites feel bad about themselves, and are stopping pushing for superior morals, for superior music, for superior science, and for superior art etc. Slowly the superior things in life are being removed using simple guilt.

      Its time to change course, head into the wind and for “whites” to be confident of their positive improving driving force.

      Ps Reid, I’m not accusing you here, like the DNA its the imputed general conclusion which is the pervasive way of thinking today that I’m committing on.

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