Scoop Election 08: edited by Gordon Campbell

On the travel perks, and Ireland’s demise

November 18th, 2010

On RNZ this morning, Speaker of the House Lockwood Smith took us back down memory lane to a bygone era when MPs lived in log cabins and traveled by horse and buggy around their vast domains, while members of their extended family licked the stamps and ran errands through the snow on their behalf, to keep the family’s political enterprise ticking over… And in return, a grateful nation compensated MPs with heavily subsidized business class travel to overseas holiday destinations of their choice. Or something like that. Given their early hardship out on the political frontier, should such individuals now have their travel perks wrenched from their grasp, while in their dotage? Smith thought not.

I’m exaggerating what Smith actually said, but not by much. The Speaker’s decision to scrap the current system of travel perks and replace it with a subsidy system for parliamentary – related travel is a good one. The decision to retain the overseas travel perk for current MPs elected before 1999, and for former MPs, is a scandal. Contrary to Smith’s absurd depiction of the homespun virtues of electorate life pre 1999, MPs and Cabinet Ministers fared extremely well back then, relative to the income of the taxpayers who paying for their perks. By some estimates, Cabinet Ministers were on something like 5 times the average wage for much of the 1990s, and MPs on around three times that figure since the 1980s. The notion that the nation is now somehow duty bound to pay such already highly-compensated individuals an additional and outrageous perk for life, is ridiculous.

The motive for revisiting the perks issue has been a shabby one. All week, the mooted changes to the perks system have been pure political diversion, to distract attention from Cabinet Minister Pansy Wong’s abuse of the overseas travel entitlement, via her colluding with her husband to use the perk for personal gain, to advance her husband’s business activities – which on the evidence, have also been run out of Wong’s taxpayer funded electorate office. Not that Wong herself is answering any of these allegations, since a cone of silence has been dropped over her by her leadership, which has sent the media haring off after changes to the system as a whole. Judging by precedents with other ministerial ‘errors” Wong’s abuse of the system will probably be judged to have been a mistake, and she will be simply allowed to repay the money – which is an indulgence not extended to beneficiaries who abuse their entitlements, and who are routinely handed over to the Police.

The focus now is on what level of compensation MPs will get for losing the travel perk. According to Smith, they part-subsidise the current system – so presumably no fresh money should be involved, but merely a rebate of the current deductions back into their salaries. Should they continue to be asked to make some contribution to the new system of parliamentary – related travel? Give the current economic climate, there is a strong moral argument for them doing so.

For the same ethical reasons, some current members of Parliament elected before 1999 and former MPs should be willing to lead by example. How many of them would be willing to voluntarily surrender their pre-1999 overseas travel perk, for the general good – and to enhance the standing of Parliament in the community? Over to you, Phil Goff, Jim Anderton, Bill English, Trevor Mallard, Nick Smith, Murray McCully, Tony Ryall, Annette King….etc etc.

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Ireland’s Troubles

Ireland’s inexorable slide into a EU/IMF bailout situation is a tragedy. Left to its own devices – and with a rational injection of funds into its banking system – it would be able to trade its way out of its current troubles by 2014. It doesn’t look as though it will get the chance, as the EU leadership is clamouring for it to buckle and accept a full scale bailout, before the contagion spreads to Portugal, Spain and – hello again – Greece.

As some of the English media are pointing out….have the centuries of struggle by the Irish for independence from England now culminated in this abject surrender of political and economic sovereignty to Germany, and its bankers? Some are envisaging a kind of digital potato famine as those who can leave, will leave – and those who stay behind will be ground down by the austerity programme. The reality is that during a major recession, the eurozone can be particularly cruel to its smaller members – Ireland, Portugal etc – who suddenly find that their debt and their export goods are denominated in one of the world’s least benign currencies. Pretty hard to export your way out of that bind when your costs bear that currency burden and when the markets tend to be merciless, and contradictory. For most of this year, the markets have hammered Spain for not enacting austerity measures to sufficiently address its deficit. Then a couple of months ago when Spain finally started doing so, the markets hammered it again for showing this sign of ‘instability.’

Still, who would want to be running the EU right now? In order to stave off the collapse of some of its smaller members, the EU is rushing to implement a bailout regime that will bring in its wake a highly centralized system of control over the tax rates, deficits and public spending programmes of several countries within its loosely federated membership. The last time we saw this on the world stage, we called it the Soviet Union. That didn’t end very happily, did it? The presidency of Barack Obama is not the only thing reliant for its survival now, on economic recovery.

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    1. 5 Responses to “On the travel perks, and Ireland’s demise”

    2. By Peter on Nov 18, 2010 | Reply

      Could you explain the process whereby Mr Wong was able to abuse the travel perks system? Surely he has no access to the clerks in parliament who make the bookings, etc?
      For politicians, it always seems to come down to a “mistake”, whereas someone who fiddles their expenses at work is fired summarily, and possible prosecuted for theft. The idea that Mrs Wong will get the travel perk for life after abusing in this way does seem bizarre, not to say offensive. And the argument that it can’t be removed because it is implied in the employment contract of MPs needs testing, too. Which MP is going to go to court if agreement to ditch it retrospectivly is overwhelming?

    3. By richarquis on Nov 18, 2010 | Reply

      Peter – I’m certainly no expert, and welcome anyone who can give detail on the subject, but my guess is, given that his business was operating in her electorate office, there would be 2 ways to scam it: Firstly, the issue of rental costs for his business premises being offset by the taxpayer. Secondly, his tickets – I would guess that he has no access to the clerks, but she does, and would claim him as staff, somehow showing that he works in the premises.

      Like I said, I’m sure someone else can shed a brighter light, but that’s my guess.

    4. By Gordon Campbell on Nov 18, 2010 | Reply

      Inadvertedly, I missed out an explicit hat tip I owe to Simon Heffer for the centralisation argument and Soviet Union analogy in the comments above. Also, for all its problems with Ireland and Portugal to the west, the EU still hasn’t worked out its relationship with Turkey, the emerging power on its eastern flank. Maybe that’s another story, though.

    5. By Lynda Johansson on Nov 21, 2010 | Reply

      Here’s a suggestion. Make MPs salaries a fixed multiple of the minimum wage. In corporate jargon, it would firmly link their interests with those of the stakeholders. And just like a corporate, they could claim any legitimate expenses on top. It doesn’t really need pointing out how focussed MPs would become on closing the wage gap between NZ and Australia.

    6. By Joe Blow on Nov 21, 2010 | Reply

      Gordon I thought you would be the first to use the Ireland example to nail John Key to the wall with his ideas for turning New Zealand into a financial hub. But not a peep out of you…

      “[I]t would mean that overseas funds would be registered in and administered from New Zealand.

      The benefit would be the creation of back-room jobs and taxing the fund administrators. The funds themselves would not be taxed.

      Mr Key said Ireland had “done a lot of this work. It was cost effective, but also predictable.”

      The Prime Minister became very familiar with the reforms in Ireland when he was London-based head of Merrill Lynch’s global foreign exchange business. He shifted a lot of the bank’s business to Dublin.”
      http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10626240

      Maybe I missed that article. Still I thought this would have been a perfect time to nail this plan before it rears its ugly head again.

      What about plans for exploring New Zealand’s potential in clean energy?

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