Parliamentarians deserve an allowance system that leads them not into temptation.

The extent of corruption in public life is determined by opportunity, risk and reward. MPs will never get rich from misusing printing allowances — the reward is low — but they certainly have opportunities, every day, and the risk is negligible. Even the more blatant misuses of the allowance can be explained away as being within the (loosely worded) letter of the guidelines.

Our current system, according to yesterday’s report from the Auditor-General “involves limited accountability for entitlements use”. That is, politicians know that if they want to rort, the risks are low. We can fix the system by increasing the risk of detection — or removing the opportunities.

The Audit report’s recommendations for better checking and certification will help. An even better solution, alluded to in the report’s comparisons with the US, but unfortunately not in the recommendations, would be full transparency: that is, online reporting of all spending by parliamentarians.

Politics is by nature highly competitive. If an MP sees a competitor using allowances to gain some electoral advantage, it becomes extraordinarily difficult for any MP not to follow suit. It is a problem of collective behaviour management; if the rules were to prohibit everyone from rorting, then there would be no competitive advantage.

If, however, the rules are lax enough to allow some to rort, the incentive structure strongly encourages everyone else to do the same. The only way to avoid this sort of collective action problem is tougher regulation.

Politicians have a seriously distorted remuneration structure. Salaries are low, perks are correspondingly high — but unfairly distributed. Long service is disproportionately rewarded, through gold pass and other entitlements. Being around for a long time, regardless of the quality a parliamentarian makes, is good enough. Parliamentary superannuation used to be outrageously generous by community standards. It has been reformed now, but those with a grandfathered entitlement are still on a good wicket.

Other allowances — of which there is a long list — are likewise capricious in their impact on politicians. For example, Canberra MPs have long complained that their colleagues make a motza from travel allowances to attend the parliament while the ACT representatives languish under-remunerated. The allowance system is almost comically random in its impact on individual MPs.

The ideal solution is the one proposed by MP Rob Oakeshott — cut allowances, increase basic salaries. It would be more transparent, close off avenues for abuse, and be administratively simpler and cheaper. He is of course an independent. Sensible solutions are harder to implement from government — but if there ever was a time ripe for a government to bite the bullet on reform of the system it is now.

Stephen Bartos is Director of Allen Consulting and a public sector governance expert.