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Oct 17, 2013

Expenses scandal: the rules leading MPs into temptation

Lead me not into temptation, oh Finance Department ... governance expert Stephen Bartos explains how the rules around MPs' entitlements encourage unscrupulous pollies to claim, claim, claim.

The problem of parliamentarians’ entitlements won’t go away.  Under our present system of multiple, complex and hard-to-define entitlements, reports of rorting are as predictable as the annual Bogong moth invasion of Parliament House now underway. It is rare for an MP to commit deliberate fraud — but some push the boundaries.

The current reporting arises partly from the change of government. What might have been ignored in opposition is magnified when a parliamentarian becomes a minister. It is a rule of politics: the higher a politician climbs, the more attention is paid to them by their opponents and the media. That applies to all sides: if Kevin Rudd had remained a backbencher, his visit to New York strip club Scores would never have become a story.

However once the stories start to multiply it is very hard to control the fallout. Yesterday we saw Fairfax reporting about Western Australian Liberal MP Don Randall — apparently inspired by a reader tip-off. That sort of citizen scrutiny is relatively easy today, because federal parliamentarians’ six-monthly reports on entitlements are published. The one advantage for politicians is that it takes massive effort to trawl through all the data — but citizen involvement can assist.

A further reminder about politicians’ claims in coming months will be the case against former speaker Peter Slipper. He argues that it is unfair to face prosecution while other parliamentarians making claims can clean the slate by repaying the money. But there is potentially an important difference. It is alleged Slipper made false claims, knowing them to be wrong, compared to others’ claims that push the boundaries beyond community standards but are not deliberately wrong.

This is a hard distinction to explain; it may not even be accurate given that important facts are yet to be established.

As Crikey clarified last week, there are a lot of entitlements. Some are more properly considered as office expenses. They include office rent, fit-out, staff and so on. Except for the rare times when a parliamentarian goes totally over the top in refurbishing, these excite little concern.

The remainder are for diverse purposes. It is an old-fashioned approach to remuneration: a base salary and numerous add-ons. It can still be found in a few other parts of the public sector such as the military, but rarely in the private sector. A detailed and complex system is costly to administer. But even worse, it favours lurk merchants who specialise in reading the rule book and exploiting every loophole. That is by no means the majority. It doesn’t have to be. If it applies to only 10% of federal MPs it still means 27 negative stories every reporting period; and public confidence in all members of parliament falls.

“Ironically it is a system that gives bigger pay packets to the ones with the lowest moral standards.”

The last major upswell of public resentment against politicians’ entitlements did lead to change. The most egregiously generous past entitlement — way outside anyone else’s reach — was the lifetime travel gold pass. That was abolished. Previously extraordinarily generous superannuation entitlements were brought into line with community standards. Reflecting this, parliamentarians’ pay has also risen to some $230,000 (depending on which electorate they represent; they have a base salary of $198,000 and an electorate allowance which is counted as salary).

Although that helped allay concerns for a while, there are still ample opportunities for politicians to make claims beyond the wildest dreams of ordinary workers.

Prime Minister Tony Abbott has resisted calls for reform. While in Brunei he said “you don’t want members of parliament to be prisoners of their offices … politicians are entitled to travel when the travel is reasonably related to their office and that’s what all of us do”.

This is absolutely fair for travel that really is related to an MP’s work. What does become a problem is add-ons for social events; grand finals, property deals. When Abbott competes in a high-profile sporting event he reasonably can claim that it is part of his job. But when an avoirdupois-challenged backbencher claims travel entitlements to get to a family event or pick up free tickets to a grand final it is different.

The Don Randall claim that the Finance Department cleared his travel claims is no defence at all. They process claims and approve them. But the rules provide that the judgement on whether it’s legitimate business rests with the claimant.

The Prime Minister’s Office has reminded Coalition MPs that they should submit their travel plans to the PMO in advance.

The other entitlement in the news has been publications. Here the problem is not that claimants have done the wrong thing; almost any book at all could arguably in some way be relevant to the job. Attorney-General George Brandis bought a lot of books, and had one of the biggest purpose-built bookcases in Parliament House. There was no suggestion that this was outside what he was entitled to claim. The problem is that this is considered an entitlement at all, lots of other professions require reading material and in other professions people buy what they need and claim it as a tax deduction. Exactly the same could apply to politicians, while perhaps allowing them to buy newspapers.

The final defence politicians make is that the rules are ambiguous and complicated. That is undoubtedly true. The online guidance is long and complicated. And that’s the plain English version, not the much more complicated underpinning regulation and legislation.

The fundamental drawback of the complex entitlements system is that it leads parliamentarians into temptation — some succumb. Ironically it is a system that gives bigger pay packets to the ones with the lowest moral standards. Many parliamentarians are scrupulous with their claims, don’t buy everything to which they are entitled and don’t travel excessively. They are the kind of people we want to see in the Parliament.

Sadly the system ends up paying them less than the ones who stretch and test every definition they find.

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16 thoughts on “Expenses scandal: the rules leading MPs into temptation

  1. Andrea

    “When Abbott competes in a high-profile sporting event he can reasonably claim that it is part of his job.”


    Rob Oakeshott also competed in the same Pollie Pedal and Ironman Challenge as Abbot but claiming expenses didn’t even cross his mind.

  2. dazza

    Politicians ripping off tax-payers is a constant source of news. There seems to be an immoral attitude of ‘oh well, if I get caught I may pay some of it back.
    However, I have always wanted to know why the same attention is not applied to company CEO’s who are responsible for $billions of tax payer money (ie super-funds)? The lurks perks and bonuses enjoyed by non-performing executives never seem to make front page news as if they were a protected species.

  3. Dogs breakfast

    Claiming expenses when attneding sporting events is nothing more than a rort. I’m with Andrea.

    Sure they go out and meet people, and that is part of being a pollie, but this not only doesn’t pass the pub test, it doesn’t pass any reasonable ethics test.

    The problem with that ‘meet the people’ line is that there is nowhere they can go that doesn’t meet that criteria.

    Primary purpose must be the arbiter, and the primary purpose of TA and others cycling around must be for personal reasons.

    Meeting the people is secondary, and in that instance claiming expenses is untenable.

    I would love the tax department to take this on to, Al Capone style.

  4. Bill Hilliger

    @…compared to others’ claims that push the boundaries beyond community standards but are not deliberately wrong. Well…indeed! Given (I hope), most parliamentarians are literate, some people would say that some have made claims that are just theft from the public purse. As a lifelong Commonwealth employee my work covered extensive travel away from home, rules about travel entitlements were not that complex, if you were able to read and write. But then I wasn’t a politician on $230K + numerous other allowances. It seems the more some earn, the more they feel entitled to take if the opportunity presents itself. And when finally they get rumbled – why, you just pay it back, and claim complex rules made you do it. Its a pity there weren’t more Rob Oakshots’ in parliament. We now seem to have *the winner takes all* mentality in our parliamentary system.

  5. klewso

    So, “you can use your allowance to pay your way around the country promoting your book, the proceeds from the sales of which are partly mine, partly the private publishing company, completely ignorant that you are doing the wrong thing deliberately”? Or to place myself within easy access to attend a private function like a wedding?
    We’re subsidising the cost of politicians pursuing their hobbies?
    [I would have thought an easy test would be “If I was a lowly, ordinary, battling tax-payer, would I like to be paying for a politician to be doing this?”?]

  6. shepherdmarilyn

    The claim that Slippers were deliberate is only the claim made by the AFP, I was surprised that Richard Ackland went with it as a fact instead of a claim.

  7. Pedantic, Balwyn

    In business the test of an expense claim is relevance to the job of the claimant; the higher up the corporate tree the more likely that there is flexibility in terms of the value of the claim, but the context remains relevance. So perhaps our pollies could explain the relevance of attending weddings, entertainment, novels, sporting events in the context of their tax payer funded job?

  8. Stephen Cox

    “When Abbott competes in a high-profile sporting event he can reasonably claim that it is part of his job.”

    As Andrea commmented above, why is this the case? He did this repeatedly as opposition leader, sometimes taking multiple days for such events. Meanwhile, he had, I thought, a full time, paid job as a member of parliament. Is this still acceptable behaviour as PM (generously implying it was previously). Was he undertaking full time parliamentary work while participating in these events? If not, what proportion of the time taken was he being paid to indulge his sporting hobbies?

    If Mr Abbott did not undertake full time work, did he take leave? If I undertook such leave from work I would need to have acruued sufficient leave or take leave without pay, the latter at the discretion of my employer. Has this been the case for Mr Abbott? My employer certainly would not be paying my expenses for it as well.

    Crikey, please explain why Mr Abbott’s sporting hobbies are part of his work? If he was an African Violet enthusiast and presented his blooms at competitions, could this also be claimed?

  9. Bill Hilliger

    @ shepherdmarilyn. good point about slipper and the claim made by the AFP keystone cops. Remember the claims of the same keystone cops and Dr Haneef.

  10. sparky

    Don Randall made a claim that he knew was wrong and took the family. If Peter Slipper is being charged then so should he.
    The sporting participation of our PM is a complete and utter rort, have they been pampered for so long that they believe everything they do is claimable.