Outrage over perks stressing MPs and families - Speaker

Speaker Lockwood Smith. Photo / Mark Mitchell

Speaker Lockwood Smith went on the front foot yesterday over MPs' international travel perks, saying the subsidies are a well-established part of an MP's salary package and that he feels partly responsible for the opprobrium attached to them at present.

"They have been deducted from their salaries. If it wasn't for this, their salaries would be higher."

Dr Smith believes the perks, and others, should be itemised in the MPs' pay decisions.

He said he had asked the Remuneration Authority to present its decisions on MPs' salaries differently to explain how the travel perks fit in but it did not do so in its latest one.

"I have written to them again because I think it is helpful because it does help people to see.

"Otherwise I don't blame people for thinking that this is a perk where someone is getting something extra whereas ... the total cost of it is deducted from the salary package of members."

Asked if he would take his 90 per cent discount this year, Dr Smith said: "I probably will. Don't know. Tell you what, though, anyone's wife is really, really troubled by the current focus on it. And it is causing a lot of stress."

As Speaker he felt partly responsible for that stress because he had decided to publish the information - previously kept secret - in the interests of transparency "and I feel quite a responsibility to make sure that the facts about how it is derived are out there".

Dr Smith briefed journalists yesterday on the recent history of the perk whereby MPs can get up to 90 per cent discount on international travel for them and their spouses, depending on their years of service.

After one term, all sitting MPs qualify for a rising level of discount. But only those elected before 1999 keep the discount after they leave Parliament.

The pay determination issued in 2003 by the Remuneration Authority sets out in detail how it reviewed MPs' pay and allowances with Inland Revenue. It says they worked out which parts could be considered part of remuneration and which covered expenses recovery.

It set a nominal annual salary for a backbencher at $142,700. Once it had deducted from the nominal salary various benefits for which it and IRD had assessed the value, it set the actual salary at $110,000 so the pay and the value of the perks amounted to a package worth $142,700.

The international travel perk was assessed to be an entirely private benefit, with an average cost of $5780 which was subtracted from the salary.

The average cost of spousal domestic travel was $7516 and IRD decided 45 per cent of it constituted a private benefit of $3382. That amount was also deducted from the nominal salary.

Superannuation benefits were also factored into the final figure with the remunerative value of the gold-plated scheme at that time assessed to be 23 per cent gross ($25,300), and 20 per cent for those not eligible to join the Government Superannuation Fund (MPs elected after July 1, 1992) or $22,000.

The 2003 Remuneration Authority decision said levels of pay to backbenchers were "now broadly in line with the levels paid in the public sector for positions of similar responsibility" but well below what would be paid in the private sector.

Dr Smith said he did not believe that the public or even most MPs realised that the travel subsidy had been counted when calculating MPs' pay and he wanted to make sure the facts were know.

The travel subsidy was a "subtle way" of recognising and rewarding experience.

"Total remuneration packages like this that recognise experience have some value or either you get people who have got independent means, very young people for whom the salary would be very useful or people who don't consider spouses - people who have spent most of their parliamentary career like me without a spouse."

Dr Smith said the travel perk was not under review although it would be considered as part of the wider triennial review of all parliamentary spending.

He had brought that forward and had asked former Speaker Sir Doug Kidd and economist Phil Barry to contribute.