Two sides to perks plan

By VERNON SMALL deputy political editor

A move to make politicians' perks and pay more transparent and silence public criticism has left the door open to bigger pensions and higher electorate expenses for MPs.

A report prepared by tax accountant Jeff Todd and former MPs Stan Rodger and Joy Quigley has recommended sweeping changes to the way MPs' pay and allowances are set, including scrapping tax-free perks in favour of taxable lump-sum salaries.

It recommends a bigger role for the Higher Salaries Commission in setting MPs' pay, and says a move to a "total remuneration" approach would help the commission to explain, and when appropriate to defend, MPs' pay.

This would help to counter negative public perceptions "and give the media a clearer basis for scrutiny and commentary".

But while aiming for "fiscal neutrality", the report concedes there may be some flow-on costs from its proposals.

It recommended adding an existing $7000 tax-free basic expenses allowance to backbenchers' salary of $90,500. Adjusted for tax, that would lift a backbenchers' basic pay to $100,645.

A generous subsidised superannuation scheme is worth another $14,480 a year.

But if the allowances are "grossed up", the cost of MPs' superannuation could rise.

"We have not attempted to estimate the fiscal outcome of these sorts of 'calibrating' impacts," the report says.

The commission would decide if current allowances and entitlements should be "grandparented".

But Speaker Jonathan Hunt, who commissioned the report, said its authors were being cautious by leaving options open. He did not expect MPs' pensions to be raised.

Other MPs were speculating that the commission could follow Australia and give non-backbenchers' pension allowances a big boost.

MPs are now subsidised on the basis of a backbencher's $90,500 pay, even when they earn much more as select committee chairs, party leaders or Cabinet ministers.

Under the Australian model, senior MPs qualify for a pension subsidy based on a percentage of their whole pay package.

But Mr Hunt ruled that out.

He said it would be too politically sensitive and Finance Minister Michael Cullen was unlikely to approve the extra cost.

The report also proposes scrapping a separate allowance of between $8000 and $20,000 paid to the 67 constituency MPs depending on the size of their electorates.

The allowance is mainly used for travel costs, but does not have to be accounted for.

Under the new regime, MPs would be required to show actual and reasonable expenses were incurred. But the upper limit of $20,000 would be removed, allowing them to spend even more.

Constituency MPs would also qualify for a $56-a-day allowance for working away from home but within their electorate.

They would retain their out-of-Parliament office expenses, worth $55,000, and two staff. The 53 list MPs get one staff member and $34,200.

The report has been referred to party caucuses. It will be considered by next month's meeting of the all-party Parliamentary Service Commission. Necessary law changes would be sent to a select committee for public comment.

Mr Hunt said he would like to see the report's recommendations "definitely in place from the day after the next general election".