Another political housing ponzi scam revealed

From Fairfax:

As many as one in five federal politicians are using their travel allowances to supplement the cost of second homes in Canberra.

Politicians are entitled to claim $273 a night when they travel to Canberra for Parliament or other business and many keep second residences in close proximity to Parliament House.

Representatives for ministers including Finance Minister Mathias Cormann, Social Services Minister Christian Porter, Indigenous Affairs Minister Nigel Scullion and Assistant Defence Minister Michael McCormack confirmed they stay in houses or apartments they own and claim the travel allowance when in Canberra, which can work out at a minimum of $1000 a week or $18,000 a year.

I have no issue with pollies being subsidised to stay in Canberra but those allowances being channeled into investments in property (note, not “investment properties”) is just another rorting of the system that deepens the housing distortion.

Ban it.

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the fouding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

Comments

    • And whom, may I ask, is to wave the proverbial scalpel?
      Yep, that’s right, no one.
      At best they get a hair clipper to 1.

  1. I don’t see the issue with this. There is still a cost to them having this second home or investment property, so why shouldn’t they be compensated for using it as opposed to staying in a hotel?

    If they are rented out at other times of the year to other people then they are potentially forgoing other income in order to use it themselves.

    • There is no obligation for a politician to have second home or investment property in Canberra.
      That some choose to is their own decision.
      It comes down to letter of the law (written by politicians or their “independent” appointees) versus spirit of the law.
      It also seems from comments elsewhere that, as usual, functionaries are banned from such arrangements (e.g. Claiming per diem allowances when staying with family or friends).
      As usual, one rule for our snout-ridden friends in parliament and another for the plebs.

    • because staying in hotel would generate businesses and jobs in Canberra. This means that some part of that 18k will stay there.
      Using that money to pay off mortgages on an existing house doesn’t benefit anyone except politicians

      • So you think the test for any travel compensation shouldn’t be the cost to the public servant, but rather whether it creates local jobs?

        Maybe you think they should only get their meal allowance if buying food which contains a high % of local produce too.

        Absurd.

      • why is absurd
        why would society provide funds that improve wealth of a particular person as opposed to benefiting local community or the country?
        None forced politicians into the office, if they don’t like compensation I’m sure there will be many people who would be fine of having paid hotel as opposed to their second or n-th home mortgage.

      • @ BB

        with all the benefits that come with their profession and employment (implied or direct), salaries are redundant. Heck even home allowances are redundant.

    • Any other government employee would only be reimbursed for the money spent, ie live in a tent be reimburse tent fee why would this be different?

      • Many enterprise agreements are online, can you highlight which one you are talking about?

        AFAIK some do reduce the overnight rate if you are using non-commercial accommodation, but it’s usually still a fixed amount, not at cost. I wouldn’t be against a reduction either, $250 a night for hotel accommodation, $100 a night for alternative accommodation. I just don’t think it’s a ‘scam’ that they are reimbursed for accommodation expenses just because they have provided their own.

      • A second house away from where you live is expensive to run.

        They are due compensation for it.

      • BB,

        On my EBA if I forgo the company paid accomm I get $150 compensation, and forgo allowances of around $120pn (B,L & D) plus $26 o/n allowance. The company basically pockets the accomm cost and I’m now also responsible for my own travel costs.

        I’m not saying that they should get stuff all, but that is very generous.

      • BB take it as a given “I Know” that this is the case for most Gov. Dept’s I have looked into many claims, the remuneration is for out of pocket expenses not a top up on your already huge tax sub salaries.

      • Well Mark, I beg to differ. Are you looking at federal government claims?

        As an example to provide you here is the EB for DIAC:

        “Where accommodation is not required, the employee will receive the following payments in lieu of the cost of accommodation:

        A Camping or Boating Allowance of $102 per overnight stay where
        an employee is required to camp out or be at sea for official
        purposes, or

        A payment of $64 per overnight stay in all other situations.

        https://www.border.gov.au/CareersandRecruitment/Documents/diac-ea-2011-2014.pdf

        A bit more than $10 to cover a tent I’m sure you would agree.

        If you would like to see it calculated on out of pocket expenses rather than a fixed amount, how would you suggest this is addressed for those with a second home in Canberra?

        As above I think a lower fixed payment would be a reasonable outcome.

        Actual costs would be an administrative nightmare, riddled with loopholes.

        Reimbursement of (non-commercial) accommodation expenses is not a scam which was my main point.

      • drsmithyMEMBER

        If you would like to see it calculated on out of pocket expenses rather than a fixed amount, how would you suggest this is addressed for those with a second home in Canberra?

        It wouldn’t be reimbursed as they don’t have any out-of-pocket expenses. They’re staying in their own house, which they are paying for regardless of whether or not they are staying in it.

    • If they’re using it to pay for a home they own in Canberra, then they’re essentially treating it as income rather than as a per diem so it should be assessed as such and its use subject to either the fringe rate or their marginal tax rate; whichever is higher. Frankly, the government probably pays these people a high enough salary that there should be no such per diem and any expenses incurred from staying in Canberra (for those not owning a home there) can be personally written off by them as a business expense come tax time. Why do these people need to have their pockets padded any more than they already are? Anyone who refuses to take office because they don’t get a travel per diem probably doesn’t deserve the job.

    • I agree with you, Bullion Barron. There are distinct advantages to having an organised and known place to stay while working in Canberra. A hotel is likely to cost over $200 per night and why should we complain if any worker can make a better arrangement for themselves. It seems petty to me to complain about this issue.

      Further, perhaps the Pollie spends the money on a better cause than the Hilton Hotel ( or some other) chain; thereby doing more good in the world.

  2. Of course they would just put the property in a wife or other family members name to escape scrutiny.

    It should be the leaches sorry i meant politician should have to submit a receipt for the costs to be reimbursed. And reimbursement only when the costs are for accommodation costs that are at commercial arms length like the ATO test for NG claims.

  3. This is not a problem. Whether the expense goes to a hotel, a rented or owned property is irrelevant. Focus on real torts of which there are plenty.

  4. The biggest rort is a lack of taxpayer funded elections.

    If we have that, then hopefully the ALP will not be puppets of big firms.

    No idea what the union position is on mass immigration, but certainly they do not want cheap/illegal 457 visa workers and “students” to replace them.

  5. The point is the PR sounds bad. It’s like helicopter trips. But compared to troops in Afghanistan or Jap subs, it’s a drop in the ocean; a smoke screen. Why not just make all pollies instant Millionaires and have done with it?

  6. adelaide_economist

    The optics are terrible and it’s debatable whether a typical Federal public servant (albeit on a much lower maximum nightly cost, mind you) would be authorised to ‘pay themselves’ in lieu of a transaction with some formal accomodation. I suspect a lot of that would be in policy rather than EBs. I vaguely recall there was flexibility to do things like pay more yourself (above the limit allowable) to stay somewhere better.

    Regardless, it’s testament to the lack of concern about what it ‘looks like’ (a big one finger salute to the public) and I fear more than a few of them are negatively gearing those properties despite (apparently) not having them available for rent…

    As others have said, there are vastly bigger fish to fry.

  7. Even StevenMEMBER

    Federal govt employees generally don’t receive fixed allowances such that they can stay in a tent and keep the $250 (or whatever the amount is). I am aware this happened for some agencies in the past (and may still for some but would be rare I think).

    This appears to be a perk particular to politicians. I don’t like it.

    Increase politicians salaries so it’s transparent rather than these underhand perks.

  8. 18,000 tax free income huh.
    It’s a good argument to make the tax free threshold 36000 for everyone.

    If politicians need it, so must everyone else.

  9. Some are more equal than others…when politicians make laws they will obviously look after themselves first!

  10. Again they are being given the means to privatise gains and socialize losses. Politicians should live in government provided accommodation which should be modest with a low carbon footprint as an example of their commitment to equality. There is really no reason for “private” accommodation in Canberra, where the government are the primary source of income. Any “profit” gained is simply unnecessary cost to the people.