Recommended.co.nz | Guide2.co.nz | Voxy.co.nz | Gimme.co.nz
Homepage | login or create an account

Labour Sees Problems In New Housing Allowance Rules

Contributor:
Fuseworks Media
Fuseworks Media
Darren Hughes
Darren Hughes

Wellington, Sept 8 NZPA - Ministers could pocket tax-free cash under the revamped housing allowance system, the Labour Party says.

Prime Minister John Key announced the new rules yesterday, cutting through the confusion that existed under the previous system and allowing ministers up to $37,500 a year, tax free, for their Wellington accommodation.

Mr Key says it will be cheaper and more transparent but Labour's spokesman Darren Hughes told NZPA today there were problems.

"Ministers will be paid a flat rate of nearly $40,000 a year without having to produce any receipts or documentation supporting the amount they've actually spent," he said.

"Presumably, someone could find a property for $20,000 and pocket the other $17,000.

"I'm not saying anyone is about to do that but it would be a tax-free addition to their salary."

The changes are based on a review of the ministerial housing system sparked after details of housing claims released last month raised concern about how allowances were being used.

Some MPs rented properties to colleagues who then used their allowance to pay for them while the owner lived in another taxpayer-funded residence.

Also Deputy Prime Minister Bill English was targeted for claiming a much higher allowance for living in the same house as a minister that he lived in as an opposition MP.

Mr English paid back the difference -- of about $12,000 -- between what he had been claiming as a minister and what he would have been able to claim as an MP.

Under the changes:

* Ministers who stayed in the same home they were already claiming the $24,000 parliamentary allowance for would get a maximum $30,000 per year. The payment replaced the parliamentary allowance.

* Other ministers would make their own arrangements and pay for it out of a fixed payment of $37,500 a year -- equivalent to a market-based estimate of rent and a small contribution to other costs. Only one payment would be made per property.

* Ministers who chose to live in a hotel would be reimbursed up to $37,500 a year.

* Properties leased by ministerial services would be retained until leases expired to avoid penalties.

"The crown got a multi-hundred-thousand dollar saving today," Mr Key told reporters.

"This isn't a system designed around one minister. This is a system designed to give greater value for taxpayers and greater clarity."

The current system costs $2.4 million a year -- an average of $83,000 per minister.

The new system will save thousands but still cost at least $1.5 million a year.

Mr Key said some ministers would be out of pocket by as much as $10,000 a year.

"The review notes that if ministers purchased the equivalent services for their accommodation directly, the average cost is $48,295 per year, so the new rates do not, in most cases, cover the full cost ... my view is they can make do with less."

About Guide2.co.nz : Politics

Find the latest politics and election news, 'how to' guides and party policies on Guide2Politics.

 

Your Questions. Independent Answers.