Part 2: Issues of Eligibility for Allowances Based on Residence

Parliamentary salaries, allowances and other entitlements.

9: The Wellington Accommodation Allowance

Introduction

901
In this part of the report we return to the Wellington accommodation allowance, which was the primary focus of our Interim Report.

902
In our interim report, we made a number of observations on the system for administering accommodation allowances and drew a number of conclusions about the management and overall control and “ownership” of the system. Part One of this report has addressed those issues in further detail.

903
The prevalence of situations in which eligibility for the Wellington accommodation allowance was difficult to assess highlighted the need for further attention to the matter of how to determine who is eligible. Therefore, that is our focus here.

The Nature of the Allowance

904
As we discussed in our Interim Report, the common element that defines eligibility to a Wellington accommodation allowance, as well as the night and travelling allowances, is where the MP lives when not on Parliamentary business.

905
The HSC has stated the underlying principle as follows:

Every member should reside in his or her primary place of residence at the member’s own cost. However, when a member is required to stay away from his or her primary place of residence on Parliamentary business then that member should be able to recover the actual and reasonable costs incurred or a reasonable allowance on account of those costs.23

906
If an MP rents a property in Wellington, the allowance entitles the MP to claim all or a portion of the monthly rent. If an MP owns a property in Wellington, the MP can claim the interest on a mortgage associated with the property. Both types of claim are subject to a 6-monthly maximum.

907
In addition, an MP can claim some irregular monthly costs – such as rates and heating costs – as long as the overall maximum limits are not exceeded (refer Appendix 2, Table A, on page 76).

10: Basis of Eligibility – “Primary Place of Residence”

Evolving Basis

1001
We described in our Interim Report how the test for eligibility for the Wellington accommodation allowance had evolved over a number of years.24 Since 1999, the HSC has used the term “primary place of residence” as the basis for the test.

1002
When the events examined in our Interim Report took place, the term “primary place of residence” meant, in relation to an MP who resided outside the Wellington commuting area,25 the MP’s residence outside that area.

1003
Advice we received from the Crown Law Office said that the test was objective and required consideration of where an MP would be living when not on parliamentary business. However, we expressed some concern about the lack of specificity and guidance in the test, and its lack of relevance to the circumstances of List MPs.

1004
We also commented on the difficulties in applying the term “primary place of residence”, which can be magnified in particular circumstances. For example, an MP may have more than one residence at which he or she lives when not on parliamentary business. One of those residences may be in Wellington, which the MP uses partly for parliamentary business, as required, and partly for other (non-official) purposes.

1005
Alternatively, an MP’s place of residence could change completely (by, for example, the MP taking up full-time residence only in Wellington) over a period of time, or the MP could continue to own or rent two residences through the period.

1006
In such circumstances, the MP’s “primary place of residence” for the purpose of eligibility for an accommodation allowance can only be determined on the facts of each case – with regard to the personal circumstances and domestic arrangements of the MP at the relevant time.

1007
It was for these reasons that the HSC changed the definition of “primary place of residence” in its 2000 Determination. Effective from 1 January 2001, the term means:

… such place of residence as the [HSC] approves from time to time as the [MP’s] primary place of residence in New Zealand.

Assessment Under the 2001 HSC Definition

1008
Before 1 January 2001, an MP was not required to make any formal statement as to the location of his or her primary place of residence. Nor was an MP required to provide any evidence to support their eligibility to claim. All that was needed was a signed claim form – certified in most cases by a party Whip.

1009
As we highlighted in our Interim Report, the practice of leaving an MP or Minister to establish their own eligibility in the absence of clear written guidelines places a claimant at risk of breaching the entitlement rule.

1010
The 2001 HSC definition addresses this risk and is, quite clearly, a significant improvement. Since 1 January 2001, the HSC has approached its task of making individual determinations of eligibility by:

  • preparing, in consultation with the Parliamentary Service, a questionnaire to obtain details of an MP’s residential circumstances;
  • sending the questionnaire to all MPs who were claiming the Wellington accommodation allowance on 26 January 2001; and
  • considering the information received as the basis for an individual determination of eligibility.

1011
The HSC questionnaire is reproduced in Appendix 4 on pages 82-83.

Our Review of the HSC’s Questionnaire Approach

1012
Because of the importance of the definition of “primary place of residence”, and the controversy that had surrounded it, we decided to evaluate how the HSC was going about making individual determinations.

1013
For the purposes of our review, we identified a number of factors which we thought could be relevant to an objective determination of residence. We based the factors on relevant law (including the law relating to place of residence for tax purposes) and the two cases that we addressed in our Interim Report. We then compared those factors with the HSC’s questionnaire.

1014
The factors we identified were:

  1. the extent of the MP’s parliamentary duties, and the amount of non-parliamentary time available to the MP to return “home”;
  2. the locations where the MP spends most of that nonparliamentary time;
  3. the locations where the MP’s current spouse or partner and family live, and where other dependent family members usually live (including where they spend most time, work, or attend school);
  4. the person in whose name (whether the MP, the MP’s spouse or partner, or some other individual or legal entity) each property is owned or rented, and the utilities (e.g., electricity, telephone) are supplied;
  5. the level of the MP’s financial commitment to meeting the financial outgoings on each residence, including property maintenance;
  6. the type of accommodation available to the MP at each residence (e.g., boarding, flatting, or full occupation), and who else lives there (other than the MP’s family);
  7. the availability of each residence for use by the MP at any time (e.g., whether it is rented out in periods of absence);
  8. the nature and extent of the MP’s ties to each local community in which he or she has a residence;
  9. the residence where the MP intends or expects to live should he or she cease to be an MP;
  10. the residence where the MP and members of his or her family are registered for electoral purposes; and
  11. for electorate MPs, the location of the electorate.

1015
We recognise that some of these factors may have a subjective element. Also, some factors will be more relevant, or require greater weight to be attached to them, than others – depending on the circumstances of each case.26

What We Found

1016
We found a high level of consistency between the HSC’s questionnaire and the factors we identified. We conclude that the questionnaire provides a comprehensive approach to aid the HSC in determining an individual MP’s primary place of residence.

1017
However, the HSC’s questionnaire does not address two of our factors:

  • consideration of the extent of an MP’s parliamentary duties, and the amount of non-parliamentary time available to that MP to return “home”; and
  • the nature and extent of the MP’s ties to each local community in which he or she has a residence.

1018
Either of these two factors could have an element of subjectivity. Nevertheless, in our view they could (in appropriate cases) be capable of measurement on an objective basis. Such measures could be quite significant in determining “primary place of residence”.

Concluding Comment

1019
The new approach introduced by the HSC to determine an MP’s primary place of residence is a considerable improvement on the previous approach.

1020
We understand that the HSC intends to review the new approach after its first year of operation. We encourage the HSC to consider what other practical improvements could be made – on the basis of our findings – to further enhance how it determines individual cases of entitlement.

11: Outstanding Cases of Eligibility

1101
Under our terms of reference, we agreed to look at any issues of an individual MP's eligibility for the Wellington accommodation or other ‘residence-based’ allowance, and Ministerial residences, should these arise in the course of our review.

1102
In addition to the cases of Ms Bunkle and Ms Hobbs, eight other cases emerged where either the residential circumstances of the MPs, or the nature of their claims, were not clear. These factors had the potential to place at risk the MP’s eligibility for the allowance or other entitlement that they were receiving.

1103
Three of these cases had been addressed by the HSC and the Parliamentary Service, and we were satisfied that no further action by us was necessary.

1104
The Parliamentary Service brought three cases to our attention:

  • We made our own enquiries into two of them and were satisfied that there was no irregularity.
  • In the third case, the Parliamentary Service had already undertaken some preliminary investigations. However, given the nature of the issues raised by the case, the Parliamentary Service (after discussion with us) referred it to the Serious Fraud Office. Subsequently, the Serious Fraud Office decided that there was no basis for bringing a criminal prosecution.

1105
In respect of the remaining two cases, no further action was necessary or appropriate by either the Parliamentary Service or us because:

  • at the time the claims were made there was no requirement for supporting receipts;
  • a significant period of time had elapsed since the claims were made; and
  • there was an insufficient basis on which to make further examination or enquiry.

1106
In our view, there is a particular issue about MPs claiming for the use of private accommodation. It is important that the matter is clarified. To that end, we strongly recommend that the HSC:

  • formulates a clear policy on MP accommodation at private residences – addressing whether claims for such accommodation can be made and, if so, the circumstances that would apply; and
  • clarifies for each type of circumstance what a reasonable level of claim for such accommodation by an MP might be.

 

23: Parliamentary Salaries and Allowances Determination 2000, Explanatory Memorandum.

24: Paragraph 803, page 36.

25: The Wellington commuting area is defined in the Parliamentary Salaries and Allowances Determination 2000 as comprising the cities of Wellington, Lower Hutt, Upper Hutt, and Porirua and the Paraparaumu Ward of the Kapiti Coast District.

26: We envisage that the HSC would take a similar approach to that now required of the courts in determining the existence of a de facto relationship in accordance with section 2D of the Property (Relationships) Act 1976:

  • Under section 2D(2), all the circumstances of the relationship are to be taken into account, including any of the nine stated matters that are relevant in a particular case. Under section 2D(3)– no finding on any of the nine matters (or any combination of them) is necessary; and a court is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the court in the circumstances of the case.

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