Auditor-General's decision on parliamentary and ministerial accommodation entitlements

In September, the Auditor-General received some requests to inquire into the way parliamentary and ministerial accommodation entitlements are administered and how they have been applied in relation to Hon Bill English. We gathered extensive background information on the two systems for administering accommodation entitlements and analysed their application to individual circumstances, including those of Mr English.

Our conclusions

In relation to reimbursement of accommodation costs by the Parliamentary Service and Mr English’s “primary place of residence”, we have concluded that:

The current parliamentary system is designed to establish whether a member of Parliament (MP) maintains a current residence (other than a holiday home) outside Wellington rather than to decide where an MP “lives” in an everyday sense. Traditionally, that residence was in the MP’s electorate.
Mr English correctly completed the declarations he was required to as an MP, and provided other information on his accommodation arrangements, in order to claim Wellington accommodation costs.
Mr English’s various declarations and claims relating to his “primary place of residence” and accommodation costs were considered and approved as appropriate by the Parliamentary Service or successive Speakers.
The Parliamentary Service therefore reimbursed Mr English’s Wellington accommodation costs on the basis that he maintains a home in Dipton, as well as the Wellington homes Mr English and his family have lived in since 2000.
For at least 15 years, the parliamentary rules for claiming accommodation costs have specifically provided for MPs to claim their costs when they buy or rent a property in Wellington. This has enabled a range of practices to arise, including renting from family trusts. The administrative system now includes protections such as a market evaluation of rent and a cap on the total that can be claimed to manage the associated risks. The fact that Mr English was being reimbursed for the cost of renting a house owned by his family trust was not exceptional.
The Speaker and the Parliamentary Service have agreed with our concerns on issues we have identified in relation to the current system for administering accommodation entitlements and the term “primary place of residence”. They have begun to review those issues with a view to amending the rules.

In relation to the provision of a ministerial residence, we have concluded that:

The long-standing practice has been for the Crown to provide Ministers with a residence, but it was not until 2003 that this was formalised in law as an entitlement and linked to the Minister’s primary place of residence.
Ministerial Services owns some properties and rents others for Ministers, and tries to find properties that suit the needs of individual Ministers. It has sometimes taken over the lease of a property that an MP was already renting when they became a Minister.
If a Minister wishes to stay in their own home rather than take up a ministerial residence, they have in the past stayed on the parliamentary level of support and had costs reimbursed up to the cap of $24,000.
Ministerial Services had not considered the status of a home owned by a family trust until Mr English asked if Ministerial Services could take over the lease of the property he was already renting from a family trust. Ministerial Services decided it would rent the property if Mr English did not have a financial interest in the family trust.
Ministerial Services asked Mr English to sign a declaration that he did not have a pecuniary interest in the family trust. He did so, and attached a copy of the advice he had received about what amounted to a beneficial interest in a trust for the purposes of Standing Orders. Having received that declaration, Ministerial Services got a market evaluation of the rent, took over the existing rental agreement, and provided the house as a ministerial residence.
In our view, the advice that Mr English relied on to make his declaration was not applicable to this situation and was based on too narrow a test for the Ministerial Services' situation. We consider that Mr English does have an indirect financial interest in the trust.
This issue arose because of Ministerial Services’ evolving practice of renting properties for Ministers combined with the parliamentary rules that enable MPs to rent from family trusts or similar. The two systems do not fit well together.
At Mr English’s request, the rental agreement between Ministerial Services and the trust has now ended. Mr English has reimbursed the rent and other costs that had been paid.
The Prime Minister has announced that a new policy is being implemented under which Ministerial Services will no longer provide accommodation directly for Ministers. Instead, Ministerial Services will simply provide a fixed level of financial assistance to Ministers, who will make their own accommodation arrangements. This approach will mean that the question of whether a Minister has a personal financial interest in a property will no longer be relevant, and may help to smooth the interface between the parliamentary and ministerial accommodation entitlements systems.

As a result of our work, we have decided that there is no need for the Auditor-General to inquire further or more formally into these particular issues.

Improving the rules and administrative systems

In our view, the issues that require further attention relate to the improvement of both sets of rules and the two administrative systems for ministerial and parliamentary accommodation entitlements. The ministerial rules have been reviewed and will be amended and the parliamentary rules are about to be. We agree that this is necessary and recommend that both of these rule change processes specifically consider the interface between the two systems, to ensure a smooth transition from one system to the other, and that any differences in the systems are deliberate and clear.

In particular, we recommend that the aim be to develop a simple and sensible system for providing MPs and Ministers with appropriate support for the costs of their accommodation while in Wellington. The system should be:

clear and well explained;
grounded in principle, with a clear purpose and scope;
controlled by appropriate checks and limits;
transparent; and
seamless for those receiving the support, whether they are an MP or a Minister.

As with the administration of all public money, the system should also reflect the fundamental principles of accountability, transparency, fairness, and value for money. We emphasise that the system needs to be able to be understood not only by those administering it, but also by those to whom service is being provided, and by the general public who fund it.

We endorse the new practice of publicly releasing information at regular intervals on the various support arrangements for MPs and Ministers that are being funded by the public purse. It is an important step towards better transparency and accountability.

Closing statement

We acknowledge the co-operation we have received from the Speaker, Mr English, and from staff in the Parliamentary Service, and Ministerial Services while we have been considering these issues.

We have attached a detailed analysis that sets out our full findings and conclusions on the two systems for ministerial and parliamentary accommodation entitlements and how they were applied in relation to Mr English. We will not be making further public comment.

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