Monday, October 28, 2013

Let MPs claim expenses as we do

You don't have to be a crook to be a rorter.  The current parliamentary expenses scandal isn't a story about bad people and corruption;  it's a story about poor incentives and bad rules.

The source of the expenses scandal is the vague governance system that rules expenditure.  When rules are vague, people interpret them to maximise the advantage to themselves.  This isn't surprising — that's just human nature;  that is also why rules should be clear and explicit.

Being an MP is a tough job.  MPs are on call 24/7 and must be on their best behaviour at all times.  They also have poor working conditions, with long hours and being away from home for long periods of time.

But here is the thing:  they get paid.  It is a well-paid job and people compete vigorously to get the job.  The base salary for an MP is $195,130, plus an electorate allowance of at least $32,000, and a payout if they lose their seat.

Then there are the entitlements well beyond the standard items such as salary and various forms of leave.  It is these that, even if not actually rorted, raise the ire of taxpayers.

We should have the best democracy we can afford.  So let nobody begrudge politicians their pay.  But let's also have transparency and consistency in their pay and conditions.

Most proposed solutions to entitlement abuse involve more disclosure and additional bureaucracy.  There is a simpler solution.  No entitlements.  Pay politicians entirely in salary (and leave).  Make it all taxable income, like most other employees.

Managing a constituency is the business of an elected representative.  That is what politicians get paid to do — any expenditure incurred in electorate business should then be treated as a work-related deduction on their income tax.  The Australian Taxation Office could work out what should be deducted, and what shouldn't, under the existing standard rules.

To be clear, this proposal relates to the remuneration of being an elected representative, and not to the business of government.  Expenditure necessary for the function of government should be paid by the government.  No doubt politicians will claim no clear distinction can be drawn between the business of politics and the business of government, but that is just cant.

Every other organisation in the country manages to resolve the difference between legitimate business expenditure and employee remuneration.

The downside of this proposal is that we may have to pay our politicians even more than at present.  That is the price of transparency.  Good government is not cheap.  But it may encourage our politicians to be more frugal with their own money as opposed to being spendthrift with our money.  Our politicians have exempted themselves from the accountability that every other organisation in Australia bears in this regard.  That has to change.

No comments: