Bill English’s Homing Instincts, for the Money

Clearly, the first item on the review of ministerial expenses is going to be to create a clear definition of what constitutes ‘home’ – because judging by the performance of deputy Prime Minister Bill English, ‘home’ is a word that means what he chooses it to mean. And Dipton – even if it is not where he or his family have lived or his children have gone to school for the past ten years or more – is what he regards as home, and the taxpayer is paying to humour him in this homage to his roots. Normally though, when people display such devotion to their home town – or to Tipperary – they don’t expect other people to pay for it.

English has not had a good week, or fortnight, on this issue. Earlier in the week he decided to pay back half of what he has received since the election in housing assistance – and then rather spoiled the effect of the gesture by calling it ‘leading by example’. In fact, the gesture put him on the same housing assistance rate as ordinary MPs – so it was rather hard to see the ‘leadership’ bit. Normally, that means being out in front of the troops. In a week when unemployment hit a ten-year high – and is forecast to get worse before it gets better – leadership might have meant foregoing any extra housing assistance at all, and getting by on his $274,000 salary.

That point seems to elude English entirely. It should not have eluded National’s spin merchants. Salary packages that include bonuses for housing, travel etc may be par for the course in the private sector – but they are historical anomalies among parliamentarians. The overseas travel perks for life that Sir Roger Douglas has availed himself of so enthusiastically were a reward created by a grateful nation in a bygone era when MPs were foregoing career advantages for life, in order to serve on salaries far below what they could achieve elsewhere, within a relatively prosperous society.

That wage gap and that general prosperity have now largely vanished – amidst a sharp rise in income inequality that the Douglas economic policies did a great deal to make possible. Even so, English and Douglas cling to their perks as if they were rights written in stone – apparently, with no sense of what this self indulgence looks like to families struggling to get by. If it was ever was, NZ Inc is no longer in a position to afford such largesse to the people steering the ship of state.

The pleas over the past fortnight from John Key and his spin merchants that Ministerial housing assistance is necessary to keep the families of Ministers happy, and together, have been a particularly grotesque miscalculation. Previously, the MPs concerned were getting housing support at half the current rate – now, as Ministers, their salaries have virtually doubled. Yet to keep their families happy and together, taxpayers must also double their housing allowances as well? Spare me.

By that logic, former Labour Ministers during the Clark government – who have seen their housing allowances halved over the same period – should be stampeding into the divorce courts. Perhaps the taxpayer can be expected to sponsor counseling for former Ministers and families making the painful transition back to life on $144,000 a year, heavily discounted travel, and $24,000 a year in housing assistance. Like an opium den, the Beehive seems to snare its inhabitants in a virulent form of the culture of dependence. We need to be compassionate about these housing handout fiends. Some toughlove, and cold turkey, is called for.

What Might Have Been

Last year, thanks to a last-minute intervention by the Clark government, Auckland International Airport narrowly avoided a takeover bid by the Canadian Pension Plan (CPP). This year, the Key government has signaled its intention to revise the rules for foreign ownership – supposedly, in order to foster the kind of foreign investment that New Zealand needs. In the process, the Key government plans to scrap the procedures that Michael Cullen invoked to thwart last year’s attempted takeover.

Would CPP in fact, have provided the sort of capital input that would enable Auckland International Airport to flourish – or would it have milked the asset to the detriment of New Zealanders ? We’ll never know for sure, but we can hazard a reasonable guess – because CPP’s fortunes have plummeted in the wake of the global economic crisis, and CPP directors have been taking a hammering in the Canadian press and in the Canadian Parliament for awarding themselves huge bonuses even while the fund’s fortunes shrunk by 18.6 % during fiscal year 2009. Is this the sort of enterprise that would had any inclination or ability to put fresh productive investment money into growing its assets in New Zealand? Hardly.

On the evidence of what has happened to CPP, New Zealand should be thanking its lucky stars that its prime tourism and transport hub did not pass into the hands of a pension plan in crisis. The lesson being – not all foreign investment is virtuous. Some of it can be about extracting monopoly rents from captive New Zealand customers. Back in the 1980s, it might have been possible for the naïve market zealots of the Lange government to treat the private sector and foreign investment as being inherently virtuous. In this day and age, it is almost criminally stupid to do so.

Unfortunately, the current government is giving no indication that it has learned from say, the asset stripping history of foreign ownership of NZ Rail. Or from New Zealand’s apparent inability to conduct such transactions competently. Earlier this decade for instance, New Zealand seems to have sold the South Island high voltage electricity grid to a US bank via a Cayman Islands tax shelter. without even realizing it had done so.


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