Wednesday, January 23, 2013

MLAs' expense allowance lets almost one-in-four buy second homes in the capital

MLAs’ living expense benefits are likely too rich when 18 of them have been able to buy second homes in the capital.
It’s reasonable to cover living costs for MLAs from outside the capital region when they’re here on business.
But when almost 25 per cent of eligible MLAs use the expense allowance to help buy second homes in one of the province’s most expensive markets, the payments  deserve a tough look. (The information is from disclosure statements. A few have half-interests in the properties.)
MLAs’ decision to give themselves big pay raises and lavish pension plans in 2007 attracted much attention. (Rightly, of course. About 75 per cent of working British Columbians have no pension plan, but pay higher taxes so MLAs can have a gold-plated plan. The average pay for B.C. MLAs is now $118,000, more than the income of 96 per cent of tax filers in the province.)
But MLAs also voted for big changes in their benefits.
MLAs had been eligible for an allowance when they had to be in the capital on business. The amount - $150 per day - was judged enough to cover meals and a hotel room. Some members - mostly cabinet ministers - were in Victoria enough that the per diem allowed them to rent a place, or in a handful of cases buy a residence.
In 2007, MLAs decided they needed more. 
The new deal gives them $61 a day for meals, no receipts required. 
And it provides generous housing allowances. MLAs can rent, and claim up to $19,000 a year in expenses with receipts. Or they can claim $12,000 a year and not have to provide any receipts.
And they can also claim taxpayers’ funds to support the purchase of a second home in the capital, based on the same approach. With receipts, they can get up to $19,000 a year for “property taxes, strata fees, if any, insurance, basic telephone and Internet service, parking and furniture rental.” 
Or they can just claim $12,000 a year with no receipts. (It’s notable that MLAs believe they need up to $19,000 for a second home, but single parent with two children on disability assistances is allowed less than $8,000. Their children must not need housing up to MLA standards.)
The new rates are a good deal for MLAs from outside the capital region, or they wouldn’t be buying the condos and houses.
But is it a good deal for taxpayers, especially when the legislature sits so rarely? The legislature has been sitting about 47 days a year. Committee work and other meetings could bring an MLA to Victoria for another 30 days a year. Under the old system, he or she would get about $7,700 for accommodation. Enough for a nice hotel or long-term rental.
Under the new system, taxpayers pay at least $12,000, maybe more - a 56 per cent increase. (The extra costs might be less for MLAs or ministers who are here more often.)
Part of the problem in assessing the benefits is that MLAs continue to cloak their spending in secrecy, despite repeated promises to provide a proper breakdown. It’s impossible to tell what they’re doing with the housing allowance - or even whether the rules are being followed.
The whole plan was presented and approved without any rationale, justification or assessment of the increased costs to taxpayers. 
The government picked three panelists to examine pay, pension and benefits - two senior lawyers and a business professor. Their average income was well over $200,000. Their perspective on compensation would inevitably be skewed by their own experiences. Unlike past compensation committees, there was no one earning the average B.C. wage of abut $40,000. No one, as the BC Liberals used to proclaim in the old days, “Thinking like a taxpayer.”
There are better approaches. For more than two decades, Washington state has used a 16-person salary commission to deal with pay for elected officials. One member is selected at random from the voters' list in each of nine geographical areas. The politicians appoint five members - one each from universities, business, personnel management, the law and organized labour. The state's HR department and universities get to name one person each. 
I don’t know if the allowances are reasonable, or fair. But when so many MLAs are able to buy second homes, they deserve a close look.


Laila Yuile said...

This is a brilliant post. Thank you for such an thoughtful and informative look at this particular aspect regarding politicians. Sharing.

Anonymous said...

Paul, I love how you kick butt even out of the country.

islandpapa said...

Just exactly WHEN are they in the capital?

Scotty on Denman said...

MLAs feel entitled to these perks which seem inappropriate to most taxpayers but perfectly legitimate to Members of the Legislative Assembly. Their thinking goes: other than public service which every MLA claims as his or her prime motivation, remuneration is far too low, considering (they say) the years away from pursuing another career; that's why MLAs qualify for a pension after only a short stint at public service--they need compensation for missing out on private pursuits. Never mind that many MLAs, especially backbenchers, actually do pursue private projects, whether at arm's length or in trust, whilst in office. Fact remains, though, that taxpayers generally feel MLAs are paid too much already so MLAs must be careful when voting themselves pay raises. One way to do that is to include things like living-out allowances; it's a way to thinly conceal part of MLAs' remuneration. It appears underhanded to us taxpayers but MLAs feel unabashedly entitled to it: they'll take the cash in lieu of a house in the pricy Capital City.

Plainly they are afraid of discussing their salaries fully and openly because they think taxpayers would demand MLA pay-cuts if they knew the real amount of money MLAs are entitled to. In this MLAs of every stripe are complicit. It therefore falls to people like Paul here to put the issue back into the open where it belongs. Even then the basics of the debate remain the same but there's no real reason to be sneaky about it.

Unknown said...

It's not clear in your article whether the $19,000 includes meal expenses. Even so, $19K is more than some of us make in a year. Do they pay tax on that 19K? I'm would guess not. So true that someone on disability is expected to live on less than $12K per year, but an MLA already making a large salary somehow needs that much more money to go to Victoria - for how many days per year? Disgusting. I thought that MLA's salaries and expenses were made public. I thought I saw a listing on the internet a couple of years ago. This type of expense structure definitely needs to be reviewed. I agree with Scotty on Denman that it would appear that this is just a way of giving themselves a raise in a sneaky manner.

Pete's Viewpoint said...

Which MLA's have a second home in Victoria?

paul said...

Peter: Sorry, I didn't keep the notes from the column, and things have probably changed. You can go through the MLA disclosure forms online and find the ones who list a Victoria residence in their assets.

Pete's Viewpoint said...

Thanks for your article. Very revealing. Interesting too considering that the bulk of govt decisions are made in the Vancouver offices.