PM makes U-turn on allowance
Prime Minister Christopher Luxon’s promise to pay back $13,000 of taxpayer cash he claimed while living in his own Wellington apartment has raised critical questions about the way politicians can pad their salaries with public money.
Auckland-based Luxon, who is a multimillionaire and owns seven properties mortgage-free, first said he was entitled to claim $52,000 a year of public money because he was not living in Premier House, before yielding to pressure yesterday afternoon.
Luxon, who spends two nights a week in the capital and has a salary of $471,049, made the U-turn after first rejecting suggestions it was hypocritical to claim taxpayer cash when he could stay at the Thorndon residence, at no extra cost to the taxpayer.
Luxon and his Finance Minister Nicola Willis are promising to “restore a culture of fiscal discipline” and cut public services by between 6.5% and 7.5%. “It is an entitlement and I am well within the rules,” Luxon told reporters about 3pm, before adding there would be many other MPs also claiming the money.
Less than two hours later, his office released a statement, and he appeared on talkback radio, to announce he would pay back the money. He said talkback hosts Heather du Plessis-Allan and Kerre Woodham had changed his mind.
“It’s clear that the issue of my accommodation allowance is becoming a distraction,” his statement said.
Luxon had claimed the $31,000 annual accommodation allowancewhile living in his home as an MP – and was going to claim up to $52,000 a year allowed for prime ministers, though few others have. In addition, according to the Parliamentary Service Commission, he claimed a taxpayer-funded monthly lease of $3750 for his Auckland electorate office, which he also owns outright and is valued at $1.52m.
Last month Luxon said he had not moved into Premier House as he considered renovations on the residence, which had maintenance issues.
The focus on the revelations and renewed interest in Luxon’s personal wealth will serve as an unwelcome distraction for his government.
Luxon and his ministers would prefer to talk about their policy programme, and its moves to repeal legislation and policy established by the former Labour government ahead of March 8 – 100 days after its election victory.
MPs have to declare any conflict of interest relating to electorate office leases, and MPs across the House are renting electorate offices where the landlord is a related party.
At least 20 MPs across parties are claiming up to $45,000 to stay in their own Wellington homes, meaning taxpayers are helping to pay their mortgages.
Sir Bill English, a former deputy prime minister and finance minister from the National Party, earned the nickname “the double dipper from Dipton” for claiming $32,000 in taxpayer cash to live in his Karori home. Sir Bill, who was from Dipton – a small town 60km north of Invercargill – ended up paying back the accommodation supplement and promised to stop claiming it.
At that time, then-Prime Minister John Key used the same description Luxon would 15 years later, calling English's housing allowance scandal “an unfortunate distraction”.
Luxon earlier yesterday said he would “ideally” live in Premier House, but that it was in need of structural repairs. He was still “digesting” a report, passed on from Labour leader Chris Hipkins, near the end of his tenure as prime minister last year.
Hipkins said it outlined how Premier House had a variety of structural issues, but that it was warm, dry and liveable. “It’s what you would expect; the carpet’s pretty worn, the décor is pretty dated, and it does need some work.” A separate November briefing on Premier House outlines the need for investment to “protect and restore” its “integrity” and to “reflect its purpose and status”, but it did not say the residence should not, or could not, be lived in.
Hipkins said, prior to Luxon’s U-turn, that it was hypocritical and a “slap in the face” for public servants losing their jobs.
MP accommodation and travel expenses are released every three months by the Parliamentary Service and the Office of the Clerk. These are the costs of travelling between their home, constituency and Wellington, and for them to live in the capital during sitting weeks. MP expenses came to almost $1.7m and the costs incurred by ministers came to more than $670,000 for the three months ending December.
According to property records, Luxon’s seven properties include his house in Remuera, a Waiheke property, his Wellington apartment, an electorate office in his Botany electorate, and three investment properties in Onehunga.
According to publicly available property valuation estimates, Luxon’s property portfolio could be worth more than $19 million.
Before entering Parliament, Luxon was a high-earning corporate executive both overseas and in New Zealand, including as chief executive of Air New Zealand where he earned $4.2m in his final year in the job. Before the election, he earned $296,007 as leader of the Opposition.
ACT leader David Seymour, a coalition partner, defended Luxon. “He’s basically being treated differently because he’s been financially successful, and that, I don’t think, is fair.”
There now seems only one scenario under which Newshub journalists, or at least some of them, could keep their jobs.
And that is if Sky Television decides to take them on to set up its own news and current affairs arm.
But that may be more than just a long shot.
Sky Television won’t say whether it could pick up some of the pieces of Newshub. But it is clearly leaving the door open. Commenting on the day of the shock Newshub announcement, a spokesperson said that it was keen to explore the role it might play as a Kiwi broadcaster.
“We know the importance of news to our customers and the importance of plurality of news in New Zealand generally, and as a New Zealand broadcaster we are keen to explore how we might continue to play our part in delivering strong local news,” she said. That sounds quite encouraging.
Importantly, Sky TV has all the infrastructure to step into the role that is being vacated by television channel Three owner Warner Bros Discovery, even including suitable broadcast studios gathering dust.
All it would really need is the people. It would have the option of offering news through its advert-supported free-to-air Sky Open channel, formerly Prime, and perhaps putting some content behind its pay-TV paywall.
It is worth noting that Sky has been making strides pushing into the television advertising market.
Indeed, that will have been one of the issues that has compounded Warner Bros Discovery’s financial woes.
Announcing its interim financial results on Wednesday, Sky boasted that it had increased its television advertising revenues 12% in the second half of last year, when it estimated revenue for the sector as a whole fell by 16%.
Assuming Sky TV might need $15 million to $25m a year to run a minimum-viable news product, that would be a significant commitment but one within its means.
The pay-TV firm has been increasing its dividend and last week announced it planned to splash out another $15m on share-buybacks.
As a result of the closure of rival Spark Sport, Sky could realistically expect to slash north of $50m a year off its annual content costs in the near future by reducing payments to NZ Rugby and other sports organisations.
Up to now, Warner Bros Discovery has been producing Sky’s News First bulletin – which plays on Sky Open at 5.30pm – under a revenue-sharing deal, so any recouped revenues from that could go into the pot to produce its own news.
Without some sort of investment in news, Newshub’s closure will leave Sky Open with a prime-time hole.
In the medium term, Sky may need to broaden its business away from its current heavy reliance on sport, and there are few obvious opportunities other than news and current affairs. But it is clear that no arrangement has been put in place for Sky to pick up any of Newshub as yet.
Assuming it is looking at this opportunity, it will be doing so from scratch right now – trying to work out if it is a commercial opportunity that stacks up.
A complication is the significant uncertainty facing traditional broadcast television more generally. It appears doubtful there will be much appetite or cash from TVNZ or the Government to keep DTT television broadcast infrastructure running beyond the next few years. And there is a question-mark hanging over free-to-air satellite television broadcasts beyond 2032.
That means all television-based news and current affairs services may need to go online in the medium term, which will be a big change for any media outlets still in the news game.