Entitlements in the “Principality of Us” vs the “Principality of AUS”

The recent focus on politician entitlements again draws attention to the manner in which some members of parliament believe themselves to be a part of the “Principality of Us” rather than the “Principality of AUS”.

Canberra

Federal Health Minister Sussan Ley has resigned following scrutiny of her use of entitlements, specifically trips that she made to the Gold Coast where she bought a property. This case followed another in 2015 when former Speaker Bronwyn Bishop was called to account for chartering a helicopter to fly to a party fundraising event. The latter event led to a review of the parliamentary entitlements scheme. The review was published in February 2016, but it was not until after the media focus on Ley’s travel that Prime Minister Malcolm Turnbull announced the recommendations of the review would be implemented and an independent agency would be created to monitor parliamentary entitlements.

No one would say that abuse of entitlements, or expenses, as they are known in the private sector, is unique to politicians. False claiming of expenses occurs more frequently in business than many realise – Australian Human Resource Institute President Peter Wilson recently told the Australian Financial Review that while companies spend an estimated 30% of employee salaries on corporate expenses, only 5% were legitimate — and senior management are often among the perpetrators.

Although some may believe diddling expenses is all part of the game, when taken seriously it is considered fraud, classified as a misappropriation of assets. According to PWC’s 2016 Global Economic Crime Survey  and the Association of Certified Fraud Examiners’ Report to the nations on occupational fraud and abuse, somewhere between 15% and 20% of fraud is committed by owners or executives.

Yet even acknowledging that there are abuses in many fields of endeavour, the frequent reports of questionable expense claims by many politicians appears to be an endemic issue – and one that stretches far beyond defined entitlements.

Take for example the former MPs who went to the High Court to challenge the downgrading of the Life Gold Pass travel scheme provided to retired parliamentarians from unlimited domestic travel to 10 free domestic return trips per year. Their protest to the changed, though still generous, scheme was denied. Yet it encompasses the mindset of some politicians.

Some politicians seem to think of themselves as being in a class of their own – immune to the rules and regulations they impose on the rest of the population. If the age of entitlement is over, it should be over for all.

Given this, it is good that there will be independent oversight of entitlements and that the recommendations of the review into entitlements will be implemented.

The review found that the confusion around what is and is not considered official business is one of the reasons so many ministers run into trouble with their claims. It recommended that this be defined.

Yet the parliamentary review also noted that an expenses system should be outcomes- and principles-based rather than rules-based. This acknowledges that rules will not cover all cases and that politicians will occasionally have to use their own judgement as to what is appropriate and not appropriate. It would also help avoid situations where a politician has followed rules, but when considered in isolation the case does not pass the “pub test”.

The principles the review suggested should be adhered to fell under the headings of:

  • Value for Money – Considering whether the expense provides value for money
  • Personal responsibility and accountability – Acknowledging that the politician is accountable for adhering to the rules and principles
  • Fair and reasonable recompense for business – Defining a right to be recompensed for fair costs incurred for work
  • Good faith – Expecting politicians to act in good faith

The idea of a principles- and outcomes-based expenses scheme fits neatly into the theme of culture, a recent hot topic for Boards following ASIC and APRA concern over recent corporate misbehaviour.

For the politicians, one step towards positive culture will be a change of language – instead of “entitlements”, the words used should be “work expenses”. The review stated that the word entitlements “conveys a sense of privilege rather than of fair recompense and support for legitimate work.”

If such recommendations, among others detailed in the review, are implemented, it will begin the journey of bringing politicians back into the line with the average Australian citizen. But it will only be the start. It will be important to consider other aspects of the “Principality of Us” mindset before there is true equality between the public and its representatives.

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