Staying in Canberra when you’re a politician does have some advantages, especially when you own or rent property in the national capital. For every night an MP spends in the town, they’re allowed to claim a $273 per night “travel allowance” from taxpayers to cover the costs of staying in Canberra.
The allowance, which is a flat rate, rather than a reflection of the actual cost of staying in the city, has led to claims of “double dipping” by some MPs. The issue re-emerged last week following revelations that Labor MP for Batman, David Feeney, stays in a Canberra unit bought by his wife, lawyer Liberty Sanger when parliament is sitting. As such, he’s entitled to claim $273 for each night he stays there.
Feeney and his wife own four properties, including three in Melbourne, some of which they negatively gear. But Feeney was in trouble for failing to declare a $2.3 million investment property in his electorate on the register of pecuniary interests for MPs.
Feeney is not alone. Former treasurer turned US ambassador Joe Hockey’s wife Melissa Babbage also owned a house in Canberra which her husband used when in town. It was a good buy. Babbage paid $320,000 for the house in 1997 and it sold last month for $1.5 million. During his time in parliament, it’s estimated that Hockey claimed around $184,000 in travel allowances over 18 years to stay in his wife’s property during parliamentary sittings.
While all that is within the rules, for an electorate told the age of entitlement was over, scoring $1000 from taxpayers to stay in your spouse’s house for a few nights struggles to pass the pub test.
The $273 allowance is not counted as income. And the deal is even better than that. The Daily Telegraph pointed out over the weekend that the ATO handed down a ruling saying MPs renting in Canberra from a spouse or family member are allowed to essentially negatively gear the property and claim income tax deductions on a range of costs, including mortgage interest, rates and power, on a second property. Even better, it’s capital gains tax free when sold.
But today, after backing the existing system over the weekend, Labor couldn’t resist the opportunity, with shadow treasurer Chris Bowen saying the opposition will look at changing the rules on travel allowances.
Bowen’s comments are a dramatic turnaround by the ALP, and aligns them with the Greens, who came out against the “double dipping” after The Tele pointed out an extensive list of nearly 40 MPs who own property in Canberra, including senior government ministers Mathias Cormann, Peter Dutton, Julie Bishop, George Brandis and Eric Abetz, as well as Labor’s Anthony Albanese, Penny Wong, Kim Carr, Mark Butler and Tanya Plibersek.
“In Labor’s view this needs to change going forward,” Bowen said. “I invite the government to make the same commitment.”
Finance minister Mathias Cormann rejected suggestions that MPs were “double dipping”, saying on ABC Insiders on Sunday that the allowances were set by independent umpires, the remuneration tribunal, and tax office.
“I don’t make the rules. None of us as politicians make the rules, we are expected to comply with them,” he said.
Prime minister Malcolm Turnbull pointed out the backflip by Labor when asked about the issue today, saying it was up to the remuneration tribunal to decide allowances for politicians.
“The way in which the allowance works in Canberra is that members and senators are paid an amount per night they stay in Canberra regardless of what accommodation they have,” Turnbull said.
“That’s the way the rule has operated for a very long time and I have certainly made those claims and I have conducted my affairs scrupulously in accordance with the rules that apply.”
No doubt both sides of politics will be watching public opinion keenly to see how long they maintain their current positions as an election looms.
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