Failing the pub test: how can Australian voters call time on MPs' expense claims?

Christopher Knaus and William Summers
·8-min read
<span>Composite: Mike Bowers/The Guardian</span>
Composite: Mike Bowers/The Guardian

The lines were lighting up in the Riverina.

In the heart of Michael McCormack’s electorate, ABC radio was posing a simple question to locals as they woke up on Wednesday.

Did the deputy prime minister’s taxpayer-funded Melbourne Cup trip, revealed by Guardian Australia a day earlier, pass the pub test?

“My pub test? Mr McCormack fails this one,” said one caller, Sophie Scott.

Related: Michael McCormack and wife billed taxpayers for Melbourne Cup flights

Another local, Graham, texted in: “The politicians have one rule for them and another for us.”

A third pondered: “It might be legal, but is it ethical?”

Three years earlier Malcolm Turnbull grappled with this very same problem.

Facing an expenses scandal that had just claimed his health minister, Sussan Ley, the then prime minister had to find a way to stop politicians acting in ways out of step with public expectations.

First, he said, the language must change.

“I have to say I hate the term entitlements,” he said. “These are work expenses.”

The system, too, was in desperate need of reform.

So Turnbull made the biggest changes to MPs’ expenses in more than 25 years, using the UK’s model as his guide.

An independent regulator was established to oversee expense claims, bringing responsibility outside of the Department of Finance for the first time.

Revellers in the Birdcage on Melbourne Cup day at Flemington last year.
Revellers in the Birdcage on Melbourne Cup day last year. Michael McCormack and his wife flew there and back on a trip the then acting PM says was greenlit by the Independent Parliamentary Expenses Authority. Photograph: Julian Smith/AAP

The rules were tightened and simplified, requiring MPs to prove they travelling chiefly for parliamentary business and that their claims were publicly defensible, value for money and made in good faith.

The system was a crystallisation of the colloquial pub test.

But does it actually work?

Related: Cabinet ministers charge taxpayers for trip involving Liberal party fundraiser

This week, as the government prepares to review the success of Turnbull’s 2017 reforms, Guardian Australia has published a series of revelations raising new questions about the adequacy of the system.

Guardian investigations found that McCormack, then the acting PM, flew with his wife to Melbourne onboard a RAAF private jet, re-announced a funding promise made three years earlier, and then spent the day at Flemington for the Melbourne Cup, where he was treated to a spot in Tabcorp’s exclusive marquee.

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The couple then billed their flights home to taxpayers. McCormack says the Independent Parliamentary Expenses Authority greenlit the trip.

It was one of a string of questionable MP expense claims that Guardian Australia has uncovered.

Three cabinet ministers – Dan Tehan, Simon Birmingham and Stuart Robert – were found to have billed taxpayers $4,500 to fly to Sydney overnight. During their short stay they attended a lucrative Liberal party fundraiser at Channel Nine’s headquarters, which cost donors $10,000 a head to attend.

Related: Chris Bowen billed taxpayers for whirlwind trip to Labor fundraiser

The cabinet ministers argue that the expense was justified because they engaged in some parliamentary business in the hours around the fundraiser.

All three refuse to say whether they organised to attend the fundraiser first, before arranging parliamentary business to coincide with it.

The Liberal and National parties were far from alone. Labor’s Chris Bowen was revealed to have flown to Adelaide for a day trip in 2018, when he was the star guest at a Labor fundraiser held in the offices of consulting giant Ernst and Young.

Bowen was in Adelaide for four hours. The fundraiser went for two.

Yet he says he was there for legitimate parliamentary business, and that the fundraiser was not the main purpose for his trip. He also says he wasn’t at the lunch for the entirety of its duration.

That trip cost taxpayers more than $2,000.

Pauline Hanson, the One Nation leader, was found to have used a three-night trip to Perth to host a series of fundraisers, including intimate dinners for high-paying One Nation donors and a fish-and-chips fundraising event that drew far-right extremists from the Proud Boys.

Related: Pauline Hanson charged taxpayers for three-day Perth fundraising spree

Hanson says she was in Perth for legitimate parliamentary business but a spokesman would not detail what that business was.

All of these claims fall in to a considerable grey area left open by the current rules. Did they organise this travel mainly so they could fundraise, therefore falling foul of the requirements?

Or, as they say, were the MPs simply on legitimate official business that happened to coincide with fundraising activities?

One ABC Riverina listener on Wednesday morning encapsulated the problem neatly. If the public perceives a problem in this area, then there is a problem.

“Motives in the mind can’t be seen in the public,” Lou texted. “But actions can.”

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Yee-Fui Ng, an expert on integrity matters with Monash University, says the week’s revelations show that the rules are too lax and continue to be susceptible to abuse.

Related: Australian political expenses: experts urge overhaul to stop 'abuse of taxpayer dollars'

“These stories show that the age of entitlement is over – except for politicians,” she tells the Guardian. “There is a culture of entitlement and opportunism among MPs about their travel entitlements. This leads to a decline of public trust.”

There is little room for further declines in trust. Surveys suggest Australians’ level of satisfaction in democracy fell from 86% in 2007 to 41% in July 2018.

On current trends, that would leave fewer than 10% of Australians trusting politicians and political institutions by 2025.

“The result will be ineffective and illegitimate government, and declining social and economic well-being,” Prof Mark Evans, a governance expert at the University of Canberra, wrote last year.

Like all integrity matters, reform on MP expenses is hard and slow. Politicians are inherently reluctant to create systems that may come back to haunt them.

The rules should be tightened to prevent further rorting of the system

Yee-Fui Ng, integrity expert

Progress on other integrity reforms, such as a national integrity commission, has also been painfully slow.

But there is an avenue for change. The government is preparing for a three-year review of the MP expenses system, which will consider the adequacy of the laws and the performance of the IPEA.

A finance department spokesman said the review – mandated by the legislation – would take place “as soon as practicable after July 2020”.

“The Explanatory Memorandum to the Bill explains that the review would be thorough and independent to ensure that the Independent Parliamentary Expenses Authority (the Authority) is meeting its objectives of improving the accountability and transparency of parliamentary business resources,” he said.

Ng says the review should give the regulator a more active role, conducting regular audits of claims and deterring MPs from misuse.

“The rules should be tightened to prevent further rorting of the system,” she says. “It would be optimal to combine a principles-based approach with more prescriptive rules to reduce loopholes.”

Others, like Graeme Orr, an integrity expert at the University of Queensland, believe the grey area for mixed-purpose trips can only be eradicated by banning MPs from claiming for any trip on which they have engaged in political fundraising.

It’s a view shared by Transparency International Australia, whose chief executive, Serena Lillywhite, says there is “too much wriggle room and ambiguity” in the rules around mixed-purpose trips.

“One option for the review would be to not pay any travel expenses which include attendance at party fundraisers as part of the trip,” Lillywhite says.

A RAAF Falcon 7x VIP aircraft. Michael McCormack flew with his wife to Melbourne on board a RAAF private jet, re-announced a funding promise made three years earlier and then spent the day at the Melbourne Cup
A RAAF Falcon 7x VIP aircraft. Michael McCormack flew with his wife to Melbourne on board a RAAF private jet, re-announced a funding promise made three years earlier and then spent the day at the Melbourne Cup. Photograph: SGT Rodney Welch/Department of Defence

“This would overcome the current challenge in trying to determine what was the dominant purpose of the trip and would guard against stacking other parliamentary business meetings either side of a fundraiser event to work around travel entitlements.”

Hannah Aulby, the head of the Centre for Public Integrity, has a more fundamental fix: removing a key motive for misuse. She sees the current misuse of public spending as driven to some extent by the obsession both major parties have in raising party funds.

Lessen the need to fundraise and you remove a significant motive for misuse, she says.

Related: The questionable use of taxpayer-funded travel expenses by politicians

“Taking the heat out of the political fundraising arms race is a good place to start,” she wrote this week. “Caps on election spending stop the richest party from having an electoral advantage as both sides can only spend a limited amount.

“Couple this with increased public funding of political parties and there is no longer a great incentive to get ahead in the fundraising game at any cost.”

Whatever the solution, as Stephen Charles, a former Victorian supreme court judge, says the misuse of expenses is an “age old problem” that demonstrates one thing.

“There are people in parliament who think they are masters of the political universe,” he says. “I’m afraid until there is proper oversight and something that acts as a general deterrent against doing this, it is going to continue to happen.”