Have your say: Lindsay Tisch claimed Govt rent allowance for living in his own rental

By Bernard Hickey The New Zealand Herald reported this morning that National MP and Deputy Speaker Lindsay Tisch has been living in his own apartment in Wellington and claiming NZ$21,334 a year in expenses for being an 'out of town' parliamentarian. Tisch was charging the government NZ$410/week for living in the apartment on the Terrace that cost him NZ$260,000 in 2003, generating a return of 8% for the company that Tisch and his wife Leonie own.

The apartment has made a capital gain of $20,000, the most recent valuation rating it as worth $280,000. Mr Tisch said the rent was set independently at the market rate and he was not doing anything wrong by funnelling the money through his own company. "It doesn't matter whether it's going in there [his company] or going to my paying to Joe Bloggs down the road," he said. As Deputy Speaker Mr Tisch is paid a base salary of NZ$169,900 a year as well as getting a NZ$14,800 expense allowance, travel perks and a superannuation contribution.

Tisch is not the only MP doing this.

Other MPs are using similar arrangements to Mr Tisch, but Parliament's Speaker Lockwood Smith last night denied it was a loophole and said he was happy for the practice to continue as long as the rent they claimed was based on an independent market valuation.

Tisch, a former management consultant and company director who is the electorate MP for Waikato, has since moved out of the apartment, but also noted in his pecuniary interests that he received directors fees from the company. However, he said he had since checked and had not received fees. It seems MPs can own the apartments and pay full market rents to themselves as long as they're not repaying any of the mortgage and as long as they have set up a front company.

MPs from out of Wellington can claim up to $24,000 a year allowance for rent, board or hotel costs. If they own a property in their own name, they can use the allowance to service interest on a mortgage but not to pay off the principal - so if the mortgage is paid off or low, they no longer receive payments. A Parliamentary Services spokesman said this was because paying off the principal was not deemed an "actual and reasonable" expense under the Speaker's Directions. However, MPs can set up a front company, or put the property in a trust or superannuation fund and claim full market rent. Dr Smith said a change in the rules he introduced this year to require that MPs with an interest in a property got an independent valuation of the rent "protects taxpayers". He said it was "not an unacceptable practice" to channel the money through a company or trust. Mr Tisch lists the company - Heritage 653 Limited - on the MPs' register as a "property investment company".

My view No wonder National (or Labour for that matter) are so reluctant to change the rules around property investment. It seems many MPs and ministers know exactly how to extract the best out of both the taxpayer and the tax system. The hypocrisy is appalling. On the one hand we have the government saying the economy is unbalanced and New Zealanders have over invested in property and under invested in the productive sector. On the other hand they are personally investing in property and using the taxpayer to reduce their risks and generate tax-free capital gains. We reported in August last year about how over half of MPs in parliament before the election use family and other trusts. Nine MPs declared ownership in rental properties, although many of the trusts will also own properties which do not need to be declared under the current rules. Labour is not much better. When I asked Labour MPs at the banking inquiry how many had LAQCs, at least a third put up their hands. This is symptomatic of a fundamental problem. Those people running the country have become personally rich from the doubling of property prices between 2002 and 2007. Yet that underlying shift in the economy is handicapping New Zealand's ability to grow faster, to raise real incomes and to keep Generations X and Y from buying one way tickets to somewhere else with higher incomes and affordable property. This tendency of the baby boomers (Lindsay Tisch graduated from Lincoln University in 1974) to protect their capital gains is coming at a cost to them and New Zealand. They are having to watch their grand kids grow up overseas. Here's some detail from Tisch's profile on his website.

Lindsay and Leonie (Tisch) enjoy music, the beach, travel and walking. They have two adult children, a daughter in London and a son working in the hospitality industry in New Zealand.

Is this really what we want New Zealand to become: a nation of retired landlords that watch their grandkids grow up by Facebook? Your view? I welcome your thoughts and insights below.