The $5 Million “Software Subsidy” for Major Parties – And It’s Only Going To Get Bigger

Since 1996, an allowance has seen over $5.6 million in taxpayer funds made available to Federal Members of Parliament for “software reimbursement”, with members of the major parties directed to claim this allowance against software prescribed by their party.

A decade long cap on the allowance of $1500 per year has now been removed, thereby exposing taxpayers to greater charges by parties and reimbursement claims by MPs.

Since 1 July 2015, MPs are now free to spend as much of their office budget as they wish (or are directed to by their parties) on electorate management software (EMS) owned or managed by the major political parties.

The software reimbursement allowance (SRA) is the source of a massive public subsidy to the Liberal Party’s associated entity, Parakeelia Pty Ltd, for access to the Liberal Party’s EMS, Feedback. This has enabled Parakeelia to in turn make substantial donations to the Liberal Party in recent years – the subject of extensive reporting last week, led by the Fairfax Media.

The SRA is also claimed by members of the ALP, who pay the money directly to the Party for access to the Labor EMS, Electrac. Unlike the Liberal’s Feedback, Electrac is owned and managed by a third party, Magenta Linas, to which the ALP makes payments for access and support for its Federal MPs.

According to the records of parliamentary entitlements, in the 44th Parliament just concluded, only 7 Senators and 3 MHRs from the major parties failed to make a claim for the software reimbursement in at least one reporting year between 2013 and 2016.

There were 203 members of the major parties in the 44th Parliament, meaning a potential claim for $304,500 in any given year for software maintained by the major parties.

All but 20 MHRs and 13 Senators from the major parties made a claim for the 2014/15 SRA (the most recent year for which claims are available. It is also possible for additional 2014/15 claims to appear in future returns).

(While MPs from the minor parties and independents are entitled to the allowance, being able to spend it on any software not already provided by the Parliament, there does not seem to be widespread uptake of the benefit.)

In 1996, an entitlement of up to $1000 was introduced for “software reimbursement”. There is no documentation on the archived sites of the various Departments responsible for the administration of Members’ entitlements to indicate to the public how this was managed in the period up to 2004, when its existence was publicly disclosed in a Ministerial Circular increasing the amount of the allowance.

An extensive audit of MPs’ entitlements in 1999-2000 by the Australian National Audit Office in 2001 failed to identify the allowance as a distinct entitlement, and made no issue regarding its administration.

In February 2004, by way of a Ministerial Circular from then Special Minister of State Eric Abetz, the allowance was raised to a maximum of $1500 to take account of “cost increases and technological advances”. At that time, MPs from the political parties were “reminded” that they could only claim the reimbursement for “software nominated by the National Secretariat of their political party”.

An answer to a 2014 freedom of information request reveals that the nominated software provider in the case of the Liberal Party is Parakeelia and for the ALP it is the party itself.

As reported during the week, in recent years, Coalition MPs have been invoiced $2550 annually by Parakeelia for Feedback support, for which most Members claim the full quantum of the available $1500 SRA.

According to the annual returns for the National Branch of the ALP in recent years, Federal Parliamentary members of the ALP have each been paying a flat fee of $1650 each year. The flat fee is consistent with a uniform levy similar to the membership levies paid to the State Branch of which the MP is a member.  The $1,650 would amount to the maximum SRA plus $150 goods and services tax.

As part of the 2015-16 Budget, then Special Minister of State, Michael Ronaldson, announced changes to office entitlements, so as to “simplify, provide greater flexibility, and give greater clarity and certainty to Senators and Members entitlements”.

Among the changes was a consolidation of five discreet entitlements (Publications; Office requisites and stationery; Flags; Printing and communications; and Software) into one “office budget”; effectively a global budget encompassing the previously distinct (and sometimes capped) office entitlements.

This means that MPs are now free to spend as much (or as little) on any particular approved item within the global office budget (other than a $50,000 limit on “office requisites and stationery”.)

From 1 July 2016, the total office budget will be $103,610 for Senators and a minimum of $131,000 (plus a sum for postage calculated by the number of electors multiplied by 85c) for MHRs. With a rough average of 100,000 voters per electorate, Members in the House of Representatives will have a global office budget in excess of $216,000 a year.

Under the new rules, the SRA still requires MPs from major parties to use software nominated by their party, but with no cap on the amount that can be claimed, it is now open to Coalition MPs to claim the full $2550 currently invoiced to them – thereby fully funding a party subsidy from within an office entitlement.

It would also be open to the major parties to increase the cost of access to their respective EMS, knowing that it can be fully paid for by a publicly funded entitlement for office supplies.

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