Finance: The cost of governance

There are several costs associated with legislator labour in Pakistan.

First and foremost, the security threats in politically volatile regions impose substantial financial costs on legislators. They often allocate personal resources toward ensuring their safety.

The cost can be anywhere from Rs150,000 to over Rs1 million monthly, depending on the level of protection. Basic unarmed guards cost Rs25,000-35,000 per month each, while armed guards range from Rs50,000-75,000. Renting a bulletproof vehicle adds Rs500,000 -700,000 per month while purchasing one can cost Rs30-50m.

Additional expenses for CCTV cameras, metal detectors, and communication equipment can further increase costs. High-end security is normally for high-profile individuals, but for most, a standard monthly security expense of Rs100,000 to Rs150,000 remains essential, which makes it more than half of their salary, even in the least expense scenario.

Another critical financial aspect is the compensation received by legislators, which is about a monthly income of around Rs200,000 (including salary and allowances). This figure pales in comparison to their regional and global counterparts, or even senior public servants. Some countries even have pension schemes for their parliamentarians; examples include UK, Canada, India etc.

The economic and practical aspects of legislative work in Pakistan reflect broader challenges within the governance system

A perk of lawmakers is being entitled to air tickets, but they are not the only ones. Civil servants and other professionals also routinely receive travel allowances or funded trips as part of their roles, making travel a professional necessity rather than a luxury.

What are the implications of modest salaries, security expenses, and (supposing) self-funded travel? These factors deter individuals from middle and lower-middle-class backgrounds from entering politics, as they cannot treat politics as a part-time pursuit nor afford to forgo other means of livelihood.

This paves the way for “limited access order’ — a term used in institutional economics, describing a system where only a few have opportunities. This is in contrast to “open access order” — a social order where everyone has access to opportunities.

The lack of robust local governance structures, too, forces legislators to shoulder responsibilities extending well beyond their legislative mandates. These include getting funds for local development and providing constituents with access to essential services, creating an economic strain that is both financial and emotional.

Accommodating over 400 legislators in hotels during parliamentary sessions would lead to logistical challenges

Then comes the intense public and media scrutiny of legislators. While transparency is a cornerstone of democratic governance, constant surveillance often impedes objective decision-making, creating inefficiencies that ripple through the system. This can cause fiscal inefficiencies, delays in initiating projects of national interest, getting influenced by their media portrayal and so on.

Previously, I wrote that a major portion of the total cost, over Rs6 billion per year, was under the head of Parliament Lodges. However, the said amount is an assumption-based estimated (rental) opportunity cost — the value of the best alternative foregone — not the actual cost or expenditure.

The Pakistan Institute of Development Economics (PIDE), as an economic think tank, advocates for the optimal allocation of public resources. One such proposal suggests repurposing the prime real estate occupied by the lodges to generate substantial economic benefits, including job creation, increased government revenue and economic activity. To offset the change, it suggests that the lawmakers could be compensated for their accommodation in monetary terms.

In contrast, while economically appealing, this perspective risks overlooking essential governance considerations. Unlike profit-driven enterprises, state decisions must balance efficiency with broader public interest. Parliament Lodges — which, by the way, are in bad condition — represent a one-time investment with minimal upkeep costs while addressing critical needs for lawmakers’ security and accessibility.

Commercialising the lodges also raises practical concerns. Accommodating over 400 legislators in hotels during parliamentary sessions every few weeks would face logistical challenges, including availability, uniformity, and cost stability. Such a move might even require state intervention in private hotel operations to ensure accommodation for its lawmakers during parliamentary sessions, which would then disrupt the market dynamics, as well as create new avenues for corrupt practices.

Additionally, dispersing lawmakers across multiple locations would significantly increase security expenses, compounding logistical and financial complexities. This issue illustrates the tension between economic optimisation and governance pragmatism, refuting the commercialisation argument. Furthermore, the monetisation of accommodation, along with complemented security expenditure, will impose an additional burden on the already constrained fiscal space each year.

The economic narrative of Pakistan’s governance system reveals the silent hustle of legislators striving to balance financial limitations, personal sacrifice, and public expectations. To foster better governance, a nuanced understanding of their economic realities is imperative.

The writer is an institutional economist and policy analyst, serving as the Assistant Chief (Policy) at the Pakistan Institute of Development Economics, Islamabad

Published in Dawn, The Business and Finance Weekly, December 23rd, 2024