Of course Christopher Luxon is claiming an accommodation allowance to live in his own apartment. That’s the rich way, writes Mad Chapman.

The prime minister is rich. He earns a high salary as prime minister ($471,000 a year to be precise, much less than his $4.2m salary as CEO of Air New Zealand) but a high salary is not how one stays rich, because a salary can go away. The way to get rich, according to Robert Kiyosaki (Rich Dad, Poor Dad) and every other financial self-help book author, is to have passive income. More specifically, a way to earn money without actually having to do any work for it. In New Zealand, the most straightforward way to own an appreciating asset that will earn you money even if you do absolutely nothing to it is property. Christopher Luxon knows this, which is why he own seven properties and those properties will make him richer than a prime minister’s salary ever could.

The next level is to own properties that appreciate while also having someone else pay the interim costs (like mortgage and rates and insurance). In other words, renting out your property. Luxon knows this too, which is why four of his seven properties are investments, earning income from tenants and paying their own way. That’s passive income, baby!

But even property investors have to live in a house and therefore pay their own mortgage or rent at some point. And even property investors have to deal, in some way, with the people renting their properties, so there’s a smidge of work involved there.

Only now Luxon has ascended to the highest plane of passive income – truly the boss level – by claiming $52,000 in accommodation allowance in order to live in his own apartment in Wellington, an apartment that has no mortgage. The only thing better than having someone else pay your mortgage is to have someone else pay your mortgage and that someone else not even live in your house and also you have no mortgage.

Now, there are wrinkles to this story. Lots of MPs get an accommodation allowance because they have to spend a lot of time in Wellington and may not already live there. That makes sense, sure. And if Luxon had purchased an apartment this year in order to live in it for work, it would make sense for that allowance to be used to help pay for the costs of the apartment. But he already owns the apartment, it has few costs (there’ll be bodycorp fees, rates and insurance, so at the high end that would be $18,000 a year, but also you have an asset) and yet he is still claiming the allowance. Yes of course he is entitled to it, and as a businessman he’d know there’s no greater passive income than one you don’t even need.

So why claim it? Why claim it when it has been proven to be a foolish political move (see: Bill English in 2009)? Why claim it when $52,000 for someone of Luxon’s wealth is barely worth the hassle? Because the rich stay rich by pretending to be poor. The rich know how to claim expenses on their tax bill for every little thing. The rich know how to use a trust to not appear to be earning money. The rich know how to present their salaries so that their kids can get student allowance at university. The rich will always, always, suggest splitting the bill at dinner. You don’t stay rich by throwing money away – or not accepting free money when it’s offered.

Luxon wouldn’t have thought twice about claiming the taxpayer-funded allowance even though he doesn’t need it. He knows that passive income is how you stay rich, and why turn that down? It’s the smart thing to do, he’d say. If anyone else was in his position, they’d do it too, he’d argue.

But pretending to be poor for benefits only works if you’re rich. If you’re poor, you better pick yourself up by your bootstraps, stop trying to get money for nothing, and get to work.