Analysis by Dr Bryce Edwards.
New Zealanders are supposed to be able to trust that there are adequate systems in place to ensure our politicians aren’t corrupt. There are mandatory systems of transparency requiring MPs and ministers to disclose all possible conflicts of interest, and yet we have learnt that this integrity system has fallen over once again. This time Labour Cabinet Minister Michael Wood has been caught out for not complying with the Cabinet and Parliamentary rules in properly disclosing his ownership of shares in Auckland International Airport.
Wood has been stood down from his Transport role temporarily as a result. But it’s not yet clear that Wood should be reinstated as Transport Minister, or indeed whether he can reasonably continue as a minister at all. His numerous transgressions paint a picture of a politician lacking in the necessary integrity – or perhaps even competency – that New Zealanders expect of politicians.
Transgression #1: Not declaring shares in the Parliamentary pecuniary register
All MPs must file a return each year detailing their assets, such as ownership of company shares. They do this in the Pecuniary Interests Register – which is designed to create accountability and transparency, because it ensures the public can be aware of any personal financial interests that might influence politicians.
Wood has owned hundreds of shares in Auckland International Airport since 1998, and was obliged to note these in his returns each year he’s been in Parliament. His failure to disclose these has been a clear breach of Parliament’s Standing Orders, and the Speaker can refer Wood to the Privileges Committee over the violation.
Transgression #2: Not correcting the Parliamentary pecuniary register
MPs are human and make mistakes, and Parliament’s rules take this into account. In terms of the rules around omissions from the Pecuniary Interests Register, MPs are meant to confess any such mistakes and correct them. The Standing Orders rules are very clear about this – MPs need to retrospectively correct their past declarations if they were incorrect.
In the case of Michael Wood, he has blatantly failed to do this. After not declaring his shares in Auckland Airport for five years, when he was made aware of this in 2022 he only started including the declaration in the register going forward. He did not file the necessary amendments for the previous years between 2017 and 2021.
Transgression #3: Continuing to hold Airport shares as a Minister
When Michael Wood became a minister in 2020 he became subject to the Cabinet Manual – which is the bible for how government operates. The manual directs ministers to uphold the highest ethical and behavioural standards, and this includes declaring and managing conflicts of interest. It is also made clear that ministers cannot be financially invested in any companies that they are involved in regulating. And they are not allowed to be involved in decisions in which there might be a perception that they could be making a personal financial gain.
In the case of Wood, by continuing to directly own shares in Auckland Airport, the public might rightly ask whether he has been serving the interests of the company he has shares in, or the public interest? As today’s New Zealand Herald editorial states, the situation “cannot be overstated for its egregious potential conflicts of interest.”
Transgression #4: Ignoring 12 reminders to sell the Airport shares
Michael Wood and his boss, Prime Minister Chris Hipkins, have explained the minister’s failure to divest himself of his airport shares as due to forgetfulness and Wood’s busy work and home life.
This explanation has fallen apart after subsequent revelations that the Cabinet Office instructed Wood to divest himself of his shares for two and half years, with a total of twelve reminders to deal with the problem – including as recently as ten weeks ago. What’s more, it turns out that although Wood claims he was let down by others in the divesting process, he didn’t even start this process until well over a year after the Cabinet Office started reminding him to do so.
To make matters worse, it appears as though Wood has also misled the Cabinet Office on the issue of divesting his shares. According to the Prime Minister, “One of the challenges is that the Cabinet Office had been advised by [Wood] on a number of occasions that he has divested himself of the shares, that clearly hasn’t happened. That is quite a material issue”.
Transgression #5: Not recusing himself from Transport decisions relating to the Airport
As a Cabinet Minister, and especially as Minister of Transport, Michael Wood has been involved in numerous decisions that impact Auckland Airport, which he has an ownership stake in and, therefore, a financial interest in the outcome. The normal procedure would be for a minister to manage any such conflict of interest by recusing themselves from such decisions.
When Cabinet decided at the height of Covid to give generous government support to airlines, which was strongly welcomed by Auckland Airport, Wood should have recused himself from the decision, as he was well aware that he had a stake in the company that would benefit from this.
Likewise, in terms of the planned light rail to Auckland Airport, Wood has been driving the case to keep this $14.6 billion project going in the face of strong opposition.
But the most obviously egregious decision made by Wood was when he had responsibility for aviation regulation, and he blocked an application from a rival Auckland airport, North Shore Aerodrome, to expand. Despite Transport officials recommending that the North Shore Airport should be given Airport Authority status, Wood decided otherwise.
It’s not clear that Wood’s decision was incorrect, and it seems unlikely that he acted out of self-interest, holding only $13,000 worth of shares, but nonetheless his decision was not as squeaky clean as is required. Critics can rightly argue that Wood’s actions were advantageous to Auckland Airport, because it meant that their monopoly in Auckland was protected.
Transgression #6: Not informing the Prime Minister
Michael Wood failed to keep his boss informed of his conflict of interest – neither Jacinda Ardern nor Chris Hipkins were made aware of the problem. Arguably this was also the fault of the Cabinet Office, which apparently didn’t warn the PM’s Office. Hipkins said yesterday, “I’m somewhat frustrated that when I was doing the reshuffle, which the cabinet office were consulted on, they had not highlighted that as an issue for me.”
Even when the Herald first uncovered the story last Thursday, and approached Michael Wood’s office about his ownership of the shares, Wood didn’t inform Hipkins personally about the problem. It is normal procedure that a party leader and prime minister should be immediately informed by their MPs of any integrity stories about to be published by the media. Instead, Hipkins says he wasn’t informed until Monday – although the blame also lies in part with Hipkins own staff who learnt about it on Friday.
Problems with the integrity systems in Parliament and Cabinet
There are increasing calls for Michael Wood to be stripped of all ministerial roles. Taken together, all of the above transgressions certainly bring Wood’s integrity into too much question.
There is still significant confusion about how Wood allowed this situation to occur, with most putting it down to incompetence or arrogance on the part of the minister. In the end the exact reasons for his failings don’t matter as much as the overall picture of multiple integrity transgressions.
Ultimately, however, it’s the integrity systems of Parliament and Cabinet that are tarnished by this episode. The public will now have less reason to trust that the pecuniary declarations of MPs can be trusted, nor that the Cabinet Manual is adhered to or enforced. Once again, we are seeing that the political process is not sufficiently protected from the vested interests of politicians.
