Political Roundup by Dr Bryce Edwards.
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Dr Bryce Edwards.[/caption]
Some soul searching about the state of democracy and transparency in New Zealand public life is warranted at the end of the year. In this column I look back at the struggle for integrity in politics in 2015.
The integrity of governance of any society is dependent on numerous pillars that hold up democracy. Akin to an old roman temple, important institutions such as the Official Information Act, public servants and watchdogs act as the foundations of a corruption-free society.
But in 2015 it became apparent that some of the pillars of New Zealand’s governing arrangements have eroded, making democracy less stable. There have been apparent failings in the OIA regime, transparency of Government ministers and departments, murky deals struck and clampdowns on attempts to get accountability.
Tightening elite control over information
Currently a stark erosion of integrity is occurring in an area unlikely to arouse much public protest: the Official Information Act regime. But the decline of this comparatively mundane, yet vital, part of democracy is causing a lot of angst and protest from the media, especially after a long-awaited review of the OIA came out recently and appeared to be somewhat of a whitewash.
The strongest reaction came in an Otago Daily Times editorial, which pointed to an overall trend of increased opaqueness in public life: “There is a slow, steady and insidious eroding of transparency in too many areas, however. Smokescreens, part-truths, secrets, semantics, brain fades, fudgings, refusals to comment, commercial sensitivities, redacted documents, and the shutting down of discussion about issues of interest and concern have become too frequent in officialdom” – see: Safety, trust and transparency.
The ODT’s strongly-worded protest against the decline of the OIA and of the Ombudsman Office is also a vigorous defence of the need to hold those in power to account: “The actions of those in central and local government, police and the judiciary should be highly scrutinised, as they are our elected or appointed representatives, charged with working for the community good, and for making and upholding the laws that govern us.” It warns of the possibilities of corruption, if transparency and accountability are not maintained in the system. A similar point is made rather elegantly by columnist Narelle Henson in Watching the watchdogs.
Commentators on both the political left and right have pointed out that the Official Information Act regime is no longer fit for purpose. For instance, Nicky Hager has been reported as saying he’s used “the Act more than 1000 times” and that it’s fine for obtaining basic information, but is “basically useless” for getting hold of important material: “In practice I’m sick of it. If someone in power wants to evade it, it’s frustratingly easy” – see Colin Peacock’s Getting it out in the open: reviewing the OIA.
Rodney Hide has also complained recently about his inability to acquire fairly straightforward data from the largest government department, MBIE, about how much it spends on a particular accounting contracting firm – see his paywalled column, Worst minister hides department’s costs.
Hide says the relevant minister, Paul Goldsmith, has continued to stonewall and provide differing justifications for why the figures can’t be provided. Hide draws some tough conclusions about the minister and department’s lack of aptitude, accountability and transparency.
The OIA “Game of Hide and Seek”
Many journalists, political activists and politicians regard the Official Information Act regime as requiring urgent reform and modernisation, alleging that the system is abused by authorities. Many had high hopes for the major review of the Act carried out this year by Chief Ombudsman Dame Beverley Wakem. The report, titled “Not a Game of Hide and Seek” has just been released, and many regard it as something of a whitewash. For the best coverage of this, see RNZ’s The watchdog and the rottweilers, or listen to Sunday’s Mediawatch programme: Information watchdog’s probe into political meddling.
The report is being criticised for the finding that there is no political interference occurring with OIA requests. For the Opposition’s point of view see Kate Gudsell’s OIA report shows interference, opposition parties. And for anecdotal examples of officials and ministers attempting to thwart the OIA regime, see Jane Patterson’s Ombudsman takes aim at ‘fishing trip’ OIA requests.
Blogger, No Right Turn, also declares the report a “whitewash” – see: Wasting our time – and says “we should all be glad that she’s retiring in a week – because she’s just shown herself to be an embarrassment to her office and fundamentally useless at doing her job” – see: The blind watchdog.
Similar notions were put forward in last week’s incredibly strong Dominion Post editorial, which reacted to the Chief Ombudsman lashing out at journalists – see: Chief Ombudsman shows how not to be an information watchdog.
The editorial says that Wakem’s anti-media statements were “truly extraordinary”, and “what you would expect from a bad-tempered bureaucrat, not an ombudsman”. The newspaper also declares that Wakem’s “retirement is welcome”, and that “If Wakem had made these statements when first appointed, they would be good grounds for seeking her resignation. They show a fundamental misunderstanding of her role and an establishment mentality.”
The Herald has also admonished the Ombudsman’s Office, calling into question its integrity and abilities – this time, following on from the publication of the Office’s annual report to Parliament – see the editorial, Ombudsman badly needs health check.
The editorial complains “There is no room for the sorry lack of self-awareness displayed this year” by the Office, and considers it problematic that there is no robust “review system for the office itself” saying “it is time this once energetic public watchdog received a thorough check-up on its own health.”
Part of the Herald’s complaint about the Ombudsman’s Office was its recent role in siding incorrectly with Tim Groser in his illegal refusal to release TPP information. To make matters worse, when the High Court ruled against Groser and the Ombudsman, the Office stubbornly refused to admit it was wrong. For more on this high court verdict and what it means for the OIA regime, see Andrew Geddis’ lengthy blog post, Comes the rule with no exception.
See also the Otago Daily Times editorial, which points out that the Ombudsman’s Office has been around “for more than 30 years” and hence it is concerning that it has little training and policy about the OIA – see: No room for complacency.
Another government watchdog is being accused of becoming a lapdog of power. On Friday the NBR’s political editor Rob Hosking sarcastically declared State Services Commissioner Iain Rennie his “politician of the year”, because he has allegedly allowed the public service to become politicised and closed off to public scrutiny – see: Politician of the year – and a warning (paywalled). Hosking says “The lack of openness by the State Services Commission is now a byword in Wellington”, and New Zealand is losing its open and accessible culture.
Similarly, Vernon Small has warned of the problem: “the threats to public service neutrality (or at least the appearance of neutrality) have not gone away. Earth to Rennie. Come in please” – see: Public watchdogs need to bare their teeth over misuse of OIA, taxpayer events.
And for an example of the questionable role of spin doctors in government departments, see Kirsty Johnston’s article from last month, Ministry tried to mitigate risk posed by report. The article points out that such manipulation, has “raised queries about potential political interference in an independent body, plus a lack of transparency at the agencies.”
For more detail on many of these problems, including criticisms of the State Service Commission’s woeful Open Government Partnership initiative, see my earlier column, New Zealand’s closed government.
Taxpayer-funded politicisation
Much of the disquiet about the public service losing its integrity relates to the increasingly powerful role of taxpayer-funded political advisers working for parties in power. Spin doctors from Heather Simpson (under Helen Clark) to Jason Ede (starring in Dirty Politics) have played an effective personal role in shaping political and bureaucratic life from behind the scenes.
For more on this, see Brent Edwards’ Public Service Neutrality under Threat? He reports the views of the PSA and Victoria University School of Government’s Chris Eichbaum, who both see the need for reform due to the politicising influence of these political advisers on the public service. Listen also to RNZ’s 28-minutes Insight programme, Politics and Public Service.
Similarly, on reviewing the Ombudsman’s Office report on the OIA, Richard Harman says “Perhaps the most revealing part of her report deals with the activities of Ministerial advisers, generally young people, often members of the National Party, who have varying degrees of influence within both their offices and over the departments their Ministers preside over” – see: How ministerial advisers thwart the Official Information Act.
The latest example of alleged attempts to use state resources for party campaigning, was highlighted by Labour’s Kris Faafoi, who uncovered an attempt by Government MPs to use the Housing ministry to increase the electoral chances of its candidates – see Isaac Davison’s National MP busted ‘trying to use taxpayer money for political campaigning’.
This was condemned by Vernon Small who believes the documents “show a disturbing willingness to use a taxpayer-funded event to promote a purely political agenda”, and that the close liaison of officials “with National Party headquarters takes the whole thing well outside the bounds of acceptability” – see: Public watchdogs need to bare their teeth over misuse of OIA, taxpayer events. He concluded “It will be interesting to hear whether the Auditor-General thinks taxpayers money has been mis-spent, or if State Service Commissioner Iain Rennie thinks a boundary has been crossed … and if he or the Ombudsman think the OIA has been rightly used or abused.”
Yet parliamentarians are seemingly always clamouring for more taxpayer funds to run their parties and campaigns. Claire Trevett reports that the latest parliamentary review of MP funding has recommended the parties get “an extra $5.2 million a year” – see: More funding ought to equal more transparency.
Trevett points out that existing funding is already used in a very opaque fashion for an array of activities including campaigning and partisan advertising, and she concludes “If MPs and parties want a big boost in funding, that should come hand in hand with similar transparency”.
David Farrar also says that some of this funding – the “leader’s budgets” (currently $3.7 million for National, $2.9 million for Labour, $1.3 million for the Greens) – are “really just a euphemism for slush fund. Millions of dollars in taxpayer funding disappear into these slush funds every year with little public accountability” – see: Greens wrong on Ministerial funding.
Cronyism in government
This year has seen an increased focus on ministerial appointments of people with close ties to the National Party. The best coverage of this issue came in August via Torben Akel’s ten-minute TV3 report on Jobs for the boys and the girls? Looking at partisan appointments, Akel found that the last Labour Government had made 30, while the current National Government has so far made 36.
More recently Duncan Garner has listed the latest selection of National appointments, including: John Carter, Tim Groser, Eric Roy, Wayne Mapp, Georgina Te Heuheu, Kate Wilkinson, Katherine Rich, Tau Henare, and Phil Heatley – see: Jobs for the boys… and girls. Garner says “Parliament is a cosy club where those in power rub the backs of their mates and those they like or owe favours to. Sometimes it’s about giving them a job, to get them out of the way or to make way for someone else”.
Blogger No Right Turn has taken a close interest in ministerial appointments, blogging, for example, in July about a former National Party MP and party president being appointed to the Environmental Protection Authority – see: Another crony appointment, and then in November about the appointments of Tau Henare and Phil Heatley – see: More crony appointments.
He’s been using the OIA to get background information on such appointments, and relays the results in Another appointment from nowhere and The usual crony process. The latter is an extraordinary insight into the process, with the conclusion: “it’s clear from this that unless you are a National crony, there is simply no point in applying for a position under this government, as the outcomes of these recruitment processes have already been pre-determined.”
Risks of corruption in New Zealand
New Zealand enjoys its reputation for low corruption, but a number of reports this year suggest that complacency could be a problem. In March Deloitte released its Bribery and Corruption Survey 2015 for Australia and New Zealand. For the best news report on this see Richard Meadows’ Rising bribery and corruption tarnishing NZ image: Deloitte. See also Daniel King’s Bribery and corruption report should be ‘wake-up call’.
In June the World Justice Project published it’s 2015 Rule of Law Index, which ranked us 6th of the 102 countries surveyed – see Beith Atkinson’s blog post, New Zealand holds 6th place on Rule of Law Index. He points out that “The elements making up the New Zealand rank show a deterioration in four of the elements, an improvement in one and no change in the other three.” Perhaps of most concern, in this index New Zealand dropped from 3 to 6 in terms of “Absence of Corruption”.
In September the Chartered Accountants Australia and New Zealand published a paper titled Are Australia and New Zealand Corrupt? written by Victoria University’s Lisa Marriott. For the best news report on this, see Ellen Read’s CAANZ: Rising corruption a serious threat to New Zealand.
Chartered Accountants CEO, Lee White explained the research and reported “We also called for corruption to be one of the top risks discussed by the board. But, worryingly, the reality is that boards simply don’t see this as a priority” – see: Corruption – the next business battleground.
But the ultimate verdict will come when Transparency International publishes its annual Corruption Perception Index in late January. Last year New Zealand lost its top spot in the rankings, and numerous corruption-type scandals over the last 18-months could see us take a further tumble.
Government efforts against corruption
The Government’s major anti-corruption achievement of the year was ratifying the United Nations Convention Against Corruption – see: NZ signs UN convention against corruption. Unfortunately it took 12 years to go from signing the convention to getting it ratified. The final step was passing “new laws that tackle organised crime, money laundering and bribery” – see: Parliament passes anti-corruption Bill.
There is still some concern about the new rules making up New Zealand’s anti-corruption regime. The Government’s decision to continue to allow New Zealanders to make “facilitation payments” was widely criticised. For example, Michael Macaulay of the Institute for Governance and Policy Studies asked: Why is bribery still legal in New Zealand?
Macaulay explained that the new legislation “doesn’t necessarily go far enough. Why? Because under certain circumstances, the Bill allows bribery to remain perfectly legal under New Zealand law. For example, it is currently OK for New Zealanders to bribe foreign officials as long as the value of the benefit is small, and that it is paid to expedite an action the official would already do. In other words, you can pay a bribe to get the job done quicker or more smoothly.”
Justice Minister Amy Adams justified the allowance of “facilitation payments” like this: “if you are operating overseas and you are offered a situation to perhaps pay $50 or $100 and go through a fast lane or get something processed as a priority application and the payment is small, it is in the usual course of activity” – see Jane Patterson’s thorough discussion of the issue in: ‘Facilitation payment’ does not condone bribes – Govt.
Despite criticisms of “facilitation payments”, the Government has still made a considerable achievement in introducing new measures to combat any corrupt practices of New Zealand companies operating overseas. The KPMG firm published a useful overview of these changes – see: Strengthening of Anti-Bribery and Corruption (ABC) laws.
Saudi Sheep scandal rolls on
Earlier in the year Murray McCully’s unorthodox deals involving sheep farming in Saudi Arabia became publically known and debated, which I covered first in my column The Bizarre “bribery” and flying sheep scandal, and then in Guilty or not? The Saudi sheep scandal.
The latest chapter in the scandal involves the Government agreeing to pay a further $2.5 million to build an abattoir – see RNZ’s Govt to build Saudi businessman abattoir. Apparently, “The abattoir will be gifted to the Saudi government then installed on the businessman’s farm in the Saudi desert, which the Government said doubles as a New Zealand agri-hub.”
The Government’s dealings over the issue are still opaque, with further refusals to supply information – see: Govt agency refuse to release Saudi sheep report.
Nonetheless, the Auditor-General’s report on her investigation into the controversy is due early next year. According to Matthew Hooton, this is part of the reason that John Key felt he had to bring Judith Collins back into Cabinet: “As we head toward 2016, senior ministers suspect the Auditor-General will soon throw the book at Foreign Minister Murray McCully over the Saudi sheep scandal but Mr Key may be unable for internal political reasons to sack him. Mr Key could hardly deny Ms Collins her return to government having been cleared but then decline to act against Mr McCully when he has not. The gender optics of such differential treatment would be awful” – see: Collins’ return a good signal to the right (paywalled).
But the return of Judith Collins – as covered in my column last week, The Political comeback of the year – is also being taken as a sign of the return of Dirty Politics. See, for example, today’s column by Bryan Gould: Kiwis scoffing at US politics on shaky ground.
Of course many other Government scandals of 2015 have also involved questionable transparency and integrity. These included the handling of the Mike Sabin Police investigation, and the Northland by-election bridge bribes – as examined this earlier column, The bizarre by-election – and the continued controversy about the unorthodox Government-commissioned convention centre in Auckland, as explained in my February column, Left and right unite against SkyCity ‘crony capitalism’. And other agencies of the state – such as the Police – were implicated in various clampdowns on journalists and researchers – see my columns, Libertarians against dirty politics and Police vs democracy.
Erosion of public information
There’s plenty to say about the erosion of the media’s ability to scrutinise power in New Zealand. But in relation to the role of the politicians themselves in escaping media scrutiny, Gordon Campbell made the observation last month about the increasing non-appearance of ministers and officials whenever questions arise about their policy areas – see: On being accountable, and holding the powerful to account.
Campbell says: “it seems as though the balance is tilting increasingly towards politicians (a) picking the interviewers/outlets to which they deign to make themselves available, while (b) dodging those they don’t like and (c) choosing to go AWOL when they land themselves in hot water. Whatever is driving this trend, it is eroding democratic accountability”.
New Zealand political and public debate will be worse off due to the forced closure of the Victoria University’s iPredict service – see Hamish Rutherford’s iPredict to close after Govt refuses anti-money laundering law exemption. And for more on the background and future situation, see Henry Oliver’s Cashing out: Prediction market iPredict closing its virtual doors but (maybe) opens a window.
Reaction has been strong from bloggers and commentators. For example, National Party blogger David Farrar says “The Government must be joking. Or high” and he calls it a “nuts decision”, complaining “So much for being a Government that believes in small Government and proportionate regulation!” – see: Government thinks iPredict is a money laundering risk! Similarly, see Eric Crampton’s iPredict ‘a thing of beauty’ and no sensible place to launder money.
Finally, although it’s surely entirely unconnected, it’s worth noting that Simon Bridges – who made the decision about iPredict – may have ambitions of being the next National Party leader, but iPredict’s trading currently only gives him a 3% chance.
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These are just four voices of 400,000; a tiny percentage of bare-boned vignettes of four student experiences that all echoed the same sentiment of being on a road that ‘sets you back’ rather than ‘setting you forward’.
A ‘she’ll be right’ attitude prevails. It assumes well-paying jobs for all, and full-time uninterrupted professions will follow years of borrowing to live. It assumes a level of gender equity that doesn’t exist, and smooth transitions through either any one qualifications pathway or career choice, where that is by no means a given – as anyone with life experience below the ‘rich line’ knows.
All of this is a bleak enough proposition for people with parental or intergenerational support, let alone for those who face tougher roads to get to be enrolled for tertiary education in the first place.
There is nothing progressive in an economy or society that indentures students to a muted future.
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Using data sourced from a variety of surveys, including the 2004 round of the Survey of Family, Income and Employment, known as SoFIE, the 2001 Household Savings Survey, and the National Business Review’s annual Rich List survey, Rashbrooke uses the recent insights and statistical predictions on wealth inequality, from writers such as Thomas Pikkety, to draw a picture of what wealth is, how it effects our society and what part it plays in inequality.
Wealth and New Zealand has a simple and urgent message, that “we can only really understand poverty by understanding affluence”. As he points out, the distinction between wealth and income is not currently well understood or sufficiently analysed. To highlight best what he is mapping and making sense of, let us make use of an analogy from the introduction to the book.
“Imagine a river that, running faster or slower as the season dictates, flows into and fills up a reservoir. While the river is a metaphor of income – a flow that changes from week to week and year to year – the reservoir is wealth: the stock, the store, the accumulation of all those years of flowing water”. It’s a powerful image and one which vividly illustrates what Rashbrooke is trying to illuminate and amplify.
While poverty has largely been the focus when discussing and investigating inequality, as Rashbrooke points out, poverty is only one side of the coin. Very much its equivalent is the flipside – the largely untapped issue of ‘wealth accumulation’. Who has it, where it comes from and how it effects our society are important factors in the overall inequality debate.
In the last few years there have been a handful of arresting and socially redefining books on inequality, wealth and the surrounding issues. The Spirit Level by social epidemiologists Richard Wilkinson and Kate Pickett, used a range of data to show how destructive inequality is to the whole society that contains it, not just those most directly affected. Using a variety of wide-ranging and decade-spanning evidence and data, they definitively and logically showed the destructive and socially differentiating effects that inequality has upon public health and wellbeing.
And as mentioned, and heavily utilised, by Rashbrooke in Wealth and New Zealand, Thomas Piketty’s comprehensive book from 2014, Capital in the Twenty-First Century has furthered the dialogue around inequality perhaps more than any other book in the last 30 years.
While Rashbrooke’s book certainly owes a fair amount to Piketty’s, more importantly, Wealth and New Zealand helps to translate the core ideas of Piketty’s findings on wealth into a New Zealand context.
Defining what wealth is – what it looks like when viewed through the relevant data – is not without some difficulties of definition. As an initial benchmark guide, Rashbrooke navigates this by using the easily understood concept of ‘net wealth’. If someone owns a house worth $500,000 and a mortgage of $300,000 – with no other assets or debts – then they have a ‘net wealth’ of $200,000. Seen through this definition, wealth starts to make more sense on a practical and measurable level.
As Piketty’s research showed, private wealth – as opposed to public wealth (government assets) – makes up most of the wealth everywhere. This is an important distinction for it helps us put into proportion what we talk about when we say ‘wealth’ and, subsequently, ‘inequality’.
One of the most important factors at play, and of special interest to those providing care and support to the vulnerable, is how the act of owning wealth greatly affects the wellbeing and social mobility of the individuals who have it. Rashbrooke draws from recent studies that show how owning even modest wealth has ‘a range of positive welfare outcomes’ not achieved by those without wealth. While the idea that owning wealth not only creates more income but increases an individual’s participation in the wider community is perhaps not a new thought for those on the front lines, it is, all the same, an important observation.
There will no doubt be some – especially among community help and support agencies – who already know of the degree to which owned wealth – and inherited wealth – can effect an individual’s opportunities. Up till this point, the public dialogue around inequality has largely centred on the direct effects of poverty, low income and financial hardship. What Rashbrooke so well illustrates, with legitimate data, is how much excess wealth accumulation entrenches and increases inequality, thus perpetuating poverty for those at the bottom of the equation.
That we still fail to see how holistically and symbiotically connected we all are is perhaps the biggest problem of all. In order for the few of our society to have so much, the majority must have less. It is the logical realisation. In essence, this is the problem we now must face and deal with head on if we are to make meaningful advances in our communities.
In his book, Rashbrooke ties in a variety of important issues and gives them meaningful context. That those with more wealth will generally live in the same areas, and send their children to the same schools, is one of the surface symptoms of how wealth entrenches inequality. Opportunities are magnified or minimized accordingly, with an obvious advantage to those who have been raised among affluence.
More widely covered previously is how tax rates, and their legal avoidance, are disproportionately weighted in the favour of those with not only higher incomes but more accumulated wealth. There is a parallel too with the growing gap between the income of those at the top and bottom. Factors like how the eroding and deregulation of the labour market helped to lower wages but increase stockholder profits, have greatly contributed to deepening the entrenchment of opportunity or its opposite lack.
Rashbrooke also covers some of the shortcuts and tax loopholes enjoyed by those with wealth and the means to access the services of proportionally expensive accountants and lawyers. The use of family trusts are a common form of tax avoidance, something which Rashbrooke and Piketty suggest should be revisited and adjusted.
An idea that can’t be overstated, and is well covered by Rashbrokke is that ‘inequality is not the problem of the poor’ but the problem for all of us. One of the most common arguments in defense of excessive wealth accumulation is an idea that is at the very heart of our capitalist economies – that those with vast wealth deserve to be wealthy, because they have used innovation or hard work to attain it.
As a continuation on the pioneering work from previous studies (like ‘Capital’ and ‘Spirit Level’), Rashbrooke shows that the data just doesn’t support this idea. Where we need to get to as a society in order to defeat or minimize inequality, is towards a more holistic and collective idea of what wealth is and how it should be distributed. Rashbrooke, taking Piketty’s lead, has given some logical and simple suggestions that could indeed reverse the current trend of inequality – that is, if we, as a country and a community, choose to listen.
It is well documented that in New Zealand we have a much deregulated economic environment. Wealth tax in the form of inheritance tax, gift tax and capital gains tax were abolished years ago and beginning with the Rogernomics policies of the ‘80’s, tariffs and taxes have been decreased to low or non-existent levels to help attract buyers for our national imports.
Using the core ideas of Piketty’s economic predictions – of a return to Victorian era inequality – Rashbrooke carefully points out that indeed, New Zealand is heading this way along with the rest of the Western world – a statement which has earned him both praise and outrage.
The choices around inequality that we as a society have in front of us, can be boiled down to a simple idea. That the collective reservoir of wealth is not only finite but intimately connected, from top to bottom. As Rashbrooke has so well said, “Wealth is always created in some sort of partnership between the individual and society,”
In other words, we are in this together and can no longer turn a blind eye to the problem. To use the old saying to maximum effect, “Nobody wins unless everybody wins”. Truly.
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