While public attention has been focused on the domestic fast-track consenting process for infrastructure and mining, Associate Minister of Finance David Seymour has been pushing through another fast-track process — this time for foreign investment in New Zealand.

But it has had almost no public scrutiny.

If the Overseas Investment (National Interest Test and Other Matters) Amendment Bill becomes law, it could have far-reaching consequences. Public submissions on the bill close tomorrow.

A product of the ACT-National coalition agreement, the bill commits to amend the Overseas Investment Act 2005 “to limit ministerial decision making to national security concerns and make such decision making more timely”.

There are valid concerns that piecemeal reforms to the current act have made it complex and unwieldy. But the new bill is equally convoluted and would significantly reduce effective scrutiny of foreign investments — especially in forestry.

A three-step test
Step one of a three-step process set out in the bill gives the regulator — the Overseas Investment Office which sits within Land Information NZ — 15 days to decide whether a proposed investment would be a risk to New Zealand’s “national interest”.

If they don’t perceive a risk, or that initial assessment is not completed in time, the application is automatically approved.

Transactions involving fisheries quotas and various land categories, or any other applications the regulator identifies, would require a “national interest” assessment under stage two.

These would be assessed against a “ministerial letter” that sets out the government’s general policy and preferred approach to conducting the assessment, including any conditions on approvals.

Other mandatory factors to be considered in the second stage include the act’s new “purpose” to increase economic opportunity through “timely consent” of less sensitive investments. The new test would allow scrutiny of the character and capability of the investor to be omitted altogether.

If the regulator considers the national interest test is not met, or the transaction is “contrary to the national interest”, the minister of finance then makes a decision based on their assessment of those factors.

Inadequate regulatory process
Seymour has blamed the current screening regime for low volumes of foreign investment. But Treasury’s 2024 regulatory impact statement on the proposed changes to international investment screening acknowledges many other factors that influence investor decisions.

Moreover, the Treasury statement acknowledges public views that foreign investment rules should “manage a wide range of risks” and “that there is inherent non-economic value in retaining domestic ownership of certain assets”.

Treasury officials also recognised a range of other public concerns, including profits going offshore, loss of jobs, and foreign control of iconic businesses.

The regulatory impact statement did not cover these factors because it was required to consider only the coalition commitment. The Treasury panel reported “notable limitations” on the bill’s quality assurance process.

A fuller review was “infeasible” because it could not be completed in the time required, and would be broader than necessary to meet the coalition commitment to amend the act in the prescribed way.

The requirement to implement the bill in this parliamentary term meant the options officials could consider, even within the scope of the coalition agreement, were further limited.

Time constraints meant “users and key stakeholders have not been consulted”, according to the Treasury statement. Environmental and other risks would have to be managed through other regulations.

There is no reference to te Tiriti o Waitangi or mana whenua engagement.

No ‘benefit to NZ’ test
While the bill largely retains a version of the current screening regime for residential and farm land, it removes existing forestry activities from that definition (but not new forestry on non-forest land). It also removes extraction of water for bottling, or other bulk extraction for human consumption, from special vetting.

Where sensitive land (such as islands, coastal areas, conservation and wahi tapu land) is not residential or farm land, it would be removed from special screening rules currently applied for land.

Repeal of the “special forestry test” — which in practice has seen most applications approved, albeit with conditions — means most forestry investments could be fast-tracked.

There would no longer be a need to consider investors’ track records or apply a “benefit to New Zealand” test. Regulators may or may not be empowered to impose conditions such as replanting or cleaning up slash.

The official documents don’t explain the rationale for this. But it looks like a win for Regional Development Minister Shane Jones, and was perhaps the price of NZ First’s support.

It has potentially serious implications for forestry communities affected by climate-related disasters, however. Further weakening scrutiny and investment conditions risks intensifying the already devastating impacts of international forestry companies. Taxpayers and ratepayers pick up the costs while the companies can minimise their taxes and send profits offshore.

Locked in forever?
Finally, these changes could be locked in through New Zealand’s free trade agreements. Several such agreements say New Zealand’s investment regime cannot become more restrictive than the 2005 act and its regulations.

A “ratchet clause” would lock in any further liberalisation through this bill, from which there is no going back.

However, another annex in those free trade agreements could be interpreted as allowing some flexibility to alter the screening rules and criteria in the future. None of the official documents address this crucial question.

As an academic expert in this area I am uncertain about the risk.

But the lack of clarity underlines the problems exemplified in this bill. It is another example of coalition agreements bypassing democratic scrutiny and informed decision making. More public debate and broad analysis is needed on the bill and its implications.

Dr Jane Kelsey is emeritus professor of law, University of Auckland, Waipapa Taumata Rau. This article is republished from The Conversation under a Creative Commons licence. Read the original article.

Article by AsiaPacificReport.nz

While attention is focused on economists finding a $500 million-a-year hole in National’s tax plans, a similar-sized hole in climate costings is hiding in plain sight — and it applies to Labour, too.

National appears to have the bigger gap, however.

The gulf was highlighted in the Pre-election Economic and Fiscal Update (PREFU) — Treasury’s official word on the state of the government’s books — which explicitly excluded the cost of meeting New Zealand’s international climate target under the Paris Agreement.

Asked how they would pay this week, politicians gave unclear answers. But the obligation was still very real.

Both Labour and National have said they are committed to meeting the country’s international climate target, known as an NDC (Nationally Determined Contributions).

Under the Paris Agreement, which covers almost every nation on the planet, New Zealand has promised to cut emissions by 41 percent off 2005 levels by 2030. Exporters and carbon market experts say failing to meet that pledge could jeopardise international trade — nevermind the fact that following the Paris Agreement is humanity’s best hope for avoiding more expensive and deadly heating.

New Zealand plans to meet its target in two ways. First, it will do as much as it can inside the country by meeting a set of “emissions budgets”.

No way to meet target
But when the Climate Change Commission ran the numbers, it concluded there was no way to meet the whole target with action at home. Because New Zealand started slow at tackling emissions, cutting transport, industry, farming and electricity emissions that quickly would cause too much economic pain, it concluded.

So there is also a second part to the target: buying carbon credits from overseas. Typically, economists assume this is cheaper than making cuts in emissions at home, though it depends on the project.

While no purchases will be made until after the election, the kinds of things that could qualify include retiring coal boilers in developing countries, or planting forests.

This is where the gap in the books comes in. Treasury had previously put the cost of buying these credits from overseas — and an estimated 100 million tonnes of them will be needed, at last count — at between $3.3 billion and more than $23 billion between now and 2030.

Even at the lower end of projections, it could work out at around $500 million a year.

Whichever way the government decides to do it, PREFU said the costs would be “significant” and will start biting “within the current fiscal forecast period”.

As things stand, according to Climate Change Minister James Shaw, one or possibly two rounds of purchases could be made in the next four years, with a third and final “washup” at the end of the decade.

Election may change timing
The election could change the timing, but whoever is in government will be expected to start showing progress towards meeting their Paris target well before the end of the decade, said carbon market expert Christina Hood from Compass Climate.

“There’s this common misconception that whoever the finance minister is in 2032 is going to have to get their chequebook out and square up by however much we missed by. It doesn’t work that way at all.

“Every emission (saving) we count has to actually occur during those years (before 2030), so we need to get on with funding that.”

Yet despite starting to fall due within the next four years, the costs did not appear as a liability on the government’s books. Nor do the major parties seem to be clear on how much to budget for them.

Bold claims, few details
This week, neither National nor Labour answered clearly how much they had planned to set aside for these costs nor how they intended to pay them. They instead focused their answers on wanting to cut planet-heating emissions more deeply inside New Zealand’s borders.

At times, politicians seemed to confuse domestic emissions budgets with the $3 billion-plus added cost of buying offsets to meet the Paris target, or they made heroic statements about how much they could do onshore, without supplying the figures behind them.

A quick reminder: the 100-odd million tonnes in overseas offsets that it was estimated we would need were on top of meeting New Zealand’s domestic emissions budgets, not instead of it. Only a truly incredible effort could meet the entire amount inside the country, requiring deep and fast climate action on a scale neither party has hinted at.

Currently, New Zealand is not even on track to meet its domestic emissions budgets, as Climate Change Commission chief executive Jo Hendy told a business and climate conference in Auckland this week.

“Latest projections show we are not on track in every single sector, so we are going to have to do more,” she said. “We are particularly reliant on pushing the dial in transport and in process heat.”

Yet when RNZ asked about the $3 billion-plus cost on the campaign trail, politicians appeared to be planning to overperform on those budgets, sometimes by impressive amounts. Their answers suggested they may not need to worry too much about that $3 billion-plus.

Here’s what Labour leader Chris Hipkins said, when asked if he had costed for meeting Paris: “We still have a way to go before we have to make a final decision on how best to meet our commitments there. We’re on track to meet our first emissions budget.

Working harder
“We’ve still got the second and third emissions reduction budgets to go. If we don’t meet our targets there is a period of time when we can figure out how best to remedy that, and that includes working harder in the second period to compensate for that.

“But we’re confident that with the stuff we’ve got in place at the moment, we’re on track to meet our first target.”

Hipkins did not address paying for offshore credits, which were required even if the country met all three domestic budgets. As prime minister, he rolled back a biofuel policy and, like National, has focused his transport promises mainly on building new roads rather than a strong shift to lower-emissions modes.

He has also promised help for home insulation and solar, but it was not clear if his new promises compensated for the cuts.

Asked the same question, National leader Christopher Luxon took aim at the government for undermining the Emission Trading Scheme (ETS), saying the scheme should do more of the “heavy lifting”.

He, too, skirted the question of paying for offsets.

For context, the ETS made polluters pay for around half the country’s domestic climate pollution (the other half was from agriculture) and was already factored into projections of needing 100 million-odd tonnes of extra ‘top up’ help from overseas.

The scheme could do more, particularly if carbon prices went higher (taking petrol prices with them), or if farming was included, or if there were no limits on planting land in cheap pine trees, but Luxon did not detail how National would navigate these kinds of changes.

Cutting domestic emissions
Meanwhile, other party spokespeople talked-up cutting domestic emissions.

Labour environment spokesperson David Parker told the conference in Auckland he wanted to look at claims that native afforestation could meet the entire Paris target (without overseas help).

National’s climate spokesperson Simon Watts told the same gathering — the annual Climate Change and Business Conference — that National believed it could meet 70-75 percent of the 2030 target inside these shores, a figure considerably higher than previous estimates by the Climate Change Commission.

Watts did not supply details on how that would be achieved, though he discussed lightening regulation on wind and solar energy.

His party has said it would scrap Labour’s Clean Car Discount and major grants to companies to switch off coal boilers, and it would also delay pricing farming emissions a further five years, until 2030. There were questions about how it would meet even the current domestic emissions budgets.

The cost of waiting
Hood had a spot of good news on the cost front. She told RNZ that based on recent purchases by Switzerland, the cost of overseas carbon offsets was likely to be towards the lower end of Treasury’s range.

Even if the government winded up buying 100 million tonnes of savings offshore, that was still only around half the quantity the John Key-led government expected it might have to stump up for when it made its first Paris Agreement pledge, despite the first pledge being weaker on climate than the current one, she noted.

But getting offsets at the lower end of the cost range relies on the government getting moving on lining them up and buying them, she says.

Shaw told RNZ that environmental integrity would be a bottom line after New Zealand was burned for buying valueless “hot air” credits from Russia and Ukraine in the early years of carbon trading.

As well as Switzerland, Singapore and others had already started striking deals to buy the offsets they needed.

While the New Zealand Government has been scoping out prospective sellers overseas, it has refused to reveal who it is talking to, citing commercial sensitivity.

The ministries for Foreign Affairs and the Environment were working on advice to Cabinet on how to make these purchases and ensure the carbon saved was real. But that advice will not land until after the election.

Most expensive time to buy
One thing is clear. 2030 will be the most expensive time to buy, Hood said, because many countries will be panic-buying from overseas projects to meet their missed domestic commitments. Shaw agreed.

“A whole bunch of countries will be going, ‘Oh crap, I’ve missed my target,’ and scrambling around trying to find ways to fill the gap.”

Shaw wanted Paris costs to go into PREFU, making it clear to the government that any money spent on domestic action on climate change was also a cost saving in terms of buying fewer offshore credits.

“This is one of the things that worries me about what some of the other parties are saying, is that they aren’t really accounting for [Paris] in their fiscal plans.”

Shaw called the huge variance in Treasury ‘s $3 billion-23 billion estimate “unhelpful”.

“It’s such a wide variance it’s hard to trust it. At the moment… people are putting their fingers in their ears and saying ‘lalalala”.”

But asked how much the Green Party had costed for meeting New Zealand’s offshore climate commitments, Shaw would not be drawn on naming a more accurate number.

Treasury estimate best
“The best estimate I’ve got is the Treasury estimate. The Ministry for the Environment and MFAT (Ministry for Foreign Affairs and Trade) are doing a lot of work on this at the moment, but they’re not going to have a report back until just before Christmas. If I was to give you a number I would be pulling it out of thin air.”

As for how to pay for it, Shaw said ETS proceeds from polluters could do a lot of it.

“In a good year that’s a billion dollars, so if there’s seven years for us to do that it’s $7 billion.”

But Shaw also acknowledged there were a lot of other calls on that money — including for adapting to climate change, paying for domestic carbon savings, and helping low-income families weather the costs of higher emissions prices, which boost fuel and electricity costs.

National has said it would use ETS proceeds to help fund its tax cuts, meaning it will need to pay for the Paris target (both the offshore and onshore parts) some other way.

This article is republished under a community partnership agreement with RNZ.

Article by AsiaPacificReport.nz

More than two million New Zealanders will get a one-off $350 sweetener as part of the Budget’s centrepiece $1 billion cost-of-living relief package.

The temporary short-term support is counterbalanced by a record $11.1 billion for the health system as the government scraps district health boards (DHBs) and replaces them with a central agency.

“Our economy has come through the covid-19 shock better than almost anywhere else in the world,” Prime Minister Jacinda Ardern said in a statement. She is in covid isolation.

“But as the pandemic subsides, other challenges both long-term and more immediate, have come to the fore. This Budget responds to those challenges.”

Ongoing uncertainty over inflation, covid-19 and the Russian invasion of Ukraine continue to cast a pall over the economy until at least the end of the year.

A large $19 billion deficit is expected this year, returning to surplus in 2025.

Treasury is forecasting house prices to ease and unemployment to drop as low as 3 percent.

Cost-of-living sweetener
New Zealanders aged 18 and over will be eligible for the $350 payment unless they earn more than $70,000 a year or already receive the Winter Energy Payment.

The sum will be paid in three instalments over August, September and October, working out at roughly $27 a week.

The temporary payment is estimated to cost $814 million — funded out of the remaining money in the covid-19 war-chest which is now being wound up.

NZ Finance Minister Grant Robertson delivers Budget 2022. Video: RNZ News

The support comes with a two-month extension to the fuel tax reduction and half-price public transport given the current high fuel prices.

New Zealanders who have a community services card will continue to get half-price public transport permanently from mid-September.

“While we know the current storm will pass, it’s important we do what we can to take the hard edges off it now,” Ardern said.

The government will also rush through legislation under urgency over the next few days to crack down on supermarkets in an effort to reduce grocery bills.

The legislation will ban supermarkets from using restrictive covenants to prevent competitors from accessing land to open new stores.

Ministers flagged further announcements in response to the Commerce Commission’s recent report in the sector “in the coming days”.

Health service
The Budget contains “the largest investment ever in [the] health system” — $11.1 billion — as the government presses ahead with its plan to replace DHBs with a centralised health service.

An initial $1.8b annual investment this year will help clear DHBs’ debt, giving the replacement Health New Zealand service and Māori Health Authority a “clean start”.

Health Minister Andrew Little said the 20 DHBs had collectively run annual deficits in 12 of the 13 years since 2008.

“As Health NZ takes over the books from the 20 DHBs on 1 July, a funding boost is being provided so the national system can start with a clean slate.”

The Māori Health Authority will get $168m over four years to directly commission hauora Māori services.

New Zealand’s drug-buyer Pharmac will also get an extra $191m over the next two years – in what Little says is the medicine budget’s “biggest-ever increase”.

It brings total funding to $1.2 billion which is 43 percent higher than when Labour was elected in 2017.

“Pharmac has assured me it will use this funding to secure as many medicines on its list as it can, with a focus on better cancer treatments, to ensure as many New Zealanders as possible benefit from this biggest-ever increase to its medicines funding,” Little said.

More than $166 million has been put aside over four years for ambulance services, adding more than 60 vehicles to the road fleet and about 250 more paramedics and frontline staff. Another $90.7 million will go towards air ambulance services to replace ageing aircraft with modern helicopters.

The Budget increases dental grants for low-income families from $300 to $1000 in line with Labour’s 2020 campaign promise.

A new Ministry for Disabled People is also being established at a cost of $100 million.

Housing support
While the housing market is showing signs of slowing, the Budget includes more support for first home buyers with funding available for about 7000 more grants.

House price caps across regions have been increased to line up with lower quartile market values for new and existing properties.

It means some significant shifts — both Wellington’s cap and Queenstown’s jump from $650,000 to $925,000, and Tauranga’s jumps from $600,000 to $875,000.

The income caps remain the same but will be reviewed every six months along with the new house price caps.

A new $350 million housing fund has also been set up where not-for-profit developers can apply for grants to build affordable rental accommodation.

Education equity
Replacing school deciles is the single biggest area of new spending for education.

The Budget provides more than $80 million a year for the equity index which replaces deciles as the measure of disadvantage in schools.

Most of the money, $75 million a year, will go directly to schools, adding to the $150 million they currently receive through the decile-based system.

The budget increases school operations grants and tertiary and early childhood education subsidies by 2.75 percent.

There is also $266 million over four years to give early education teachers pay parity with school teachers.

In tertiary education, the Budget provides $56 million a year to pay for an expected increase in enrolments next year and in 2024.

There is also $40 million for modernising polytechnic facilities.

Māori health, wellbeing
More than half a billion dollars is being pumped into the Māori Health sector with $579.9 million going towards Māori health and wellbeing.

The Māori Health Authority, Te Mana Hauora, is set to be launched July 1 and will receive $188.1 million over four years for direct commissioning of services.

Some $20.1 million will go to support iwi-Māori partnership boards, and $30 million will be invested into Maori providers and health workers to provide support and sustain capital infrastructure.

Lack of workforce capability has been identified as a key factor in being able to bolster Te Mana Hauora — and $39 million will be used for Māori workforce training and development to support them within the new health system.

The $579.9 million invested in Māori health and wellbeing is on top of the $11.1 billion health allocation.

This article is republished under a community partnership agreement with RNZ.

Article by AsiaPacificReport.nz

The “cockup or conspiracy” debate was vividly explored yesterday in RNZ’s weekly Nine-to-Noon Politics show, with a clash between rightwing commentator Matthew Hooton putting forward the “conspiracy” arguments, against leftwing commentator Stephen Mills arguing for a “cockup”.

Hooton put the case that the Minister of Finance, Grant Robertson, had been complicit in dirty politics, and explained why he might take such a risk: “Because he was extremely angry… He thought ‘I’ve got an opportunity to attack the National Party using the Police and false allegations of hacking and I can turn the story around’. And it worked.”

According to Hooton’s theory, the conspiracy involves many in the Beehive: “This involves the Office of the Prime Minister, the Office of the Finance Minister, the office of the head of the spy agencies, Andrew Little, and the Treasury secretary – who have told lies to the public”.

In contrast, although Mills agreed that a conspiracy is always a possible explanation, he replied to Hooton: “I know that you’re psychologically kind of framed to believe it’s a conspiracy, but I think that the evidence is almost always that it’s a cock-up”. Hooton hit back, saying “I think that you’re part of the cover-up Stephen because you’re deeply involved in the Labour Party, and you’re close friends with all the people in this who are in fact telling lies”. It’s a fascinating piece of political debate – listen (from about the ten-minute mark) here: Political commentators Mills and Hooton.

Hooton’s theory is explained at length in his Herald column from Friday, in which he paints what has happened as “the sort of thing that might happen in a quasi-democracy like Russia, or in House of Cards” because “making up a false allegation about the Opposition and calling in the police” is what we normally associate with despotic governments rather than our own – see: Truth gets lost in hacking claims (paywalled).

The idea that Treasury Secretary Gabriel Makhlouf was acting alone and without the complicity of at least some in the Beehive is scoffed at by Hooton: “the Beehive’s story of a suddenly rogue Treasury Secretary doesn’t ring true. Treasury Secretaries simply don’t, of their own accord, recklessly use inflammatory words like ‘hack’ to describe searches of their own websites, or call in the police to investigate matters involving the Opposition, especially when already advised by the GCSB there had in fact been no breach of security.”

According to Hooton, Makhlouf appears to be taking the hit, when it is “deeply implausible” that the Government had no knowledge of his actions until afterwards. For example, Hooton says: “Wellington’s infamous ‘no surprises’ rule in practice operates as a “prior approval” rule. More importantly, Beehive staffers are in almost constant real-time contact with people in departments, including through private communication channels like WhatsApp and SnapChat in an effort to thwart the Official Information Act.”

In Hooton’s favour, the Herald’s Derek Cheng also broke the story on Friday that the head of the GCSB had contacted the Beehive on the Tuesday when the scandal was first unfolding, to communicate that no hacking had in fact taken place – see: Budget Bungle: the Govt was told there was no hacking but kept tight-lipped (paywalled).

According to Cheng, “Andrew Hampton, head of the Government Communications Security Bureau, made an urgent call to GCSB Minister Andrew Little in an attempt to stop Treasury Secretary Gabriel Makhlouf from publicly saying that his department had been hacked”. And he reports “National deputy leader Paula Bennett said it was inconceivable that Little didn’t pass that information on to Robertson and Ardern straight away, and they should have immediately revealed the advice that there had been no hacking.”

The exact timing and details of this GCSB communication to the Beehive informing them that Treasury was wrong to suggest any hacking is now vital to working out whether there was a cockup or a conspiracy, and who was responsible.

Robertson went on TVNZ’s Q+A last night to defend his handling of the scandal, and explained why he got it wrong in his own public statement about the Budget leak: “We were relying on the advice that we had at the time. We didn’t know what had happened. That’s what the police were looking into” – see 1News’ ‘The advice we had’ – Grant Robertson defends his initial description of pre-Budget release as hacking.

In his interview with Jack Tame, Robertson was asked about whether he sufficiently challenged the advice from Treasury about the “hack”, and he replied “I’m on record as saying that Mr Makhlouf was very clear in his description to me of what he described as 2000 or so attempts to hack into the Treasury system”.

Prime Minister Jacinda Ardern has until now been reluctant to comment on the crucial timings involved, with the justification that the whole issue is now the subject of the State Services Commission investigation. However she has now come out to say that the GCSB contact with the Beehive came after Robertson and the Treasury made their public statements about the “hack” – see Derek Cheng’s Prime Minister Jacinda Ardern: Ministers didn’t know GCSB advice when they said Treasury was ‘hacked’.

Nonetheless, questions remain as to why the Government didn’t correct the record the next day. Cheng reports: “The following day, neither Ardern or Robertson revealed the GCSB advice despite being questioned repeatedly in the House about the so-called hack and despite National leader Simon Bridges calling Robertson a ‘liar’ for saying that the Treasury had been ‘hacked’.”

Commentators continue to question why Robertson or even the Prime Minister failed to act. According to Fran O’Sullivan, the Government could have saved everyone a lot of hassle by being up front: “Once Little, Hampton, Robertson and Makhlouf knew an error had been committed — and that there was no substance to the hacking claims — they should have simply ‘fessed up all round: issued a correction (accompanied by an apology by Makhlouf) and pulled back from the politicking. There would have been political embarrassment. But that would have been transitory. Instead, they allowed a wrongful claim to persist, for 36 hours, that National had hacked Budget information” – see: Pomp and trying circumstances for a Gabriel Makhlouf farewell (paywalled).

Gordon Campbell writes that, when the truth became apparent in the Beehive, this “should have galvanized Robertson to go on the front foot and (a) publically clarify the likely nature of the leak (b) re-assure the public of its limited nature and thereby (c) begin to distance the government from Treasury’s overcooked initial “explanation” as to what had happened. As we now know, Robertson did none of the above. As a result, the government now remains ensnared with Treasury’s mishandling of its information” – see: On how the Treasury debacle reflects New Zealand’s wider security problems.

Similarly, Herald political editor Audrey Young says that Robertson is now vulnerable on this question, and today’s Parliamentary Question Time might allow some clarification on this – see: GCSB advice shifts focus from Makhlouf to ministers (paywalled).

Young thinks, however, that clarity is unlikely to be forthcoming today: “Unfortunately for National, the rules of the debating chamber mean that any minister, including the Prime Minister, is able to decline to answer a question if he or she believes it is the public interest not to do so. Ministers need simply say that because it is the subject of an SSC investigation, they do not believe it is in the public interest to answer. Speaker Trevor Mallard may indirectly criticise such judgment calls but he cannot override them.” See also, Barry Soper’s Jacinda Ardern will need her flak jacket over Budget debacle during question time.

Andrew Little is one of the ministers who could help clarify what happened, but he’s currently overseas. And according to Richard Harman, “the Prime Minister will be in Hamilton at the Field Days on Wednesday and the deputy Prime Minister, Winston Peters will substitute for her. That is unlikely to make anything any clearer” – see: Budget leak spotlight turns on the spies.

According to Harman, there are also still questions about whether GCSB acted fast enough in the scandal, when they could have possibly corrected the public’s misinformation: “There are questions about why the GCSB kept the information about what had happened at Treasury to itself and did not see fit to advise its own Minister about what had happened even though the issue was dominating news headlines all through Tuesday. If it was a straightforward human error, as National sources are saying, then why wasn’t the GCSB able to say so?”

The whole episode has shown “politics at its ugliest, most naked, worst” according to Tracy Watkins who also says the official State Services Commission inquiry “seems designed to shut down questions” – see: Farewell speeches for outgoing Treasury boss likely to be short.

Watkins wonders if the scandal might end up damaging Ardern, because “Labour’s danger is it starts to wash up against ‘brand Jacinda’, which is supposed to be above all this. Why do politicians never seem to learn that the cover up is almost always worse than the crime?”

She also points out that it appears that the leaking to the media of details of the GCSB call to the Beehive is also dodgy: “there can only have been one purpose in leaking details of that phone call – to hang Makhlouf out to dry. The higher the stakes, the dirtier and more desperate the tactics look.”

This is something that Fran O’Sullivan has also commented on: “The Beehive did not wait for Ombler’s inquiry to be finalised before briefing a journalist over the GCSB’s urgent warning. This made for a great Herald scoop and revealed material that should have been in the public domain earlier. But in my view, it has the capacity to taint the inquiry as Makhlouf is under an obligation of confidence while Ombler’s probe continues.”

Of course, it’s still possible that the whole scandal could be both a cockup and a conspiracy – which is nicely conveyed in Steve Braunias’ Secret diary of the Budget hack (paywalled).

Finally, for anyone who still thinks that the Government’s handling of the “Budget hack” is a non-story, Danyl Mclauchlan thinks this is probably because you’re a partisan hack yourself, and he implores the left to take seriously issues of accountability and ethics, rather than mindlessly cheering on your own side – see: Why calling the Treasury data scandal a ‘beltway issue’ is basically bollocks.

The front page of the Christchurch Press declared it to be the “Helping Hand Budget”, while for the Dominion Post it was “The People’s Budget”. However, there’s another side to the Budget coverage that also deserves some attention – the more critical examinations, which raise questions about the shortcomings and substance in yesterday’s announcements.

Of course, there are always the usual partisan Opposition criticisms, which can be put aside (and really don’t amount to much this year anyhow). Even the business community’s criticisms were half-hearted and, in fact, many businesspeople seemed entirely positive about the Budget. More interesting, are the leftwing or “critical thinking” analyses, which question some of the fundamentals of what has been delivered – or not delivered.

It’s certainly worth thinking about whether the Government’s own constituency – beyond the cheerleaders – will be satisfied by what’s on offer. This was my thinking in an initial analysis piece I wrote for RNZ yesterday afternoon, in which I suggested that the hopes of many on the left might be dashed by what is a rather pedestrian Budget – see: A status quo Budget when transformation was promised.

I argue that this is not the budget of a “transformational government” and it delivers little for supporters when it needed to deliver so much

Many leftwing commentators have also been critical. The most important analysis comes from Gordon Campbell, who comprehensively eviscerates Robertson’s Budget for being timid and orthodox – see: On the ‘morning after’ feeling from the Wellbeing Budget.

Campbell says that instead of anything like “socialist red”, the Budget is more of a “lighter shade of pink that’s been spread thinly across a slew of social and infrastructural spending initiatives that – with a couple of exceptions – are disappointing in their scale and scope. It isn’t transformational.”

Even the increase in mental health funding, which takes that funding to a total of $1.9bn over five years, isn’t as impressive as it might look: “To some extent, those headline funds for mental health will be met from other areas of operation. For example: about $213 million of the funding to enhance mental health and addiction services will be ‘ring-fenced’ from within the funding boost delivered to DHBs. The downside of that situation is that DHBs have received a limited level of extra funding”.

Campbell argues that if the Labour-led Government really cared about fixing the infrastructure deficit or getting rid of child poverty, they simply could have spent proper amounts of money on those projects. Instead they’re “doing relatively little” because of their fiscal orthodoxy that they share with the National Party.

He points out that even National had been spending up on KiwiRail when it was in government, and there doesn’t seem to be any “transformational” plans for rail at all – just playing catchup on necessary expenditure.

Likewise, on the question of benefits being indexed, Campbell argues much more is needed, and “Nowhere was the gap between the caring rhetoric and substance made more clear than in the Budget’s treatment of beneficiaries.” The lack of any generous funding for this group, as for many others, has him concluding that it all “felt more like well-being on a budget, rather than a Wellbeing Budget.”

So, will the political left be disappointed? Herald columnist Rachel Stewart says today that “The left will secretly feel hacked off. And, if not, they need to ask themselves why” – see: Rail on track but climate challenges ignored.

Stewart suggests that much of the big spending initiatives were inevitable under any government and Labour has simply made a virtue of a necessity. Even on the praise-worthy mental health plans, she says this focus isn’t adequate: “it pays to temper such praise with reality. Poverty is also a driver of family violence. So, again, funding initiatives for family violence are just more ambulance/bottom/cliff stuff. Until the lowest-paid workers and beneficiaries see significant gains in their capacity to pay for the basics, the mental health/violence/addiction stats will remain static.”

In fact, the limitations of both the indexing of benefits and the mental health programme are being criticised by some high-profile campaigners. Although Grant Robertson credits Children’s Commissioner Andrew Becroft as giving momentum to the indexing of benefits, Becroft has come out today to say it’s not enough. Isaac Davison reports that “he also felt there needed to be a ‘catch-up’ increase in payments which took into account the fact that benefit levels had fallen behind over the last 25 years” – see: Beneficiaries will get $17 more a week – eventually.

On the topic of a large increase in benefits, Becroft says “That’s what we are waiting for”. And Davidson’s article points out that the “Welfare Expert Advisory Group said earlier this month that core benefit payments should be raised urgently, and recommended an increase of between 12 and 47 per cent.”

In the same article, anti-poverty campaigner Ricardo Menendez complains that “the lift in benefit payments was small when the costs of living continued to rise”. He says: “The Government needs to introduce a wider range of welfare reforms and invest on public housing if it is serious about the wellbeing of low-income people. This budget, unfortunately, failed to deliver on these two crucial issues.”

Menendez has also spoken out on the limitations of the large mental health spend, saying that the “Budget may be handing an impressive boost to mental health but without addressing what’s causing mental health problems, the $1.9 billion investment won’t mean much” – see 1News’ Anti-poverty campaigner says Budget 2019 gives ‘breadcrumbs for people on the benefit’.

He says: “We welcome the fact that there’s been an injection of cash for mental health wellbeing but what has been left behind is the determinants of mental health which is incomes and housing… Access to adequate incomes and adequate housing is one of the most important things for your wellbeing.”

Of course, such large spending on wellbeing isn’t being considered by the Labour-led Government. Victoria University of Wellington’s Max Rashbrooke argues the government is being held back by its fiscal conservatism: “the Government’s predetermined fiscal rules severely limit its ability to enhance wellbeing. It plans to keep public spending at 28.8 per cent of GDP by 2023, even though many developed nations spend 40 per cent or more. Yet greater wellbeing is going to require a greater tax take” – see: For term wellbeing to be meaningful, Budget spending must be assessed across society.

Rashbrooke says that although the Budget “doesn’t deliver a transformation”, he’s still hopeful that the new wellbeing approach will lead to that. But ultimately more taxation and spending is necessary: “We’re also going to need to spend serious cash on things like renewable energy if we’re to avert disastrous climate change. The absence of any notable spending here is the Budget’s greatest blind spot.”

Others such as Greenpeace’s Russel Norman have raised similar concerns. And in her column, Rachel Stewart also draws attention to the lack of spending on climate change: “Where is the money for massive solar projects, or battery tech to start the huge task of reshaping our transport and industrial systems? If the Government won’t change their emphasis on solving the biggest crisis facing all of us, when will they? After the next election? After the next climate calamity?”

For a similar critique, see No Right Turn’s blog post, A deckchairs budget. Here’s his main point: “It’s the only policy that matters, and next to it everything else is deckchairs on the Titanic. But that’s what we got: deckchairs. No money for a major decarbonisation of our electricity system. No money for a major decarbonisation of our transport system. No money, in short, to stop us poisoning the planet. Governments show what they value with money. Jacinda Ardern’s government has shown what it values today, and it is not the future.”

Not spending money to deal with these issues was a deliberate choice made by the Government, according to Bernard Hickey: “it is essentially deciding that keeping interest rates low is more important than getting kids out of poverty and reducing the stress of painfully high housing costs. New Zealand could easily increase its net debt to 50 percent of GDP over the next 10 years without either hurting our credit rating much or sparking a spike in interest rates. The Government should be using that flexibility to address New Zealand’s massive infrastructure and social deficits” – see: What the Wellbeing Budget should have been.

Hickey argues that the Government should be borrowing “$150 billion over 10 years to rebuild the housing and transport infrastructure in our major cities in a way that drives down housing and transport costs and sets us up for a carbon neutral economy by 2050. That extra investment would drive up productivity and then flow through to increases in both GST and income tax revenues to pay the slightly higher interest bill. That $150 billion could be invested in rail lines, bus networks, brownfield housing infrastructure, EV vehicle subsidies, and better education and health spending to improve the health and skills of young workers, who’ll be needed for that re-engineering of New Zealand.”

Similarly, economist Ganesh Nana said in the Herald today that the Government had the fiscal ability to be much bolder in the Budget: “Is it transformative? Sadly, not really. Debt is is projected at a meagre 18.7 per cent of GDP in 2023 – and there is a surplus track of $1.3b, $2.1b, $4.7b and $6.1b. With these numbers it is somewhat surprising that this Government did not use more of this elbow room to trigger a dramatic transformation in business, economy, and communities across Aotearoa.”

If not borrowing, the Government could be raising more money to pay for such necessary spending according to The Spinoff’s business editor Maria Slade: “Tax is the elephant in the room. If the government wants to continue down the wellbeing route it has to be able to pay for it. It’s in the ballpark this year with an expected surplus of $3.5b and new spending of $3.8b, but at some stage New Zealand will be forced to face the fact that a large proportion of our revenue comes from taxing salaries and wages” – see: The well-meaning budget.

Slade says although the Budget is “a well-meaning start… it could hardly be described as transformational.” She acknowledges change takes time, but says it’s not clear much is being achieved at all: “Rome wasn’t built in a day. Nonetheless you’d hope the Romans achieved a metre or two of roading in a 24-hour period.”

Similarly, RNZ’s political editor Jane Patterson argues the Budget was a long way off “creating a seismic political shift” – see: Wellbeing Budget: Laudable, but not transformational. Patterson says many of the changes were more about easing “some of the pressures that have been building up since the election of the coalition”.

In the area of welfare, she says despite “promised transformation” Labour and the Greens “have delivered only incremental changes.” Other traditional areas of leftwing importance are also being neglected financially – for example we’ve seen “in education not enough money to keep up with operational spending.”

Finally, from a distance much of yesterday’s Budget seems bigger and bolder. Looking at the international coverage of the Budget, Alex Braae says they seem to be getting it all wrong – see: ‘A beacon for the world’: What foreign media is saying about the Budget.

For the best overall guide to what has happened in the Budget leak/hack scandal, see the just-published article by Henry Cooke: What we know and don’t know about the Budget ‘hack’. Amongst his rundown on the background to the scandal and the theories offered so far, Cooke points out that, rather than being hacked, the Treasury website might simply have been scanned by Google, allowing a cache of pages to become available to someone who has handed them on to the National Party.

Another leading explanation for how the Treasury’s Budget information was released early to National comes down to a simple but obvious idea that parliamentary staffers looked for and found the information on the Treasury website. This would also explain how National leader Simon Bridges could be so categorical in his insistence that his scoops weren’t based on hacking or illegality.

According to this theory, National had one of its Parliamentary staffers monitoring the Treasury website in the days leading up to Budget Day, constantly using the frontpage search bar on the site to look for “Budget 2019”. The hope being that at some stage some Budget documents would be loaded onto the site momentarily, in anticipation of Thursday’s publication, before they were then locked away for safety.

The story goes that by searching every five minutes or so, the National staffer eventually hit the jackpot when documents or pages turned up with the goods. It might have taken hundreds or even thousands of searches over a couple of days.

In fact, National Party pollster and blogger David Farrar has outlined a similar scenario based on his previous experience as a parliamentary staffer: “when I worked for the Opposition in 2000 or 2001, I recall waiting for the Government to release the Police crime stats. They always put a positive spin on it. I went to the Police website and looked at last year’s stats. I also looked at the previous year. They had the same URL format. I changed the year to the current one, and hey presto I had the official crime states four hours before the Government was due to release them” – see: My guess as to what happened.

Farrar argues that something similar may have happened, and it therefore wouldn’t constitute hacking: “So my guess is something similar has happened. That possibly the material was put up on a website of some sort and someone found it. Treasury are calling it hacking because they didn’t think it was open to the public. But there is a difference between hacking a secure computer system, and locating information that is on the Internet (even if hidden). Was there any cracking of passwords for example?”

But do such explanations fit with what Treasury are saying when they claim that their site has been “deliberately and systematically hacked”? It’s arguable either way. Certainly, some tech-specialists seem to think that something much more sophisticated must have happened – especially based on the fact that Treasury has called in the Police. For one of the most in-depth discussions of the potential hacking, see John Anthony’s Budget 2019: ‘They’ll remember it as the budget that got hacked’.

Despite some tech specialists believing that a sophisticated hack has occurred, one expert believes a software application might have simply found the material on the Treasury website: “Kiwi cyber security consultancy Darkscope technical director Joerg Buss said a likely scenario was that someone used a ‘spider or crawler’ program to find hidden content in the Treasury website. Such software may have uncovered Budget 2019 files which had not been protected properly, he said.”

It could also be as simple as using Google to search for the material, which is covered by Juha Saarinen in his article, Conspiracy or cock-up? Strong evidence Treasury published Budget accidentally – rather than a hack. He says that “screenshots of the results from a Google search for ‘estimates of appropriation 2019/2020’ are circulating on Twitter suggest that the data was published accidentally.”

Of course, the fact that Treasury has called in the Police would suggest that the government department believes that something much more sinister or malevolent has occurred. However, care needs to be taken in reading too much into this – especially since the Police haven’t even confirmed that they have agreed to investigate, except to say that they are assessing Treasury’s request.

Furthermore, whenever governments and officials call in the police or make claims that criminal actions have occurred in the political sphere, we should always be very sceptical. It’s the oldest trick in the bureaucratic book – to divert attention or to impugn an opponent with charges that they are mixed up in criminal activity. That’s not necessarily the case over the controversial budget leaks – it’s still far too early to tell what has happened.

This is certainly the argument made today by leftwing blogger No Right Turn, who suggests that government officials have a tendency, when they’ve made mistakes, to try to point the finger elsewhere, often using rather draconian measures to do so – see: Treasury, “hacking”, and incentives.

Here’s his main point about how politicians and officials are inclined to bring the police into politics: “Unfortunately the natural instincts of power in New Zealand are to double down rather than admit a mistake, and to call in the police when embarrassed – just look at the tea tape, or Dirty Politics. With those, we saw police raiding newsrooms and journalist’s homes. I’m wondering if we’re going to see police raiding the opposition this time. Which would be highly damaging to our democracy.”

The blogger says that “the bureaucratic incentive towards arse-covering and blame-avoidance pushes that to be reclassified as nefarious ‘hacking’, and that incentive gets stronger the higher up the chain (and the further away from IT knowledge) you get.”

Here’s his own explanation for the release of the information: “The most likely scenario is that Treasury f**ked up and left them lying around on their web-server for anyone to read, and National or one of its proxies noticed this and exploited it. Accessing unprotected data on a public web-server isn’t ‘hacking’ in any sense of the word – it’s just browsing.”

The onus is therefore on the Treasury to be much more transparent about what has happened writes Danyl Mclauchlan, saying a “brief technical explanation about what the ‘hack’ amounted to would be a lot more useful than all the bluster and nebulous waffle we’ve heard so far” – see: Budget hacking scandal: About time Treasury told us what actually happened.

Mclauchlan says that if it turns out that the leak has simply come from information on the Treasury website, “then we’ll be talking about the resignation of the Treasury Secretary, rather than National Party leader.”

The No Right Turn blogger doesn’t see the Government delivering such transparency any time soon: “neither Treasury nor their Minister has any interest in that (Ministers are rarely interested in incompetence in their own agencies, because it makes them look bad for allowing it). As for us, the public, we’re the loser, stuck with an incompetent, arse-covering public agency which has just failed on one of its most important tasks” – see: Treasury owes us answers.

He argues that the decision to go to the Police means that Treasury can now sidestep such accountability: “conveniently, by referring the matter to the police Treasury has ensured that they can never do that. It might prejudice the police investigation, you see. OIA requests can be refused to avoid prejudice to the maintenance of the law, and anyone who actually tells anyone anything can be prosecuted. Accountability of course goes out the window”.

That doesn’t get National off the hook, however, if the party has done something illegal in the way they have procured or used the Budget information. One lawyer who knows a lot about hacks is Steven Price, and he argues that the release by National of the information was not in “the public interest”, and that it appears to have “broken the law relating to Breach of Confidence” – see: Budget leak: Nats’ behaviour “entirely appropriate”?

Price says that he is “irritated at the sanctimoniousness of Simon Bridges’ denial that the Nats had done ‘anything approaching’ illegality.” He does admit however, that if National have obtained the Budget information “through some area of Treasury’s (or some other government) website that was technically publicly accessible, then that would at least raise arguments that it wasn’t confidential in the first place, because it was in the public domain.”

Herald political editor Audrey Young is also less than impressed with how Bridges has dealt with the matter today, saying: “Simon Bridges needed to do two things today when he fronted the news media about allegations of hacking Treasury and he did neither. He needed to say, at least in general terms, how he received the leak of Budget of documents. And he needed to say he had contacted the police to offer them any assistance they needed in their investigation” – see: Simon Bridges needed to do two things today and he did neither.

But for another view on the politics of it all, and an explanation of why Bridges’ manoeuvres have been smart, see Brigitte Morten’s National plays strong hand over politics jackpot. She argues that it’s in the public interest for National to be able to dispute the Government’s narrative over Budget spending, and to be able to point out the “lower than expected spending” in areas such as health “that the government doesn’t want you to reflect on.”

Finally, for a recent minor – but extremely colourful – Treasury controversy, involving the use of a transformative wellbeing experiment for staff, see Danyl Mclauchlan’s must-read investigation: Peace, Rest and the Monkey Emoji Moon: playing Heartwork cards at Treasury.

Pacific Media Centre Newsdesk

Papua New Guinea’s opposition has declared it will fight a good fight to expose and oppose what it describes the 2018 state money plan as a “fake budget”, reports the PNG Post-Courier.

However, the rival daily newspaper, The National, quotes Prime Minister Peter O’Neill as decribing the K14.7 billion (NZ$6.6 billion) Budget as Papua New Guinea’s “best in 16 years”.

The opposition’s Shadow Minister for Treasury and Finance Ian Ling-Stuckey presented the “alternative government” 2018 Budget response titled “Fake Revenues, Fake Loans and a Fake Budget”, the Post-Courier reported.

He said the 2018 Budget was filled with misguided spending priorities, failed plans for financing and yet another huge deficit that would burden “our children” with too much expensive debt.

“Put simply, when I look at the budget, I think of PNG as being similar to a very large and diverse company-PNG Government Limited,” Ling-Stuckey said.

“Is PNG Government Ltd broke? Our people are feeling the pain through a lack of jobs, a lack of incomes, a lack of foreign exchange and a lack of important government services.”

-Partners-

Ling Stuckey said that since 2011 debt had grown from K8 billion (NZ$3.6 billion) to more than K24 billion (NZ$10.8 billion) in just five years.

‘Fake revenue’
“The 2018 Budget has, at this early stage, some K2 billion in ‘fake revenue’. This is not the ‘building block’ that the Minister for Treasury promised. So where is this K2 billion in fake revenue?”

He said to assume that revenues were going to increase as much as 20 percent from K10.6 billion to K12.7 billion in 2017 was wrong.

He said the opposition supported the increase in health expenditure of K285 million but relative to the 2015 Budget, health had been cut by 16 percent in real terms.

“It’s no wonder our health services are declining. It is good that more funds are being provided for medical supplies. However, the underlying issue is a lack of transparent competitive tendering in the medical supply contract,” he said.

Ling Stuckey said the biggest winners in this budget were interest costs, administration, health and APEC.

“Are some of these really the right priorities at this time of severe economic pain and failing government services?

‘Bad signal’
However, The National’s Clifford Faiparik reported that Prime Minister O’Neill criticised the opposition budget response, calling on Ling-Stuckey to withdraw his “fake budget” remark.

“This is very disappointing as it will give a bad signal to our international investors. I’m calling on the Shadow Treasury Ian Ling- Stuckey to withdraw his statement,” he said.

“This is by far one of the best budgets that I have ever seen since I have been in this Parliament for 16 years now. That includes the budget that I have presented as well.”

O’Neill had served as a treasurer in the Sir Michael Somare-led government.

“I say this because this budget is now putting us on a course to make sure that this country’s economic base and growth will be such that it can be self-sustainable,” he said.

“So it is quite disappointing that some of the terminologies that he [Ling-Stuckey] used are unbecoming of leaders of this honourable House. We have to be careful of how we portray the image of our country, our parliament and ourselves.

“Sometimes for short political convenience and point-scoring we say things and do things that are not really in the best interest of our country. We have to be constructive.”

The Post-Courier and The National are Papua New Guinea’s only two daily newspapers.

Article by AsiaPacificReport.nz