News that the Government’s new Parliamentary Undersecretary for Health, Todd Stephenson, has been pressured today to sell his investments in pharmaceutical companies shows how New Zealand is becoming more sensitive and suspicious about politicians’ “conflicts of interest”.
Yet, we need to get much more serious about creating rules and procedures to avoid such problems in the first place. After all, conflicts of interest are the common theme in a growing number of stories lately about alleged corruption, political appointments, and poor political processes.
When politicians are conflicted
Herald journalist Simon Wilson has written about this today, and he’s usefully defined the problem like this: “In politics, a conflict of interest is where you’re in a position to decide something for the greater good, but your personal interests get in the way, or could be seen to get in the way” – see his must-read column, National MP David MacLeod and a Parliament full of conflicts of interest (paywalled)
Wilson expresses his astonishment that New Zealand has few rules to prevent conflicts of interest across the board. He argues that elected politicians should recuse themselves whenever they are voting on issues that could significantly impact their personal assets. So, for example, when Auckland City councillors recently voted on selling its shares of Auckland International Airport, Wilson says the three councillors who admitted to having family shareholdings in the asset should have stepped aside from the vote.
Likewise, in Parliament, many MPs own investment properties: “Why don’t investment property owners recuse themselves on all votes to do with tax? How is it not a conflict of interest when every vote related to tax is, in effect, a decision not to introduce a capital gains tax?”.
For more on this, see my two columns from Friday on the latest pecuniary interests conflicts of interest:
Sunday Star Times columnist Andrea Vance has also drawn attention this week to the growing list of “scandalettes” and “petty cronyism”, which she says are cumulating into a sense of “ick”: “All these tempests in teapots encapsulate every negative stereotype that is perpetuated about National: that it’s too chummy with business, and too ready to bend the rules to further private interests” – see: Coalition of the compromised? Luxon’s MPs need to look a bit less dodgy (paywalled)
What is particularly alarming to Vance is that the sort of rottenness occurring usually is what happens towards the end of the life of a government, as occurred in the last Labour administration: “It usually takes a couple of terms before a government starts to go off. By off, I mean the perceptions of corruption, cronyism and conflicts of interest that infect late-term governments and give the impression an administration is out of touch, ethically compromised and governing in the interests of the powerful rather than the public.”
Conflicts of interest: Political donations and the Fast Track Bill
Both Simon Wilson and Andrea Vance are particularly concerned with last week's news that new National MP David MacLeod failed to declare about $178,000 in donations. For more on the scandal, see my column from last week: How serious is an MP’s failure to declare $178k in donations?
For Wilson, the biggest issue is that the MP is currently chairing the select committee scrutinising the Fast Track Approvals Bill: “The MP in charge of hearings on the bill received far more donations for his election campaign than any other candidate, and failed to declare 85 per cent of them. Some of the undeclared money came from interests who will probably benefit if the bill becomes law.”
Wilson asks: “But what was he even doing in the job in the first place? Isn’t his conflict of interest obvious?” He spells out the conflict of interest: “MacLeod has been the recipient of considerable largesse from members of the mining, property and investment worlds, all of which stand to benefit when the Fast-track Approvals Bill becomes law. It’s not credible that senior members of the Government were unaware of either the scale or the source of his financial backing – right from the get-go.” The answer, according to Wilson, is possibly just laxity: “too many politicians think that conflict of interest actually doesn’t matter”.
Andrea Vance also details why one of the donations that MacLeod received produced a conflict of interest for the chair of the select committee: “The New Plymouth MP received $10,000 from a businessman with substantial shares in seabed-mining company Trans-Tasman Resources (TTR). TTR wants to mine ironsands off the coast of Taranaki and hopes to finally get the green light under the Fast-Track Bill, despite the project being rejected by the Supreme Court, and deeply opposed by mana whenua.”
The Post editorial on Saturday also argued that the McLeod was just the latest in a “surprising number” of conflict of interest stories lately, and they “add to a sense of political murkiness” in the new Government – see: The risks of political cronyism (paywalled)
Conflicts of interest: Politicians with links to industry
Parliament’s annual release of MPs’ pecuniary interests last week also produced more reasons to worry about conflicts of interest in the new government – the biggest concern being the Government’s new Parliamentary Undersecretary for Health, Todd Stephenson, holding shares in pharmaceutical companies. This was explained last week by David Fisher in his Herald story, David Seymour’s special medicines envoy has investments in Big Pharma (paywalled)
In his role assisting the Government on Pharmac, Stephenson has an official role advising Associate Health Minister David Seymour on pharmaceuticals. But his office claims that his Parliamentary Undersecretary role isn’t formally part of the Executive, and therefore, he’s not subject to the Cabinet Manual rules on conflicts of interest.
David Fisher followed that story up today with further details of meetings with pharmaceutical companies with connections with Stephenson. In reviewing Seymour’s official ministerial diaries of meeting appointments, the journalist has found that the Minister met with Vertex Pharmaceuticals (who Stephenson worked for before coming to Parliament), Johnson & Johnson (who Stephenson worked for and has investments in), and Merck, Sharp & Dohme (who Stephenson had close connections with during his 17 years in the industry). Stephenson is detailed in the official records as being at two of the three meetings – see: Pharmac Minister David Seymour met Act MP Todd Stephenson’s former drug company employer – and the MP sat in on the meeting (paywalled)
Stephenson has now agreed to sell his stake in the companies, claiming he wants “to ensure no distraction exists” – see David Fisher’s latest report: David Seymour’s special envoy in medicines is dumping his drug company investments
Conflicts of interest: Lobbying for government services
The connections between National-aligned lobbyists and significant Budget decisions have also been causing concern about how cosy and inappropriate some of the connections and taxpayer-funded contracts are. Two weeks ago, I wrote about the problematic close connections between the University of Waikato, their employment of lobbyist Steven Joyce, and National’s decision to fund the University to set up a new medical school – see: Lobbying for Waikato’s Medical School causing problems for the Govt
However, it now appears that the Government and the University are backtracking on the deal, with news today that Waikato has now withdrawn their advertisements to find a property developer to build the new medical school. Richard Harman has reported: “The University announced yesterday afternoon that it was withdrawing the call for tenders on the Government procurement website GETS” and that a University spokesperson has said this was due to “advice from MBIE and other stakeholders” – see: Med school backdown the “right thing” says Seymour (paywalled)
Harman reports that Act, and possibly New Zealand First, has forced National to keep to its coalition agreement in which a complete cost-benefit analysis about the medical school is produced before funding is agreed to Waikato. This is a problem for Prime Minister Christopher Luxon, who Harman says “made the medical school the centre of National’s plans to produce more doctors… without any detailed economic analysis”.
Political commentator Matthew Hooton has also written today, celebrating that the idea of the new medical school is now dead – see: Long-suffering Waikato Med School proposal moves from asylum to morgue (paywalled)
Hooton has parodied the whole debacle, which lobbyists and vested interest have led: “Congratulations are in order this morning to Finance Minister Nicola Willis and Act leader David Seymour for putting Steven Joyce and Christopher Luxon’s looney Waikato Medical School proposal out of its misery. A quick cremation will be carried out this morning. There will be no mourners except Joyce, Neil Quigley, [and lobbyists] Anna Lillis and Kenny Clark.”
Conflicts of interests: Political appointments
I have recently written several columns about the various political appointments that the new Government has been making:
Paula Bennett’s political appointment will challenge public confidence
Steven Joyce’s revolving door entry into a $4000/day govt appointment
In addition, more scrutiny is needed of the appointments of Murray McCully, Roger Sowry, and Bill English. Andrea Vance wrote about these on Sunday, labelling them “petty cronyism”. She points out that all governments make crony appointments – which Peters criticised in 2016 as being a “bro-reaucracy”, but that it’s “usually with a little more subtley, and never in such rapid-fire succession.”
On Sunday, TVNZ’s Q+A challenged the Minister of Education about her appointment of her former boss, Murray McCully, to review the state of school buildings. She responded, “I couldn't think of a better person to lead this inquiry” – see: Q+A: Erica Stanford says no issues appointing her old boss to inquiry job
McCully is being paid $2,200 per day. He previously employed Stanford in his electorate office for four years, and she calls him her “political mentor.” Despite this, Stanford doesn’t believe that McCully’s connections to her or the National Party will reduce the public’s confidence in the review's status as “independent.”
Regarding Chris Bishop’s employment of former prime minister Bill English to provide an “independent” review of Kāinga Ora, there has also been some news about his payment. Newsroom’s Tim Murphy reported last week that the $274,000 funding for English’s company to deliver the report was taken out of the government’s budget for the “provision of transitional housing places” – see: Govt paid Kāinga Ora reviewers out of urgent housing fund
Conflicts of interest: National’s taxpayer funding of charities
On Sunday, I wrote about the conflicts of interest involved in National’s decision to give Mike King’s I Am Hope charity $24m – see: The Negative social impact of taxpayer-funded partisan charities
In addition to the connections between the charity and the National Party, Gordon Campbell also points out that “former National MP and National Party leader Todd Muller is listed as an employee, and has been a board trustee” – see: On Blurring the lines around political corruption
The Otago Daily Times has now written an editorial on the charity conflicts of interest, saying yesterday that there appears to be a trend in funding charities without proper evaluation, and therefore, “if there is poor transparency around its selection process for winners it risks looking like a blinkered runaway horse” – see: Blinkered thinking (paywalled)
The newspaper comments that National’s decision not to have a contested and rigorous process for funding charities is “unwise”, concluding: “The government seems increasingly oblivious to such perception issues. It is hard to work out whether this is arrogance or naivety. Either is frightening.”
Time for an Integrity Commission
Back in January, I wrote about the worrying amount of integrity issues that the last Labour Government had created over their six years in power, and I suggested that the new National-led Government needed to “declare war on corruption, cronyism and low standards” to avoid going down the same pathway – see: Christopher Luxon needs to raise standards in the Beehive
This hasn’t happened. And the “Chumocracy”, or “cosyism”, that has become so central to our political system keeps growing.
It might well be that regardless of which politicians and political parties are in power, there is a need for a more systematic regime of rules and regulations to ensure integrity is maintained. At the moment, New Zealand politics operates with too much of a “high trust model,” in which we just expect politicians and those with power to do the right thing. That largely unregulated model is no longer fit for purpose.
Fortunately, there’s a model that we might learn from. Australia has also experienced many of the same problems and, as a result, has established an anti-corruption agency to monitor such conflicts of interest. Here in New Zealand the need is probably broader, and a more general Integrity Commission is sorely needed.
Dr Bryce Edwards
Political Analyst in Residence, Director of the Democracy Project, School of Government, Victoria University of Wellington
This article can be republished for free under a Creative Commons copyright-free license. Attributions should include a link to the Democracy Project (https://democracyproject.nz)
Bryce - thank you for your energetic pursuit of these increasingly troubling conflicts of interest. How long will it be before New Zealand loses its long-standing status as one of these least corrupt of nations, based on the Transparency International Analysis?
Steven Joyce has done very nicely out of the Waikato Medical School we are not getting, let them eat layer cakes...