Paula Bennett’s political appointment will challenge public confidence

The list of former National Party Ministers being given plum and important roles got longer this week with the appointment of former Deputy Prime Minister Paula Bennett as the chair of Pharmac. The Christopher Luxon-led Government has now made key appointments to Bill English, Simon Bridges, Steven Joyce, Roger Sowry, and Maurice Williamson.

Several good reasons can be given for adding Bennett to the list. She’s a talented and experienced political operator and will be able to assist the democratically-elected government in reforming the tarnished Pharmac drug-buying agency.

Yet there are also significant problems with such appointments – especially because the former Deputy PM is not just a retired politician but an ongoing political figure deeply involved in partisan activity, most recently raising millions of dollars in corporate donations for her party. Bennett’s various business, partisan and government roles mean she has several potential conflicts of interest that will need scrutiny and management.

Also, because Bennett will now be governing a public agency specially designed to have an arms-length relationship with the government of the day, to retain public confidence in Pharmac's integrity, she will have to display total independence from the ministers that she is closely associated with.

Arguments in favour of Bennett and other political appointees

Debates about political appointments to government roles have been heating up in recent months. This is an overdue conversation that we need to have about our political system. Each new government makes more such appointments than the last one. And indeed, Jacinda Ardern’s Government made plenty of partisan appointments – indeed, that outgoing chair of Pharmac is former Labour Minister Steve Maharey. He had to recently resign as his partisanship was deemed too great.

As I’ve argued before, there is good reason for having such political appointees, and it would be undesirable to have them banned. In this regard, today’s Otago Daily Times has a strong editorial that makes the case in favour of Bennett’s appointment and generally favours having plenty of politicians put in as top public officials – see: Editorial – Jobs for the boys and girls (paywalled)

Here’s the ODT’s key point about the value of political appointees:

“There are good reasons why former politicians are in demand for governance roles. For a start, they are actually experienced in governance — and at the highest level what is more. The pool of experienced and capable board members in our small country is not large, and overseeing a government department offers unparalleled experience of what the role requires. Ex-MPs know how to deal with government, they know how the public service works, and in many cases — Mr Bridges, a former transport minister being a prime example — they not only have extensive sector knowledge but know most of the main players.”

In terms of Bennett herself, the newspaper says that although she has no portfolio experience in health issues as a senior minister, she “will be well aware of both the insatiable demands on Pharmac to provide new drugs and the limitations on the public purse to afford them.” Furthermore, the newspaper suggests that because Bennett has “high standards”, she will be the right person to bring about “culture change” in an organisation that has lost public confidence due to its operating style.

The ODT also points out that appointments such as Bennett’s are overseen by the Treasury, which has a permanent team carrying out due diligence on the appointment process. Therefore, the public should trust that the public service isn’t becoming politicised.

The New Zealand Initiative’s Oliver Hartwich is also cited today approving of Bennett’s appointment, saying that it would actually be “desirable” for New Zealand’s public service to be run on greater political lines, giving the government of the day increased ability to install more of their own side running government departments.

This is in an article by Thomas Manch in The Post – see: Jobs for the boys (and girls) common in the New Zealand system (paywalled). In this, the head of the New Zealand Initiative argues that Paula Bennett has “quite transferable skills” for chairing agencies like Pharmac. In general, political appointees are OK, Hartwich argues, if they are the best person for the job, regardless of their political roles. Former politicians like Bennett make good governors because “they would have dealt with large bureaucracies, with large organisations, and so therefore, the whole world of big scale management is not alien to them.”

The person responsible for employing her is Act leader David Seymour, who is Associate Health Minister responsible for Pharmac. Thomas Manch reports that Seymour “said Bennett had leadership qualities and experience leading reform of the welfare system”. This experience, according to Seymour, made her “the best person to make the decisions needed to ensure that Pharmac is world-leading” – see: Paula Bennett appointed chairperson of Pharmac (paywalled)

The Counter arguments to increased political appointments

Opposition to the appointment of partisan people to top public service roles isn’t limited to a left-right dynamic – there are plenty of people on the political right who are uncomfortable with the increasing politicisation of the public service under the National-led Government.

For example, conservative political commentator and former Reserve Bank chief economist Michael Reddell was outspoken yesterday on X/Twitter about why Bennett’s appointment is wrong. He has long argued that certain institutions like Pharmac (and others like the Reserve Bank) aren’t regular government agencies but have roles where they need to have the confidence of the public that they are genuinely independent of the Beehive. Therefore, they should be governed by “respected non-political figures, not highly partisan players”. Consequently, he argues that it was a mistake for Labour to put Steve Maharey in as chair and “so much worse” for National to appoint Bennett. Reddell points out that at least Maharey had been out of Parliament for ten years.

If the National Government wants political control of Pharmac, then, Reddell argues, it should officially remove its independence and bring it back into the core public service, where a minister can be in charge of it.

Here’s Reddell point in his post about the role of Pharmac being different to other government agencies:

“Pharmac is supposed to be the quintessential case – perhaps paralleled by the RB [Reserve Bank] – where power, and v real power, and choices are delegated to non-partisan technocratic experts, within a mandate specified by Parliament and/or ministers. There are good reasons for choosing such a delegation model, but an integral element is supposed to be developing and maintaining confidence across the community that these are expert-led processes. How then it is appropriate to appoint a highly political, highly partisan (leading fundraiser), person with no domain expertise (& not even any board experience) as chair?”

Bennett’s potential conflicts of interest under scrutiny

Those arguing in favour of politicians being appointed top public servants often ignore the problem of conflicts of interest. Do the appointees have other roles that might influence their new jobs? Indeed, integrity scholars point to the issue of the “revolving door”, in which even if you resign from a position when you take up a new role, the individual still carries all sorts of obligations and connections with you into the new role. Hence, for example, in most countries, politicians have “stand down” rules that mean they have to wait several years after leaving politics before they take up private sector roles like lobbying – and vice versa.

So, does Paula Bennett have any such conflicts of interest, and how are these being managed? We haven’t been told by the Government. In this regard, Michael Reddell posts on X: “One wonders what, if any, commitments the government has sought or obtained from Bennett about keeping out of partisan political activity while she holds the Pharmac role.”

Bennett has been involved in several business activities since she left Parliament. Most prominently, for the last four years, she has worked for the real estate agency Bayleys as “Director—Strategic Advisory.” According to her LinkedIn status, she is remaining in that role while governing Pharmac: “Thanks for the support from Bayleys. I am staying on in my role with them.”

Bennett’s connections with the new National-led Government are powerful. She’s been cited by some commentators as one of the “key influential figures” in the party.

She has already been able to hold three meetings with ministers in the Beehive. According to the ministerial diaries published by the Beehive, at least one of these has involved what looks like lobbying related to a transport company, Ocean Flyer. In February, she met with Associate Transport Minister Matt Doocey, company CEO Shahnawaz Aslam, and manager John Hamilton.

Bennett also has influence as one of National’s top political commentators in the media. She can be relied upon to give a pro-National stance on topical issues. Normally, these have a very pro-business orientation – take, for example, her recent column on National’s proposed fast-tracking of resource consents – see: Fast Track Approvals Bill a good reason for tradies to stay in NZ (paywalled)

In this, Bennett explains how business owners are frustrated by limitations on their developments – her anecdotal example is King Salman aquaculture farming – which leads to workers leaving the country searching for jobs.

Rich List fundraiser for National

Bennett’s most significant conflict of interest, however, is her role as corporate fundraiser for the National Party. She’s been focusing on getting large donations from the super-rich in New Zealand, especially Auckland. In this role, Bennett is said to have attempted to meet with every single person on the NBR’s Rich List to get them to donate to National.

She’s been incredibly successful in this regard. Between 2021 and 2023, the party declared $8.2m in big donations. In one particular fundraising drive, Bennett was credited with raising $1.8m in just three weeks. This involved collecting large donations from the likes of Graeme Hart, Murray Bolton, and Nick Mowbray. One Auckland businessman, Warren Lewis, gave $500,000—which is said to be the largest-ever single donation in the country’s political history.

Bennett has also organised significant fundraising events. For example, in 2022, she gathered about 300 businesspeople, paying $1500 per ticket, to meet with Christopher Luxon, Nicola Willis, and others at a party.

Many in the public will see this as incompatible with being the chair of Pharmac, regardless of whether she is still involved in fundraising. The conflict of interest continues, making her appointment look like cronyism. Ultimately, the big loser in all of this is public confidence. Few will genuinely trust that the government agencies former National ministers now run are independent and neutral.

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)