Political Roundup: Auditor General inquiry into ministerial conflicts of interest

Oct 31, 2024

The Auditor-General’s decision yesterday to investigate ministerial conflicts of interest, particularly in relation to the Government’s Fast Track Act, represents a critical step in scrutinising how governmental processes handle potential ethical risks. This investigation dives into whether the influence of lobbying, political donations, and ministerial entanglements with wealthy interests has compromised the integrity of the Fast Track Act’s accelerated approval process. Auditor-General John Ryan has previously voiced concerns on this issue, especially through a significant submission to the parliamentary select committee in April, which flagged potential weaknesses in the Bill’s conflict management approach.

The Auditor-General’s longstanding concerns

Back in April, the Auditor-General submitted to the select committee reviewing the Fast-Track Bill, raising serious concerns about the potential for unchecked ministerial conflicts within this expedited approval framework. The submission cautioned that the Bill, while designed to address infrastructure bottlenecks, lacked robust mechanisms for identifying and managing conflicts among ministers.

He recommended the Government “consider whether the transparency and accountability arrangements in the Bill are proportionate to the discretion being provided to Ministers”.

The Auditor-General’s comments underscore a recurring theme in recent criticism: the process of declaring conflicts remains murky, leaving the public uninformed about ministers’ ties to Fast-Track projects. This lack of transparency, critics allege, could leave the Fast-Track Act vulnerable to favouritism and influence from entities with political or financial sway.

Issues with Ministerial conflict-of-interest management

Media commentators and analysts argue that existing ministerial conflict-of-interest protocols fail to address the nuanced risks posed by the Fast-Track process. A number of articles have recently noted that ministers involved in approving fast-tracked projects may have financial ties, political relationships, or donor obligations that complicate impartiality. In one case, a minister overseeing Fast-Track applications had indirect financial connections to companies involved in these projects, leading observers to question how thoroughly these conflicts were managed and disclosed.

According to the Auditor-General, the Fast-Track Act’s accelerated nature only heightens these risks by limiting the usual checks and balances provided under the Resource Management Act. By prioritising speed, the Act appears to bypass necessary scrutiny on whether all relevant conflicts have been properly disclosed and managed, leaving critics to question whether the current system adequately protects against undue influence.

The Role of political donations and lobbying

Political donations and lobbying efforts around Fast-Track projects represent another focal point for concerns. In recent years, development firms, construction companies, and fossil fuel interests have contributed significant sums to political campaigns, sparking questions about whether these donations might influence which projects get fast-tracked.

Farah Hancock of RNZ has recently detailed how “Companies and shareholders associated with 12 fast-track projects gave more than $500,000 in political donations to National, Act and New Zealand First and their candidates”.

However, the minister leading the Fast-Track process, Chris Bishop, has explained that the Government does not accept that political donations produce any sort of conflict of interest. The Government maintains that political donations are managed transparently through required declarations, which are disclosed publicly. However, critics argue that this approach does not adequately address the influence these donations may have on fast-track decisions.

For example, in October the Listener political columnist Danyl McLauchlan said that the public is likely to view the donations and connections that many of the Fast Track candidates have with political parties to be politically smelly: “Some of them already have a certain fragrance – like the Winton Group’s housing development in Papakura. That company had previously requested exemption from zoning laws and local body consenting from Kāinga Ora and was declined. The same project is now included in the fast-track bill – and one of the company directors is former National cabinet minister Steven Joyce, and chair Chris Meehan is a significant donor to the National Party. It looks an awful lot like well-connected companies paying money to political parties that then pass laws circumventing standard legal processes.”

Lobbying, while legal, amplifies these risks. Companies with vested interests in fast-tracked projects are known to employ lobbyists with strong government connections, and various commentators have pointed out how the Act’s minimal requirements for lobbying disclosures leave the public in the dark about private sector influence.

Ideally, the Auditor-General’s inquiry should examine how these lobbying practices intersect with ministerial decision-making and whether they align with public interest objectives.

The Auditor-General’s influence on parliamentary debate

The Auditor-General’s April 2024 submission directly influenced parliamentary discussions on the Fast-Track Bill. Several MPs cited the submission as they pushed for amendments aimed at tightening conflict-of-interest rules. Labour’s Barbara Edmonds has argued that the Auditor-General’s concerns should prompt Parliament to adopt stricter transparency measures and clearer protocols for handling conflicts in high-stakes decision-making processes.

Conversely, National’s Chris Bishop voiced reluctance, viewing some proposed restrictions as potentially burdensome. Hence, the Bill proceeded largely unchanged, leading critics to argue that the government missed an opportunity to build stronger safeguards directly into the legislation.

Influence of wealthy interests and political clout

High-profile developers and industry leaders, many of whom have funded political campaigns, look to benefit from the Fast-Track process, raising concerns about the influence of elite interests. Critics contend that the Fast-Track Act prioritises wealthy stakeholders by facilitating easy project approvals without standard RMA oversight.

But the Auditor General’s inquiry isn’t going to look at any of these potential examples. In announcing the inquiry yesterday, John Ryall stated: “We will not examine or comment on policy decisions underpinning the Fast-track process, or the merits of individual projects or the decisions to include an individual project in the Fast-track Approvals Bill.”

Nonetheless, the eventual report is likely to spark further debate about whether the approval process disproportionately favours well-connected applicants, who may receive preferential treatment due to their political affiliations.

In recent months, critics and commentators have argued that by enabling projects that align with the interests of influential donors, the Act risks fostering a political climate where ministerial decisions reflect elite priorities over public good. This favouritism not only impacts fair access to the Fast-Track pathway but also deepens skepticism about the government’s commitment to balanced development that considers environmental and social factors.

For example, the Listener’s Danyl McLauchlan said that the Coalition Government should be establishing a “risk register” to monitor areas that could lead to problems: “The fast-track bill and perceptions of corruption should be at or near the top of National’s list. It is unusual for Parliament to pass legislation that directly benefits the commercial interests of specific private companies, and almost unheard of for it to do so in a way that circumvents existing laws and legal processes.”

The Government’s opacity on Fast Track conflicts of interest

Right from the start the Government has maintained an ethos of secrecy about the Fast-Track process, refusing at various stages to provide information on key parts of the programme. Over time they have been pressured to give up more and more information, but only begrudgingly.

When they recently announced the 149 Fast Track applicants that are to be included in the initial legislation, pressure came on the three ministers to give up information on their conflicts of interests and how they managed them. Shane Jones was the most willing on this, identifying the eight conflicts of interest that had led him to recuse himself of any decision making on them.

Bishop admitted to one. But none of the three Fast Track Ministers – to say nothing of the rest of Cabinet – were willing to disclose a full list of conflicts of interest and state how they were dealing with the ones that they weren’t recusing themselves from.

The Government justified this opaqueness on the needs of Cabinet and personal confidentiality. Instead, it was explained that Ministers would self-regulate their conflicts and would leave the room if any discussion occurred about a Fast Track company that they had a conflict of interest with.

Possible reform outcomes

Although the focus of the new inquiry mostly applies to the Fast-Track, it might be expected to recommend structural reforms aimed at insulating ministerial decisions from conflicts of interest. Suggestions might include establishing an independent oversight body to monitor disclosures, instituting clear guidelines on political donations, and increasing transparency around lobbying activities. Once again, the creation of an Integrity Commission comes to mind.

Certainly, the current practice by which conflicts of interest are managed behind closed doors, without any need to declare what these are or how they are dealt with is likely to change. This is standard practice in other countries.

Similarly, in the way that ministers make appointments – such as to the Fast-Track’s so-called independent expert panel – is ripe for reform. Other countries use public appointment committees to establish candidates short-list for such appointments.

Ideally, the Auditor-General’s recommendations would also push for a more formalised code of conduct for ministers involved in Fast-Track decisions, including mandatory public declarations of all relevant financial and familial ties. These reforms, if implemented, could help New Zealand align its processes with international best practices and revive its reputation for clean governance. But more than that, such changes are essential for rebuilding public trust and ensuring that Fast-Track projects genuinely serve public interest rather than private profit.

Concerns about the Fast Track integrity isn’t just from Government opponents

What’s important about the Auditor General’s inquiry into ministerial conflicts of interest is the fact that the office has a strong reputation. The inquiry can’t be dismissed as troublemaking by political opponents.

Although opposition to the Fast Track may have been dismissed as coming from the Coalition Government’s political opponents, including environmentalists, this isn’t accurate. There are in fact also many on the pro-business and political right side of politics who also believe the Fast Track rules have the potential for enabling corruption, and therefore needs to be carefully regulated.

For example, The New Zealand Initiative has argued that the Fast Track Act should only exist for a short period of time. A Senior Fellow at the Initiative, Nick Clark, argued in the Herald last month that there are very real problems of corruption likely to arise from the Fast Track Act if it gets out of control: “The biggest problem is the opportunity for ‘rent-seeking’ – manipulating the political environment for private benefit. Getting projects on the fast-track list could be incredibly valuable for proponents. While projects should have strong economic benefits, the process heightens the risk of bad outcomes – ranging from misallocation of resources reducing economic efficiency to encouragement of corruption and cronyism. The risks might be small initially but may increase over time.”

Similarly, National Party pollster and analyst David Farrar has previously written about his concerns, saying that a “legitimate concern is the potential for corruption” flowing from the new rules, and he worries that there are no safeguards to prevent bribery being used by the wealthy to get consents from whichever politicians are in charge of the Beehive.

Farrar has even argued that the potential for corruption under the new legislation is so significant that much greater regulation of lobbying and transparency of political donations is necessary. For example, he proposes that “a condition of consent applications should be applicants have to detail (at risk of criminal penalty) all dealings they have had with Ministers, MPs, staff in the last x years, and if there have been any donations by them or associated parties.”

Interestingly, even many National voters are concerned about potential for corruption in the Fast Track Bill. Horizon Research was commissioned by Greenpeace to ask the public if they are concerned that the Fast Track “could create a risk that commercial interests, some of whom have made donations to political parties and MPs, may influence development decisions”. The results showed that 41% of National voters stated that they had this concern. While this figure is lower than for the average voter (68% were concerned), it still indicates that concerns about the integrity of the process isn’t confined to the Government’s opponents.

A Critical juncture for ministerial integrity

The Auditor-General’s inquiry into the Fast-Track process underscores a moment of reckoning for New Zealand’s political integrity. His April submission to Parliament revealed serious concerns about how the current process handles ministerial conflicts, laying the groundwork for an inquiry aimed at restoring faith in public decision-making.

This inquiry might well reveal a deep-rooted vulnerability within New Zealand’s governance framework, where ministerial autonomy sometimes outpaces public accountability. If it is thorough enough, the Auditor-General’s scrutiny of political donations, lobbying influence, and self-reported conflicts will raise biggest questions about the systemic issues that have allowed private interests to potentially overshadow the public good in ministerial decision making – not just in the current government but its predecessors. The findings of this investigation could pressure ministers to finally adopt stricter conflict-of-interest regulations, offering the public a greater assurance that development projects reflect shared national values rather than the priorities of a powerful few.

Dr Bryce Edwards (assisted by AI)

Political Analyst in Residence, Director of the Democracy Project, School of Government, Victoria University of Wellington

Key Sources

Auditor General: How Ministerial conflicts of interest were identified and managed in relation to Fast-track projects

Auditor-General: Submission on the Fast-track Approvals Bill

Dan Brunskill (Interest): Parliament's watchdog will examine how conflicts of interest were managed in the Fast-track Approvals Bill

Thomas Coughlan (Herald): Auditor-General concerned about fast-track bill’s lack of transparency, protections for conflicts of interest

Jamie Ensor (Herald): Inquiry launched into how conflicts of interest dealt with during fast-track approval project decision-making

David Farrar (Patreon): Is RMA fast track a necessary evil? (paywalled)

Farah Hancock (RNZ): $500,000 in political donations associated with fast track projects

Farah Hancock (RNZ): Most fast-track panellists picked by ministers, political parties

Thomas Manch (The Post): Cabinet ministers' conflicts over fast-track project made public (paywalled)