The week before Christmas was dominated by what may actually have been the most important political issue of the year in New Zealand – revelations that government agencies have spied on New Zealanders through the use of private investigators. The matter ended up being somewhat buried in the end-of-year chaos, and perhaps conveniently forgotten about by politicians with an interest in the issue remaining unresolved.

Yet the story isn't going away. Today, the Herald published revelations about how the private investigations firm Thompson & Clark was previously employed by government-owned Southern Response insurance to review Official Information Act answers about the use of the private investigations firm itself – see Lucy Bennett's Megan Woods seeks answers on Southern Response's use of private investigators.

Here's the key part of the story: "In January 2017, when Woods was the opposition spokeswoman on the Christchurch quake recovery, Thompson & Clark Investigations Ltd (TCIL) invoiced Southern Response $2070 for reviewing a response to an Official Information Act request from the Labour Party research unit on its use of TCIL."

The article reports on how "TCIL also appears to advise Southern Response on how to circumvent public scrutiny." For example, Thompson & Clark gave the following advice to Southern Response's chief executive: "to get around disclosure, privacy and OIA issues, we normally set up a discreet email address for you – in Gmail or similar ... do you want us to set up a discreet email account for you – or do you want to?"

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The original "explosive" SSC report

Despite the State Services Commission report being released during the busy period just prior to Christmas – leading to what some see as a lack of media coverage and scrutiny of the issues – there have been some excellent articles and columns published about it.

Andrea Vance produced some of the best coverage of the report and the aftermath. Her first report, Security firm spied on politicians, activists and earthquake victims, detailed the full extent of what had been uncovered by the report into government agencies using private investigators. Overall, she said that the "explosive report details a slew of damning revelations".

Vance followed this up with an in-depth article, Public service bosses ignored warnings about Thompson & Clark for years, which revealed that "for a decade public service bosses ignored the warnings about Thompson & Clark. Their tentacles were everywhere. Dozens of ministries and agencies used their services – and yet no-one in the upper echelons of the public service questioned their reach or influence."

According to Vance, "officials became drunk on the power of the information offered up by security firms like Thompson & Clark. It allowed them to keep tabs on their critics and stave off any reputational damage." She also argues that "A cavalier attitude to personal and sensitive information, and a troubling disregard for the democratic right to protest, was allowed to flourish within the public service over 15 years and successive governments."

Hamish Rutherford produced some excellent analysis, explaining: "In an age where the use of contractors is already under scrutiny, a string of government agencies have effectively outsourced snooping, in some cases for highly questionable reasons. In some cases this was done with a lack of clear contracts, creating a fertile atmosphere for mission creep" – see: Use of private investigators exposes carelessness about role of the government.

Rutherford writes about how remarkable it is that public servants weren't aware (according to the report) that what was going on was unacceptable. He therefore concludes: "we are reading about public servants who appeared to be seduced by private investigators, who decided to make their job easier without considering the implications for democratic rights, or the need to remain neutral. Weeding out improper behaviour may take work, but it seems the report exposes examples where public servants need to be told what their job involves, which would be a far more fundamental problem."

RNZ's Tim Watkin also has some strong analysis of what occurred, saying that the report on the state snooping "is a bit of a page-turner and a terrifying read for anyone who cares about the integrity of the public sector" – see: Heart of Darkness in the public sector.

According to Watkin, the situation is perplexing, given the risk-averse nature of the public service: "My concern is what this says about the culture at the heart of our public service. How did leaders who are by the very definition of their roles meant to be servants of the public decide that this level of covert surveillance was a good idea? Government agencies are typically so risk averse these days that they have multiple managers signing off press statements and an inability to make a decision on which pencils or toilet paper to buy without first clearing it with the minister's office. Yet they are willing to subject those 'ordinary New Zealanders" to secret surveillance."

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Possibly, Watkin says it's the very risk-averse nature of the current public service that has caused them to be more open to snooping on citizens: "there seems to be a deep-seated sense of butt-covering and paranoia". This is the very point made by Gordon Campbell in his blogpost, On why Thompson + Clark are just the tip of the iceberg.

In recent years, according to Campbell, the public service has become politicised, meaning that public servants have become more sensitive to the political needs of their ministers rather than the public good. This means that snooping on citizens and protestors starts becoming sensible, and to dissent against breaches of ethics in the public service has become much more dangerous for your career.

Not surprisingly, some of the strongest condemnation of state snooping on citizens has come from those organisations known to be affected – especially environmental groups. Former Green co-leader, and now Greenpeace head, Russel Norman emphasises the anti-democratic nature of what has been going on: "The chilling effect of being under constant and intrusive surveillance for simply campaigning on important social issues, fundamentally corrodes what it means to live in a free and democratic society. We've learnt that under the previous government, no-one was safe from being spied on if they disagreed with government policy" – see: Rotten to the core: The chilling truth revealed by the SSC report.

Norman concludes: "The State Services Commission (SSC) investigation may well be one of the most important examinations into the inner workings of the state that we've seen in New Zealand. I'd go as far as to call it our Watergate moment."

If that sounds like the expected complaints of an activist, then it's also worth reading what former United Future leader Peter Dunne had to say in his column, Only a first step in the data battle.

Dunne explains what has occurred as being "a gross breach of that implicit covenant between the Government and its citizens", and he raises serious questions about how much more privacy is being curtailed by government agencies. In particular: "Was any information provided, formally or informally, to the intelligence services by Thompson and Clark, and was any information gathered at the behest of the intelligence services?"

Newspaper editorials have also condemned what has been uncovered in the public service. The Otago Daily Times has a strongly-worded editorial about the dangers to democracy uncovered in the report: "It blasts a warning about the insidious nature of state power and the need for vigilance and protection. Those who would disregard civil liberties for what they might think is the greater good should think again. Big brother and big sister are an ever-present threat. This is even more so in the electronic age. It was first thought the internet might lead to more freedom and more opportunity for dissent. But the massive losses of privacy, the ease with which data is collected and modern data analysis all hand more potential power and surveillance ability to big business and big government" – see: An 'affront to democracy'.

In Christchurch, The Press has been asking important questions about what the report has revealed – see the editorial: More questions about spies and the public service. Here are the concluding questions: "The public needs to know more about this scandal that is so contrary to the way we expect our public servants to behave on our behalf. The public wants to know who approved of this surveillance, why it was considered necessary in a democracy and, perhaps most important of all, how much was really known about it by the ministers in charge."

Will anything actually be done about the spying scandal?

The biggest risk to arise out of the controversial investigation into government agencies' misuse of spying on citizens is that nothing further will now occur. So despite new stories being published about the state surveillance, there's a danger that we are coming towards the end of the scandal, with no significant reform being offered to correct the problems.

Although the Thompson & Clark firm has been discredited by the scandal, many are arguing that they are not actually the real problem. For example, Andrea Vance says: "although they took advantage, Thompson & Clark aren't responsible for public service culture and the undermining of democratic rights. That lies with Peter Hughes. For public confidence to be fully restored, the public service must demonstrate accountability and accept culpability, starting from the top down."

Perhaps it's time for a proper official and independent commission of inquiry into the spying problems in the public service. Security analyst Paul Buchanan has been arguing for this. And Gordon Campbell agrees: "given that the Thompson+ Clark problem is a by-product of the politicisation of the public service, security analyst Paul Buchanan is dead right in calling for a public inquiry. Only a wide-ranging investigation can address the attitudinal issues and power relationships between ministerial staff and public servants, of which Thompson + Clark are merely one of the end results."

Tim Watkin has also argued that more needs to happen: "The proper response to this report is not a few hours of tut-tuting, the Prime Minister expressing formulaic concern that the spying was "disturbing" and the symbolic resignation of a single chair. No, the proper response is a change to the public sector culture. So who will lead that?"

Long-time political activist Murray Horton also proposes an inquiry – see: Thompson & Clark just tip of spyberg. Let's have an inquiry into whole covert world of state spying. Horton explains the significance of the latest changes in state surveillance of citizens, saying that there's been two major changes: contracting the spying out (perhaps deliberately in order to escape rules), and expanding the targets beyond just activists.

Other activists – especially those affected by the state spying – put forward proposals for reform in Jessie Chiang's article, Environmental groups call for change after security firm revelations. For example, Russel Norman calls for prosecutions of those involved, and for the Ministry of Business, Innovation, and Employment to be broken up. And Kevin Hague from Forest and Bird says: "I'm encouraging state services to go back to [learning] how to operate as a state service... and your obligations to the public and not just to the government of the day".

For more thorough reform suggestions, also see blogger No Right Turn's A private Stasi. He says "Businesses like Thompson and Clark, whose service is explicitly anti-democratic, need to be made illegal and put out of business."

Finally, there's the issue of the breaches of rules by Crown Law when working for the Ministry of Social Development – which Andrea Vance has described as "one of the most shocking findings". The chief executive of MSD at the time was Peter Hughes, who of course is now chief executive of the State Services Commission, and therefore in charge of the whole of the public service. There will therefore be suspicions of conflicts of interest in terms of resolving that issue, and Hughes has handed the ongoing task to his own deputy at the SSC. For the best discussion of all this, see Aaron Smale's Hypocrisy at the highest levels.