Should a Cabinet Minister be able to leave Parliament and immediately become a lobbyist, taking insider information with them while pressuring former colleagues?
Do rules around political donations - which can be very large and largely hidden - enable undue influence for the wealthy or certain industries with deep pockets?
Is it wrong to have no penalties for flouting the law around access to official information, which helps to shine a light on what goes on behind the scenes?
These are the questions that underpin an increasing risk of political corruption in New Zealand, according to a new report published by the Helen Clark Foundation called, Shining a light: Improving transparency in New Zealand’s political and governance systems.
Released today, the report says political integrity in New Zealand has evolved from social norms, rather than good systems.
“Sadly, today, we’re naïve to think that’s enough,” says author Philippa Yasbek, who is also co-founder of Gun Control NZ.
“New Zealand needs stronger laws and regulations to improve trust and confidence in political decision-making, or we risk seeing the rise of populist leaders who are prepared to sweep away democratic norms.”
Several issues involving ministers and parties have emerged in recent years: Kris Faafoi leaving politics and immediately becoming a lobbyist; Stuart Nash telling donors about confidential discussions in Cabinet; Michael Wood failing to declare his airport shares; donations to New Zealand First from the fishing and racing industries, along with party links to the tobacco industry; both National and Labour “fundraising” for access to ministers; and a return of lobbyists to Parliament, their identities hidden.
Meanwhile, parties amass millions of dollars in donations, while the identity of donors can be hidden if the money is funnelled through a trust or foundation.
The Government is considering some of these issues - such as a $30,000 cap per party on political donations - which were raised in the final report of the Independent Electoral Review at the end of last year.
But Yasbek said New Zealand remained vulnerable to a corruption crisis, and urged the Government to strengthen five key areas: lobbying, donations to political parties, access to official information, laws against foreign bribery, and a register of beneficial ownership of corporate entities.
“‘She’ll be right’ can be a common response when problems and issues are pointed out in New Zealand ... Rather than doing too little, too late, we are recommending simple changes now that can reduce the risks of corruption in New Zealand and forestall future crises.”
The report includes a forward by Chris Finlayson, former Attorney-General and Cabinet Minister for the previous National-led Government, who said “corruption is an insidious cancer”.
“Other jurisdictions have very strict rules on lobbying but New Zealand is far too informal when it comes to regulation of lobbying. We need to raise our standards. The recommendations made in the report are in my opinion very sound and need to be followed.
“It is not enough for democracies like ours to pay lip service to principles of transparency and steps which need to be taken against corruption. New Zealand must critically examine these issues on a regular basis.”
Lobbying is largely unregulated, and New Zealand ranks very poorly on the OECD transparency index; only Slovakia, Luxembourg and Turkey have worse scores.
Lobbyists are often former ministerial or senior government advisers, which creates perceived or real conflicts of interest.
“In some cases, lobbying activity may be completely coincidental with no causal connection or influence between the lobbying and subsequent decisions. The decision-makers involved may sincerely believe that lobbying has no influence on their decisions,” the report said.
“But studies have shown that those who are the targets of lobbying are often more influenced by it than they believe. Whether this influence is based on the arguments put forward by lobbyists or by norms of reciprocity, or by both, is a moot point.”
A voluntary code of conduct is being worked on but the report said this was “close to useless because it will only reveal the activity of more ethical lobbyists”.
It recommended a mandatory code of conduct, a public register of lobbyists and their contact with certain officials, and a three-year stand-down period before those officials - including ministers - could lobby the Government on issues they were directly involved in.
Those officials should also have to publish all gifts they’ve been offered, including ones they’ve declined, while our democracy should be made more accessible for everyone through, for example, citizens’ assemblies.
Yasbek noted research showing 65% of New Zealanders believed the “economy is rigged to advantage the rich and powerful”.
There are two main issues with donations: the unlimited size of them - National collected more than $10 million in 2023 - and hiding who makes them.
“Even if nothing illegal occurs, the perception that policy and other favours are obtainable in return for political donations is corrosive,” the report says.
“This perception can undermine trust in our political institutions regardless of the legality of the donation or the intent behind it.”
Donations to political parties of more than $5000 are generally publicly disclosed, but splitting them or giving them to “independent” entities (such as the NZ First Foundation, which won a court battle that prompted a changing of the law) are ways to obscure the source.
The report endorsed some of the recommendations in the Independent Electoral Review’s final report, including:
“The amount being spent by third-party promoters has rapidly increased in recent years: $147,000 was declared in the 2020 election. Nearly $2 million was declared in the 2023 election,” the report said.
“While there is transparency about which groups are fronting these campaigns, it is not possible to determine where these groups get their funding from. This undermines transparency and public faith in the electoral system.
“Offshore people cannot be registered as third parties, but there are no limits on their ability to donate to domestic third parties.”
The report examined the Fast-Track Approvals Bill, which the Government says will cut unnecessary red tape but critics argue will give too much power to three ministers to allow infrastructure proposals to bypass existing planning laws.
“Experts consider that this bill inappropriately gives ministers very specific decision-making powers over projects with significant private benefits, with attendant risks of corruption,” the report said.
“Even if the Ministerial decision-makers act appropriately, the amount of power that would be invested in them by this bill would still create strong perceptions of the potential for corruption.”
The report recommended codifying the Cabinet Manual’s conflict of interest policies - which are currently not binding - into law.
It also wants the Government to sign up to the Extractive Industries Transparency Initiative, which requires information about how contracts are allocated, and who benefits; one in five cases of transnational bribery involve extractive industries, according to the OECD.
The OIA is meant to be a tool for anyone to gain access to government information, but there are no penalties for flouting the law.
“As a young public servant, the author was told by older colleagues that there are no consequences for not following the OIA, but that we did it because it was the right and ethical thing to do,” Yasbek said in her report.
“A public servant, faced with countervailing pressures to withhold (such as the minister’s office yelling at them on the phone) has no incentive to do the right thing, except for their conscience and the unlikely prospect of an Ombudsman review.
“A penalties regime is sorely needed in the act. Creating consequences for doing the wrong thing encourages people to do the right thing.”
The report called for Parliamentary Services to be included under the OIA, and endorsed the Ombudsman’s recommendation for a penalties regime, suggesting similar ones - in the tens of thousands of dollars - to those in Australia.
It also wanted ways to curb ministerial overreach on OIA requests, which should only be transferred to ministers for information “generated inside the ministerial office and for Cabinet papers”.
The report also called on the Government to implement OECD and Transparency International recommendations on foreign bribery, and for a registry of beneficial ownership to be established, which would show who ultimately exercises control over corporate entities including trusts.
Such entities are often vehicles to “obscure the identity of beneficial owners, to enable money laundering, facilitate the payment of bribes or political donations, or hide lobbying activity”.
“New Zealand is gradually slipping in international measures of corruption and we risk this trend continuing, or even accelerating, if we, as a country, shrug our shoulders and do nothing,” the report said.
“If the political system is seen as rigged in favour of insiders, if we fail to improve trust and confidence in political decision-making, we risk seeing the rise of populist leaders who are prepared to sweep away democratic norms. First gradually, and then suddenly.”
Derek Cheng is a senior journalist who started at the Herald in 2004. He has worked several stints in the press gallery team and is a former deputy political editor.
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