One of the government’s election pledges is to reduce public service spending on consultants and contractors by $400 million a year. This is probably why David Seymour has publicly mused about reducing the cost of school lunches: the Ministry of Education contracts out the entire programme at a grand sum of $323m, a large proportion of the $1.2 billion the core public service spent on contractors and consultants during 2022-23.
Some of the first casualties of the cutbacks have been the business consultancies: why should public agencies pay PwC or EY millions of dollars to spout incomprehensible jargon about agile backend fungibility when the Prime Minister provides this service for free?
But as one door into the Crown accounts closes, another opens: Wellington is now a welcoming and lucrative place for former National Party cabinet ministers. In the past few weeks, Simon Bridges has been appointed chair of Waka Kotahi the New Zealand Transport Agency and Murray McCully is leading a review of the Ministry of Education’s management of school property, after allegations of a multi-billion-dollar cost escalation in its building and maintenance pipeline.
Sir Bill English is about to deliver a review of Kāinga Ora, Roger Sowry is looking into KiwiRail’s interisland service and Steven Joyce is advising Treasury on the design of the government’s new infrastructure agency, at a rate of $4000 a day, which would cash out at just over a million dollars a year – except that his payment is prudently capped at a mere $40,000 for the current scope of work.
Surely, it’s only a matter of time before Sir John Key is hired as media spokesman and paid a handsome sum to lean against the podium in the Beehive theatrette and reassure the nation that he’s relaxed about everything.
The previous government brought in its own heavy hitters when it took power: Sir Michael Cullen and Heather Simpson – a feared and respected senior adviser to Helen Clark – conducted reviews into the tax system and public health system respectively (Labour cheerfully ignored most of their recommendations). But when Cullen and Simpson left government in 2008, Wellington’s lobbying industry was still in its germinal stage – a few specialist outfits, industry groups and law firms.
Cullen chaired New Zealand Post; Simpson went with Clark to the UN. By the end of the Key government, lobbying was booming. It ran rampant throughout the Jacinda Ardern-Chris Hipkins regime and the largesse of the Covid era, its tendrils enveloping every area of government.
Revolving doors
The career options for retired politicians used to be limited: an ambassadorial appointment if your prime minister felt especially generous, or sinecures on a few governance boards for the workhorses. The also-rans eked out a living as regional councillors or mayors of provincial towns.
Now, there’s an exciting new opportunity for them to earn more than they did in Parliament for less work and a fraction of the stress. The revolving door between the public and private sectors is a barely perceptible blur, and “government relations” is probably the only sector in New Zealand that isn’t in recession.
But what happens when the government changes, and politicians who’ve transitioned into lobbying are appointed as advisers or chairs of government entities?
Bridges is currently chief executive of the Auckland Business Chamber, arguably the oldest lobby group in the country (founded 1856), and was recently chair of a National Road Carriers advisory group and the Northern Infrastructure Forum, resigning these positions for Waka Kotahi.
Joyce sits on the board of a number of IT, project management, property development and venture capital funds, and is the director of the media and government relations firm Joyce Advisory. Last year, RNZ revealed that Waikato University paid Joyce Associates just under $1m for consulting fees, and commentators at the time noted that Joyce’s consulting seemed to coincide with the emergence of a National Party policy to build a third medical school at Waikato: Joyce also chaired the university’s business advisory board.
Joyce is eminently qualified to advise Treasury on infrastructure. He was one of the most capable ministers of the Key government, and one of the few politicians in recent decades to successfully deliver large-scale infrastructure projects.
But he was also the architect of the Ministry of Business, Innovation and Employment (MBIE), the sprawling public service mega-entity that quickly became the state’s primary mechanism for delivering corporate welfare.
The new infrastructure agency will be yet another hybrid of different agencies merged into one vast body that then distributes public funds to private developers. Treasury estimates the cost of the infrastructure pipeline over the next few decades at $210 billion.
Shrewd moves
The government’s new consultants and advisers are shrewder than the business consultants they’re replacing: English, Joyce, McCully and Bridges all bring decades of experience at the highest levels of government. But they also bring a web of vested interests and potential conflicts into a political system that’s almost uniquely bad among OECD nations at handling them.
Most developed economies have extensive rules around lobbying: it’s illegal for cabinet ministers to leave Parliament and immediately start selling their knowledge and influence to the private sector, and it’s illegal for senior governance and advisory roles to be held by people with direct commercial conflicts of interest.
New Zealand’s politicians prefer to leave this booming new industry unregulated – why constrain their own future careers? It’s probably not a coincidence that we get worse value for money out of our state spending than democracies with proper oversight. And it’s true that NZ has the third-best ranking in Transparency International’s latest corruption index, but let’s note that its survey measures perceptions of corruption. We don’t perceive the inhabitants of that shadowy region between politics and commerce breaking any laws, because the laws constraining them barely exist.
