By Dr Bryce Edwards

This week global anti-corruption agency Transparency International released a report on lobbying, which described New Zealand’s lack of regulation as “glaring”.

Transparency International New Zealand has developed an international comparison of New Zealand’s lobbying regulations so that MPs here can decide whether to reform this sector. Currently, a group of MPs who are members of the Global Organisation for Parliamentarians Against Corruption, are reportedly weighing up the pros and cons of regulating lobbying in New Zealand.

Transparency International compared New Zealand’s lobbying rules with ten other similar countries, including the US and Canada, and found that New Zealand is at the unregulated end of the spectrum. In contrast, US lobbyists can face prison sentences of up to five years for the activities that are carried out in New Zealand.

The report looked at the seven areas of lobbying regulation that typically occur and found that New Zealand only had two of these: the publishing of Government Ministers’ diaries and MPs’ personal, financial, and business interests. The anti-corruption report says that “the absence of independent oversight of, and personal gains from lobbying in New Zealand is glaring.”

Even lobbyists see that something is wrong

With Transparency International joining the voices highlighting the way that lobbyists have carte blanche ability to assist vested interests and corporates to get their way in New Zealand, will there now be a stronger chance of reform of corporate lobbying?

Revelations that former Cabinet Minister Kris Faafoi recently moved almost straight from the highest levels of government to be a lobbyist highlighted the lack of rules. And Transparency International’s report shows that New Zealand is an outlier in not having any enforced “cooling off” period for politicians before they move into roles with conflicts of interest.

This has become embarrassing even for those working in the lobbying industry. Former journalist Jonathan Hill wrote last month about his own experiences in the area, saying a “stand-down” period for ministers and their staff before they move into lobbying is necessary, and such a rule would help improve public confidence in the industry.

Hill says the industry has been growing very quickly recently, “and there are large sums to be made in it”, but it’s made him feel “uneasy”. Hill writes: “My personal view is that lobbying – or government relations (GR) as it is termed – is a bit of a fraudulent industry.” He goes on to explain how easy it is to lobby politicians in New Zealand.

The fact that political insiders can come into lobbying with no regulation of their conflicts of interests clearly needs attention according to Hill. He points out: “The private sector has restraint of trade, gardening leave and the principle of continuous disclosure to prevent trading on inside information. But our democracy has nothing.”

Hill also suggests that the media is enabling the lucrative lobbying model:

Media should stop using lobbyists as political commentators. This has become common, for no good reason, and serves only to raise the profile of the lobbyist. That’s why they do it.”

Hill isn’t the only one involved in lobbying with doubts about the lack of controls on conflicts of interest. Lobbyist Holly Bennett, who runs the government relations firm Awhi, told RNZ last month that she was able to go straight from working as a ministerial and policy adviser in Parliament to lobbying MPs five years ago. She bluntly states: “I think it’s entirely inappropriate. I shouldn’t have been able to do that.”

Bennett is arguing that the lobbying industry should now proactively set the rules for themselves, arguing in favour of “a code of conduct; a register; and the establishment of an industry regulatory body, similar to the Media Council.”

Politicians arguing over lobbying reform

Prime Minister Jacinda Ardern is under pressure to do something about the lack of lobbying regulation, especially in light of the Faafoi scandal. Last month she faced strong questions from Guyon Espiner on Morning Report about why Faafoi should be allowed to take insider information from his role as a Cabinet Minister to help private businesses.

Ardern’s response to this was that regulation of ministers becoming lobbyists was unnecessary because: “Every New Zealander knows our intentions and policy from our manifesto”. Espiner was incredulous: “Come on. Are you really making a comparison between a member of the public and a cabinet minister?”

Rightwing political commentator David Farrar responded to Ardern’s argument saying: “Is the Prime Minister really suggesting that a member of her Cabinet knows no more about what the Government will do than a member of the public? It’s ludicrous and insulting to our intelligence. The only way this could not be misinformation is if the Cabinet doesn’t actually discuss policies or legislation when they meet.”

Farrar, who claims to know most lobbyists in New Zealand, says that the information that comes to Ministers from sitting around the Cabinet and ministerial tables is invaluable to corporate clients: “Cabinet debates and decides on every major piece of government legislation. They decide on what options to proceed with, and when to backtrack (as with KiwiSaver Funds GST). They debate pros and cons in great detail. At Cabinet Committees they receive detailed advice from officials. And within their own portfolios Minister receive the most valuable info of all – oral briefings. This is the stuff so sensitive that it is never put in writing so it can’t be discovered under the OIA.”

Farrar uses the example of insider information that Ministers get on an array of commercial decisions: “There is also great commercial impact from decisions. They can decide on share sales, on regulatory regimes, on proposed taxes. The criteria for being a default KiwiSaver fund can be worth a billion dollars to a KiwiSaver fund manager.”

Former Cabinet Minister Peter Dunne has joined the chorus of those demanding reform in this area, labelling it “urgent”. He explains that “the adequacy of the rules regarding conflicts of interest for ministers and former ministers” has arisen out of the tradition in Parliament that politicians should be self-regulating: “When it comes to conflicts of interest, MPs have been largely left to manage them themselves.”

Dunne argues that the “time has surely come to formalise general conflict of interest rules for all MPs, and for the Cabinet Manual to address the specific issues raised by the Faafoi case.” He calls for “the Cabinet Office, the Speaker and the Standing Orders Committee to prioritise over the next few months updating the rules and practices regarding managing conflicts of interests for ministers and MPs.”

Perhaps Jacinda Ardern needs to talk to Labour’s last prime minister about lobbying reform. Helen Clark has now entered the debate, tweeting to Justice Minister Kiri Allan to point out that Transparency International “recommends 2 years” of a “cooling off period for political insiders after leaving taxpayer-funded positions before becoming lobbyists”.

An array of voices from across the political spectrum, including a former Labour prime minister, are now calling for reform on how vested interests can trade on inside information and connections.

Will the Labour Government rise to the occasion?

By Dr Bryce Edwards from The Democracy Project under CC BY-ND 4.0.

Dr Bryce Edwards is Political Analyst in Residence at Victoria University of Wellington. He is the director of the Democracy Project.