Lobbying corrupts decisions

Those who pay for access to public servants and Ministers get a big payback so New Zealand should follow what other similar countries did many years ago and introduce strict rules on lobbying. Our democracy is frequently undermined by lobbyists who arrange for promised policies to not be implemented or for new policies to be introduced. Vested interests get big benefits but at the expense of the community and future generations.

Public servants are supposed to provide Ministers with ‘free and frank’ advice but this process is often corrupted by lobbyists.

Ministers do not have the time, ability, knowledge and experience to be able to make informed decisions that are in the best interests of the country. Under these circumstances, it is easy to influence a decision if a lobbyist is the only person who can get or buy access to the public servants who give advice and to the Minister who ultimately makes the decision.

Ministers have very little time each week to make decisions but they allow lobbyists, who mainly represent those with money, to take up most of this time. The reasons for this are that they personally know the lobbyist or access has been purchased by donating money or they know that organisations representing businesses, farmers and other vested interests have the money, spokespeople and public relations budgets that can attack a political party or help get it re-elected. Some businesses have journalists and social media commentators on retainers and they are ready to say whatever is required. Ministers may also know that those lobbying them are financially supporting their favourite sport or arts organisation but this support would be withdrawn if they act in the public interest and not in the interest of those doing the lobbying. Ministers may also want to take advantage of a range of inducements such as corporate box hospitality at a major sporting event. They may also want to get a high paying job when they leave Parliament so keep in good with lobbying firms.

Ministers usually accept what they are told as being true and unbiased but if they only know one side of the story this is all they take into account when making decisions.

Paid lobbyists have usually gone through the revolving door of working in Parliament or in the Public Service and then taking their inside knowledge and contacts to a lobbying firm. Other countries do not allow this to happen for 18 months to five years but NZ has no rules about this.

Community organisations who represent the public often do not have the time or money to carry out lobbying activities. They are becoming increasingly reluctant to get involved in advocacy on behalf of the public due to the threat of having their charitable status withdrawn. This threat is probably the result of the lobbying of politicians and the public servants working for Charity services by vested interests who want to eliminate any opposition to their promotion of their short term greed and self interest.

In most cases vested interests have lobbying all their own way because there is no-one to represent the public and so the other side of the story is never properly considered.

Community organisations are not in a position to make anonymous or declared donations to political parties so they are not able, by this means, to gain lobbying access to Ministers and their staff or to the Public Servants that provide advice.

Those community organisations who could provide a different view usually do not know what is under discussion behind closed doors.  If they do find out, they may be reluctant to criticise what is being proposed because they could put at risk any Government funding they receive or annoy well off potential donors.

Experience in the charitable sector shows that requests to get an appointment to talk to a Minister are routinely rejected or ignored but a large well known charitable organisation might get an appointment once a year. In contrast to this, farming lobbyists meet with the Prime Minister about 20 times each year and with the Minister of Agriculture or public servants hundreds of times. The huge range of handouts and other assistance they receive is outlined in a separate document on farming.

Lobbyists tell politicians that if they look after the rich, this will create jobs and stimulate economic growth. This sounds good to politicians so they use these claims when explaining to the public the decisions they have made. In most cases these claims are just an illusion and at the best resources are moved from one sector of the economy to another. If politicians were genuinely interested in creating jobs for all New Zealanders, they would not allow each year tens of thousands of immigrants and visiting foreign workers to take jobs which could easily be done by New Zealand citizens if employers were prepared to offer adequate pay and conditions. Politicians like immigration because it brings money into the country and stimulates economic activity. This improves their re-election chances so over the years they have ignored the various negative consequences of some of their immigration policies. (For example, a low wage economy with rapidly increasing house prices and rents).

In 2012 a Members Bill designed by a member of the Green Party to put some minor controls on lobbying was drawn from the ballot. Some submissions were made on the Bill with lobbyists and vested interests who make a huge amount of money from lobbying opposing most of the measures. In 2013 the Bill did not proceed and there are still no rules on lobbying.

If the Chief Executive of a business made decisions in the same way as politicians do, he or she would quickly be fired for incompetent and corrupt behaviour.  No business or other organisation would allow decision-making processes to be dominated by secret meetings with outsiders who push their own self interest.

Countries that are larger than New Zealand have a better resourced news media and so journalists have been able to conduct sting operations to expose some of the lobbying activities that corrupt decision-making. These larger countries are well aware that lobbying can result in bad decisions being made so they have introduced rules to control the activities of lobbyists. New Zealand should do the same.

Lobbyists can earn far more than Cabinet Ministers. The only reason why business interests spend a lot of money on lobbying is that they know from experience that it usually pays very high dividends. They can make big short term profits by getting the decisions or inaction they require but often the public and future generations can end up saddled with huge costs and losses.

It is important that the activities of lobbyists become open and transparent so that the public get some idea of what is going on behind closed doors. This openness could result in a greater degree of trust in the honesty and integrity of public servants and politicians.

The collapse of finance companies and the leaky buildings debacle are examples of how lobbying can result in light-handed regulations and poor decision-making. The consequences have been that many individual citizens ended up losing a lot of money and taxpayers and ratepayers have had to pay out billions of dollars to clean up the mess that has been left. Typically, profits are capitalised and losses socialised.

Members of the public suffered large losses as a result of poor advice by financial advisors who were paid high commissions by finance companies that later collapsed. The Government set up a committee with some financial advisors on it to recommend rules to regulate the activities of financial advisors. Consumer New Zealand later said that `lobbying of public servants and Ministers had rendered regulations to control financial advisors worthless’.

In 2019 a book by Sir David Skegg titled ‘The Health of the People was published.’ He outlined how the Ministry of Health had for a long time been concentrating on personal health but public health had been badly neglected. He was Chair of the Public Health Commission which was independent and responsible for public health. It did some good work but the National Government abolished it due to lobbying by alcohol, tobacco, business and farming interests. He gives a detailed account of what happened and also outlines how the Key National Government stopped improvements being made to drinking water standards and got rid of an independent Food Safety Authority. His 2019 book made it clear that the Ministry of Health did not have the resources and staff to properly deal with a future pandemic.

A December 2020 NZ Herald article revealed that on 2 March 2020 Business New Zealand executives had a meeting with Treasury and MSD officials and the Prime Minister and the Minister of Finance. Business New Zealand put forward the wage subsidy scheme they wanted and two weeks later Cabinet approved a wage subsidy that turned out to be wide open to abuse by businesses.

In 2017 the Prime Minister and other Ministers said that they wanted to make big improvements in the areas of child poverty, inequality, unaffordable housing, freshwater and climate change but they ended up doing almost the opposite. The lobbying of Treasury and other public servants by business organisations resulted in them recommending that businesses be given tens of billions of dollars in wage subsidies and 35 other assistance measures. In contrast, those renting and on low incomes were granted $400 million in loans. The Treasury later advised the Government to cut spending so this means that some urgent social and environmental projects will not be able to go ahead.

If a Public Servant arranged for large sums of their employer’s money to be transferred to themselves or relatives or friends, this would be regarded as a crime. Treasury, MSD and other public servants did something similar by arranging to give away vast amounts of taxpayer money to as many businesses as possible. They would have had partners, children relatives and friends who could have received payments and no-one would ever know because payments to individuals have been kept secret. The excessive funds given away to businesses were often used to provide the deposit to buy houses so this drove up the cost of residential properties by 43% over two years. The New Zealand sharemarket increased in value between 1 February (pre covid-19) and 31 December 2020 by 14%. Public servants would have benefited from big increases in the value of their homes, and Kiwisaver and their other investment assets. They probably also would have relatives and friends who owned businesses who received substantial payments. Vastly more money has been lost than if a few individuals were involved in a fraud.

What has happened highlights the need for rules to prevent the lobbying of public servants and to ensure that they cannot get away with squandering large amounts of taxpayer money.

The lobbying of public servants and Ministers in person should not be allowed but a representative organisation could put their case in writing and provide the funding for a consultant’s report that represents the interests of the community and future generations. Officials could then provide a summary and any recommendations to the Minister. This would end the domination of lobbying and the undermining of democracy by those with money and would result in better decisions being made.

An investigative series looking at the influence of lobbyists in New Zealand can be found on the RNZ website.

Examples of Lobbying

Check out the following links outlining the sectors of the economy where decisions were made as a result of lobbying by vested interests who did not care what happened to the community and future generations. Farming is the standout amongst the following examples.

    Check out more than 20 articles about lobbying

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