Few rules mean that we have greater corruption than in other similar countries who have rules to control lobbying, political party donations and the other means by which Government decision-making is corrupted.

The Australian Centre for Public Integrity states that ‘if someone adversely affects the exercise of public administration directly or indirectly, this is corrupt conduct.  On that basis, the administration of pandemic funds by top public servants and the lack of action by the Auditor-General amount to corrupt conduct.

Transparency International is a worldwide organisation that helps expose corruption by Government employees and advocates for laws to try to prevent this type of corruption. They have a corruption Perception Index compiled by a few people who have few facts to go on so rely on Chapters of Transparency International in different countries to provide details of what is happening in their country. Corruption is normally kept well-hidden so perceptions about it are very unreliable Transparency International New Zealand many years ago decided that its main aim was to help businesses make money by having a high place on the Perceptions Index. Monitoring of TINZ newsletters and news releases over the past ten years shows that it failed to mention or condemn examples of Public Service corruption when they occurred. In some cases, news releases were sent out about corruption overseas in order to cover up what has happened here.

TINZ could be seen as an ethically and morally corrupt organisation because they usually fail to speak out about examples of corruption. They promote the perception that there is little corruption here in order to divert attention away from the vastly worse corruption of Government decision-making using lobbying, money and influence.

In December 2021 the Government called for submissions on political party funding but this was not mentioned in the TINZ December and January newsletters.  TINZ did not complain publicly about the very short Christmas submission period or encourage people to make submissions. In its own submission they mainly went along with what was proposed despite this being inadequate by most overseas standards.

Whenever academics and commentators call for far better controls on lobbying, political party donations etc,  politicians always say that New Zealand has very low corruption according to TINZ so there is no need for any changes to be made. The TINZ strategy has been very successful in allowing the corruption of Government decision-making to flourish.

Ministers often have little time and lack the ability to make well considered decisions so rely heavily on official advice and lobbying by vested interests.

In December 2022 water legislation was passed with an entrenchment clause but two weeks later it was said to be a mistake and was reversed. This shows that Cabinet Ministers do not read most of the documents they are given and agree to what is recommended unless any political implications are identified.

The Auditor-General has had three very critical reports on the wage subsidy, emergency housing and the tourism fund.  These all involved public servants promoting giving away huge amounts of taxpayer money without adequate justification.  These schemes involved the lobbying of public servants and Ministers. The huge wage subsidy giveaway resulted in a big increase in the value of homes and other assets so public servants, Ministers and their relatives and friends would have greatly benefited.  The ’group corruption’ decisions to give tens of billions of dollars to businesses cost vastly more than anyone to one corruption would have done. Despite over 200 news media reports, TINZ had no comment to make on what happened.

In June 2022 the trial relating to N Z First donations had started when the TINZ newsletter came out but it was not mentioned. Many witnesses said that they had split up their donations to N Z First but they were not charged.  The trial ended on 22 July with the judge finding the two people charged with deception under the Crimes Act not guilty. Experts said that the Electoral Act needed to be quickly changed. On the following Monday the trial of those who split donations to the National Party and Labour Party was due to start with charges being brought under the Electoral Act. On that day TINZ sent out a news release about the Statistics Department.

In 2022 TINZ ignored the SFO corruption trials and the revolving doors controversy that related to lobbying. TINZ is funded by the establishment so they cover up and downplay the worst types of corruption of decision-making.

TINZ also ignored the tens of billions of dollars given away by public servants who used Covid-19 as an excuse to channel huge amounts of taxpayer money to business interests.  Bernard Hickey said that this was the most wasteful use of taxpayer money in the world.

The ranking of New Zealand in 2020, 2021 and 2022 as first or second on the Transparency International corruption perceptions index demonstrates how meaningless and corrupt the index really is.

TOURISM HANDOUTS

The MBIE website provides a lot of information on how they promote tourism. They say “We listen to and provide support to the sector to help them navigate through difficult times, including the COVID-19 pandemic.

Tourism New Zealand prepared a Cabinet paper, dated 12 May 2020, outlining a tourism model that would “enrich New Zealand and the well-being of New Zealanders.”  This proposal became the basis for the Strategic Assets Protection Programme.   It was a fancy name for made up concerns that sounded plausible but had no basis in reality.

On 13 May 2020, Cabinet formally agreed to establish a $400 million tagged contingency “Tourism Sector Recovery Fund.”  On 14 May 2020, the Minister of Tourism announced the $400 million Tourism Recovery Fund and the establishment of STAPP to protect strategic tourism assets.  In June 2020 300 applications were received.  On 9 July 2020 the delegated Ministers were asked to make decisions but had difficulty deciding what was a strategic business and had other concerns regarding the need to only pay businesses that needed the money.  They asked officials for further advice.  A week later on 16 July 2020 officials could not justify their recommendations and said that tourism businesses had bounced back after the lockdown and had access to the extension wage subsidy and other assistance so recommended that the STAPP be stopped or changed.  Ministers did not accept this advice because of the announcements already made, including the Prime Minister giving large sums to two well known tourism companies when visiting Queenstown and Kaikoura.

This was another case of officials giving away large sums of taxpayer money to individual businesses with loose rules and very poor checking and monitoring. When Ministers asked for justification of details, MBIE officials could not provide this and realised that circumstances had changed so they recommended changes.

The following article by Bryce Edwards of The Democracy Project at Victoria University provides more information and suggests possible corruption.

Political Roundup: Questions around the Govt’s tourism “slush fund” Was political corruption involved in the dishing out of millions of dollars by government ministers to tourism businesses? We can’t know, because the Government didn’t keep sufficient records or have proper processes for the handouts. That’s the obvious question arising from a scathing report released by the Auditor General on Thursday, which has received far too little attention.The Auditor General’s report investigates a scheme set up by the Government early in the Covid crisis (May 2020), called the Strategic Tourism Assets Protection Programme. The report is one of many that have criticised government procedures during Covid for their lack of integrity.The multi-million-dollar scheme was set up to give money to local tourism businesses, with the aim of keeping them operating despite the lockdowns and the severe reduction in tourism. But every element of the scheme’s design seems to have been poor. While it’s unclear if any untoward handouts were actually made, this is precisely the point – procedures were set up in a way that makes it almost impossible to know.In the end, 127 tourism businesses were given grants and loans worth at least $166 million. Dozens of businesses were turned down, and many more didn’t apply due to confusion over eligibility because the criteria for funding was so unclear.Some of the biggest beneficiaries were large tourism operators that were owned by highly profitable companies – such as AJ Hackett Bungy, which was allocated $10m to help them through the pandemic. Poor processes According to the Auditor General, Ministers never developed clear criteria for how to dole out the money, and no proper records were kept on their decision-making process for who to give money to. Conventional funding processes were seemingly cast aside. And on investigation, the Auditor General’s office couldn’t get adequate explanations from the ministers as to why they gave millions to certain businesses.Although it’s the prerogative of ministers to decide how they spend public money, the Auditor General points out in the report that such expenditure still comes with an obligation to ensure decision-making is transparent and consistent, and in this case it wasn’t.The advice of officials also seems to have been sidelined. Government departments such as Treasury were often kept out of the policy processes. And when the Ministry of Business Innovation and Employment advised the Government to call a halt to the programme, Ministers overruled this.One of the problems with the scheme was the lack of criteria for eligibility. Although the scheme’s rules stated that businesses first needed to have “exhausted all other avenues of support” before being eligible, this criteria was neither clear to businesses, nor checked on by the Government when doling out the money – as no information was sought from applicants about their financial position.In the end, about a quarter of businesses were actually given more money than they requested. Favouritism from politicians? The report refers to numerous examples of funding under this scheme that appear questionable. One example is the $1.5m given to Whale Watch Kaikōura. The money was doled out on the same day that Ministers made their decisions about funding criteria, and before that criteria had ever been advertised or the application process officially opened.Apparently, this particular application was in the form of a letter which didn’t include any financial information about the business and its needs. The Auditor General’s office commented on this case that “We have not seen any evidence to identify what criteria the Tourism Recovery Ministers used when making this decision” and “We also did not see any advice from Ministry officials.”The wider tourism sector reacted to this and other funding decisions with anger. Other operators that were rejected for funding, or led to believe they weren’t eligible, have complained that they’ve had to compete against other businesses that have government funding as well as being owned by large, profitable parent companies.Some in the sector have called for their financially healthy competitors to pay the money back. So far, none have. Others have called for the Government to revise the scheme to be more transparent and with clearer criteria.Some businesses clearly believe that the Government gave funding to their favourites.   For example the owner of Heritage Expedition, Aaron Russ, was reported as saying “I think 100 percent the government sat back and picked favourites and chose who they wanted to see at the finish line.”Similarly, the owner of Cromwell’s Heliview Flights, Yolanda Foale, has complained: “Us as a small business is having to compete against big business that has been favoured by government, and on top of the Covid problems, it’s made life double difficult by having to compete against businesses that have been given a hand out”.Some have also raised questions about why Māori-owned tourism businesses were required to meet a lower threshold for funding. According to the report, Government ministers developed a basic criteria in which each business was rated out of a possible 30 points for eligibility, and those business that received more than 15 points were funded. Māori tourism businesses were exempt from needing to meet this threshold. Government response The Government has been rather dismissive of the Auditor General’s report, downplaying the questions it raises. In fact, the Minister of Tourism at the time of the scheme’s creation, Kelvin Davis, won’t even comment on the report, instead leaving it to the new minister, Stuart Nash.Nash has emphasised that, in the Government’s defence, they were prioritising speed and the need to save jobs during a pandemic: “Ministers were operating under great urgency at a time of massive uncertainty… and they had to make decisions quickly”. He is somewhat dismissive of the report, arguing that “We’re always wise in hindsight”.Likewise, Finance Minister Grant Robertson says he stands by the general approach, and also argues it was an unprecedented situation that required corners to be cut, but he admits “We will always look at those decisions again and, in hindsight, we may make slightly different decisions.”Yesterday’s Otago Daily Times editorial on the subject doesn’t buy it. They are highly critical of the Government’s response: “It is not good enough for Tourism Minister Stuart Nash to airily dismiss the issues identified by referring to the time pressure the Government was under in early 2020 and saying that with the beauty of hindsight there will always be lessons to learn.” They suggest that using Covid as an excuse shouldn’t wash, and correct procedures are vital for good government.The newspaper concludes: “The Labour Party’s trumpeting of transparency must be backed up by its behaviour. The sort of sloppy, poorly documented process highlighted in Mr Ryan’s report smacks of arrogance, pandemic or no pandemic.”Similarly, veteran political journalist Richard Harman emphasises the significance of this report: “This is a most damning report of how the Ardern Government has interacted with (or really ignored) officials since it came into office in 2017. The question must now be whether this is now administered what amounted to a tourism slush fund, were there other areas of Government activity where it has been exhibiting the same behaviour.”Harman draws attention to the fact that there have been a number of other reports from the Auditor General’s office that have pinged the Government for poor processes in regard to government departments dealing with private vested interests during Covid – especially the Ministry of Health and the Ministry of Social Development.Of course, one of the most problematic has been the multi-billion-dollar Wage Subsidy Scheme, which was seen to be poorly designed and administered.There’s a theme building up from these reports – that of crony corporate welfare getting out of hand in recent years. This is one of the blind spots in New Zealand politics and society. Recent governments are prone to giving generous subsidies to business interests, often without any great systems of integrity or best practice. And unfortunately, the public never seem to mind much when it becomes apparent.It could well be that New Zealand is just too eager to believe the annual Transparency International Corruption Perception Index results that show this country to be the least corrupt nation on earth. In ignoring reports such as this latest from the Auditor General, we seem determined to block out any evidence to the contrary.

 NEWS MEDIA

The MSD ignored the numerous stories about abuse of the wage subsidy and ignored efforts to get them to do something about getting repayments so it was decided to try to get some publicity about what had happened.

At different times since late 2020 news releases were sent to all news media, including particular journalists and programmes. Verifying documents were attached and subject lines were designed to attract attention. These included: Businesses 14% more profitable, Business bank deposits up 24%, wage subsidy fraud, wage subsidy repayments required, Woman keeps $45 million scandal, only 2 wage subsidy prosecutions, huge financial scandal, Judicial Review of MSD failures, Court challenge to Auditor-General.  These stories were ignored by most news media but some were used by newspapers and by RNZ Checkpoint.

Stuff and the Herald published some of the news releases sent to them as business stories. They have also published about 150 articles about the abuse of the wage subsidy. This was despite the fact that they were an essential service and made a lot of extra money from advertising so wrongly retained the original 12 week wage subsidy. They also risked annoying the advertisers mentioned in some articles.

RNZ Morning Report and TVNZ ignored all the above news releases and other stories about wage subsidy abuse and the need for repayments to be made. It appears that their producers and their relatives and friends made a lot of easy money from the wage subsidy so those making decisions about whether to broadcast important or trivial items did not want to do anything that might result in repayments being requested.

The judicial review of the failure of the Auditor-General to do his job properly was a very important story so a public relations company was used to try to get better access to the news media. The news release made three main points. The first was that if billions of dollars were not repaid, then every taxpayer would have to pay thousands of dollars in extra tax to help repay the debt that was incurred in making these particular wage subsidy payments. The second point was that within a few weeks of a cost of living payment of $116 being made to those on low incomes, the Auditor-General had recommended that action be taken to get repayments. He had failed to do this after two and a half years from the start of the wage subsidy. The third point was that the Auditor-General states that he has to act as the watchdog and guardian of taxpayer money.  He has often said that accountability, transparency and the good stewardship of public money is very important. Taxpayers are totally reliant on him to ensure that public money is spent appropriately so if he fails to carry out his statutory duties, a dangerous precedent will be set.

The Auditor-General story was not carried on TVNZ but there was a Newshub breakfast television interview. It was only mentioned on late night RNZ news bulletins but there was a story on the RNZ website. Stuff and the Herald had the story on the business pages but left out important parts and included other information and made some mistakes. There were no other important stories on the day and there were a lot of trivial stories that affected only one person or a family.

Many journalists are self employed so they would have claimed the wage subsidy while working normally from home. Other journalists who were employed knew that their jobs and pay increases were not secure so they were happy for their employer to keep the wage subsidy. Most journalists would have relatives and friends who made extra money from the wage subsidy so they would be reluctant to put their name to an article about the need for repayments to be made.

There is evidence that business interests have some people in the news media on retainers and they promote or suppress stories as require.  The huge wage subsidy overpayments and fraud should have been major news stories and put pressure on the Government and MSD to do something about repayments but this did not happen.  Similarly, the Cases involving the three main political parties that were brought in 2022 by the Serious Fraud Office were not adequately covered by the news media. If there had been better coverage, this would have revealed a lot of what goes on with party fund raising and would have brought pressure on for substantial changes to be made.