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Politics and Corruption

June 1, 2024

This should be a picture of smoke and mirrors rather than spheres and ripples at Luma, Queenstown

This week, an article in the local Mountain Scene news outlet revealed John Key got to buy a $2 million dollar section in Gibbston Valley Resort for $400,000. The quid pro quo was Key's name could be used in the Resort's marketing. Okay, you mightn't be too fascinated by that news; we have more of a vested interest as we live in the area.


I was particularly interested in the news because, first off, I was sure Key had been giving a deal but I never thought it would be that much of a deal. Black Caps cricket captain Brendon McCullum also got a deal at the same time. The price of his section has not been discovered although its likely he received a similar discount. McCullum has already on-sold his section at what he called a favourable price. The Gibbston Valley Resort CEO says having John Key as an ambassador was worth the discount. And  McCullum is still an ambassador, despite having sold his section. I am not sure how you remain an ambassador for a place after demonstrating you dont want to live there by selling your section; clearly I'm not a professional marketer.


Why does the price John Key paid feel so wrong to me? How can we know what is a fair price for the notional value of marketing? Perhaps it feels wrong because, at the time John Key bought the section, $400,000 was cheaper than any section available in the Wakatipu? Maybe it feels wrong because the majority of people in the Wakatipu are on the minimum wage, so would have to work for 69,114 hours to get the windfall John Key received? Thats 34.6 years of full-time work.


Perhaps Key's deal feels wrong in the same way the tens of millions Sam Bankman-Fried paid individuals for minimal amounts of effort promoting his FTX cryptocurrency exchange was seen as very wrong – after FTX failed spectacularly. Bankman-Fried paid Tom Brady (a former American Football quarterback in the New England Patriots) $55 million for 20 hours work a year for three years. He paid Steph Curry (an American baseball point guard) $35 million for the same amount of time. So perhaps John Key wasnt paid well enough for his time? Or maybe his endorsement isn't as valuable as that of a US sports star?


As if finding out the John Key deal wasn't enough this week, the latest real estate gossip in Gibbston is that an entity is wanting to Fast Track a consent to put in an entire new subdivision in Gibbston with hundreds of sections, a school and retail outlets. The entity is most likely Gibbston Valley Wines, who is building Gibbston Valley Resort. The entity is currently lobbying government to be part of the queue ready to use the Fast Track Approvals process, if the legislation is approved.


To be fair, I'd rather have a new subdivision with local people in it than more Gibbston Valley Resorts holiday houses where you can't occupy the house for longer than 6 months in a year. However, the Fast Track consenting process fills me with terror because, if you can give an ex-Prime Minister a cheap section to market your subdivision, you can give ex-politicians (and other people) incentives to talk to the trio of Ministers who will make Fast Track approval decisions. These decisions will be made without any input from locals, wider community or society. If the Fast Track Bill passes, we will be trusting the Minister of Housing (currently Chris Bishop), the Minister for Transport (currently Simeon Brown) and the Minister for Oceans and Fisheries (currently Shane Jones) to make decisions in the best interests of the country and the people, ignoring any expert opinion provided in the process. How easy would it be to put words in their ears, thereby influencing their decisions?


We heard this week how a J Swap, a (weirdly named) company involved in quarrying, is lobbying to include land currently protected from use by QEII covenants under the Fast Track legislation. In other words, the Ministerial trio would be able to approve projects on QEII land which was supposed to be protected in perpetuity. Conservation land is already included in the Bill as land on which the trio can grant consents, overriding the Conservation Act. Shane Jones has made it clear that, if a threatened species gets in the way of development, it should become extinct.


On the influencing front, J Swap donated $11,000 to NZ First in December, after the coalition was formed. The company previously gave $5,000 to NZ First's Shane Jones (August 2023) and $3,000 to National's David MacLeod (September 2023). David MacLeod was chairing the Environment Committee hearings into the Fast Track bill before he was stood down for failing to declare donations.


Should I be worried, though? New Zealand has typically scored very well in the Corruption Perception statistics. We are currently at third best in the world, below Denmark and Finland (having moved down from second equal in 2022). Our high scoring has puzzled me because, in my work, I've seen plenty of unethical behaviour that is on the margins of corruption, if not squarely corrupt; I have assumed  there must be far worse in other countries. However, last year RNZ published an exposé regarding the organisation providing the Corruption Index score – Transparency International.


A business consultant, Eric Newman, spoke to RNZ after he was offered a position with the NZ branch of Transparency International (TINZ), which he declined on the basis he would be joining a (secret) group of lobbyists who would provide expert advice to TINZ about the extent of lobbying in NZ. Foxes in the henhouse? Newman told RNZ of his concerns about Kris Faafoi joining a lobbying firm within weeks after leaving his role as an MP, suggesting a revolving door between politics and lobbying. RNZ also noted TINZ receives funding from government sources, including the NZ Security Intelligence Service, Government Communications Security Bureau, as well as big consultancy firms (KPMG, Deloitte and PWC).


Newman said, "I think they [TINZ] have been sucked into the very system - captured by the very system - they are there to protect the public from and I think they are doing New Zealand a great disservice by continuing to tell everyone we are a relatively uncorrupt country. I don't believe we are anymore."


Newman also said, "...it is vital TINZ is strong and independent because lobbying and consultancy firms have taken over much of the work career public servants used to do. We have actually handed over, to a large extent, the soul of the New Zealand government machine to the private sector without putting any apparent constraints around them, how they share information and how conflicted they may become." One can only imagine how much more has been handed over with the recent major government retrenchments to finance Budget 2024 tax cuts.


The result of the RNZ article was then Prime Minister Chris Hipkins asking the Speaker to remove swipe card access to Parliament for lobbyists, rewriting the Cabinet Manual and providing government support to the lobbying industry for development of a code of conduct. This was something, but not a lot.


Perhaps I'm drawing a long bow, from John Key supporting a local development, to ex-politicians getting kickbacks for influencing major project consenting. Or maybe it's a short bow? What do you think?


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