All Hail Our Secret Government
It’s a golden time for lobbyists at the moment. We’ve just had a change in government and that means it’s time for everything to change, come what may. Duh, it has to – as the last guys obviously got every single thing wrong!
But there’s a slight problem in that, aside from a couple of dinosaurs, very few in the shiny new government have any idea of what the hell actually running a country entails, as nine years is a long time to spend cooling your heels on the opposition benches. So, who can help the new kids on the block transform the Beehive from a den of iniquity to socialist nirvana?
Well, luckily there is a group of gnarled policy veterans on hand who know all the ins and outs of government. These people aren’t your usual blowhards from the office, pub or Facebook, who have the answer to every political question and anyone who dares disagree with them is a ‘non-thinking IDIOT’! These guys actually know their onions, having served time in government – even as a ‘temporary’ Labour Chief of Staff, in the case of Hawker Britton’s Neale Jones. Some, like Thompson Lewis’ Wayne Eagleson, have even just been in the evil outgoing government and, like a football player who has helped a team get relegated, is suddenly available for the top division again.
But what’s so bad about the new government turning to experienced people to help them through the tough transition from idealistic promises to compromised realities? We like having a former rugby player coaching the All Blacks and an ex-farmer in charge of Federated Farmers. Our reasoning is that, by having spent a lot of time in the industry, these people have a reservoir of experiences to draw on to deal with any issues that arise. Conversely, should you or I put our hands up to do either of those jobs, we might have the enthusiasm and perhaps a base knowledge of the industry, but as soon as the proverbial hits the fan, we’d be lost. And, more importantly, our staff probably wouldn’t have any confidence in our ability to navigate the organisation through turbulent times either. So, why are political analysts like Bryce Edwards and Asher Emanuel getting so het up?
Because these lobbyists are not just altruistically ‘helping out’, that’s why. They are hired guns on retainers from special interest groups with a goal of enabling regulations that will suit those same groups. Behind closed doors. You and I don’t get any say in what gets hammered out in the PM’s office, even though our taxes have helped train these people in the wiles and ways of government. And, unlike other Western countries with pretensions to democratic government – like Canada, Australia and the USA, in New Zealand, we have no stand-down period for anyone switching between government and lobbying roles. In other words, the email Neale Jones was typing for a special interest group as a lobbyist could be finished by him as an advisor for Jacinda and/or Winston. Can’t see any conflict of interest there – yeah right!
Plus, the word ‘advisor’ to me implies someone who is an expert in their field. Yet if Messrs Edwards and Emanuel are right, and lobbyists/advisors like Wayne Eagleson, GJ Thompson and Neale Jones are merely shuffling between advisory and lobbying roles, then the only thing they are expert in is getting what they want from politicians. The outside world is exactly that to them – outside of their sphere of interest. It’s not for them to care about the undeniable nature of budgets nor that should they actually get what they want, then someone else will therefore have to lose what they want/need too. That’s our problem.
LIFE IN THE LOBBY EXISTS
Of course, like us, not all lobbyists are made the same. Some are genuinely motivated by personal agendas to ban alcohol, improve women’s wage levels, punish despicable foreign regimes or decrease governmental influence in our lives. To them, it doesn’t matter how our government operates, whether the lobbying is transparent or opaque, they’ll still rock up every other day to plead their cases. Often unpaid too.
Then there are the paid advocates. Aside from Eagleson and Thompson, possibly the most high-profile lobbyists at the moment are being unearthed over in the United States as a result of the ongoing Great Mueller Probe/Witch Hunt (delete as necessary). Forget about Game of Thrones, it has long jumped the shark, this is the best thing on our screens by far!
To catch you up: as part of their investigation, Mueller’s team have been pretty much ‘questioning’ whoever they can get their hands on in the quest to link President Donald Trump’s election victory with the Russians – even including laying in wait at airports, as in Nader’s case. One of the side effects of this approach has been to turn the spotlight glare onto some of the murky characters who normally flit about in the corridors of power well away from the public’s gaze.
What the spotlight has revealed here is that, within Trump’s administration, some of these lobbyists – or ‘back-channel negotiators’ – like Sam Nunberg and George Papadopoulos, are little more than grifters. You know, the kind of guys who can be found at any high-powered conference/junket snapping their fingers at the nearest waitress for more champagne and laughing hysterically along with their bosses’ coarsest jokes. In reality, of course, they simply serve as expendable straw men who act as go-betweens for the really important people. You know, the ‘my people’ who will talk to ‘your people’ kind of operators.
Very useful too, because even if they are caught with incriminating texts on their mobiles, their very presence can be quickly explained away by the Department of Spin as merely a ‘low level assistant’ or ‘volunteer campaign worker’ who was never operating in any sort of official capacity. The inference here, of course, is that these poor innocent boobs were just bubbling over with misplaced initiative. Lord knows how they got into so many invite-only meetings or flew around the world on governmentally approved purchase orders – but we’ll instigate a broad security clearance review at once…
The most interesting aspect of the Mueller probe, for me, is that it has dragged the whole policy-making process, in all its glory, into the light. And while we all may have imagined politicians cutting a deal over a cigar and cognac, I certainly never envisioned roles for characters like Sam and George in it. Nunberg sure wasn’t happy about being subpoenaed either, given his extraordinary – and incredibly amusing – series of cable TV interviews in March. In trying to explain his very public meltdown, claims were made that Sam went crazy because he was angry with the administration for dropping him in it. But let’s not forget he’d been fired by Trump twice before, so should be fairly laissez-faire about the experience by now: “What the hey? He’ll hire me back again, it’s just how the Big Orange Guy rolls.”
What I really think upset Sam (bay-by!) was that in being forced to testify, his lack of expertise and real power had been exposed to the world – for time eternal – and the grifter exposed is the marked man looking for a real job.
Such characters are less common in New Zealand, of course, as there is generally less money available to fund an army of power broker gofers. Plus there is still a modicum of difference between left- and right-wing governments here. For example, it is de rigueur for lobbyists from Australian firm Barton Deakon to wear suits and leave their muted mobiles on the table during National Party caucus meetings, whereas practitioners at left-wing sister company Hawker Deakon are smart enough to wear a bone carving over a turtleneck and offer an enthusiastic ‘Kia ora’ to open any Labour/NZ First presentation.
One thing lobbyists from both ends of the spectrum believe in, however, is that keeping an even lower profile than their American counterparts is ideal. Until people like Dr Edwards and Laura Walters have started writing stories about these people, we had little idea of their existence at all. Unless it suits them of course – then all of a sudden they will appear like an apparition before a reporter to hand out a press release – I’m sorry, I meant to say; ‘leak a story’. And, as Dr Edwards points out, a lot of the so-called ‘journalists’ in our country rely on exactly these people to give them the down low on what’s really going on. So, any unwanted coverage of the lobbyist/advisor will mean an instant shutting off of the leaky goss tap for that reporter. For evermore.
Of course, this isn’t a fool-proof method as can be seen with the sudden ‘resignation’ of Wayne Eagleson during the government negotiations late last year. The word on the street is that his head was part of the price New Zealand First were demanding of National to prop up their government – hence the timing of his resignation. Apparently, this was in response to a certain ‘leaking’ of Winston Peters’ alleged superannuation overpayments, not that it ultimately did Mr Eagleson or National any good in the end!
DESPERATELY RENT-SEEKING SMITHY
But why are lobbyists operating on the sly such a big deal? I’ve still got my Sky TV subscription and my selection of craft beer; does it really matter to me whether these guys operate in secret or not?
Well, before we answer that we should probably sense-check what the purpose of running a business in the first place really is. And to do that, we need to go off on a bit of a tiki-tour to the UK and rewind a few hundred years. Back to the 18th century when Scottish economic philosopher, author and all-round brainy guy Adam Smith had an epiphany one day; that there are three ways any individual can make money – profit, wages and rent.
Now while that may seem like a bit of a ‘meh’ statement today, it was a real breakthrough at the time and, believe it or not, his words still resonate loudly today. But first, we need to doublecheck that the meanings of these humdrum everyday Tech Start-up clichés have crossed the centuries unscathed.
At first, it seems like we’re on track as Adam’s ye olde understanding of profit pretty much matches up with our much cooler 21st century digital version. Although the salient point to note here is that his definition of profit usually comes as a result of RISK, i.e. something we’re putting on the line like reputation, ideas or capital outlay. It’s a similar deal with wages, as our salaries today are still bought via the sweat from our brows just as they were in Mr Smith’s time – although I’m sure our McPhilosopher would be gutted to see how many of us eke out a living polishing office chairs with our butts these days.
But once we get to ‘rent’, there is a slight difference. In using this term Mr Smith didn’t only mean the hard-earned cash we hand over to the demon landlord – or bank! – just for the right to squat in ‘our’ featureless ticky-tack dwelling. He was also talking about entities making money out of their resources without growing those same resources or saving the world. In other words; merely milking some risk-free cash from the status quo.
A good way to illustrate this point is to look at how some energy companies operate here. Basically, their business entails raking in the rent from the (taxpayer-funded) resources they’ve largely inherited from the government. Yet, along with our often-staggering power and/or gas bill, there will sometimes be a page wah-ing on about how the company is helping to fund this cycleway or that children’s sports promotion.
Now whilst initiatives like these are commendable, and even ‘right on!’ in some cases, the business-minded amongst us would probably prefer to hear how the company is using its profits to invest in developing even greater profits and/or infrastructure in the future. But before we get too critical of any comms department we also need to take into account that the management team will be well aware the vast majority of their customers aren’t interested in any detail beyond the latest Call of Duty game release date or Javanka scandal.
The important point the energy company is making here – aside from chopping down more trees to make the paper to print their information page – is that they are not merely ‘rent-seekers’. Therefore, despite whether you think their initiatives are good or not, you cannot accuse them of being lazy or risk-averse.
Our energy company also has to take into account the market they operate in, as they have to contact a vast swathe of people and demand payment from them for services rendered on a regular basis. Inherent within this public-focused paradigm is the very real danger that one day they will have to shut off electricity to an elderly hero-of-the-people-in-waiting who, for whatever reason, cannot – or will not – pay her bill.
A situation like this makes any runs on the board gained via past public-spirited ventures such as cycleways and children’s sports promotions very useful indeed in combating any negative publicity garnered by such actions: ‘Surely, the energy company can’t be THAT mean-spirited if they are always stumping up for community works! Maybe there really are two sides to the poor pensioner freezing in her armchair story…’
In other words, the benefits of looking beyond your financial bottom line are comparatively obvious to our energy company’s management team.
The same cannot be said of – for example – a security, intelligence, military or herbicide company as they operate in Opaque World where they are answerable to no one except maybe insiders like themselves and/or the odd major shareholder. Public opinion is largely irrelevant to them therefore they are quite happy to keep prying eyes out. So, any interest in their dealings beyond a polite nod of acknowledgment can be actively discouraged due to quickly drummed-up ‘national security’ or ‘commercially sensitive’ concerns.
To combat this, steely-eyed lawmakers can write all the draconian anti-insider measures they like but, as Bryce points out, if these companies’ lobbyists are constantly hobnobbing with government on the sly, who will police them? And then, how long before the shoes of our advisors busy to-ing and fro-ing between government and lobby firms scuff out the line of acceptable practice?
It’s at this point when your Sky TV subscription and/or craft beer selection could disappear overnight with absolutely no warning. Simply because a decision has been made behind a set of doors – probably ‘for your own good’ – yet you have not been allowed any say in the matter whatsoever.
A DEAL IS A DEAL-UNTIL IT SUCKS
But not all advisors are so nefarious. Sometimes, in the genuine attempt to create what they regard as ‘good regulation’, well-meaning lobbyists and lawmakers end up helping creating what business genius President Trump would call; a ‘bad deal’. Now we’re not just talking about insanely stupid ideas like the Green Party’s genius notion of removing benefit restrictions on alcohol and tobacco spending, these nominally bad deals can look perfectly reasonable on the surface.
It’s often only once these kinds of regulations are applied that the consequences turn out to be less than ideal. In The Captured Economy Brink Lindsey and Steven Teles make a case that poorly thought-out regulations allow wriggle holes for special interest groups – and their lobbyists – to divert wealth to themselves and crush any potential for opposition to open up the market for consumers. They are at pains to point out that this isn’t a left- or right-wing problem per se, but that even the most well-meaning rules can backfire spectacularly.
A case in point could be the Ministry of Foreign Affairs and Trade (MFAT)’s funding model currently outlined in the New Zealand Aid Programme Strategic Plan 2015-2019. It’s an imposing document that outlines how the aid funding boxes have been ticked – and to be fair, there are a lot of boxes to tick! New Zealand gives aid to an awful lot of countries throughout the Pacific – Asia, Africa and Latin America too. Plus, when you add in all the different sectors, like renewable energy, health, education, justice, agriculture, ICT and goodness knows what else, it becomes a massive logistical job to make sure everyone gets their piece of pie.
So, let’s see where the money is going in, say, the Cook Islands…
Uh… I know! How about tourism? It’s worked for us here in New Zealand, plus they’ve got lots of sunshine, white sandy beaches and friendly locals over there. Let’s spend most of the aid money there!
Well, yes, all that is true. Yet there are other industries in the Cooks aside from tourism. Actually, how about horticulture? Or fishing? Or black pearl harvesting? They’re all there in the Cook Islands along with the sunshine, white sandy beaches and friendly locals. Plus, the locals might even turn out to be even friendlier if they had extra job options that didn’t necessarily involve sycophantically serving drinks or changing dirty sheets.
MFAT’s policy isn’t wrong as such – it’s just vague. Cook Islands imports are around $96 million per year while exports are in the region of $200,000 to $300,000 (including the export of metal scrapped from previous imports). That makes the trade deficit well over $90 million, so how on earth is a heavy focus on tourism going to start closing that gap? Sounds like a blueprint for continued aid funding for – well, eternity, really. And if you don’t believe me, give yourself a theoretical $100 million to spend on developing industry in the Cooks and if you come back with a similar heavy split in favour of one industry over another, I’ll give myself a couple of quick uppercuts.
My question for the MFAT advisors/lobbyists: is just throwing a bunch of money into the air and hoping enough will land in the right places the optimum approach to helping the people in all these countries? Or will focusing investment within certain areas then working with private interests to develop more money that can then be spread around the wider pool? This is a bit like what the government has done here previously with state housing, by inviting private industry to actually buy/build the houses then the government guarantees, at an admittedly lower rate, the rent week-in, week-out. To my mind, this is a very tidy way of dealing with a housing shortage and the prohibitive cost to the taxpayer of building a multitude of new ones.
This is an approach the Chinese government has embraced wholeheartedly in the Pacific. In the Cooks, they went in and built a courthouse – of dubious quality, it must be said – to demonstrate their willingness to partner up. The Cook Islands then eagerly allowed the Chinese to create a local fishing company and granted them extensive rights. Now, you could argue that this deal benefits the Cooks in several ways; revenue is generated by fishing licenses, the boats purchase fuel locally and… well, that’s two benefits anyway. Too bad about the millions of dollars’ worth of fish spirited away by the Chinese every year! Not a lot of that benefit is being seen by the locals at all.
If only MFAT’s advisors/lobbyists had used some of their aid money to create a true local partnership with a Cooks or New Zealand fishery to pump some of the profits back into the country. Plus, there would have been extra fishing/processing/transport jobs for the locals without a serving tray or dirty linen basket in sight. And maybe there would even be a slight dent in the trade deficit too…
LET’S HEAR IT FOR THE GOOD REGS
So, is the problem having any sort of regulations at all?
No way! Some regulation is always necessary, otherwise middle New Zealand’s penchant for jumping on the bandwagon of anything that smacks of ‘sure thing’ is guaranteed to wreck any fledgling industry, viz the not-so-awesome kiwifruit, ostrich and angora goat rushes in past decades and the pretty-damn-embarrassing language school frenzy in more recent times.
With the latter, the government was forced to step in after some incompetent business people, thinly disguised as newly minted language schools, proceeded to default on tours – leaving schoolchildren from countries like China and Japan on New Zealand streets without any school or accommodation to go to. There’s a harsh word for this kind of practice and it is ‘fraud’. NOT the kind of image you or I want people from other countries – and potentially investors for our own businesses – to have on instant recall whenever the syllables ‘New Zealand’ are uttered.
In order to prevent these kind of debacles from happening again, the New Zealand Qualifications Authority created a requirement that language companies here hold a certain amount of money in a trust. Then, should the tour fall over for whatever reason, the investors would get their money back first and any finger-pointing could happen later.
Now, right-wingers may protest such governmental meddling in the market, while left-wingers might claim this is creating a financial barrier to entry, whereas I’d argue this is an example of good regulation. This simple requirement helps keep bungling fools out of the industry while safeguarding the nation’s reputation for quality education and Kiwi experience carefully built up by over decades of trading by trustworthy private (and governmental) institutions and companies.
LET’S OPEN SOME CLOSED DOORS
Okay, so having your country run by code-hopping lobbyists isn’t great, but let’s not default to a simplistic conclusion that all politicians, advisors and lobbyists are selfish chumps who are only looking out for themselves and their mates.
Creating good policy and regulations isn’t easy; it’s hard to take everyone and thing into account as there are often consequences that absolutely no one saw coming. We just have to accept that we aren’t smart enough to have all the answers ourselves. Therefore, if we are developing policies that will affect a lot more than just ourselves, then the truly smart thing to do is to involve more than just a select few in our decision process.
Adam Smith believed that, if left alone, a business person would be guided by an ‘invisible hand’ that would allow his or her business to succeed and assist in benefiting society as a whole. Now I don’t know if Smith was bang on the money – or whether he’d been smoking too much hookah, but I’m open to discussion. Who knows? Maybe there’s someone out there with a better answer – and I’d be a damn fool to ignore them.
