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Ministry of Justice and lobbyists lock horns over proposed code of conduct

14 Jun 2024

| Author: Sally Lindsay

The Ministry of Justice is preparing a draft code of conduct for lobbyists – people it defines as “engaging in advocacy activities to influence government policies and decisions”.

But compliance with the code will be voluntary, meaning it could be an exercise in futility, industry leaders say.

While the ministry works on a substantive review of policy options for regulating lobbying activities, many of the lobbyists, companies and other organisations it has consulted with say the code is a solution looking for a problem.

The ministry is planning to publish the draft code on its website as a resource if the lobbying industry wishes to use it, or develop its own code(s) of conduct. Many lobbyists believe this is pointless.

New Zealand has a reputation for maintaining high levels of transparency and low levels of corruption but, unlike other developed countries, the consultant/lobbying industry is unregulated.

There is no lobbying register; lobbyists don’t have to reveal their clients’ names; and there is no code of conduct or restrictions on how quickly lobbyists can move between top government jobs and the private sector, or vice versa.

This has led to a negative public perception that lobbying is “mates going to mates” and those relationships being misused.

Lobbyists say that’s not the reality, claiming the industry already operates with integrity, ethics and accountability. Further, they say there are many existing mechanisms that promote transparency and good practice, such as the Official Information Act and a requirement for ministers to publish their diaries.

 

Client confidentiality

One of New Zealand’s most experienced lobbyists, Mark Unsworth of Saunders Unsworth, doubts the code will ever come into existence.

He says a code can never apply across the board because some of the best lobbyists in Wellington are lawyers. “If they work for law firms, they can’t be expected to sign up to something that might jeopardise a client’s confidentiality.”

What worries Unsworth the most is that a code can’t be one-size-fits-all. “Is a code any more necessary for consultant lobbyists than any other industry? Perceptions of dishonesty, underhand deals and big money influencing government policy are just that: perceptions.”

Wellington is small and if a lobbyist is dishonest, he or she is quickly sprung and doesn’t get access to ministers and government officials, Unsworth says. “People won’t talk to you. It is a pretty simple system. If you break the rules you get chopped out fast.”

So, lobbyists are questioning whether further measures are necessary in the absence of clear evidence of malfeasance.

The ministry says its concerns are around issues arising when there is a real or perceived imbalance in who gets access to decision-makers. There is also uncertainty about the motivations, origins and influence of some lobby groups.

“This can erode trust in the democratic process and could ultimately affect social cohesion,” the ministry says.

But lobbyists say many of these issues are not something they themselves can resolve and the focus should be on decisionmakers, who can decide who they talk to or consult with, and what they do with the information they are given.

 

Lobbying defined

Justice officials have studied more than 40 codes from other countries and the ministry’s civil and constitutional policy group chief adviser, David Crooke, says the draft code will reflect OECD principles.

He says the aim is to strike the right balance between enabling legitimate advocacy and protecting the public interest in having transparency around lobbying activities.

Essentially, it provides guidance, based on ethical principles about expected behaviour, which 48% of organisations consulted by the ministry said they wanted. This is a more high-level, second version of the code put together after feedback on the more prescriptive initial version.

The code defines a lobbyist as any person or organisation aiming to influence government policy, process or law. Lobbying activity includes any direct or indirect method used to influence government policy, process or law.

The ministry expects lobbyists to use fair access to public officials responsibly. It says personal relationships are inevitable in a small country, but public trust can be undermined if people believe a lobbyist has an unfair advantage through a personal relationship. Improper influence of public officials has a highly corrosive effect on democracy, it says.

Under the transparency clause in the code, lobbyists must be clear about who they represent and the purpose of the lobbying activity. They will have to state clearly what they are aiming to achieve, and disclose any donations and conflicts of interest.

Providing accurate information to decision-makers is paramount as decision-makers rely on accurate information, the code says. Lobbyists are expected to be truthful in all their communications and promptly correct errors or omissions.

They also need to demonstrate integrity, maintain confidentiality and be respectful of information obtained from public officials in the course of their work.

Conflicts of interest need to be disclosed and carefully managed as they can result in actual, or perceptions of, bias or unfair access.

Upholding a positive reputation for lobbying activities is also included in the code by fostering a culture that advocates and supports ethical practice.

The ministry says lobbying activities play an important part in democratic processes and lobbyists must comply with relevant legal obligations, be accountable for their actions and establish a business culture that sets clear expectations about appropriate conduct and behaviour to help build public trust.

 

Sharing confidential information

Then Prime Minister Chris Hipkins tasked the ministry with drawing up the code in the wake of revelations in June last year that former Police Minister Stuart Nash shared confidential cabinet information with political donors.

A year earlier, former Immigration and Commerce and Consumer Affairs Minister Kris Faafoi resigned from Parliament and three months later was hired as a lobbyist. And Andrew Kirton resigned from his lobbying job the day before he became Hipkins’ chief of staff – a move that led to calls for mandatory stand-down periods.

Unsworth says there is plenty of case law on stand-down periods and the courts take a critical line on any organisation affecting somebody’s ability to change jobs.

He says the real value in hiring a former minister or Beehive staffer is not what they know about Cabinet papers but the fact they understand the system, know the personalities, who the prime minister likes and who he or she doesn’t like, who is going to be in Cabinet and the key advisers in each minister’s office. “It’s not illegal to have that knowledge.” Unsworth’s company publishes a lot of this information on its website.

However, the ministry says a revolving door between the Beehive and a lobbying role can result in the misuse of privileged information and unfair access.

Most lobbyists disagree, but say there should be more public transparency and understanding, particularly around the role of lobbyists and lobbying and how it works.

More than 75% of OECD countries, including Australia, Ireland, France, Canada, America and the UK, have laws requiring “cool off” periods to stop this revolving door between government and lobbying. Stand-down periods preventing ministers and top officials moving directly between lobbying and government are set at 18 months in Australia and five years in Canada.

In the aftermath of the Nash affair, lobbyists, including business and union representatives, found their swipe-card access to Parliament had been revoked. The Cabinet Manual was amended to clarify that a minister’s prospect or expectation of future employment should not influence his or her conduct while holding a ministerial warrant.

However, the new Speaker of the House, Gerry Brownlee, told RNZ he did not agree with the blanket ban on lobbyists having swipe-card access and some discretion was needed.

Brownlee has approved swipe-card access for about four new people whom he says can be described as having lobbying roles. They, however, are not employed by lobbying firms and most have jobs assisting parties in Parliament.

Brownlee has also moved, on privacy grounds, to keep under wraps the identity of those with lobbying roles, who can freely access Parliament.

 

Majority want code

There has been a mixed reaction to the idea of a voluntary code from 180 people the ministry has consulted with. They include lobbying firms, interest groups, academics and think tanks, transparency interest groups, industry and professional associations, individual companies and iwi/Māori.

About 80% think there should be a code, 56% think it should be voluntary, 34% want it to be mandated by government, 29% think it should be administered by a government department and 27% say it should be administered by a new industry group.

Those in favour of a voluntary code say it is important for lobbyists to maintain a degree of independence from the government, so they can operate with integrity. In their view, a voluntary code is not necessarily toothless as those who do not sign up may be subject to public scrutiny and a mandated code suggests increased regulation, paperwork, monitoring costs and enforcement mechanisms.

Participants who favoured a mandated code say a voluntary code is ineffective and does not hold lobbyists to account. They believe unregulated lobbying undermines the public interest and there is a risk of corruption and lobbyists wielding undue influence.

Most of those consulted questioned how effective a code was likely to be as New Zealand does not have the same problems with lobbying as other countries, even though big New Zealand and international companies routinely use paid lobbyists to get access to ministers and sensitive government information.

A recent RNZ investigation unearthed thousands of emails, text messages and encrypted signal communications, revealing the extent of the lobbying industry in New Zealand. There were invitations to ministerial advisers to drinks, dinner and sports events, via text messages addressing them as “brother” and “comrade”.

This in itself is not illegal, but has led to widespread perceptions that the lobbying industry is not quite legitimate and underhand deals could be made behind closed doors.

 

Other attempts

It is not the first time there have been attempts to rein in the lobbying sector.

In 2012, the Green Party introduced the Lobbying Disclosure Bill, aimed at addressing a perceived lack of transparency and regulation of lobbying activity.

The bill would have established a register of lobbyists and empowered the auditor-general to develop a code of ethics for lobbyists.

It was voted down unanimously at the select committee stage because it could have, in the committee’s opinion, limited freedom of expression, defined lobbyist excessively broadly, and could have impinged on the privileges of the House.

The committee instead recommended non-legislative alternatives, such as guidelines for MPs, requiring regulatory impact statements to include the names of non-departmental organisations consulted in policy development and the proactive release of official documents.

Many of these recommendations have been adopted in one form or another, says Steven Sutton, special counsel, and Tim Clarke, partner for public law and regulation at Russell McVeagh.

They say the bill showed that lobbying is an “inherently amorphous idea and difficult to define”.

Lobbying, Sutton and Clarke say, is an important and expected part of the country’s political and democratic process. “That said, the public must have confidence that a transparent, effective and robust framework exists.

“Given the comprehensive review of lobbying regulation the Ministry of Justice is now leading, it must maintain free access by the public to ministers, MPs and officials, guarantee the right to freedom of expression and maintain the operation of Parliament as we know it.”

 

PRINZ code

Last year, the Public Relations Institute of New Zealand (PRINZ), which has many lobbyists as members, was part of the ministry’s lobbying project team. It found the collective view of participants was that there didn’t appear to be a widespread issue with irregularities in lobbying. “Are we trying to fix an issue that doesn’t exist?” PRINZ asked.

It says the project team was broadly supportive of a voluntary code of conduct, but there were already several government-led mechanisms to support transparency, such as the requirement for government to proactively release ministerial diaries.

While there was consensus that stand-down periods for departing politicians who move into lobbying were required, this should be an issue for the government to address through contracts, the Cabinet Manual and legislation, rather than by the lobbying sector.

Without an industry association, PRINZ says the sector does not seem to naturally fit into a voluntary code.

On several occasions it was suggested the PRINZ code of ethics could provide all the necessary components of a voluntary code for lobbyists. The ministry took that onboard and has added aspects of the PRINZ code to the draft lobbyists code.

 

Definition the key

The biggest issue for the various groups who met with the ministry is the definition of a lobbyist and lobbying.

There is a lack of international consensus around definitions of political lobbying. In practice, any person who aims to influence decision-making at any level could be covered.

Many of those attending the ministry’s meetings already adhere to industry codes of conduct and some are regulated under other legislation.

Most agreed that lobbying is a spectrum on which everyone is a lobbyist to some degree if they actively promote policy interests.

Most think a lobbyist should be defined as a person or organisation that represents a known group of people or acts on behalf of a client or firm, as distinct from citizens making submissions on their own behalf.

However, even this was not cut-and-dried; one person questioned where “rich-listers” with influence or connections might fit.

Many countries set standards and guidelines governing people who are lobbied, as well as measures around bribery, corruption, political donations and conflicts of interest. Only a small number of countries set standards for political lobbying activities.

A 2021 OECD report Lobbying in the 21st Century noted that most regulatory approaches in OECD countries were confined to lobbyist registries and codes of conduct and did not cover the full spectrum of modern lobbying practices and risks.

The ability for people to contact ministers, MPs and senior government officials to discuss matters affecting them is an important and legitimate feature of New Zealand’s democracy, the ministry says.

Lobbyists, legal advisers, industry and stakeholder organisations can play an important role in these lobbying processes. They enable a range of perspectives to be considered in policymaking, provide knowledge and expertise, and alert the public and decision-makers to problems.

The difference between advocacy and lobbying is difficult to define, with some groups querying how government officials distinguish between who has commercial interests and who has not. Others think commercial entities often say they are advocating when they are not.

They were unanimous that many of the issues associated with political lobbying arose from a lack of standards and codes for ministers on how to manage lobbyist access and transparency.

Only ministers, in their view, can decide who they see and listen to. One noted that if a minister did hear a point of view from one party, others would need to be given a right of reply.

Industry associations say while they might be paid, they are different from corporate and consultant lobbyists, claiming they are open and transparent, have codes and are answerable to their membership and are generally advocating for a whole business sector rather than individual firms.

An example given was the difference between a firm, law firm or consultant acting on behalf of a specific client versus an industry association working for a member. The former has less transparency (often due to legal privilege).

They suggested lobbying for self-interest or for vested interests was the issue, not lobbying for the public interest.

Individual companies the ministry consulted say they are often contacted directly by ministers or ministers’ offices, and MPs as experts on the subject matter in their field.

They see lobbying as primarily an exchange of information that helps both decision-makers and the industries they represent.

Unsworth says a quick survey he did of ministers’ gatekeepers about the extent of lobbying by paid consultant lobbyists compared to law and accounting firms, industry associations, private companies, churches, trade unions and other bodies revealed it was between 10% to 15%.

“It turned out the vast number of calls and requests for meetings came through industry associations.”

Some participants within transparency interest groups believe the definition of a lobbyist and lobbying needs to be broad to counter “public grooming” by vested interest groups working through other organisations. An example was a digital marketing company making a website about “saving our dairies” that was underwritten by a vaping/nicotine company.

Lobbyists themselves are concerned about being forced to disclose their clients on a public register, as lobbying firms in Australia and other countries do.

Ministry documents show that “on balance” lobbyists support a voluntary code of conduct to improve transparency – if only to improve understanding and perceptions of the industry

“Those who were supportive noted that addressing the public perception of the industry was important,” the ministry’s documents say. “Some said that if done well, a code could help to create better outcomes and that it was less about solving a problem and more about taking the opportunity to improve public understanding and perception.”

 

Playing with fire

Academics think a voluntary code will be ineffective and it may be a “window dressing exercise,” or “like a fox guarding the chicken coup”. They queried whether a mandated code would work.

Author and academic Max Rashbrooke, who has written extensively on lobbying and democracy, suspects the code will go nowhere.

He says Justice Minister Paul Goldsmith has made it clear that lobbying regulation is not a priority for him. “If the proposed code is published by the ministry in its existing form, it is essentially irrelevant.”

Internationally, three measures are becoming standard in developed countries for regulating lobbyists: a register of lobbyists that also shows who is meeting with whom; a one-year stand-down period between ministers and top-level staff leaving government and becoming lobbyists; and a code of conduct.

The code of conduct is always the least effective measure unless it has real teeth, Rashbrooke says. “Other countries have struggled to give a code teeth because there is no body or organisation with the power to oversee the code, check for breaches and punish people.

“In New Zealand’s proposed code there are no consequences at all, such as deregistration, barring lobbyists from meeting with ministers and fines.”

But he says what the ministry originally put forward for the first version of the code would have been a decent start because it at least contained some standards around not misusing confidential information, not sharing misleading information, not using personal relationships improperly and some thinking about stand-down periods for ministers and high-ranking staff leaving to become lobbyists. But the second version has been so watered down, ironically by the lobbying industry, that it’s almost entirely meaningless, he says.

“There are two problems – the words and no enforcement mechanism. There is also no process for making complaints about lobbyists who are not meeting the code. It is in no sense fit-for-purpose and there is no real desire from the government to do anything.” ■

 

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