Lobbying for Waikato’s Medical School causing problems for the Govt

It’s becoming a classic case study for why lobbying deals with politicians need greater scrutiny. Former National Minister Steven Joyce runs a lobbying company with a major client – the University of Waikato. The University desperately wants $300m+ of taxpayer funding to establish a third medical school in New Zealand, and Joyce’s firm has convinced his former colleagues to hand over the money. But there’s an increasing number of voices raising problems with the medical school deal, and it could yet become an issue of severe contention within the Beehive.

The Controversial University deal-making

The whole Waikato-Joyce-National project to build a new rural-focused medical school has been messy and controversial. And it now threatens not just to tarnish the reputations of all involved but to endanger the stability of the new coalition government. Act leader David Seymour has pointed out today that the Coalition Agreement will be breached if Waikato University is allowed to proceed with its medical school before a robust business plan proves the deal is in the public interest.

Seymour’s warning of coalition instability has come about because the University has already started advertising for a property developer to build the medical school. This is despite Cabinet not yet deciding or allocating the $300m+ necessary for the project. Act is insisting that a promised business case first be established, and is pushing back against the medical school being a “done deal” for National to deliver on its election manifesto commitment.

Richard Harman reported this development today, saying that Waikato University seems confident enough to start the construction tendering process “possibly because of the strength of its political connections, which it has forged by employing former National Finance Minister Steven Joyce as a lobbyist”. Harman argues that “if the case succeeds, it will be despite numerous previous official studies and reports questioning the proposal” – see: Controversial proposal could threaten coalition (paywalled). He says it “risks a major political blow-up within the coalition”.

Lobbyists have been at the centre of the medical school deal

The last National Government developed the idea of a third medical school. It then stalled in 2017, with the election of Jacinda Ardern’s Labour Government. Ardern’s initial chief of staff in the Beehive, Neale Jones, left to set up corporate lobbying firm Capital Government Relations, which Waikato University then contracted to get the proposal progressed by his Labour contacts.

When Jones’ progress slowed, Waikato hired Steven Joyce, who worked on his connections with National to revive the deal. National agreed to fund the school. Harman reports today that “National made an election promise last year to fund up to $280 million of the estimated $380 million capital cost to establish the school, which would open in 2027 with 120 students.”

Joyce’s lobbying and consultancy work for Waikato became controversial when it came out that he had charged $1.1m for his services. And Joyce’s contract with Waikato is still ongoing.

RNZ’s Guyon Espiner uncovered how closely Joyce and National had worked together on the policy development for the medical school – especially with its vice chancellor Neil Quigley (who is also the Chair of the Reserve Bank). The University even helped pay for National’s announcement of the medical school, and Quigley emailed Health Spokesperson Shane Reti to say the policy could be “a present” to a future National government to help with its re-election.

In addition, two of Joyce’s colleagues, Anna Lillis and Kenny Clark, who used to work for him in the Beehive, have also been involved in lobbying and promoting the medical school proposal to politicians and the public.

The Auditor-General’s investigation of Joyce’s contract with Waikato University

The Office of the Auditor-General has since taken an interest in Waikato’s arrangements with Joyce and earlier this month concluded its investigations, publishing an open letter to the University about serious concerns over its employment of the lobbyist’s company – see: Auditor General: Procurement of services by the University of Waikato

In this, Auditor-General John Ryan condemns the University’s hiring process of Joyce as lacking transparency and a satisfactory explanation. In contracting Joyce Advisory Services Limited, the University did not follow the usual procedures, including a competitive tender process. According to the Auditor-General, Waikato has been unwilling to account to the public for the expenditure of a large amount of money.

The open letter is best covered by the Herald’s Adam Pearse, who reports that neither Quigley nor Joyce have been willing to comment in response – see: Auditor-General: Waikato University dismissive of concerns about former National minister Steven Joyce’s $1 million contract

Part of Joyce’s qualifications for helping advance the medical school was his experience dealing with other large infrastructure projects. He famously brokered a deal between the Government and SkyCity Casino in which they would build Auckland’s convention centre for free in exchange for a law change on gambling. He is also responsible for creating the Ministry of Business, Innovation and Employment (MBIE) and the rollout of the high-speed broadband network.

Joyce is also now involved in other infrastructure projects for several private companies, including Winton property developers, who are associated with large donations made to National and have been invited to apply for the Government’s new Fast-Track resource consenting process due to be operational later this year.

Even more significantly, Joyce has now contracted his services to the Government to assist Treasury in setting up a new infrastructure agency – see my column on this from last month: Steven Joyce’s revolving door entry into a $4000/day govt appointment

Does the Waikato Medical School proposal stack up?

It’s a testament to the skills of Joyce, Waikato and National that the proposal for the third medical school to be based in Hamilton has survived this far. It has been knocked back many times.

Richard Harman provides an overview today of these setbacks: “If the case succeeds, it will be despite numerous previous official studies and reports questioning the proposal. Officials advised the previous Government that the school would be a costly project unlikely to add large numbers of general practitioners to the New Zealand total. Instead, it could even reduce the number of doctors being trained at the University of Auckland.”

One big problem is that in 2017, the Treasury, the Tertiary Education Commission, and the Ministry of Health conducted a joint study of the issue. This focused on the problem of training more doctors for rural areas and concluded that it might be better to concentrate on the existing medical schools in Auckland and Otago. It also raised the likelihood that the University of Auckland’s existing programme to get doctors into the Waikato region would likely suffer if the new school were built.

What happens now?

The new National-led Government signed its Memorandum of Understanding with Waikato University and the Ministry of Health in February this year. In this, the Government agrees to go forward with the proposal, but only once the Ministry of Health has carried out a “full cost-benefit analysis” business case for the new school. And Harman reports that the Ministry has yet to do this.

The timeframes become a real problem. According to Harman's research, the University has advertised the following timeframes: “the design and construction contracts will begin in July”, and “the design for the medical school should be finished by the end of this year, and construction should start in January next year”. And Harman says, "Thanks to the University’s Registration of Interest deadlines, the Government has until May 30 to produce the business case.” But he argues that the only way this can occur is if the money is provided in this year’s Budget, also due on 30 May.

It, therefore, sounds like a done deal amongst National ministers. Some will label this “dodgy”, “corrupt”, or just another example of vested interests and influence of well-connected lobbyists. The problem, however, is that Act doesn’t seem willing to go along with all of this. As Harman says, “a major political blow-up” could result.

Dr Bryce Edwards

Political Analyst in Residence, Director of the Democracy Project, School of Government, Victoria University of Wellington

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