Political Roundup: Ministry of Health’s conflict of interest error helps Casey Costello

Dear Subscribers

As you know I’m making some changes to the Substack newsletters at the moment. And I’m basing these changes, partly, off feedback from the current subscriber survey (which is here). One strong theme that’s coming through so far is that people would like more “Political Roundup” columns that summarise a topic, especially detailing items that are paywalled.

Therefore, from today I’m trialling doing more “Political Roundups” (although the name might yet change) that do just this, but that don’t include a lot of my own editorialising. (I will look at doing a separate newsletter/column based around my own analysis.)

For this purpose, I’m going to make use of artificial intelligence to help aggregate and bring together the different perspectives for the newsletter. This is something of an experiment in seeing how AI can be used ethically in helping disseminate political analysis and news.

The first attempt is below. Feedback, as always, is always valued – even if I don’t always get a chance to respond.

Dr Bryce Edwards

Political Analyst in Residence, Democracy Project, Victoria University of Wellington

Political Roundup: Ministry of Health’s conflict of interest error helps Casey Costello

Casey Costello has spent her first year as Associate Minister of Health, fending off accusations of bias in her smoking reforms, with the suggestion of conflicts of interest – largely due to NZ First’s close connection to tobacco lobbyists. But suddenly the boot is on the other foot, with integrity questions being raised in Parliament by her leader and Deputy Prime Minister Winston Peters.

The controversy of the last week involving Labour MP Ayesha Verrall, her sister-in-law and the Ministry of Health, underscores the tensions between government transparency, political rivalries, and the ethical handling of conflicts of interest in New Zealand. This incident has quickly become a touchstone for discussions on public sector neutrality, inter-party dynamics, and the challenges in maintaining integrity within the scrutiny of smoking policy.

The Conflict at the core

The scandal began when Peters, during a parliamentary session, accused a Ministry of Health official – Verrall’s sister-in-law – of working on tobacco policy alongside Costello without disclosing her familial relationship with Verrall. Peters suggested that this connection might have facilitated leaks or otherwise biased support against NZ First’s policies on smoking reform.

However, the Ministry of Health clarified that the official had indeed declared the conflict internally, placing responsibility on the Ministry itself for not informing Costello. The official’s adherence to protocol highlights the complexities in managing family ties within a small nation’s political and administrative framework.

A Ministry blunder, but who is to blame?

Several commentators, including Craig McCulloch from RNZ, argue that the Ministry of Health’s failure to inform Costello has created a debacle that leaves the official vulnerable to political attacks. McCulloch highlights that while the official followed Ministry guidelines, her name and credibility are now embroiled in political manoeuvring, especially with Peters invoking parliamentary privilege to reveal her identity.

This point is critical: the public servant is now a pawn in a much larger political game, as Peters uses the situation to shift the spotlight from NZ First’s own tobacco policy controversies.

Several commentators criticise Peters for using parliamentary privilege to name the public servant. Peters is certainly no stranger to the art of political offense-as-defense, using parliamentary privilege as a shield to bring personal accusations against individuals who cannot publicly defend themselves.

A Deflection from substantive policy discussions

Peters’ manoeuvre was tactical, providing him an opportunity to deflect Labour’s criticisms of NZ First’s ties to tobacco lobbying. Yet, his lack of evidence when pressed only underscores the impression that the attack may be more about sowing doubt than uncovering genuine wrongdoing.

Jenna Lynch from Stuff encapsulates Peters’ approach as one designed for maximum deflection, giving NZ First an opportunity to play the victim in a narrative where they are often seen as antagonistic toward public health initiatives. She concludes: “The Ministry’s failure has handed an easy deflection to Winston Peters which distracts from real and necessary scrutiny of tobacco policy.”

An Otago Daily Times editorial has also commented on this: “The irony of finger-pointing about conflicts of interest coming from New Zealand First will not be lost on those aware of the various questions which have been raised for months about the part Big Tobacco may have had in setting that party’s agenda on smoking issues.”

Political ramifications and leadership scrutiny

Prime Minister Christopher Luxon and Labour leader Chris Hipkins have taken divergent approaches, each aiming to leverage the situation to their advantage. Jamie Ensor (Herald) and Michael Daly (Stuff) report that Luxon criticised the Ministry’s oversight and questioned Labour’s lack of proactive disclosure.

Luxon’s decision to stand by Peters has been seen as a move to support his coalition partner, while Hipkins condemns Peters’ actions, labelling them “reprehensible.” Ensor interprets Luxon’s stance as a bid to deflect criticism from Costello’s smoking policy, framing Luxon as opportunistic in his willingness to focus on the Ministry’s failures rather than address deeper issues with Costello’s policies.

In contrast, Hipkins has defended the public servant and emphasized that, as a professional, she acted appropriately by declaring her conflict within the Ministry. Daly highlights that Hipkins questioned Peters’ motives, arguing that the attack on a public servant under parliamentary privilege is inappropriate and does not address the substance of smoking policy issues.

But Hipkins was also forced into an awkward position, initially downplaying the familial relationship by calling the official a “distant relative” of Verrall. This mischaracterisation invited further scrutiny and gave Peters an opening to challenge Labour’s credibility.

Hipkins later corrected his statement, but the damage was done: the misstep has allowed Peters to claim Labour was not forthcoming, further fuelling the public perception of opacity within Labour’s ranks.

Public perception and bureaucratic neutrality under threat

Public sentiment surrounding this issue reflects broader frustrations with perceived bias within New Zealand’s bureaucratic institutions. Peters and Costello’s supporters argue that institutional bias undermines the government’s mandate, feeding into a rightwing narrative of a “deep state” that obstructs conservative agendas. Chris Trotter, writing for Interest.co.nz, highlights that Peters’ approach resonates with conservative voters who feel disenfranchised by what they perceive as a left-leaning bureaucracy that does not fully accept their mandate.

Trotter contends that conservative voters view such bureaucratic lapses as part of a broader pattern of bias against rightwing government, compounding a sense of alienation. The fallout from this scandal thus feeds into a political climate where the neutrality of public institutions is increasingly questioned.

This issue exemplifies how public servants with familial or social ties to political figures can become scapegoats in larger ideological battles. Rightwing media and political commentators have seized upon this conflict to argue that the government’s institutional framework is inherently biased against conservative policies, particularly those around tobacco and industry regulation.

This scandal underscores the tension between public service neutrality and political affiliation in New Zealand. The Ministry of Health’s failure to communicate the conflict has left an impression of opacity that Peters exploited.

The Integrity of health policy

At the heart of the debate is the policy conflict between Verrall and Costello over tobacco regulation. Verrall, a public health advocate, has been vocal against Costello’s policies, which she argues favour tobacco industry interests, notably in promoting heated tobacco products (HTPs). Labour has requested an Auditor-General investigation into NZ First’s tobacco tax decisions, suspecting industry influence. Peters’ attack on Verrall’s sister-in-law can be viewed as an attempt to undermine Verrall’s credibility and derail Labour’s scrutiny of NZ First’s tobacco policy.

The irony is hard to miss: Peters, who has long faced scrutiny for his own party’s connections to the tobacco industry, now redirects attention by questioning the integrity of Verrall’s public servant relative. This tactic allows NZ First to maintain a counter-narrative while diverting attention from potential conflicts of interest within their own ranks.

As Tim Murphy of Newsroom has noted this week, “It would be a shame now if the ministry’s failure to alert this minister to the official’s relationship with Verrall took the focus off Costello’s way of doing politics when it comes to tobacco and the tobacco industry. The smoking gun in this instance is the secrecy, and the smoking.”

Calls for independent oversight and reform of conflict of interests policies

Some commentators have called for an independent review of the Ministry’s conflict-of-interest protocols to address the perceived failure in this case. Some argue that while the current protocols are generally robust, this incident demonstrates the need for clearer guidelines in cases where public servants have direct familial connections to opposing political figures.

The Health Ministry’s current protocols allowed the staff member to follow procedure, but the lack of direct notification to Costello exposed a loophole that NZ First has been quick to exploit.

The scandal has prompted a broader discussion about conflict of interest management within government agencies. The Otago Daily Times editorial on this, reflects a consensus that while it’s common for public servants to have political or familial ties, the Ministry’s failure to inform Costello points to systemic weaknesses.

The newspaper suggests that an independent review of the Ministry’s policies may be warranted, especially in high-stakes situations involving sensitive topics like smoking reform: “This whole matter has become so messy and murky it would be good to see a comprehensive independent examination of it.”

The Ministry’s protocols, which align with the Public Service Commission’s standards, require review to ensure they are sufficient in managing complex relationships. Many of the politicians involved in this saga have agreed that it is common to have family members in the public sector, and that this is manageable through proper disclosures. However, there seems to be a growing admission that a more stringent disclosure policy is needed when familial relationships intersect with politically charged issues.

A Political scandal with lasting implications

The scandal surrounding Verrall, Costello, and the Ministry of Health is a potent reminder of the challenges facing New Zealand’s public service. In a country where personal and professional connections are often intertwined, managing conflicts of interest requires transparency and strict adherence to ethical guidelines.

This incident, though rooted in a relatively minor oversight, has been transformed into a bigger political firestorm, illustrating the fragility of public trust in government institutions and the risks of weaponising bureaucratic lapses for political gain.

From a broader perspective, this conflict underscores the ongoing tension between New Zealand’s left and right factions over the role of government, the influence of industry, and the impartiality of public institutions.

Therefore, this scandal reveals not only the weaknesses in existing protocols but also the ideological battle lines that shape public perceptions of government transparency and integrity. In a climate of heightened polarisation, such incidents risk further eroding trust in public institutions and amplifying calls for reform to restore faith in government neutrality.

Dr Bryce Edwards (assisted by AI in aggregating this summary material)

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

Key Sources

Michael Daly (Stuff): Chris Hipkins says he chose ‘wrong form of words’ to describe Ayesha Verrall’s relative

Jamie Ensor (Herald): Christopher Luxon calls out ministry for failing to tell Casey Costello worker was Ayesha Verrall’s relative

Jamie Ensor (Herald): Smoking policy: Ministry of Health apologises for not telling Casey Costello worker was Ayesha Verrall’s relative

Jenna Lynch (Stuff): Ministry of Health has questions to answer over Costello conflict

Craig McCulloch (RNZ): 'Incredibly disappointing': PM turns up heat on Ministry of Health failing to disclose conflict of interest

Craig McCulloch (RNZ): Ministry of Health apologises to minister over failure to disclose conflict of interest

Craig McCulloch (RNZ): Health Ministry not winning any friends over conflict of interest handling

ODT: Editorial – Messy smoking saga drags on (paywalled)

Adam Pearse (Herald): Ayesha Verrall contests Winston Peters’ conflict of interest claim about ‘relative’ working on smoking regulation

Chris Trotter (Interest): Christopher Luxon should be grateful that Chris Hipkins is as out of sympathy with the temper of the times as he is