The SFO will be kept busy monitoring the Fast Track Act list
The Serious Fraud Office will be looking closely at the list of Fast Track Applications that have been green-lit this week by the Government. The 149 development projects are to be incorporated in the Fast Track Approvals Bill going through Parliament at the moment. It means that the individual infrastructure proposals will get an urgent hearing from the Government’s new Fast Track panel of experts, a mechanism designed to be something of a rubber stamp to authorise public and private developments that Cabinet Ministers want to proceed.
For the Serious Fraud Office (SFO), their concern will be about possible corruption connected with such developments. This is because many private developments involve millions of dollars, some of which can be used to bribe or help “facilitate” obtaining approval. The financial windfalls will be considerable for those fortunate applicants who get the go-ahead to bypass the Resource Management Act and other mechanisms in the public policy process that often stop private companies from doing whatever they want to make a profit.
Serious Fraud Office concerns
The SFO is responsible for detecting, monitoring, and prosecuting private and public sector corruption in New Zealand law. They complain that their job is getting busier as New Zealand becomes more vulnerable to integrity violations around politics and public life. Last year, their case referrals went up 20%.
An insight into the SFO’s detection of corruption was provided recently at a recent Anti-Corruption Forum held at the Office of the Auditor General in Wellington, where one of their senior leaders, Dan Eaton, explained what his agency was worried about in New Zealand at the moment. Eaton provided tips on where the public should be looking at to detect political corruption: “If you’re ever reading your news – wherever you get it from – and you see words like ‘streamline’, ‘speed-up’, ‘red-tape’, or anywhere that there’s a disaster and the government needs to pump money into a local economy – those are all places where the trends would tell you to go and look.”
Eaton explained that the SFO is seeing an increase in corruption and fraud at the moment: “While the current focus might be on gangs and retail crime, and ram raids and the like, it’s clear that fraud (and corruption, as a subset of fraud, as we see it) is quietly harming people seriously, and our economic wellbeing as well. So, we shouldn’t be complacent.”
The “red flags” that Eaton talked about in terms of politicians and businesspeople talking about the need to streamline, speed-up processes, and remove red tape is basically a description of the Fast Track Approvals Act.
Concerns about Cabinet conflicts of interest
Critics of the Fast Track process have questioned whether the streamlined process puts too much power into the hands of a few ministers and political parties. This could make them vulnerable to decision-making based on who they are connected with, who they are lobbied by, and who makes generous political donations.
In contrast, the current process for getting resource consent is a much more open and democratic one. Typically, consents for significant developments occur through an open process in which the public can participate, and expert officials make final decisions.
Under the new process, it’s essentially Cabinet ministers who decide on which developers get their projects authorised. Some officials assist in this process, but ultimately, the process is opaque, and the politicians get the final say. The potential for “backroom deals” is significant.
That’s why critics have been particularly concerned about making the process more transparent. And there’s been a desire to have more scrutiny of the connections between possible Fast Track developers and the politicians authorising them.
Critics have focused on the political donations from people associated with developers to the politicians. For example, the Herald’s Jamie Ensor reminds readers today that Shane Jones and his party are closely connected to one of the successful developers: “Another project selected for inclusion with links to New Zealand First’s Jones is the Kings Quarry expansion in Auckland. As was previously reported by the Herald, Andrew Ritchie, whose company AJR Finance has donated to both New Zealand First and Jones, is also a part-owner and former director of Kings Quarry. Another part-owner and director is Jones’ relation Stan Semenoff.”
Similarly, Ensor reminds us that National are close to property developers that are being put on the Fast Track list: “National also received donations from Fletcher Building and individuals associated with Winton Land Limited, National Green Steel and Carter Group. Those companies had projects listed.”
Senior political journalist Richard Harman expanded on this yesterday – particularly in terms of the connections between National and the Winton property group, which looks to be about to get a Fast-Tracked authorisation for its 3400-house Sunfield housing development in Papakura, Auckland:
“Sunfield’s developer, the Winton Group, is currently suing Kainga Ora for $138.5 million after it refused to allow its development to be a Specified Development Project, which would have fast-tracked its planning application. That is precisely the kind of problem the Fast Track process outlined yesterday is designed to remedy. But Winton is closely linked to National. The former National Finance Minister, Steven Joyce, is a director of the company and interests associated with it and its chairman, Craig Meehan gave National $156,000 in the two years leading up to the election and another $52,000 to Act.”
The Government is refusing to be transparent about its conflicts of interest
Many will be disturbed that the Government continues to rebuff requests for information about the various conflicts of interest that Cabinet Ministers have in awarding Fast Track authorisation to various developers. The Cabinet Office has advised Ministers about handling their potential conflicts of interest, but Infrastructure Minister Chris Bishop is refusing to release this advice.
More concerningly, he’s also not willing to provide any details about the specific conflicts of interest that have been identified within Cabinet, nor how these have been dealt with. In justifying the secrecy, Bishop simply refers to past precedents.
He has also argued that the political donations that he and his colleagues have received from Fast Track developers do not produce any sort of conflicts of interest. He stated on Sunday: “The advice that I’ve received is that donations in and of themselves through parties do not create a conflict of interest for the government”.
Bishop has also been opaque about how the individual conflicts of interest have been dealt with. In a statement yesterday, he merely said that ministers who declared an interest with a particular project “left the room for any discussion at Cabinet Committee or Cabinet relating to that project”. Expanding on this under questioning from journalists, Bishops has added: “There were a variety of ministers with a variety of conflicts, and all of those were managed, declared and managed in the appropriate way”.
The public is expected to simply trust that Ministers have acted honourably regarding any conflicts of interest that they might have with various developers who are being authorised. But few will be content with such a minimalist approach. For example, political editor of The Post, Luke Malpass says: “Given that one of the big concerns about this new legislation was the potential for graft and corruption, this is important. More information on exactly how this was handled will be important for public confidence.”
Government announcement of the List
Some call it “The Corruption List”, but there’s no doubt that plenty of genuinely valuable projects deserve to be on the Government’s list of 149 developments that are being pushed to the front of the queue to be consented. And although there are plenty of mining and mineral extraction proposals, there are also lots of projects put forward by government agencies – including eleven bridges to be built.
Some critics have also suggested it’s just “good PR” that the list includes renewal energy projects like windfarms and plenty of iwi business initiatives. But campaigning groups such as the Environmental Defence Society have acknowledged that plenty of worthy projects are included, and this is a good thing. The groups’ CEO Gary Taylor however complains that the Government’s list of projects to green-light “lacks strategic direction”. He says the list “is a grab bag of ad hoc projects that just happen to be available for the picking now.”
But there is one theme that BusinessDesk editor Pattrick Smellie has identified: lots of regional development for Northland. That region has disproportionately benefitted from 11 projects that are on track for approval. The area just happens to be where Regional Development Minister Shane Jones lives and campaigns.
Smellie says: “Perhaps the most joined-up set of projects are those that would not only connect Whangarei’s Northport to Auckland and beyond far better than today, but also expand the port’s capacity. The string of wharf, rail, and road projects from Northport through to Southdown in Auckland looks like gold for NZ First’s Northland-focused Regional Development Minister Shane Jones.”
Not everyone is cynical or critical about the list of projects. Today, BusinessNZ chief executive Katherine Rich has come out saying how pleased businesses are with the list. Likewise, the Employers and Manufacturers Association credits the announcement as a potential major economic boost.
As to whether the concerns about conflicts of interest will trump the economic benefits of these developments, Shane Jones has an answer when he stresses the billions of dollars involved: “There's well over $60, possibly up to $70 billion worth of capital injection that's going to come into the economy through these reports, and conflict of interest is only one process that we've got to go through in order to inject more momentum into the economy.”
One thing is for certain, to keep a watch on all this, the Serious Fraud Office is going to need a much bigger budget.
Dr Bryce Edwards
Political Analyst in Residence, Director of the Democracy Project, School of Government, Victoria University of Wellington
Key Sources
Jamie Ensor (Herald): Fast-track approvals projects raise conflict of interest questions, Govt maintains ‘robust’ process followed
Richard Harman (Politik): Bishop answers the call (paywalled)
Luke Malpass (Post): Why fast track is the centrepiece of the coalition’s first term (paywalled)
Glenn McConnell (Stuff): Government won’t say how fast track conflicts of interest were managed
Fox Meyer (Newsroom): Fast-track list: ‘zombie projects’ among the first 149 in line
RNZ: Shane Jones calls Fast Track Bill conflict fears politically motivated
Pattrick Smellie (BusinessDesk): Northland connections aplenty in fast track list (paywalled)
Gary Taylor and Shay Schlaepfer (Newsroom): The fast-track bill: the good, the bad and the clumsy
Great article thanks.
A pleasure to read your deep dive into this.
Pleased a subscription helps you do this, Bryce
Where's the Opposition in this. They should be screaming - it's as corrupt as anything can be, yet I've heard hardly anything from Labour, Greens, Te Pati Maori. We hear snippets in the media but it should be front page every time one of these ministers picks cronies to receive contracts. We rely on these to shine light on what's happening and to point out how deeply corrupt the whole thing is and how bad to our country. Thank you to Bryce for informing us.