PoliticsJune 24, 2019

Time to regulate the lobbyists


Recent revelations around lobbyist-turned-chief-of-staff GJ Thompson reinforce the urgency for change, writes Kate Nicholls.

Questions have been raised over recent weeks about the relationship between Jacinda Ardern and corporate lobbyist GJ Thompson, and how potential conflicts of interests were handled during Thompson’s stint as the prime minister’s chief of staff during the first few months of the current government’s term.

At issue is not only the apparent lack of transparency surrounding that relationship and whether any rules were broken, but also the system that regulates lobbying in New Zealand. In short: we don’t have one, but it is probably time that we did.

No one who studies government-interest group relations seriously argues that lobbying can or should be eliminated from the normal course of democratic politics. In fact, interest groups, who increasingly pay professional lobbyists to get their message across, are an integral component of what makes democracies work.

Interest groups may include businesses and corporations whose narrow goal is to maximise profit. But they can also include social enterprises, trade unions seeking to promote the wellbeing of their members, voluntary and community groups seeking to enhance the wellbeing of vulnerable communities, and altruistic lobby groups that have grown out of social movements, such as Amnesty International or Generation Zero.

Interest groups seek to protect the interests of their members, but they are also experts in their field. Governments actually need their street-level knowledge to make better policy decisions.

States mediate, channel, and articulate between these interests in a number of different ways, and how they do so depends on national context and national policy-making traditions. In much of Western Europe, interest groups are formally acknowledged as social partners in the policy-making process, which tends to equalise the influence of organised labour and business.

By contrast, New Zealand is much like other mature, English-speaking democracies in how it combines ad hoc interest group input into policy decisions. It uses channels such as expert working groups and commissions of inquiry, and the very traditional process of stakeholder submissions on proposed legislation through select committee hearings with a much more free-wheeling system of lobbying that is becoming increasingly professionalised with the use of paid third-party lobbyists.

It is these so-called “pluralist” systems that are most in need of regulation.

In the wake of the Global Financial Crisis that began more than a decade ago, regulation of lobbying has spring up around the world. In places such as the United Kingdom, Australia, and Ireland, the centrepiece of legislation tends to have been the adoption of some sort of registry designed to keep a record of which corporations and other interest groups have devoted financial resources to lobbying government.

Such regulations, however, vary vastly in strength.

Stronger regulatory frameworks, for instance, seek to capture who is paying for what no matter whether the lobbying advice is paid for “in house” or to a third party (ie a PR or professional lobbyist). They seek to make the registry publicly and easily available and punish transgressors of the rules more severely.

However, according to data regularly collected by the United States’ independent Center for Public Integrity, only a few state-level systems in North America meet this very strong threshold. Many other polities have had their legislation watered down in the face of — ironically, perhaps — opposition and interest group lobbying.

‘Revolving door’ rules are another regulatory feature that is often incorporated into overarching lobbying legislation. This refers to further attempts to make the business-government relationship more transparent by providing some kind of oversight over how easily individuals and firms slip between the public and private sectors. If there are no in-house central or local government rules governing such behaviour, it is quite possible for individuals or firms to be working for the government one week and then bidding for a government contract the next.

This close relationship is often justified in New Zealand on the basis that we are such a small country. That means there is a lack of competition for government contracts and a paucity of expertise in general.

But, at the very least, wouldn’t it enhance the quality of our democracy to at least know something more about the nature of these relationships?

One previous attempt has been made to regulate lobbying in New Zealand. Former Green MP Holly Walker’s Lobbying Disclosure Bill made it only as far as a first reading in parliament in 2012. The record of the parliamentary debate at this time makes for quite extraordinary reading in comparative global context.

The bill was based on Canadian legislation, which is not a particularly strong regulatory framework, according to the criteria discussed above, and notably aims at “third party” rather than in-house lobbyists. Given that it tends to be businesses and business associations rather than trade unions or other interest groups that employ such professional lobbyists, the bill quickly drew criticism from centre-right commentators on the basis that it was biased against business interests. Yet both Labour and National quite fiercely challenged the proposed legislation, arguing that it would stifle democracy and make it difficult for MPs to do their constituency work. Images were conjured up of constituents being fined for raising issues of concern with their local MPs.

This was well out of step with the debate occurring in similar countries around the same time. Quite simply, it was nonsense. Lobbying regulations do not seek to stop interest groups talking to political decision-makers. Rather, they seek to make those discussions transparent and enhance democratic accountability in the process.

New Zealand has a strong democracy in many respects, ranking highly in international rankings and indices when it comes to its quality. Yet there is reason to suspect that some factors drive these scores more than others: our electoral system is exceptionally clean and, believe it or not, we retain relatively high rates of electoral participation compared to some of our foreign cousins.

We also generally rank very highly in Transparency International’s annual Corruption Perceptions Index. It is worth noting that although this is not actually a measure of democracy (authoritarian Singapore is often close to us at the top) and that what is being measured is the perception of corruption, not its actual form, it is sometimes invoked in these discussions.

Might it be that these perceptions are based on incomplete information about the interweaving of politics and interests in New Zealand? That, among other questions, is something that the existence of lobbying regulations could help answer.

Dr Kate Nicholls is senior lecturer at the School of Social Sciences and Public Policy at Auckland University of Technology

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