NZ POLITICS DAILY: NZ's tax haven policy called slack

New Zealand and its political system have an international reputation for integrity.

But this could come under threat with continuing questions about aspects of the way the country is governed and our financial affairs are managed. New Zealand’s role in allowing tax havens to operate could be a significant area of concern, with new ‘Winebox’ style tax havens being identified in a major international investigative story, involving New Zealand’s own Nicky Hager.

This is detailed by Hager in his Sunday Star Times feature story, Money trail leads home to New Zealand. As Beith Atkinson (a senior public servant at the Department of Corrections) argues, ‘New Zealand may be tarnished as the attitudes of tax haven governments become better known.  The Cook Islands is substantial player in the tax haven market, and though self governing, of course is part of New Zealand’ – see his blogpost, Wikileaks-like focus on elites’ use of tax havens.

The Government is promising that IRD will look into any potential wrongdoing involved, but Hager has identified New Zealand’s ‘slack’ policies as part of the problem – see Kathryn Powley’s Dirty deals in paradise. Tax expert Deborah Russell (of the School of Accountancy at Massey University) has blogged about the scandal, saying ‘We’ll know that the government is serious about all New Zealanders contributing fairly to the common good of our society when they start asking hard questions of their tax avoiding mates’ – see: The problem with tax havens. And for a good background on the huge scale of both the leak and the investigative project, see Peter Griffin’s Massive investigative journalism project probes offshore companies.

With integrity being the watchword of the moment, it seems that these days we are awash with calls for inquiries and reviews – the latest being David Shearer’s promise of a ‘full independent inquiry into our intelligence agencies’ – see: Labour pushes for security review. Previously the Office of the Auditor General had a low profile, but today it’s become the major referee called upon by political actors when alleging corruption, cronyism, or any other political or bureaucratic improprieties.

Yet it’s Prime Minister John Key who could play a bigger role in the declining confidence around the integrity of public affairs in this country, particularly over the on-going scandal with the GCSB and, perhaps more especially, the PMs handling of that scandal. The latest twist, in which Key has lashed out at journalists – calling them ‘knuckleheads’ – and given notice that he’ll be less forthcoming in his replies to public questions, could be particularly damaging.

Attacking the media is a bad move for Key according to one well-argued blogpost on The Standard – see: Temper, temper. I’ve also argued that in the whole affair, Key has shown the ‘most inept political management since he became Prime Minister back in 2008’ – see: John Key: The honeymoon 'is over'.

Johnathon Howe, writing in the Manawatu Standard, takes strong issue with Key ‘throwing his toys and threatening to restrict the freedom reporters and Opposition MPs have to question him’. Howe says that a free press which scrutinises authority is what helps keep New Zealand relatively free of corruption, ‘and if Mr Key is unhappy about having his actions questioned, then perhaps he is in the wrong job’ – see: A full transparency maintains freedom. A similar argument is made on the No Right Turn blog: This is not how democracy works.

Predictably Key’s attack on the media hasn’t gone down well in the press gallery.

Tracy Watkins describes it as a Hissy fit at media just doing its job – ‘Mr Key might find it annoying when the media worries at statements made by prime ministers that later turn out not to be true…. Or he could accept the more obvious explanation – that it would be a worrying place if the media no longer saw that as its role’. Colin Espiner writes that the correct targets for anger are closer to home: ‘The real issue is that Key is sounding off because he's angry at what's transpired over the whole Kim Dotcom/GCSB/Ian Fletcher saga. Fair enough. I'd be angry too. But rather than blaming the messenger, the prime minister should be taking a good look in the mirror - and across the road at the State Services Commission’ – see: John Key's media tantrum.

The jury is still out amongst commentators as to whether the GCSB scandal is significantly damaging for Key and National, or whether it’s purely a ‘beltway’ issue of absolutely no interest to the wider public. Matthew Hooton argues that ‘no New Zealand voters outside Wellington’s non-existent beltway give a stuff – rightly or wrongly – about how John Key appointed his new spy boss’ – but pokes fun at the PM’s protestations in a very amusing and smart column, 'I did not have sexual relations with that woman'. John Armstrong takes a similar stance, making an important point about public perception: ‘The procedures of public service recruitment are hardly riveting. Moreover - and this is the truly telling point - if Key has committed a political crime, the public has yet to be convinced there was a truly base motive, such as money, political favour, patronage, or something equally venal.  Key is guilty of cutting corners. He may deserve crucifying for helping a mate - or a mate's mate. But he got nothing else out of it. Finding a job for someone who really did not need his help and who was also more than qualified to do that job does not quite meet most people's definition of real cronyism’ – see: Rennie draws the line on Key's phone call.

Matt McCarten argues otherwise in Drip, drip ... time is running out. He says, ‘This one incident won't kill Key. But from now on he won't get the benefit of the doubt.  Most people thought he was straight and true. Only his diehards and the dim-witted believe that now.  I liken it to a dripping sound - the seeping away of our Prime Minister's integrity’. And for this reason, Kerre McIvor concludes, ‘Key is starting to look like the sort of pleasant, well-groomed young man that my mum loved and my dad loathed on sight - for no other reason than he didn't trust them’ – see: Shoulder tapping is fine, but not amnesia.

For further thoughtful blogposts on these issues, see Russell Brown’s Key Questions and Danyl Mclauchlan’s Conspiracy theory of the day, GCSB timeline edition. And if you want to know more about the man at the centre of Key’s scandal, David Fisher has put together a useful backgrounder on Ian Fletcher – see: Spy who came in from the heat, revealing a background that includes both international intrigue and previous parliamentary scandals. And for the most humorous take on the issue, see Sean Plunket’s John Key: Who are you and why are you in my office?.

Non-government organisations (NGOs) also play a central part in bolstering the integrity of public life, but how healthy is our NGO sector, and does the state foster them as independent organisations – see Laetitia Laubscher’s Democracy Under Threat. And if you want to keep track of the allegations of National stacking the bureaucracy with its friends, see Frank Macskasy’s Crony Watch!.

Overall then, there continue to be many challenges to New Zealand’s number one international ranking for corruption-free status – from questions about SkyCity’s proposed convention centre, John Banks’ relationship with Kim Dotcom, the Hobbit law changes and the immigration allegations involving Shane Jones. Fortunately, these challenges come at the time when the New Zealand branch of Transparency International is undertaking a major stocktake and evaluation of the country’s ‘National Integrity System’ (NIS) – writing up a report on how well all the institutions of government and society help to prevent corruption. (Disclosure: this writer is a Transparency International NZ Board Director, and a researcher on the NIS project). If you want to learn more about the project, you can listen to yesterday’s Radio New Zealand’s interview with Suzanne Snively on Public Service and Integrity.

Other recent important or interesting items include the following:

• Having just finished our longest ever military engagement, it seems the PM was looking at another on the Asian continent – see Audrey Young’s Key says NZ could take part in a Korean war and Hamish Rutherford’s Key tones down war talk.
• Our PM loves photo opportunities, and as usual, Toby Manhire of the Listener is aggregating the best of them here: In Pictures: Key in China. The best photo so far, is of Key and Julia Gillard embracing in China, which Fran O’Sullivan writes, was ‘careful stage-managed’ – see the photo and details: Day One: “It’s like ‘Gone with the Weennd’.
• Grant Robertson’s success in putting John Key on the back foot will soon have some wavering MPs re-thinking their support for David Shearer thinks Martyn Bradbury – see: 6 reasons David Shearer can’t front John Key’s GCSB Brain Fade. David Shearer’s appearance on Q+A in the weekend (see David Shearer interview) may not be much help in shoring up his support and has caused a bit of a splash in the blogosphere – see Cathy Odgers’ Visionary Stuff From Shearer. Brian Edwards blames the interviewer in his final blog: The Last Post – on the little known connection between Ritalin and ‘terrific’ TV interviewing.
• Karl du Fresne is continuing his argument about media political bias – this time in his blogpost, How two highly educated men miss the point – or do they?, but also in a discussion on The Nation – watch: Is Radio New Zealand too left wing?.
• Wrong smelter, wrong power scheme, wrong prime minister – Chris Trotter  gives a Listener columnist a history lesson at the Daily Blog: Following Jane Clifton Down The Memory Hole. For a detailed look at the original sweetheart deals with Comalco, that saw the plant built, read Charles Anderson’s Tracing the history of Tiwai Pt.
• While a 5-year closedown of Tiwai Point may comfort both Southlanders and potential Mighty River Power investors, Rod Oram says an earlier shutdown may make more economic sense for both Rio Tinto and Genesis Energy – see: Key's game of two halves over smelter.
• Rumours of staffing problems for Hekia Parata are reinforced by documents from Parliament’s Speaker which show how, prior to becoming a minister, the the MP went through five staff in two years – see Kate Chapman’s Parata staff lasted 4 months before her rise.
• With the Government clamping down on maritime political protests, environmentalist Nicola Toki looks back at the ‘long history of protest on the sea’ but wonders if we have ‘lost our protest mojo’ – see: The art of protest in New Zealand.
• The upcoming release of the 2013 census results is tipped to show that a majority, or near-majority, do not regard themselves as Christian. But David Farrar draws attention to a recent UMR survey indicating that we’re far from this point yet, and there’s strong gender divide to beliefs – see: Belief in God. (A further disclosure: I am speaking in Christchurch tomorrow night on the topic of ‘The Influence of religion on politics in New Zealand’ as part of a series of public appearances by a leading US political secularist – see: Sean Faircloth Tour.
• Finally, New Zealanders are good at defending the country’s reputation. The latest slur is from a visiting rightwing politician – see Nicole Pryor’s Dane MP labelled racist after NZ visit. One humourous response can be seen in Ben Uffindell & Sebastian Boyle The Civilian satrire, Outrage grows over Danish politician’s Lord of the Rings comments. But forget your gripes over Argo, Will de Cleene had discovered an even greater abuse of New Zealand’s reputation by Hollywood – this time involving our GCSB – see his blogpost, Our Man in the Loop.