Political Roundup: NZ First scandal raises integrity issues for the Government

There are many electoral and political questions arising out of the current NZ First donations scandal. Will the imbroglio tarnish the reputation and popularity of Winston Peters and his party? Or will Peters and his colleagues be exonerated, allowing NZ First to climb back up the moral and polling ladder for the next election?

But the big political questions are about its impact on the Government’s credibility and popularity. And is Prime Minister Jacinda Ardern adequately dealing with the matter?
Yesterday’s Political Roundup column laid out the substance of the issue – see: What's going on with NZ First's mysterious donations?

This highlighted that such donation arrangements in a government political party raised the prospects of possible corruption in the current administration. If so, then the question becomes one of whether the Prime Minister should be dealing with the matter.

Ardern has been deflecting on this, suggesting that the issue is nothing to do with her, because it involves another political party, NZ First, not her own. And she is leaving the matter to the Electoral Commission.

Some political commentators say this isn’t good enough. On Tuesday, Danyl Mclauchlan argued that such an approach would fall short given the seriousness of the situation: “the matter of whether or not she presides over a corrupt government is not a matter for another party or office. The integrity of the government is the prime minister’s responsibility” – see: The NZ First donations scandal is very serious, and won’t let Jacinda Ardern hide.

Mclauchlan put forward some alternative approaches that Ardern could take: “She could ask the auditor general to find out whether these donations influenced the spending of government funds. She could call for the Privileges Committee to determine how these donations were solicited whether they’ve generated conflicts of interest that were not disclosed, and whether they’ve caused ministers to mislead parliament. And she could suspend ministers from their portfolios while these investigations are being carried out.”

He also suggested that calling a snap election might be desirable for Labour: “One of the things that destroyed the Helen Clark government’s credibility was the endless drip feed. The allegations of secrecy, illegality, deceit and corruption just kept coming. And now this government is trapped in the same political hostage situation, with the same politician, facing accusations of engaging in the exact same practices. An early election might be worth the risk if the alternative is a year of ongoing leaks and allegations resulting in a contest that makes Simon Bridges prime minister.”

On the same day, Matthew Hooton came out with a similar argument, saying that although Ardern and her Labour colleagues will be inclined to just “batten down the hatches, await further events and hope it goes away”, they would be “better advised to act boldly and decisively now” and call an election for before Christmas – see: The case for a snap election (paywalled).

A pre-Christmas election seems unlikely now, given the time required for administering a poll. But Hooton’s argument that an early poll was likely to be advantageous to Labour had some logic: “With both Ardern and Bridges ruling out working with NZ First afterwards, a December election would be a straight drag race between Labour and the Greens in the left lane and National and Act in the right. The overwhelming majority of polls suggest a Labour-Green Government would be victorious, one surely more able to advance Ardern's personal policy agenda than the failing status quo.”

The alternative, he argued might be a corrosive situation in which further leaks about NZ First’s financial arrangements occur, and people continue to speculate on how wealthy donors might be nefariously benefitting under the current government. He warned that “the irresistible combination of the nation's kingmaker, significant amounts of money, unnamed businesspeople and lack of transparency will drive the story on over the months ahead.”

Hooton has written again this morning in the Herald challenging the PM’s argument that she has no constitutional role in dealing with her ministerial colleagues’ political donation arrangements. He points to the Cabinet Manual, which acts as the constitutional job description for the PM, saying that she has clear responsibility for ensuring her ministers aren’t connected to unethical political fundraising – see: Winston Peters must tell — but Jacinda Ardern must ask (paywalled).

Here’s Hooton’s key point about Ardern’s constitutional obligations: “Ministers are at all times accountable to the Prime Minister. The manual makes clear that this accountability extends not just to ministers acting in a ministerial capacity, but also in a political or personal capacity. The required standard of behaviour is to uphold ‘the highest ethical standards’. Even tougher, ministers must not just in fact uphold the highest ethical standards, but be seen to do so. The perception of a breach of ethics is treated the same way as an actual one.”

In Hooton’s view, Ardern is shirking her responsibility, and has essentially adopted a questionable modus operandi of “Don’t ask; don’t tell” with regard to her coalition partner. He also points to some other questionable actions by the PM, such as hiring lobbyists in key roles, again where it appears she has operated a “Don’t ask; don’t tell” policy in terms of potential conflicts of interests.

A different view is held by former Labour Party president Mike Williams, who is quoted in the Herald today saying the NZ First scandal “has utterly nothing to do with the PM… And there's nothing she can do about it and nothing she should do. It's a party matter, not a Cabinet matter” – see Derek Cheng’s in-depth article, Helen Clark weighs in on NZ First donations saga (paywalled).

Nonetheless, Williams admits there is a definite possibility that Ardern and her government will be tarnished by the political donations arrangements in NZ First. He says: “That's the price you pay when you get into bed with other political parties. They have the ability to embarrass you and there's nothing you can do about it. That's MMP”.

Newsroom political editor Sam Sachdeva also sees the potential for damage to the whole Government “if there were even the perception that they may have been influenced by private donations without declaring a conflict of interest” – see: Peters allegations another political toothache for PM. But he also says at this stage “there is not enough evidence in the public arena for that conclusion to be drawn just yet – and breathless talk of a snap election before Christmas is premature to say the least”.

Sachdeva suggests that even if the situation gets worse for NZ First – with a police or Serious Fraud Office investigation – this “would allow the Prime Minister to cite ongoing investigations as a reason not to take action”. But, generally, if the scandal drags on, it won’t be good for Ardern’s administration.

In another column, Sachdeva also backs up Ardern’s lack of action against her NZ First ministers, saying “Ardern should not be expected to lop off Peters’ head at the first opportunity, given the tenets of natural justice” – see: Stonewalling on donations saga but many questions remain. Nonetheless, he says, “it is fair to ask whether she would have been quite so evasive if similar allegations were made against a member of her own caucus, or even the Greens.”

Sachdeva believes the pressure might be about to come off the Government: “Parliament is in recess next week too, meaning no pesky questions from the Opposition and fewer chances for journalists to snap at their heels.”

Audrey Young reports on the dilemma that Ardern faced in answering questions in Parliament this week on the allegations, saying she had to simply deflect rather than give an answer to Simon Bridges’ repeated question of whether “she had confidence that Deputy Prime Minister Winston has acted within the law at all times” – see: The one question Jacinda Ardern could not afford to answer (paywalled).

According to Young, Ardern “vowed and declared it would not be proper for one political party, Labour, to inquire into the practices of another, New Zealand First. She was leaving that to the independent agencies.” Young explains the PM’s reluctance to be upfront: “To answer No would have been unthinkable. To answer Yes would have been untruthful when she has no way of knowing.”

Some commentators are calling on Ardern to take a harder line against alleged misbehaviour by her NZ First coalition partner. Heather du Plessis-Allan outlines a number of questionable actions by NZ First ministers, and says: “The Prime Minister needs to act. She needs to draw a line in the sand with New Zealand First. The list of bad behaviour from this party over the last two years is growing intolerably long” – see: PM must take a stand against NZ First.

Du Plessis-Allan concludes: “The Electoral Commission is looking into the donations matter and will draw conclusions, but regardless, now that the commission is involved, the Prime Minister must take a stand. She cannot simply say she doesn’t know what’s going on and that’s not for her to answer. When Helen Clark was PM and there were questions about donations to NZ First, she stripped Peters of his portfolios.”

Parallels are increasingly being drawn with such former governments in which Peters served and became embroiled in scandals. Former Cabinet minister Peter Dunne has blogged about how previous coalition prime ministers have either appeased Peters (Jim Bolger and Helen Clark) or taken a hardline with him (Jenny Shipley), with varying results – see: NZ First donations scandal. Dunne suggests that Ardern is following the Bolger/Clark line of appeasement, which he believes will become increasingly untenable as the scandal drags on.

Here’s Dunne’s main point: “While there is scant evidence this row is doing the Labour Party collateral damage at the moment, it is really only a matter of time, unless things are quickly tidied up. But the Prime Minister’s problem is that by then it may be too late for her. Already, she is being lambasted in some quarters for being too laid back in her dealings with New Zealand First Ministers and some of their more egregious behaviours, although this does overlook some of the realities of holding a coalition government together. Nevertheless, it could become increasingly difficult for her to maintain a dignified silence on this issue without looking weak and ineffectual, as is already being suggested”.

Also, appearing on the AM Show, Dunne suggested that Ardern was in a bind, due to the leverage that NZ First has in the coalition: “It suggests that New Zealand First does hold all the power, does play all the cards. I think that's the problem that Labour's got in all of this… They can't control the situation, it's going from bad to worse in the public mind as far as New Zealand First appears, and that's going to start dragging the Government down with it” – see James Fyfe: ‘Leopards don't change their spots’ – Peter Dunne on Winston Peters.

While Dunne sympathises with Ardern, saying “It's a very difficult position to be in”, Herald journalist Derek Cheng says “All this is a headache that Prime Minister Jacinda Ardern doesn't need” – see: NZ First donations and the danger of history repeating (paywalled).

Cheng says not only is there immense “risk of political damage to NZ First”, but the whole scandal could contribute to the downfall of the Labour-led government, as it did back in 2008 when a similar scandal embroiled Peters in the Helen Clark administration.

Here’s Cheng’s useful discussion of that possibility: “The last thing NZ First or Labour will want is a repeat of 2008, when the donations scandal dominated the election, NZ First's vote fell to 4 per cent, and National won the Treasury benches after John Key ruled out working with NZ First. Peters will be hoping that the Electoral Commission will report back well before the 2020 campaign and clear the party of any wrongdoing, so that he can justifiably crow to the heavens about how wronged he was. If the issue remains unresolved by Decision 2020, however, the public may very well consider the party – and the Government – to be damaged goods. And history may very well repeat.”

Finally, could all this be a case of the Establishment wanting to politically kill off Winston Peters (and the coalition Government) through nefarious means? For the conspiracy-style theories on this, see Chris Trotter’s two blog posts, The second (and final?) crucifixion of Winston Peters and A bloody great political story (from a parallel universe).

Dr Bryce Edwards is a politics lecturer at Victoria University and director of Critical Politics, a project focused on researching New Zealand politics and society.