Dr Bryce Edwards: The Rise and Fall of a top lobbying PR firm

The top lobbying-PR firm SenateSHJ has closed its doors today for the last time, announcing that it has gone into liquidation. The reaction from those in the same or similar industries in the Capital has been one of shock and sympathy.

However, the wider public might not be mourning the demise of the lobbying business. In fact, they might be excused for indulging in some schadenfreude over lobbyists being made unemployed. After all, it’s not often that Wellington’s vested interests and those representing the rich and powerful lose their jobs.

I was asked by the media for a comment yesterday on SenateSHJ’s demise, alongside the reported decline in government contracts for the Four Big Consultancies. I said: “I don’t think there will be many New Zealanders that will be feeling sorry for unemployed lobbyists and PR people. In fact, there seems to be a growing public suspicion of consultancy firms like Deloitte, EY, PwC, and KPMG. So if these firms are no longer thriving off the taxpayer, this isn’t necessarily something to mourn.”

This was reported by The Post today. I explained that although the public is rightfully sympathetic to all the Wellington cafes and other service providers that are struggling due to the cuts to the public service economy, there might not be the same concern for lobbying and consulting firms. I said that sympathy is likely to be reduced because “SenateSHJ has been a major and wealthy political-corporate entity that some might even regard as being parasitical.”

It is hard to gauge to what extent the public mood is unfavourable towards firms losing lucrative government contracts and lobbying clients. But when the story originally broke yesterday on Newsroom’s website, the only two comments left by readers were very negative. Richard Hamilton simply stated, “This is great news for democracy in New Zealand.” Tam Irvine wrote, “Couldn’t have happened to nicer, more useful people…”

The SenateSHJ hybrid lobbying-consulting business

SenateSHJ has been a typical hybrid lobbyist-PR-consulting firm. By carrying out lobbying alongside other consultancy functions, such firms have been able to contract with both business and government clients, creating a synergy in which the firm is strongly connected with money and power in Wellington. On the one hand, they can lobby politicians on behalf of business, and on the other hand, they can get political contracts and work for different government agencies.

This political-business model became controversial late last year when RNZ’s Guyon Espiner uncovered that SenateSHJ had several conflicts of interest in being contracted to various government agencies. The most contentious was SenateSHJ being contracted (for over $300,000) by the Commerce Commission on highly sensitive competition issues even though the lobbying firm had clients in the same industries being regulated – especially the energy and building sectors. Oil and gas companies were some of their main clients.

Senate also had grocery sector clients, but that didn’t stop them from being employed by the Commerce Commission in this policy regulation area, either. Espiner found they had been paid about $100,000 for work on the Commission’s supermarket competition investigation.

SenateSHJ also worked closely with the Labour Government in other reform areas. The Three Waters programme was particularly lucrative, with the agency paid over $600,000 to help sell the changes to the public. Similarly, SenateSHJ was paid $245,000 for advice on health restructuring.

They also carried out more routine public service functions – one report showed that the Ministry of Justice paid SenateSHJ “$128,000 a year just to upload court decisions to a government website.” And Senate also had strong ties with the NZ Transport Agency and the Department of Conservation.

One of the founding partners in SenateSHJ, Tracey Bridges, also caused controversy because she was also employed part-time in Prime Minister Jacinda Ardern’s Beehive office as a spin-doctor while still maintaining SenateHJ business clients. This came to light because she was also undertaking political commentary as a regular participant on RNZ. The problem was that Bridges failed to disclose she was working for Labour while giving her analysis of the politics of the day.

This practice of “wearing different hats,” i.e., having different business-PR-consultancy roles, is intrinsic to the SenateSHJ model. However, many other lobbying firms in Wellington also practice it, as it helps create networks of power and influence.

This often means that conflicts of interest occur. But because New Zealand doesn’t have the rules and regulations that other comparable countries have, the industry continues to operate like the “wild west,” doing what it wants. And often, it’s the ministers and staff in the Beehive that are assisting them.

The Rise of SenateSHJ and its influence

The rise of consultancy firms that mix public relations and lobbying really took off during the Fourth Labour Government, when David Lange and Roger Douglas carried out their business-friendly neoliberal reforms. This is where SenateSHJ’s origins can be found.

The then Labour Government was close to a company called “Strategos” involving former union leader Rob Campbell and former National Cabinet Minister Derek Quigley. Such firms performed an array of political tasks that could help governments, political parties, and businesses—especially connect them all.

It was essentially the first big shift towards the professionalisation of politics that now totally dominates. New Zealand political analyst Bruce Jesson wrote about this at the time: “These consultancy and public relations firms work for government departments. They organise political campaigns for the government. They represent businesses to the government and provide businesses with political advice. Their techniques span a variety of skills: market research, polling, advertising campaigns, ‘networking’, lobbying, and political and economic analysis. These political consultants have become the new mediators in an age of commercialised politics”.

After the fall of the Fourth Labour Government in 1990, a new firm became the leading player in Wellington – “Logos Public Relations”. It had become the fashion for all such consultancy firms to have classical Greek-sounding names – the other two big ones were Communicor and Consultus (also run by Labour-friendly former television journalists). It was this Logos firm that the Fourth National Government of Jim Bolger and Ruth Richardson used.

The Logos firm eventually merged into “GRC Partners + Porter Novelli,” which is now another top lobbying firm that is especially powerful in Wellington but also part of a global group. However, some of Logos’ key staff set up their own new agency, Senate Communications, which later merged with an Australian company, Scaffidi Hugh-Jones, to become SenateSHJ in 2003.

The firm soon became infamous in the Wellington Beltway for its annual parties, where MPs, journalists, and public servants could network. As Julie Jacobson says in The Post today, SenateSJH’s “annual party featured a roll-call of Wellington’s movers and shakers… Senate’s parties were renowned”. Other events were also put on for politicians to meet with clients.

Ministers in the last Labour Government attended some of these functions. For example, various parties, dinners, and private events organised by SenateSHJ involved attendance and sometimes speeches from Grant Robertson, Andrew Little, Megan Woods, Michael Wood, James Shaw, David Parker, Damien O'Connor, and Priyanca Radhakrishnan.

In lobbying circles, the staff at SenateSHJ were referred to as “Senators.” Some of them have become very influential. Most of them came from either jobs at Parliament or working in the media—or sometimes both.

There have been some high-profile ones. For example, David Cormack has gone on to set up his own lobbying-PR firm, run the Green Party’s communications for a while, and now also do political commentary. Sarah Maguire did Jacinda Ardern’s political communications for a while, writes political commentary for the Spinoff, and now has set up her own firm.

Most are very highly regarded for what they do in Wellington. Notably in 2022 SenateSHJ was awarded “BusinessDesk Consultancy of the Year” at its industry awards.

Why has SenateSHJ gone out of business?

I’m quoted in The Post today explaining that the change of government has led to major changes for lobbying and consultancy businesses in the Capital. Most obviously, the cuts to the public service and the new Government’s directive to agencies not to contract out to consultancies have led to a major problem for many businesses. As The Post reports today, “Forty roles in PwC’s government advisory team were cut in April.”

Yet SenateSHJ’s demise is due to more than just the cutbacks in the public service. It’s also related to the changing political alignments of lobbying firms. In the past, lobbying firms tended to carefully stay on board with both sides of politics – left and right. However, the trend in recent years has been for lobbyists to align themselves more with one side of the political spectrum. We’ve, therefore, seen the rise of hyper-partisan lobbyists.

The lobbyist at the forefront of this trend has been Neale Jones, who left his plum role as Chief of Staff for Jacinda Ardern when she became PM so that he could more lucratively attract corporate clients that wanted the ear of the new Government. He went straight through the revolving door, working on the Nineth Floor of the Beehive on Friday and lobbying the Beehive on Monday.

When changes of government occur, however, the lobbyists aligned to a particular side have to be able to pivot politically. In the case of Jones, I explained to The Post that Jones’ lobbying firm, Capital Government Relations has cleverly “hired former National staffer Ben Thomas and former NZ First MP Fletcher Tabuteau. Other consultancy-lobbyists — such as SenateSHJ — haven’t been so nimble, and have found that they have less access to the Beehive, and therefore have been less attractive for business.”

By being so strongly tied to the last Labour Government, SenateSHJ lost its access to the new National-led Government. Clients, therefore, shift to the lobbying firms that can get them the ear of the latest politicians in power.

SenateSHJ shows why we need to regulate lobbying

There has been a growing public demand for lobbying activities to be better regulated and restrained. However, firms like SenateSHJ have been battling to prevent this. Notably, in 2012, when lobbying regulation was proposed in Parliament, SenateSHJ led efforts against this.

This year, one of SenateSHJ’s last public acts was to help the Ministry of Justice put together a proposed “Voluntary Code of Conduct” for lobbyists in New Zealand. This was released in mid-March but was immediately criticised as extremely weak. It contained platitudinous and wishy-washy directives such as “Act honestly and fairly,” “Acknowledge that others may wish to have their say,” and “Be accurate and truthful.” Those favouring regulating lobbying saw the code of conduct as a debacle, as it didn’t help with accountability, self-regulation, or dealing with conflicts of interest.

It seems that lobbyists are too self-serving to be able to self-regulate, which is what many politicians have been hoping they would do. SenateSHJ epitomised this problem.

Ironically, SenateSHJ promoted itself as specialising in “reputation management,” promising to help clients improve their public integrity. But in the end, SenateSHJ and the rest of the lobbying industry are widely seen as part of the machinery of government and vested interests. Therefore, no one should shed any tears when such companies go under. They merely symbolise how the political system is looking rather morally bankrupt.

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. This article was first published HERE