Auditor-General Lyn Provost

February 13th, 2016 at 10:00 am by David Farrar

An interesting profile in Stuff of Auditor-General Lyn Provost. An interesting extract:

Police Association president Greg O’Connor initially supported Provost’s appointment, until she was given operational command of three police districts. That, he said, was “like an army contingent in East Timor being run by a bureaucrat”. On reflection, though, he thinks she did “a remarkable job”.

Having a civilian in charge of three districts was controversial at the time, but for O’Connor to say she did a remarkable job is high praise.

Auditor-General to investigate Saudi farm deal

August 19th, 2015 at 7:00 am by David Farrar

The Auditor-General has announced she will look at the following issues around the Saudi farm deal:

  • the amount of public money budgeted and spent on this Partnership, how it has been used, and the outcomes achieved with it;
  • whether the expenditure on services was within the appropriations of Vote Foreign Affairs and Trade, as authorised by Parliament;
  • the procurement and contract management practices used by the Ministry and New Zealand Trade and Enterprise to purchase services relating to the Partnership;
  • whether the services received were in keeping with the business case and contract specifications; and
  • any other related matter that I consider it desirable to inquire into and report on.

I’m glad the AG is investigating, and said I hoped she would.

I think the real question is what outcomes have been achieved from it.

Auditor-General says Rich not conflicted

May 15th, 2015 at 9:00 am by David Farrar

The Auditor-General has stated:

As you know, Katherine Rich has been a member of the board of the Health Promotion Agency (HPA) since July 2012. The HPA is a Crown entity. Mrs Rich is also chief executive of a private sector organisation, the New Zealand Food & Grocery Council (FGC). The FGC promotes the interests of various manufacturers and suppliers of products sold by the grocery trade.

We have received complaints about whether Mrs Rich’s two roles have led to her different interests coming into conflict.

We have considered the issues raised, obtained and reviewed relevant documentation, and spoken with the chair and chief executive of the HPA. We have not found it necessary to interview Mrs Rich.

We are satisfied that there are no matters we need to investigate further. We have not identified problems with the management of conflicts of interest by the HPA.

Particular legal conflict of interest rules that apply to board members of the HPA are set out in the Crown Entities Act 2004, in ss 62-72. In particular, s 62(3)(ca) notes that a person does not have conflict of interest merely because they have “past or current involvement in the relevant sector, industry, or practice.”

In our view, there is a need for rigour and specificity in identifying or analysing whether two different interests conflict. It is not easy to assess a conflict of interest in the abstract. A conflict of interest does not arise simply from a person’s general background, or from their personal or professional involvement in a sector or industry.

Some on the left seem to think anyone from a business sector must be banished from having a voice on health issues!

Most typically, any issue is able to be sufficiently dealt with by the person declaring their interest and withdrawing from participation in the relevant decision. As such, it ought to be rare that a conflict of interest is so pervasive and all-encompassing that a person cannot remain a member of the governing body at all.

Here, we consider it would be too simplistic to assume that the aims and activities of the HPA and FGC are incontrovertibly opposed and utterly incompatible, such that a person who was associated with one organisation was impossibly compromised from any association with the other. Similarly, it would be too vague and indirect to conclude that it is impermissible for Mrs Rich to participate in any matter relating to a broad general subject-matter, such as alcohol or tobacco.

As the Auditor-General says, you deal with conflicts on a case by case matter – now be having a witch hunt to drive someone off the board.

Auditor-General on Whanau Ora

May 6th, 2015 at 11:00 am by David Farrar

The Auditor-General reports:

I chose to report on Whānau Ora because it is an example of innovation and new thinking in service delivery. Whānau Ora was an opportunity for providers of health and social services in the community to operate differently and to support families in deciding their best way forward.

Whānau Ora has been a success for many families who now have a plan to improve their lives. For example, some whānau are working towards getting their young people living and working on their ancestral land. The government spending to achieve this has been small, but the importance for the whānau is significant.

Bringing whānau members together to prepare plans seems to have had benefits that are wider than the plans themselves. For example, reconnected whānau members not only provide each other with support but have also learned where skills and expertise already lie within the whānau. Some whānau have also gained shared experience in goal setting, planning, and managing projects and budgets to achieve their goals.

We wanted to clarify for Parliament and the public what Whānau Ora is, where the funding has gone, and what Whānau Ora has achieved after four years. It was not easy to describe what it is or what it has achieved.

We could not get a consistent explanation of the aims of the initiatives in Whānau Ora from the joint agencies or other people that we spoke to. So far, the situation has been unclear and confusing to many of the public entities and whānau.

So it has been beneficial for many families, but there is no clarity on what the aims are, and how one would define success.

During the first four years, total spending on Whānau Ora was $137.6 million. Delays in spending meant that some of the funds originally intended for whānau and providers did not reach them. Nearly a third of the total spending was on administration (including research and evaluation). In my view, Te Puni Kōkiri could have spent a greater proportion of funds on those people – whānau and providers – who Whānau Ora was meant to help.

A third on admin is far too high. Around 10% should be the aim.

I have no doubt that some commentators will make light of the successes described in this report and make much of the criticisms. However, an innovative idea should not be abandoned just because of implementation problems. I earnestly hope that those involved with the next phase of Whānau Ora are able to take my criticisms on board and learn from them.

Whanau Ora shouldn’t be scrapped necessarily, but it needs to be significantly improved with greater clarity of aims, and greatly reduced administration costs.

Pouring a third of the money intended for families into bureaucracy benefits no-one, but the bureaucracy.

Fran on why the Auditor-General should investigate

December 21st, 2013 at 12:00 pm by David Farrar

Fran O’Sullivan writes:

Auditor-General Lyn Provost is the right person to take inquiries into Len Brown’s relationship with the SkyCity hotels and casino operator to the obvious next stage.

The mayor of Auckland has attempted to brazen his way through the embarrassing detritus exposed by the EY (Ernst & Young) report into some of the implications of his two-year affair with Bevan Chuang.

But that report, emasculated as it was after legal negotiations between Brown’s lawyer and the Auckland Council’s QC, has put new material on the table which must now be investigated by the Auditor-General herself.

I agree.

But in the Auditor-General’s case there is a firm basis on which to make more inquiries of Brown, the mayor’s office and SkyCity. The EY report is fact-based. But it also suffers from the obvious limitation of being a report commissioned by Auckland Council CEO Doug McKay into his boss.

Provost is not constrained by any such relationship and, importantly, has the power to inquire and make relevant comment.

The EY report established some useful facts, but didn’t cover many things. For example there was no asking of the Auckland Art Gallery whether or not the Mayor’s reference was the major reason Chuang was hired.

The EY report – as published – shies away from disclosing whether Brown solicited any of the nine freebies he had in four city hotels or requested any of the 64 upgrades.

The impression by Brown’s public comments is that his wife, Shan Inglis, made most of their hotel bookings.

But it stretches credibility to believe Inglis would have made the booking for her husband’s rendezvous with Chuang in a SkyCity hotel bedroom.

Especially as rumour has it that some of the bookings were for the day, not the night!

EY saves the mayor some embarrassment by failing to distinguish between Brown’s overnight stays and his daytime stays in hotels. A footnote to the report simply says “room nights refers to both night stays and day stays”.

It is unclear whether these so-called “room nights” cover the pop-in arrangements that Brown was said to have when a room was sought for a few hours for him to get away from the pressures of the office.

Pressures of the office?

Dom Post on Jones inquiry

March 13th, 2013 at 6:30 pm by David Farrar

The Dom Post editorial:

Given the paucity of talent within Labour’s ranks and the divisions within the party, Mr Shearer’s desire to restore a supporter to the front bench is understandable.

The public, however, may well have different priorities when it comes time to assess Labour’s fitness to operate the levers of government.

Ms Provost’s investigation found no evidence of corruption, but it did find ample evidence of poor judgment on the part of the former associate minister of immigration.

A harsh summary is not corrupt, just incompetent.

She found Mr Jones acted hastily before he was in possession of all the relevant information, did not consult either police or the Immigration Service despite knowing both were investigating Mr Liu, and failed to document the reasons for his decision.

Immigration and citizenship cases are fraught with danger for ministers because the final say on cases rests with them and because those making representations on behalf of applicants are often their parliamentary colleagues.

It is easy for the perception to develop that it is not what applicants offer New Zealand that is important, but who they know.

Especially when the applicant boasts to the Department that he is mates with MPs, insists on a quick decision despite officials telling him they will recommend no.

In those circumstances the best protection for ministerial reputations and New Zealand’s reputation as a country free of corruption is for the decision-making process to be properly documented.

Mr Jones’ failure to record why he ignored official advice to reject Mr Liu’s application and his failure to even document under which section of the Citizenship Act he granted Mr Liu’s application brought his reputation and that of New Zealand into disrepute.

As Mr Jones observed, officials were also criticised by the auditor-general for failing to adequately brief the minister and assuming he understood his responsibilities. Fair enough. It is as important for them as it is for ministers to follow proper process.

However, having explained their concerns about Mr Liu’s dual identity and the fact he had been red-flagged by Interpol, they had grounds for thinking the minister would put the integrity of New Zealand’s citizenship ahead of his impatience to be done with a vexatious case.

The question voters may want to ask themselves ahead of the next election is would they employ someone with Mr Jones’ impetuous nature to run their company. If not would they trust him to run a government department?
A question that may be answered in time.

The Sky City reports

February 19th, 2013 at 2:32 pm by David Farrar

The Deputy Auditor-General has reported:

The inquiry has considered both the adequacy of the process followed and whether anything substantively wrong has taken place. The main question underlying this inquiry was whether the Government’s decision to negotiate with SkyCity had been influenced by inappropriate considerations, such as connections between political and business leaders.

We have seen no evidence to suggest that the final decision to negotiate with SkyCity was influenced by any inappropriate considerations.

The Opposition will try and ignore this conclusion.

However, we found a range of deficiencies in the advice that the Ministry provided and the steps that officials and Ministers took leading up to that decision. The quality of support that was provided fell short of what we would have expected from the lead government agency on commercial and procurement matters.

And this appears to be very fair criticism. Note that there is no suggestion that the process should be redone. Also none of the other bidders want (as far as I know) for the process to be redone.

The full report is here. A quote:

In our view, the result was that one potential submitter had a clearer understanding of the actual position on a critical issue – that the Government  did not want to fund any capital costs – than any other potential submitters. 

Although this is a fl aw in the process, it might not have had significant consequences. The other submitters still understood that the Government’s finances were constrained, and became more so as 2010 progressed. No other submitter appears to have been likely to be able to adapt their proposal to enable them to fund the full construction costs. We accept that it is unlikely that this flaw made a material difference to the outcome.


Given the nature of the responses, it is likely that the SkyCity proposal was always going to be the most attractive from most perspectives. Indeed, in the course of this inquiry, we have not heard any comment to suggest that other proposers did not understand the reasons why the Government might prefer the SkyCity proposal. …

We accept that officials were acting in good faith to support decision-making by Ministers on some difficult and controversial matters. The fact that the process was unsatisfactory does not automatically mean that the conclusions reached were unsound.

Now this is not to minimise the criticism of the Deputy Auditor-General. MED did not run the process to the standard expected, and the Government should ensure it does so in future. But let’s be very clear that this is a different issue from whether the report of the DAG means the convention centre agreement should not proceed.

Also worth noting:

In the previous Parts, we briefly mentioned that officials have researched the costs of increased gambling and provided advice to Ministers on this. It is not appropriate for us to detail the content of that advice in this report, but we can confirm that we are satisfied that the issues have received adequate attention during the evaluation and negotiation process. As already noted, any reforms of this kind will also be debated publicly and by Parliament before they can be implemented.

Of course the Government and Sky City are yet to agree on a package, so the focus will now be on an agreement being struck, and then legislation proposed to implement it.

The doubled edged audit sword

June 15th, 2012 at 3:16 pm by David Farrar

I write at the NZ Herald:

The decision by the Deputy Auditor-General to inquire into international convention centre tender, more popularly known as the Sky City deal, is a double-edged sword for the Government and the Opposition.

If the Deputy Auditor-General finds that the tender process was not run in a fair way, then it will damage the credibility of the Minister of Tourism. The Minister also, of course, happens to be the Prime Minister. This means adverse findings could strike at the heart of the Government.

However if the Deputy Auditor-General does not conclude there were any significant issues in the awarding of the tender, then it could blunt the opposition attacks on the awarding in principle of the tender to Sky City.

I also note the way different PMs have handled the Audit Office:

The Office of the Auditor-General is a vital one in our constitutional arrangements. It is the public watchdog, and has very wide powers. It has not always endeared itself to the Government of the day. When the Auditor-General found that most parliamentary parties had illegally spent taxpayer money on electioneering, then Prime Minister Helen Clark attacked the finding, saying she does not accept the reasoning in his opinion and judgement, and that he was wrong. She refused to express confidence in his competence, and said he “has a serious credibility problem”.

This response is in stark contrast to the current Prime Minister who said he welcome the inquiry by the Deputy Auditor-General, and was “delighted” with it. 

I still regard those attacks on the Auditor-General as a low point in executive behaviour.

Shearer shafts Jones

June 13th, 2012 at 6:02 pm by David Farrar

NZ Herald reports:

But Mr Shearer said Mr Joyce was being “extraordinarily arrogant in continuing to run this process while an inquiry is going on”.

“To me it beggars belief that he can continue to do this while an inquiry is going on.”

Not only should negotiations be put on hold until the inquiry was complete, but the tender should be reopened begun again from scratch.

He said there was “obviously something dodgy” around the deal “otherwise the Auditor General wouldn’t take a look”.

Deborah Coddington just pointed out that Shearer has just effectively declared Shane Jones is “obviously dodgy”, as Jones is under investigation by the Auditor-General also.

The only thing I can’t work out is did Shearer shaft Jones on purpose, or did he just do it by accident as he didn’t consider the stupidity of his comment?

Deputy Auditor-General to inquire into convention centre tender

June 13th, 2012 at 1:20 pm by David Farrar

The Office of the Auditor-General has announced:

The Deputy Auditor-General, Phillippa Smith, has decided to carry out an inquiry into the expressions of interest (EOI) process for proposals to establish an international convention centre. This document sets out the terms of reference for the inquiry. …

The inquiry will examine:

  • the overall process for seeking and assessing proposals for an international convention centre;
  • the adequacy of the assessment of the likely costs and benefits of each proposal; and
  • any other matters the Deputy Auditor-General considers it desirable to report on.

The inquiry is being carried out under sections 16 and 18(1) of the Public Audit Act 2001. We will not comment while the inquiry is under way, but will publish a report when the inquiry is completed.

The Auditor-General has a small share-holding in Sky City, so hence the Deputy is doing the inquiry.

It is good that DAG is investigating. On the basis of what is known, I don’t think there is a problem – but sunlight is the best disinfectant. We benefit from having a strong and independent Auditor-General and associated office.

It is important that the decision to in principle award the contract to Sky City was made in a sound and fair way. The inquiry will look into that and either confirm it was, or point out deficiencies – either way it will be good to have its conclusions.

Labour and Greens have called for negotiations to halt during the inquiry. The parties may decide to do this, but I don’t see it as a major issue. Even if a agreement is reached, it can only be enacted by Act of Parliament which would take six to 12 months and go through normal select committee scrutiny.

The Jones inquiry

May 31st, 2012 at 10:00 am by David Farrar

The Auditor-General is inquiring into the Jones/Liu affair. The terms of reference are:

The inquiry will examine: 

  • the policies and practices of the Department of Internal Affairs when advising the Minister on applications for citizenship, in particular where the applicant’s ‘good character’ is in question;
  • how and why the Minister decided to grant citizenship to Mr Yan; and
  • any other matters the Auditor-General considers it desirable to report on.

Francis Cooke QC has been appointed to lead the inquiry, which is being carried out under sections 16 and 18(1) of the Public Audit Act 2001. We will publish a report when the inquiry is completed.

It is a pity that the inquiry is into the citizenship issue only, as I think it would have been better to look into the totality of Yan’s dealings with the Government, and with Labour officials such as party fundraiser Shane Te Pou who was paid $5,000 to help Yan get citizenship.

On the positive side, the Auditor-General has the power to require people to provide information and to give evidence under oath.

Liu found not guilty

May 24th, 2012 at 1:00 pm by David Farrar

The Herald reports:

A millionaire businessman at the centre of a political scandal has been found not guilty of immigration fraud charges.

William Yan – also known as Yang Liu and Yong Ming Yan – pleaded not guilty to four charges relating to false declarations on immigration papers in 2001 and 2002 and one of using false written statements to get citizenship.

He was found not guilty on all five charges against him in the High Court in Auckland this morning. …

Justice Timothy Brewer said the case had nothing to do with political connections and commentary.

His decision was based on the evidence in court about whether false declarations had been made on documents.

He said he found that the Crown had not reached the level of proof of beyond reasonable doubt which the judge said was a very high standard.

The court case, as I said before, was on whether Liu lied on his immigration forms. The issue with Shane Jones is whether he granted Liu citizenship against official advice because Liu had donated to various parties and MPs. His explanation that Liu faced execution because he was Falun Gong is very dubious when you consider:

  • The decision was about being a citizen vs a permanent resident, not about staying in the country
  • Falun Gong are strictly banned from gambling, Liu spent over $10m at Sky City
  • There is no written record of the advice Jones claims he was given by an official he seems unable to name

I’ll comment tomorrow on the request for the Auditor-General to investigate. The way the request has been worded is incredibly narrow. Any investigation should be full and robust. I’ll try and blog tomorrow what, at a minimum, an inquiry should look at.

The danger for the Auditor-General is that things could be a repeat of the Ingram Inquiry into Taito Philip Field. Helen Clark set very narrow terms of reference, related to Field’s ministerial role only. Ingram actually did a superb job with his inquiry, but due to his terms of reference found no breach by Field in terms of his ministerial role. As people know, the Police later charged Field and he was convicted of corruption and bribery. Ingram’s report was unfairly seen as a whitewash, because the terms of reference were so narrow.

The essence of the allegations against Jones is that he was influenced by MPs (principally Dover Samuels) to grant citizenship despite the lack of good character, and that part of the motivation for this was because Liu had donated to various MPs and parties. Now it is difficult to see how one can investigate this, unless you can access the donor records of the various political parties. And I am unsure that the Auditor-General has any power over political parties.

Hence I think a full inquiry with powers to compel witnesses and material would be the best way forward, if Shearer and the PM could agree on terms of reference. In the absence of such an inquiry an investigation by the Auditor-General is better than nothing happening – but the terms of reference need to be as wide as possible to ensure it is not a repeat if the Ingram Inquiry.

Will Mallard and Little promise to quit also?

April 5th, 2012 at 10:00 am by David Farrar

Stuff reports:

ACC Minister Judith Collins has promised to quit if she or her office is found to have leaked an email at the centre of a spat over an ACC claimant as the auditor-general launches an investigation into governance at the state insurer.

So will Mallard and Little resign if their allegations it was Collins are found to be untrue?

Mr Little, along with Green MP Kevin Hague, earlier asked Auditor-General Lyn Provost to look into aspects of ACC’s governance that would not be examined by the investigations already under way by the privacy commissioner and being considered by the police.

Ms Provost said yesterday she would hold an inquiry examining aspects of ACC’s governance.

“The inquiry will examine how ACC manages a range of risks at the board level of the organisation. It will also examine how any matters relating to ACC claimant Ms Pullar that came to the attention of the board or individual board members were dealt with,” she said.

As well as this inquiry, Ms Provost intended to develop an audit proposal on ACC’s general operations, with a focus on its case management.

I’m pleased the Auditor-General is investigating.

The billboard probe

December 14th, 2010 at 1:36 pm by David Farrar

Matthew Dearnaley in the NZ Herald reports:

Prime Minister John Key says he supports a proposed inquiry into a donation by a Manukau trust to Auckland Mayor Len Brown’s election campaign.

Mr Key yesterday said he supported the view of Local Government Minister Rodney Hide “that it may be appropriate for the Auditor-General to look at the nature of whether the entity that actually gave [Mr Brown] a donation is capable of doing so or whether it’s within their rules to do so”.

He was referring to a donation of billboard space worth $3375 from the Counties Manukau Pacific Trust, which runs the TelstraClear Pacific Events Centre.

One issue for the Auditor-General might be whether the value of the space is correctly recorded. I know of no billboard space in Auckland that goes for $1,000/mth. $2,000/mth is pretty much the minimum for an average billboard, and my understanding is the size and prominence of the trust billboard is such that the commercial value would be at least $3,000 + GST a month.

So if the billboard was up for three months, then the value of the donation and associated expense should be $10,125.

If the billboard was up for more than three months, then the associated expense for the Brown campaign would remain at $10,125 (as only last three months count), but the donation value would be even great – would be $20,250 if it was for six months.

So these two facts need to be established – the commercial value of the billboard space, and the length of time the billboard was up.

“We are a community charitable trust,” he said. Trust chairman Sir Noel Robinson said no costs were incurred or revenue lost by providing Mr Brown’s campaign with billboard space, which his board had made a decision to provide free to any mayoral candidate who approached it.

This is spin of the highest order. The trust CEO is on the Len Brown campaign team, along with two trustees and possibly a senior trust employee. And you expect us to believe that they would have stuck up John Banks billboards if asked.

The Auditor-General should ask for a copy of the board minutes where this decision was allegedly made.

Even if they made such a decision, it was obviously to give the illusion of political neutrality. Unless they actually wrote to all the other mayoral candidates advising them of the availability of the billboard space, how could they possibly expect another candidate to know that they could ask to use their space.

Mr Brown said yesterday that he was unconcerned about Mr Hide’s intention to ask Ms Provost to look into the trust’s donation.

Excellent. Let the facts be discovered.

Well done the Auditor-General

November 16th, 2010 at 8:13 am by David Farrar

Whale Oil blogs:

Some time ago I sent an OIA request to the Auditor-General for all of their credit card expenses. They ini­tially refused because the Auditor-General is not sub­ject to the OIA.

They have now recon­sid­ered and accord­ingly pro­vided the infor­ma­tion that I requested.

Voluntary compliance with a request, when there is no statutory obligation to do so is great leadership.

Every instance of expense is detailed with who was there and what it was about. Even park­ing dock­ets are fully explained. Com­pare that to Len Brown’s still secret Volare dinner.

Talking of which, has the Ombudsman made a decision yet?

Lyn Provost is the epit­ome of fis­cal rec­ti­tude. She flew Pacific Blue to Port Moresby which is pig of a flight at the best of times and one that no one would be-grudge a busi­ness class fare and/or a Groser/McCully style truck load of piss to soothe the nerves for that flight. But our cheap and fru­gal Auditor-General flew Pacific Blue and bought two sets of sand­wiches, cook­ies and an iced tea for a total of $28.20. That’s a bar­gain no mat­ter how much they charge for an iced tea on Pacific Blue. She even stayed in a dive of a hotel. That’s tak­ing one for the team in any­ones book. …

On the 26th of March 2010 there is an amount of $3 for short term park­ing, this was when her fam­ily came to pick her up at the air­port instead of billing it to Cor­po­rate Cabs for a hundy. She fre­quently gets peo­ple to pick her up from air­ports instead of bill the tax­payer for cab fares.

She is tighter than a fish’s arse and that’s water­proof. Lyn Provost, civil ser­vant, I dub thee The Queen of Mean.

Most recipients of a nickname from Whale Oil are not that happy about it, but in this case I think the Auditor-General will be happy with it.

More seriously, it is great to see the AG aware of the moral leadership role of her office. It is a million years removed from the days of Jeff Chapman, who was actually convicted for fraud.

The Heatley Report

March 30th, 2010 at 2:40 pm by David Farrar

The Auditor-General has published her 20 page report into spending from Phil Heatley’s Ministerial Office.

We found that a total of $1,402 of Mr Heatley’s expenditure – $608 in Vote Ministerial Services and $794 in Vote Parliamentary Service – was outside the rules. In all cases, Mr Heatley thought that the expenditure was within the rules, but he did not understand the rules correctly. In the case of the expenditure in Vote Parliamentary Service, the Parliamentary Service was also administering a rule incorrectly for members of Parliament, and Mr Heatley is not the only member who will have been affected.

That is significant. There may be a few more reimbursements to come.

We found that Mr Heatley generally took care to account for his expenditure appropriately. His Senior Private Secretary took her responsibilities seriously in managing the ministerial office expenditure. On occasion, Mr Heatley’s ministerial office received a reminder from Ministerial Services to submit a late reconciliation of his expenses or invoices or receipts; these were standard reminders that are sent by Ministerial Services to many ministerial offices. The problematic expenditure that we discuss in this report was approved by the relevant officials and was never queried with Mr Heatley or his Senior Private Secretary. For some items of expenditure, it was not clear from the supporting documentation provided that it was outside the
rules, but it was for others.

As in the UK, there has been a culture of parliamentary officials not questioning claims.

We accept that the expenditure outside the rules was not deliberate on the part of Mr Heatley or his ministerial office, and that he had repaid a sum of money before we started our inquiry. He has also personally paid for expenses that are allowed under the rules.

And to be fair to MPs, many of them pay for stuff they could claim, but do not bother to.

Heatley has repaid $2,852, and the AG has ruled that only $1,402 was outside the rules. But

Notwithstanding deficiencies in rules or the systems for administering them, everyone spending public money – in this case Mr Heatley – has a personal responsibility to manage their expenditure appropriately with good judgement. In our view, even though Mr Heatley was sometimes operating under an incorrect understanding of the rules – for example, when his wife and family accompanied him on ministerial business – a more conservative approach that took greater account of how others might perceive his use of public money would have served him better.

I think that is a fair point.

They found five instances of spending outside the rules:

  1. $287 out of $929 spent travelling to Auckland And Queenstown accompanied by family
  2. $251 out of $2,677 spent travelling to Picton and Kaikoura
  3. $70 for wine out of $425 spent attending the National Party Conference
  4. $692 for a child’s travel between Wgtn and Queenstown
  5. $102 for a child’s train and ferry travel between Wellington and Kaikoura

This is a total of $1,402. Note a total of $2,852 has been repaid.

The OAG has clarified that a spouse’s meal and accommodation expenses should only be paid for, if they are attending official functions or meetings with the Minister, but not if they are just accompanying him. This soudns reasonable to me.

For the National Party conference, they ruled that accommodation and meal costs are legitimate expenses as that is part of the parliamentary role of an MP. There was no need to refund the meal. The wine explanation is:

He later wrote “food and beverage” on the eftpos receipt. This was his usual practice when it was not lunch or dinner – it was not necessarily a payment for food and beverage; merely his way of categorising food and beverage-related costs that were not technically lunch or dinner. His Senior Private Secretary assumed that the costs were for dinner and wrote “Minister and spouse – dinner” on the credit card reconciliation form. Mr Heatley certified this form as the card-holder. His Senior Private Secretary told us that there was no intention to misrepresent the situation on the reconciliation form – she had assumed that it was for dinner from what he had written and she did not check it with him. Mr Heatley told us that hedid not read the form carefully before he signed it and that it was a careless rather than dishonest act. …

From our review of Mr Heatley’s expenditure documentation, we can confirm his practice of categorising expenditure on his receipts as “food and beverage” when they were only for beverages such as coffee. However, in our view, Mr Heatley should have taken greater care in ensuring that the description of his expenditure was accurate.

The conclusion seems to be the description was inaccurate but not designed to be misleading.

As for the wine itself:

In our view, the two bottles of wine that Mr Heatley purchased for his table were more in the nature of entertainment costs incurred in the course of parliamentary business. We therefore concluded that the cost of the wine should not have been charged to Vote Ministerial Services. It would have been better to regard it as covered by the expense allowance.

Again I think this is a reasonable approach. This is partly what the expense allowance is for.

Notwithstanding deficiencies in rules or the systems for administering them, everyone spending public money – in this case, Mr Heatley – has a personal responsibility to manage their expenditure appropriately with good judgement. In our view, even though Mr Heatley was operating under an incorrect understanding of the rules when his wife and family accompanied him on ministerial business, a more conservative approach that took greater account of how others might perceive his use of public money would have served him better.

And that sentence is why it is unlikely, in my opinion, Phil will return to Cabinet immediately, or indeed probably this term.

UPDATE: I was wrong. Phil has been reappointed. While I am pleased for him personally, I actually think it is the wrong decision. The thing people hated about Labour was the revolving door nature of Ministerial stand downs.

Canterbury Regional Council Conflicts of Interest

December 22nd, 2009 at 1:00 pm by David Farrar

Th Auditor-General has just ruled that four members of the Canterbury regional Council illegally voted on a resolution that affected them financially (more than normal members of the public).

The report is very interesting for those who deal with conflicts of interests, and doesn’t reflect well on the Councillors. They are somewhat lucky that the AG decided not to prosecute on this occasion.

Auditor-General on English

October 28th, 2009 at 4:23 pm by David Farrar

Am reading full report. The summary says:

The current parliamentary system is designed to establish whether a member of Parliament (MP) maintains a current residence (other than a holiday home) outside Wellington rather than to decide where an MP “lives” in an everyday sense. Traditionally, that residence was in the MP’s electorate.

Yes, this is the essence of it.

Mr English correctly completed the declarations he was required to as an MP, and provided other information on his accommodation arrangements, in order to claim Wellington accommodation costs.


For at least 15 years, the parliamentary rules for claiming accommodation costs have specifically provided for MPs to claim their costs when they buy or rent a property in Wellington. This has enabled a range of practices to arise, including renting from family trusts. The administrative system now includes protections such as a market evaluation of rent and a cap on the total that can be claimed to manage the associated risks. The fact that Mr English was being reimbursed for the cost of renting a house owned by his family trust was not exceptional.

So there is now no doubt that Bill retained eligibility for Wellington accommodation assistance over the years 2000 – 2008.

There is an issue over the Ministerial assistance:

Ministerial Services asked Mr English to sign a declaration that he did not have a pecuniary interest in the family trust. He did so, and attached a copy of the advice he had received about what amounted to a beneficial interest in a trust for the purposes of Standing Orders. Having received that declaration, Ministerial Services got a market evaluation of the rent, took over the existing rental agreement, and provided the house as a ministerial residence.

In our view, the advice that Mr English relied on to make his declaration was not applicable to this situation and was based on too narrow a test for the Ministerial Services’ situation. We consider that Mr English does have an indirect financial interest in the trust.

This issue arose because of Ministerial Services’ evolving practice of renting properties for Ministers combined with the parliamentary rules that enable MPs to rent from family trusts or similar. The two systems do not fit well together.

At Mr English’s request, the rental agreement between Ministerial Services and the trust has now ended. Mr English has reimbursed the rent and other costs that had been paid.

What this basically says is the advice that the house could be leased as a Ministerial House was not correct. This means however that he would still be eligible for the normal parliamentary level assistance of $24,000 a year – however he has confirmed he will not be taking up any assistance.

This reinforces my position that it is much better if MPs do not directly on indirectly own the house they get assistance for. If Bill had moved into Vogel House, or Bolton Street, these issues would haver have occurred I suspect.

The Prime Minister has announced that a new policy is being implemented under which Ministerial Services will no longer provide accommodation directly for Ministers. Instead, Ministerial Services will simply provide a fixed level of financial assistance to Ministers, who will make their own accommodation arrangements. This approach will mean that the question of whether a Minister has a personal financial interest in a property will no longer be relevant, and may help to smooth the interface between the parliamentary and ministerial accommodation entitlements systems.

The news system does sort out any conflict of interest issues.

UPDATE: The full report has more details on the trust issue, and where the advice came from:

He sought advice from the Registrar of the Pecuniary Interests of Members of Parliament on what amounted to a pecuniary interest in a family trust. The Registrar responded with advice that discussed generally what is a beneficial interest in a trust for the purposes of the Standing Orders requirements. …

The Registrar’s advice was based on the definition in Standing Orders of when a beneficial interest in a trust should be declared for the Register of the Pecuniary Interests of Members of Parliament. We have concluded that this was not the right test to apply in this situation, as it is a narrow definition of pecuniary interest for a particular purpose. In general, it is usual to regard an interest held by a spouse or close family member (such as a dependent child) as creating an indirect financial interest. In our view, Mr English has an indirect financial interest in his family trust, because of his relationship with the likely beneficiaries.

So he sought advice from the Registrar for Pecuniary Interests, but that advice was not applicable to the accommodation issue.

The result was that the Crown was renting a property for Mr English from a trust in which he had an interest, and the arrangement was explicitly based on a view that he did not have an interest. Clearly, this was unfortunate. We emphasise that the Minister’s declaration was based on advice. However, in our view, the advice was not directly relevant to this situation. We consider that Ministerial Services should have raised this with the Minister.

Again this is my point about both Bill’s situation, and the Greens Super Fund. Even an indirect relationship is undesirable.

This issue illustrates the different starting points of the two accommodation entitlement systems and that they do not fit well together. Having an interest in a property is not a barrier in the parliamentary system, and protections are in place to manage the risks created by the conflict of interest. The issue has only arisen in the ministerial system because Ministerial Services has moved to rent properties rather than own them and has worked to tailor the housing support it provides to the needs of individual Ministers, including sometimes taking over existing rental arrangements.

The upshot is that the owning the home through your trust was okay for parliamentary rules, but not for Ministerial rules. This really shows why the the two systems need to be streamlined.

Armstrong on English

September 26th, 2009 at 7:15 am by David Farrar

John Armstrong writes in the Weekend Herald:

The time has come for Bill “Double Dipton” English to end the charade.

It has been apparent for a while that it is no longer tenable for him to stipulate his primary place of residence as being in his Clutha-Southland electorate when his real home has long been in Wellington.

I’m a bit surprised by the timing of this, as the Auditor-General is now making inquiries and presumably in time will advise whether or not Bill English has followed the rules correctly.

His highly questionable claim to be an out-of-Wellington MP – a status which made him eligible for an accommodation allowance while in Opposition and which entitles him to taxpayer-funded ministerial accommodation now he is in Government – has become unsustainable in purely political terms.

Of course there is a wider perception issue that goes beyond the rules. But I’m wary of the precedent that gets set if you punish MPs for having a family, and even worse punish them because they chose *at their own expense* to have some of their family live in Wellington with them while they are an MP.

English’s predicament has in part come about because of public expectation that MPs should reside in their electorates. That many don’t will come as a shock to many people. Those who don’t live in their electorates thus feel they have to perpetuate a fiction that they do, especially in large rural seats like English’s which feel isolated from and neglected by Wellington.

I doubt there were many people in Clutha-Southland who were unaware that during most of the year, Bill is in Wellington and his family are also. It was never a secret.

But this is not a new issue, and in fact one that the Electoral Act has been quite explicit about since at least 1956. First we have s 72(6)(b):

The place where, for the purposes of this Act, a person resides shall not change by reason only of the fact that the person is absent from that place for any period because of his or her service or that of his or her spouse, civil union partner, or de facto partner as a member of Parliament

Now this is for the purposes of electoral enrolment, but it shows that long long ago it was recognised that MPs would be forced by their job to reside outside their normal home, and that it was undesirable for this temporary relocation to be deemed a change of primary residence.

We also have s72(10)(a):

In the case of a person who is appointed to be a member of the Executive Council, or who is the spouse, civil union partner, or de facto partner of any person so appointed, the following provisions shall apply notwithstanding anything to the contrary in this section, namely so long as he or she holds that office he or she shall be deemed to continue to reside at the place of residence in respect of which he or she was registered as an elector of an electoral district (in this subsection referred to as the original district), notwithstanding his or her absence therefrom at the seat of Government or otherwise, unless and until he or she duly applies for registration as an elector of another electoral district of which he or she is, apart from the provisions of this paragraph, qualified to be an elector.

This is why both Bill and Mary English (the media have incorrectly reported she is enrolled in Wellington – she is enrolled in Clutha-Southland) are residents of Clutha-Southland for electoral purposes.

Now the electoral district enrolment is not the only test for primary residence. The Auditor-General in 2001 laid out a series of factors. Now these are not black and white in that you must tick 11/11 or 9/11 to be deemed to live in Place A or Place B. Ultimately the Speaker decides on the totality of the factors. They are:

(a) the extent of the MP’s parliamentary duties, and the amount of non-parliamentary time available to the MP to return “home”;

It takes around ten hours return (five hours each way) to get from Parliament to Dipton. And in the last decade English has held senior roles in Government and Opposition with duties around the country. I doubt there is much dispute on this factor that he has little time to return to Dipton, even if his family had stayed there.

(b) the locations where the MP spends most of that nonparliamentary time;

During most of the year it is Wellington, but during the summer break it is Dipton, as I understand it.

(c) the locations where the MP’s current spouse or partner and family live, and where other dependent family members usually live (including where they spend most time, work, or attend school);

And this is clearly Wellington.

(d) the person in whose name (whether the MP, the MP’s spouse or partner, or some other individual or legal entity) each property is owned or rented, and the utilities (e.g., electricity, telephone) are supplied;

I’m not sure but think the Dipton property is in Bill’s name and the Wellington property in the name of the Endeavour Trust.

(e) the level of the MP’s financial commitment to meeting the financial outgoings on each residence, including property maintenance;

Same for both I guess.

(f) the type of accommodation available to the MP at each residence (e.g., boarding, flatting, or full occupation), and who else lives there (other than the MP’s family);

Both are fully available.

(g) the availability of each residence for use by the MP at any time (e.g., whether it is rented out in periods of absence);

As far as I know Dipton is not rented out, during periods of absence. This is a key factor in my eyes. The provision of accommodation in Wellington is designed so that an MP is no better or worse off. If you were renting out your electorate home, then you would be gaining money.

(h) the nature and extent of the MP’s ties to each local community in which he or she has a residence;

I have little doubt Bill will have stronger ties to Dipton than Karori.

(i) the residence where the MP intends or expects to live should he or she cease to be an MP;

Bill has said he will return to Dipton when he is no longer an MP.

(j) the residence where the MP and members of his or her family are registered for electoral purposes; and

Bill and Mary are registered in Clutha-Southland. The children of voting age are enrolled in Wellington Central – as required by law.

(k) for electorate MPs, the location of the electorate.

Which is Clutha-Southland.

Now as I said there is a degree of subjectivity involved, as it is not just a case of ticking all 11 boxes one way or another. You can reasonable argue the merits.

This is why I think it is absolutely correct the Auditor-General is investigating. This is not a bad thing. This is a desirable thing.

Now John Armstrong is right that there is a wider issue of perception, and political judgements have to be made with that in mind. But personally I think it would be desirable to wait for the Auditor-General to report back before rushing to any decisions.

Auditor-general agrees to English investigation

September 25th, 2009 at 1:53 pm by David Farrar

The Dom-Post reports:

Deputy Prime Minister Bill English’s use of his taxpayer-funded accommodation allowance is to come under scrutiny from the auditor-general.

Following a complaint fro Progressive MP Jim Anderton to Auditor-General Lyn Provost about the finance minister claiming out-of-town accommodation expenses, the Office of the Auditor-General confirmed today it would make “preliminary inquiries”.

I’m delighted the Auditor-General has agreed to investigate. It is entirely appropriate she does so as questions of propriety have been raised.

I actually think the Auditor-General should have been asked to investigate much earlier on. In fact it would have been smart politics for Bill English himself to have asked them to investigate a month or so ago.

Complaint to Auditor-General re Anderton

September 25th, 2009 at 12:00 pm by David Farrar

No Minister has a copy of a letter to the Auditor-General asking them to investigate the extra funding Jim Anderton gets (both personally and for expenses) by purporting to be the leader of a political party.

Sadly it will not be successful. Standing Order 34(1) is clear:

Every party in whose interest a member was elected at the preceding general election or at any subsequent by-election is entitled to be recognised as a party for parliamentary purposes.

So under the rules of Parliament, Anderton is entitled to still be seen as a Progressive MP (and Leader) even though he has announced they will not stand a party list in 2011, and has endorsed Labour and encouraged all his members to join Labour.

But as with Bill English and his housing situation, it is not just about the “entitlement”, it is about the perception and Anderton fails on the perception front. He gets an extra $13,500 a year salary and no doubt an extra $2,700 a year superannuation. And his office gets an extra $100,000 a year budget. Total extra cost to the taxpayer over three years is $348,600.

He doesn’t get the difference

March 26th, 2009 at 3:00 pm by David Farrar

No Right Turn says:

Back in 2006, the (then-Labour) government passed the Appropriation (Parliamentary Expenditure Validation) Bill, which retrospectively validated Parliamentary Services expenditure in the wake of a nonsensical, retrospective reinterpretation by the Auditor-General. The rabids in the sewer (and some supposedly outside it) preached revolution.

Today, the (now-National) government introduced the Appropriation (2007/08 Financial Review) Bill, which among other things retrospectively validates various items of unapproved, unappropriated expenditure.

Will we see the same outpouring of outrage from the sewer, or will they finally admit that such retrospective validations are standard procedure and happen almost every year? Hmmm, I wonder…

This is one of the more desperate rewritings of history.  Yes validations are common place, but Idiot/Savant deliberately overlooks the vast differences with this one.

Also he continues to smear and lie about the Auditor-General. The Auditor-General warned parties before the 2005 election about their spending. They ignored him. The opinion of the Auditor-General was backed up by the Solictor-General. And what was truly despeciable is that the Government and certain scyophantic supporters attacked the Auditor-General time and time again claiming he was wrong – and then they went and passed a law which killed off a law suit that would have resulted in a Court deciding if he was right or not.

It is bad enough to attack an Independent Officer if Parliament for doing their job, but to attack them and to support a law change that would stop a court case over whether they are correct is disgusting.

As for the other issue of validation, here are what made this case different:

  1. The MPs voting for validation had personally gained (in a political sense) from the illegal expenditure. They were not disinterested participants. This is totally different to a minor breach by some junior official in a department.
  2. Not all parties had agreed to pay the money back, and in the case of NZ First never paid it back.
  3. The MPs voted down an amendment that would have allowed the Darnton vs Clark lawsuit to continue, so that a court ruling could have been obtained on whether or not the pledge card was illegal.
  4. The MPs who voted to validate kept claiming the expenditure was legal and like Idiot/Savant attacked the Auditor-General, rather than accept the ruling.
  5. The Auditor-General had explicitly warned MPs before the election about their expenditure, and they ignored his advice

Bye Bye Barry

February 18th, 2009 at 7:12 am by David Farrar

The Auditor General’s report into how the Corrections Department manages parole is a shocker:

My staff looked at how the Department managed offenders released on parole. We chose 100 offender case files in the four areas we visited to assess whether probation officers and other staff were managing offenders in keeping with the Department’s requirements. We deliberately included 52 offenders considered to pose a high risk to the public.

In most of those 100 case files, the Department had not followed one or more of its own sentence management requirements. Five of the requirements that my staff checked are the most important, in my view, for keeping the public safe, and one or more of these five requirements had not been followed in most of the 100 cases. There were several cases, some of which I have included in my report, where the Department had not completed important sentence management requirements at each stage of an offender’s parole, and we concluded that the Department was not managing these cases adequately.

They are damning words, coming from the Auditor-General. Equally damning was the response of Minister Judith Collins:

Corrections Minister Judith Collins today asked the State Services Commissioner to establish who is accountable for serious failings identified by the Auditor-General’s report into the management of offenders on parole. …

“I have today asked the State Services Commissioner to work with Corrections Chief Executive Barry Matthews to establish who is accountable for the deficiencies identified in the report and what should be done to restore public confidence.”

Ms Collins has asked the Commissioner to report back within 10 working days.

This is about as subtle as John Cleese. I mean you do not need to run a competition to guess who the State Services Commissioner will find is responsible for management failings in the Department. This must qualify as the most unsubtle ever request to SSC to remove a CEO. But not wihout considerable merit – the OAG report is damning, and the mistakes in this area do and have cost lives.

The Herald reports that Corrections CEO faces the axe:

Barry Matthews’ future as head of Corrections is in serious question, after his Minister Judith Collins pointedly refused to express confidence in him yesterday. …

Ms Collins would say only: “I have confidence Mr Matthews understands exactly just how seriously I am viewing this issue.”

Again, you don’t exactly need a PhD in Politics to read between the lines here.

John Armstrong comments:

Wielding a calculated, but ruthless combination of raw power and tactical guile, Corrections Minister Judith “Crusher” Collins has torn up the public service rulebook and effectively engineered the sacking of her departmental chief executive.

Technically, she cannot fire Barry Matthews, the long-suffering head of the problem-plagued Corrections Department. But “technically” is not a word in this Collins’ dictionary.


But regardless of this, Matthews’ resignation letter should have been on the desk of State Services Commissioner Iain Rennie yesterday, so damning was the Auditor-General’s report on Corrections’ management of its parole responsibilities. …

The report shows the department failing to follow its own procedures in monitoring potentially dangerous prisoners on parole – procedures tightened after the murder of Lower Hutt father-of-two Karl Kuchenbecker by Graeme Burton in January 2007.

This is the scary thing. The audit was done after the Burton fiasco, and was meant to measure the new improved processes in place.

Has United Future paid the money back?

January 26th, 2009 at 1:49 pm by David Farrar

NZ First never paid back the $140,000 + GST it owed the taxpayer.  We know this.

But a reader has reminded me that United Future also still owed some money. In the 2006/07 year they paid back only $31,000 o fthe $64,000 they owed (morally) the Parliamentary Service.

As far as I can tell from their annual report, no repayments were made in 2007/08 but there is a $3,000 other revenue line which might be a repayment.

So how much of the debt has been paid, and when will it be paid in full?

Toad on why the centre-left lost power

November 18th, 2008 at 3:56 pm by David Farrar

Toad from the Greens has an insightful piece as to why the centre-left lost power:

  1. The Taito Phillip Field Affair Allegations of misconduct against Field had been simmering since just before the 2005 election. Instead of implementing a proper investigation with the teeth to interview witnesses under oath, Clark implemented an Claytons inquiry that was widely perceived as a whitewash designed to clear Field. Then despite further very serious allegations, Field was retained in the Labour Caucus right through to February 2007, creating a perception of tolerance of impropriety and possible corruption.

    Dead right. It was a disgrace, and even after the Ingram report they defended Field with Cullen saying he was just working harder for his constituents than National MPs did. Richard Prebble showed the correct way to respond to allegations of corruption around an MP – Helen Clark did the opposite.
  2. The pledge card Labour’s handling of the pledge card and the Auditor-General’s report was appalling. The should have simply admitted “we got it wrong, and we’ll pay the money back” (as the Greens did). Instead, they allowed the pledge card affair to drag on interminably, and were subjected to daily allegations in Parliament of corruption. They hadn’t actually done anthing that most other political parties had done, but their reluctance to own up to their mistake and put it right undermined public confidence in them as a Government.

    They only conceded to pay the money back after they had taken all the flak for resisting. And the attacks on the Auditor-General were disgraceful.

  3. David Benson-Pope Much like Taito Phillip Field actually, although the allegations were not so serious. The perception was created, through Clark’s continued tolerance of Benson-Pope through the “tennis balls affair” in which he had quite clearly been economical with the truth. He was finally dispatched in July 2007 after allegations of him lying to Parliament over matters relating to the appointment of a Communications Manager in the Ministry for the Environment. Clark said at the time, “The way in which certain issues have been handled this week has led to a loss of credibility and on that basis I have accepted Mr Benson-Pope’s offer to stand aside”. Pity for her that she didn’t realise he had lost credibility much earlier.

    Benson-Pope clearly lied about the tennis ball incident, with 11 or so pupils recalling it. And the issue was not whether or not he was a perfect teacher – it was that he called his former pupils liars and denied an incidents. He created all the problems for himself by the way he went on the attack.

  4. The Electoral Finance Act This was handled by Labour in the most appalling way. The original Bill was so poorly drafted that Justice Minister Mark Burton deserved the sack for allowing a Bill that was such a shambles to come before Parliament. He was later quietly stood down, but by that time the damage had been done. Labour railroaded the Bill through Parliament, refusing to consider very pertinent submissions from organisations such as the Human Rights Commission or suggestions from the Green Party who were left with a “take it or leave it” option. This allowed the right to create the perception of the Electoral Finance Bill, and consequently of Labour, being undemocratic – a task which the NZ Herald took up with great gusto.

    Here I will have a go at Toad. The bloody Greens voted for the EFA, and they voted against many good amendments that would have made it a lot better. They sacrificed any moral high ground on electoral issues with their shameful kowtowing to Labour. If the Greens had the backbone at the beginning to say we won’t vote for this at first reading unless you consult with all parties, then the EFA would never have happened. I’m actually getting sick of how many people on the left are now decrying the EFA, when they never spoke up at the time.

    And while the final EFA was bad enough, I agree Mark Burton should have been shot for letting the original EFB through – that was the most draconian law I have ever seen with statutory declaraions needed to send an e-mail to a mate on a topical issue.

  5. Winston Peters Need I say more. Clark stood by Peters as allegation after allegation of impropriety and, in the last few weeks, even corruption emerged against Peters. In her first and second terms he would have been promptly dispatched, at least temporarily, for allegations of far less substance, but her continued tolerance of him as a Minister allowed her and her government to be tarred with the same brush as Peters.

    Here at least the Greens can take a bow, and did put some heat on Clark. Clark’s legacy will always be tained by her disgraceful defence of Peters, and her total lack of concern with the evidence from the Serious Fraud Office and the Muerant papers about possible policies for cash.