Corruption is pecuniary interest masked as public interest

When the rotting house crisis hit NZ, the government of the day knew they had to do something. Unfortunately, there were no MPs with much experience in the building industry, and the likewise the Ministry of Business, Innovation and Employment lacked expertise in construction. They turned to the very industry that had caused the crisis in the first place. While the media and pundits blamed “cowboys”, meaning small, independent contractors with a ute, dog and cellphone, facts showed the failure came from the big players who advocated untreated radiata pine, no-eve buildings and designs that allowed water in, but did not dry out before the wood started to rot and the building began to mould.

Those industries were represented by lobbyists in the form of trade associations, and they took advantage of the ignorance of elected officials and public services in MBIE to write rules that served their pecuniary interest at the expense of home buyers. It hit at every level, and created the affordable housing crisis.

Need for a Public Impact Advocate at the Table

When standards are written, the Committee should include a public-impact specialist, deeply knowledgeable in the particular industry, armed with the power of veto – meaning their role at the committee table is to say No, on behalf of the people who have to pay in time or money because of how the rule is written.

Every committee, department, agency and other government or quasi government agency should have an ex-officio advocate. These the powers must extend not only to when the rule is written, but after the fact, when the public encounters the barrier created by government and makes a formal complaint. Bad rules, complicated rules, rules that require consultants to negotiate simple processes, unfair rules, rules that demand significant delays and rules that can be rewritten to achieve the same outcome without red tape should all be fair game for the public impact advocate.

Independent Authority

The Authority should be funded with tax dollars, and each political party in Parliament shall appoint one representative to the Authority Board to serve four-year terms. The board’s charter should make clear it serves the people, not the politicians or the power structure, and its staffing should seek out well-informed specialists who understand their particular industry but are neither beholden to it, or have an insider’s relationship with it.

The authority should be empowered to actively solicit public feedback where government is seen as the problem not the solution. This includes local government and special entities. It should be granted the power of investigation, where claimed barriers of commercial sensitivity, confidential information or privacy have no standing.

The authority shall have negative authority only – to say no, to cancel. It may identify changes that would not attract a veto, but not impose them. It may however, take matters directly to Parliament with recommendations for new law. The authority should have the right to take personnel matters to the personnel’s senior management. In some cases, bad rules are promulgated by problematic public servants. They may need education, or in a personnel review, found unsuited for the office they hold, or unsuited to work in government. There needs to be a mechanism to identify such people and remove them from positions where they do not serve the public interest.

This practice is an inherent conflict of interest:

 We invite organisations that represent the views of a large – usually national – group with a common interest in the area being addressed by the standards solution to nominate a representative for the committee. We review nominations and select committee members from them.       Standards NZ

Yet Standards NZ seems oblivious because it is so normal in NZ. 

The Fox Guarding the Hen House – (cc) by John Cole, NC Newsline

Case Study: How standards are written

The above quote in the cartoon comes directly from Standards NZ web page on New Zealand standards development. There seems to be no awareness either of the inherent conflict of interest, nor any examination of the outcomes that create barriers to competition and substantially increase costs to ordinary Kiwis.

The policy of Standards NZ is to establish a committee made up of representatives of the trade organisations that advocate for the pecuniary interest of their members. This is a bit like inviting the foxes to design and build the chook house.

The outcome is Fortress NZ, where artificial barriers to overseas competition are erected. NZ’s population and geography is the size of the US state of Colorado,  thus companies that make far superior and more affordable products, due to their economies of scale and higher standards (especially in the EU) take one look at NZ and give it a pass – just what the committee members want.

Small scale entrepreneurs try to import better products – such as German made joinery, but the barriers prove insurmountable. BRANZ testing must be conducted and paid for before the small-scale importer can earn their first dollar. The local competition will pull every string they can – and there are many – to thwart the competition. The upshot is the affordable housing crisis. The losers are the struggling class. In the end, many middle-level earners give up and move to Australia.

The same game rigging has stifled the financial markets, where FMA rules tilt the playing field to the big banks and the sophisticated investors. Ditto the food industry, and soon the natural products industry. Even the classic car industry in NZ, that was world-renowned, has been killed by the draconian repair certifier rules.