Just watch what you say

The Minister of Revenue did not like a couple of columns in the New Zealand Herald from National Party affiliated people - Ministers of former National governments. 

Recall that the Herald also runs columns from the left, including Labour-affiliated. But that isn't the point here. 

Here's the letter, signed by the Minister of Revenue as Minister of Revenue, courtesy of Simeon Brown on Twitter.

The Government is currently progressing legislation on media regulation, and will be introducing legislation on media funding (the Google/Facebook link tax mess). 

The newspapers are generally supportive of stealing from Google and Facebook to help pay their bills, but have expressed concerns about the media regulation bill. 

Stuff chief executive Sinead Boucher said the moves had the potential to “significantly impact independent New Zealand media companies and our journalists”.

“Professional independent New Zealand media companies are already heavily regulated. Further regulation of the news media is wasteful and could impact press freedom.

“The Government’s focus should be on regulating the business practices, content and business models of the social platforms which are under-regulated, publish enormous volumes of harmful content, and are not subject to already strict laws governing New Zealand media companies and journalists.”

So media regulation is currently in-play, as is legislation that would affect media revenues. 

The Herald publishes a couple columns that Minister David Parker does not like, and they get a rebuke from the Minister in their letters section. 

Cabinet decisions are coming on bits of legislation directly affecting the Herald. Minister Parker is in Cabinet. 

Surely the Herald shouldn't infer from this rebuke that the Herald should be careful about criticising the government, lest the legislation that will directly affect them and that is currently in-play be affected.

Because you could only infer that in a banana republic - a tinpot little Pacific country. 

Maybe you should worry about it if you were in the kind of country where the Minister of Broadcasting and Media makes threats to platforms that they ought to 'voluntarily' give more money to his preferred media companies. 

But certainly not in New Zealand.

Because that sort of thing just doesn't happen here. 

Even more innovative than I'd thought

In last week's Insights newsletter, I celebrated public sector innovation and entrepreneurship. But I'd underappreciated just how innovative folks have been!

I'd written:

Entrepreneurship is highly rated. My son’s school even renamed their NCEA Level 1 economics paper “Entrepreneurial economics” and their accounting paper “Entrepreneurial finance.”

But entrepreneurship remains underrated. Entrepreneurs’ alertness to opportunity, and determination to see it through, are a fundamental source of rising living standards. 

Public sector entrepreneurialism often goes unnoticed. Results may not always be as desirable as in the private sector, but who are we to judge?

So let us recognise some remarkable public sector entrepreneurship.

Public sector bodies traditionally did not get involved in electioneering. But that missed an opportunity! Supporting a candidate who supports the agency’s views could make both better off.

Local government candidates extolling the merits of new cycleways feature in NZTA advertisements. The ads will have to stop running during the regulated period, but name and face recognition count for a lot. Voter memories might be short, but they aren’t that short.

It’s an innovative move that, somehow, seems allowed by law. So why shouldn’t they?

Public funding of sympathetic documentaries about Members of Parliament who are sympathetic to public funding of documentaries? It’s obvious win-win in hindsight, but it took entrepreneurial alertness to spot the opportunity. Kudos to New Zealand On Air.

And let’s not forget EECA’s exceptional achievement earlier this year. Deeming a consultant’s presentation as mere opinion, and out-of-scope of my OIA request, rather than in-scope advice? A masterstroke!

The Wiri alcohol licensing trust has been promoting candidates for local body elections – including election to their own board.

Unlike some other licensing trusts, Wiri has no monopoly on local alcohol sales. But friendly councillors would be helpful when central government considers tighter alcohol restrictions.

Local campaigner Nick Smale complained Wiri’s actions were unethical. But should we blame the Trust? They discovered an opportunity. That kind of gumption should be celebrated rather than discouraged.

Monopoly licensing trusts able to earn cartel-like rents could follow Wiri’s entrepreneurial example. In 2014, the Auditor General said they were “probably the least scrutinised part of the public sector.”

Lack of oversight provides tremendous opportunity for entrepreneurial innovation. Why not recycle trust cartel profits directly into billboard and radio campaigns for friendly candidates? It’s an entrepreneurial opportunity ready to be taken up.

So stop complaining about a moribund public sector. Innovation is all around us. You need only be alert to see it.

If New Zealand’s high schools taught civics, they could even rename it “Entrepreneurial politics”.

That bit about NZTA not running ads featuring candidates during the regulated period? They've been more innovative than that. And why shouldn't they? Nobody will tell them that they shouldn't, not even the Public Service Commissioner who's presumably perfectly pleased with their conduct. [Important update below!]

Jem Traylen over at BusinessDesk has been all over this file, most recently on Monday. Jem writes:

Such are the slow machinations of the state at these lofty levels, particularly when it seems the public service has embarrassed its political masters for the third time on the same issue of political neutrality in government advertising. 

Meanwhile, we’ve had ads featuring local body politicians running as early as January in a local government election year, with some as recently as Sept 2. 

The formal election period commenced on July 8 – nearly three months after Hughes was first notified of the situation by the NZ Taxpayers’ Union's April 12 complaint.

And I'd left out all of the wonderful innovations by the Mahuta-Ormsby family, and by the bureaus very happy to accommodate New Zealand's shift away from the rule of law, and from impartial and impersonal institutions, back toward kin-based contracting norms that do wonders for development. 

Raise a toast to all of these spectacular innovators. They will lead the country into a new age. 

Update: The Public Service Commissioner has weighed in!

Thou shalt not suffer a conservative on your Board

Stuff reports on how Wellington works, and how the consensus is enforced. Former NZIER CE Laurence Kubiak has long been a patron of the arts. He's been Chair of the NZ Symphony Orchestra Board since 2019.

But he joined the Board of the New Zealand Taxpayers' Union in January. 

And Labour will not suffer a witch to live.

In December last year Kubiak advised the NZSO and the Ministry for Culture and Heritage that he accepted an appointment to the Taxpayers’ Union board, starting in January this year.

The ministry then informed Arts Minister Carmel Sepuloni by way of verbal update in a regular officials’ meeting shortly thereafter, according to ministry spokeswoman Emily Fabling.

Kubiak said he was then contacted by officials prior to his term as the NZSO chairperson ending on May 31 this year, saying the minister wanted to make some changes to the NZSO board, among other boards.

Kubiak said he asked whether there was any specific reason why his contract was not being renewed, and asked whether there was any issue with his governance of the NZSO, to which he said he was told: “absolutely not”. “[They] wanted to make changes. [It was] nothing more than that,” he said. “We serve at the minister’s pleasure.”

He told officials he was prepared to stay on until a replacement had been appointed, however that had not happened as of Monday.

Kubiak said it was “often hard to judge the timeline on these things” and there was a “large bureaucratic process” behind board appointments of agencies like the NZSO.

I don't know whether National should be pushing Sepuloni on this, or taking inspiration from her. 

National could, now, start drawing up an enemies list. 

All of the affiliations that would render someone no longer be suitable on various Boards, come a change in government, for Boards that serve at the Minister's pleasure. 

I'd really prefer that governments not play this game, but only one side playing it may be worse than both playing it. 

Afternoon roundup

I've got tabs, they're multiplying. And I'm losing all control - why can't Chrome be as good as it was a decade ago?

So time to clear them. The worthies:

• The ag sector's plan for dealing with ag emission pricing was released yesterday. I'm still thinking through this one. It is definitely not a first-best. Trying to figure out whether it's a second-best or a fifth-best. Executive Summary here, full report here. Stuff covers it here and here, and here with very minor comment from me. And here's BusinessDesk.
• Prohibitionists get mad that Emerson's Brewery donated to a breast cancer research fund. I'm pleasantly surprised that there's a cancer charity that cares more about cancer than about anti-alcohol activism. 
• Labour's proposals around supermarkets are populist nonsense. I worry that they're a foreshadowing of what's coming down the track for more sectors. Labour's falling in the polls, the next year will bring some horrible combination of high inflation and higher unemployment, and an election's due for 2023. Populist stuff like this will be tempting. 
• If water takes were under a cap-and-trade regime, this sort of thing would be better policed.
• A Grand Inquisitor has been appointed who seems likely to be very diligent. 
• America's welfare system has some worse EMTR cliffs than New Zealand's.
• The Ministry of Health continues to be a dangerous clown-show. 
• Winnipeg has a new slogan: 'It's made from what's real.' Bartley Kives ahs a thread of alternatives...
• Set density restrictions on bars and outlets, create rents for incumbents. Tullock's Trap. 
• The Commerce Commission has published submissions on regulatory barriers to entry in key building supplies. The Affordable Building Coalition's submission is very good.
• Maybe it would be a good idea to make it easier for foreign-trained GPs to practice in New Zealand? Maybe?
• There's maybe one degree of separation between everyone in New Zealand but come on.

It isn't good

The Auditor General confirms the general open secret around Wellington about shameless conflicts of interest in covid test procurement. 

It's good that he's written it down. 

He's unlikely to be sued for defamation by anyone involved. 

Nobody else has been able to say much, because while everyone knows, nobody who could officially know it would ever go on record, because they worried about being punished by the Ministry of Health in repeated games. 

Pattrick Smellie provides an excellent summary at BusinessDesk. You should subscribe to BusinessDesk.

Multiple poorly managed conflicts of interest, no formal procurement plan, and a failure to properly appoint a probity auditor are among the failings in the health ministry’s procurement of saliva testing in a report published today by the Office of the Auditor General (OAG). 

The watchdog makes a number of damning findings and expresses “serious concerns” about the way the ministry conducted the highly controversial $60 million contract to provide saliva testing that was awarded to Asia Pacific Healthcare Group (APHG) in May. 

Among key findings was that four of the five people on the panel selecting the saliva testing provider had declared possible conflicts of interest, including “past and current employment relationships with staff from potential respondents or associated laboratories”.

RNZ also reports on it. The Auditor General's discussion is here. 

So.

Rako's saliva testing was up and running from January. We could have been running accurate saliva-based PCR testing at scale since then. The incompetent Ministry of Health got bad advice from incompetent advisors who had not been able to make PCR saliva testing work on their own. That led Bloomfield to repeatedly make assertions about the inaccuracy of saliva testing at the 1pm standups. He was wrong every time. 

Then they ran a fundamentally flawed procurement process riddled with conflicts of interest that led to the awarding of the saliva testing contract to a provider with which the Ministry was well familiar, but which had no appropriately validated test. 

We still have no deployment at scale of saliva-based PCR testing. Rako provides its testing to private clients. 

We could have had mass deployment of far more rapid, and accurate, saliva-based PCR testing in every outbreak since January. It would have found and stopped things faster. But the incompetent Ministry of Health just did not want to. Remember that speed in getting results back matters. It helps in contact tracing. And it helps in avoiding test hesitancy. If you figure you're going to be stuck home for 2-3 days waiting on a test result because of a sniffle, will you bother? No. Test hesitance matters - though we have no clue in this case whether the likelihood of being stuck waiting for results was the specific barrier in Stratford. 

And now we have a large outbreak that is out of control and that has little prospect of the governments' getting back on top of. We could have had mass deployment of saliva-based PCR testing in South Auckland when this all started, as surveillance. That too could have caught things before it got out of control. But a different government-preferred advisor said it would be racist to run surveillance testing in the place where it would be necessary. And they didn't want to deal with Rako anyway, and they had nothing else as options. 

Yesterday, Select Committee reported back on the COVID-19 Public Health Response Amendment Bill (No 2). Labour dominates the committee. And so the Committee reported back that they see no problem in giving the government the power to just go and requisition all of Rako's test materials and testing capacity. I'd explained here all the problems in that part of the legislation. My submission to the Select Committee is here. 

I understand that one view is that the requisitioning bit is seen as no big deal, by the incompetent Ministry of Health and by the people who are happy to take advice from the incompetent Ministry of Health, because similar arrangements often get worked into procurement contracts in health. But there is a fundamental difference between a contractual deal where part of the bargain is that the government can compel supply at a fixed price in a surge, and just imposing that without any contract. If it's worked into the contracting, it works into the price. People take the deal or they don't. 

So we've wound up with botched procurement on covid testing, no real capacity to deploy at scale, massive public health cost, and consequent threats enacted through legislation to just steal all of the testing capacity from the provider who can deploy at scale. 

I do not understand how New Zealand maintains a clean record on corruption indices. Is everywhere else really that much worse? Or is it that passing legislation allowing this kind of expropriation doesn't count as corruption because it's all in the open and legitimized by Parliament?

Taking tests

The least-bad potential explanation for what the government is up to, in its rushed legislation that would give it the power to expropriate Rako Science's testing setup, runs as follows.

Suppose that, as Director General of Health, or the Minister of Health (who knows where this came from), you finally FINALLY figured out that most of your advisors on saliva-based testing are, in fact, utter idiots. They have led you astray for almost a year. All that stuff about saliva PCR testing not being that reliable was wrong, even if DG Health announced it as truth from the podium of truth. It's just that your idiot advisors couldn't figure out how to make it work themselves so spent the past year trash-talking it. And suppose you also figured out that there really only is one game in town if you want to scale up to a ton of testing that meets international ISO standards. And you've finally FINALLY figured out that you actually need a metric shit-ton of testing capacity. Because you only decide to do anything about an outbreak when there is an outbreak. Not before.

When you finally realise that you need to contract for tons and tons of testing capacity, and the only possible reliable supplier of an international-standard validated test in New Zealand is the company you have been utterly screwing over for the past year, well, you might just be a bit worried that prices could be higher than you'd like. 

In that case, having backstop ability to requisition testing from them at a price that you deem fair is a bit like the public works act, but worse. But you hope not to have to use it and that some negotiated contract could work. 

That would be the least-evil explanation for the powers the government is giving itself. 

There are, of course, more evil explanations. But I don't think there are less-evil ones. 

They brought the legislation 29 September, without telling Rako. Rako found out about it on 5 October. Submissions close Monday. The government is giving itself the power to steal all of Rako's kit: requisition their materials, requisition tests. 

I wrote it up as this week's Insights column.

There’s an old saying that makes the rounds now and again, with various attributions. “First they ignore you, then they laugh at you, then they fight you, then you win.”

I wonder how this one is going to end for Rako Science. I desperately hope it ends well. If it does not, it will be an utter travesty of justice.

The Initiative has long been keen on better Covid testing methods. They featured again in my report, released this week.

The University of Illinois’s SHIELD protocol saliva-based PCR testing rolled out very successfully in August 2020.

By late 2020, Rako Science had brought it here, under licence. By January, Rako was providing accurate and rapid PCR testing for private clients under contract, with a test validated to ISO15189 standard.

Rako had offered its testing services to the Ministry of Health in December 2020.

First they ignored Rako.

When Rako’s deployment spread through early 2021, the Director General of Health made erroneous statements, perhaps through simple mistake, at 1pm briefings about the accuracy of saliva-based PCR testing.

Then they laughed at Rako.

When it became increasingly obvious that it was impossible to scale up nasal swab-based testing in any practicable way, the Ministry of Health set a procurement process for saliva-based PCR testing. That process is the subject of a complaint by Winston Peters to the Auditor General.

And, for months, according to Rako, the Ministry ignored or denied requests from Rako to link Rako’s test results into the nationally integrated reporting system.

Then they fought Rako.

Last week, on 29 September, the Government introduced the COVID-19 Public Health Response Amendment Bill (No 2) into Parliament.

Rako found out about it on 5 October. Submissions close Monday 11 October.

Section 11 of the Bill provides the Government with the ability to requisition Rako’s materials and services, compensating the company at a deemed “market price”. Existing contracts with private hospitals for testing might need to be voided, come the requisition order.

On a charitable and optimistic interpretation, the Government has finally realised that it needs to contract for a massive amount of testing and does not want to have to negotiate with the provider of the only test validated to the appropriate ISO standard.

On a more frightening one, the Government is preparing to quasi-nationalise the provider they fought for so long.

Let’s hope Rako wins this one. If they don’t, we all lose.

BusinessDesk also has it, because Pattrick there has been the single best journalist in the country in following this file. Here is a snippet, you should subscribe. 

How else to explain parts of the COVID-19 Public Health Response Amendment Bill (No 2), tabled in Parliament last week, which would give the health ministry remarkable new powers to commandeer the use of private laboratories’ testing capacity? 

The bill proposes that the director general of health have power to make an order – and provide compensation – to a private laboratory to “undertake testing solely for the purposes of the public health response to covid-19 while subject to the order ... whether or not the laboratory is contracted by the Crown for that purpose”.  

It proposes the ministry be able to demand that any and all private test results be available for its national database.  

This sort of draconian drafting doesn't happen by accident and has the potential to produce results that could be both highly ironic and commercially damaging, depending on your perspective. 

Imagine, for example, if the Ministry of Health were effectively to commandeer the saliva testing resources of Rako Science to ramp up the national testing effort, having fended the company off by any means possible ever since its highly accurate saliva test became available last year. 

Rather than contracting for the service, the ministry would simply be obliged to "compensate" such a provider for their trouble. Watch this space.

Jonathan Milne at Newsroom also has it here. He quotes Rako's Leon Grice:

"There is other legislation where the Government can come in and expropriate or requisition private property – that's the Public Works Act. But that has more protections, like a process to determine a market rate that the Government must pay.... They can just insist we give up our stock and our reagents and our premises that we need to do our work."

If you care about the rule of law in New Zealand, and about the Covid response, you might consider submitting. 

If you haven't time to do anything else, just telling them that it is wrong to propose stealing the testing system that they spend months and months deriding might be nice. 

If you have more time, reminding them that they ought at least be indemnifying Rako against all of the breach of contract messes that will result if the government steals Rako's testing capacity, taking testing capacity away from the private hospitals and others who have paid for this service, causing a breach of contract, after having told Rako repeatedly not to reserve testing capacity for any government need and not to scale up for it - well, that could be a nice addition too. 

On a straight-econ side, even the least-evil explanation above is terrible. 

If investing in testing capacity is high risk, because the government will spend a year crapping all over you, telling people not to contract with you, telling media at the 1 PM Podium of Truth sessions that your testing system isn't reliable, because you're not their preferred supplier - and then the government FINALLY figures out that they might need to get a ton of testing from you? 

Well, at least some return on that risky-as-hell investment is in order if you want anybody to be willing to take similar risks in future. 

None of the international corruption indices understand how New Zealand works.

I'll be submitting on Monday. I'll probably write more on this for next week's Newsroom column. It stinks. 

Morning roundup

This morning's worthies:

• Michael Reddell in defence of capital charges and higher public sector discount rates. Bottom line: you will have nonsense if public sector entities don't have to account for their costs of capital. 


• Construction and Corruption: the game. Based on Montreal's construction sector. 

  Each player is a Construction boss, responsible for a Construction contract on each turn. If you do not finish your contract, you keep it, and get paid again the turn after.
  
  The incentive is to keep your work unfinished as long as possible. Bosses can send their workers to opposing players’ sites, and finish their work instead. Thus the dynamic of the game is ‘screw your neighbour,’ with the added element that players’ cash totals are secret. Each turn also holds an election for mayor, who can punish their opponents, and reward supporters.

  Relevant to the environment in which SNC-Lavalin grew up.


• Insurance rationing in Wellington. Why is this market not clearing on prices? Are there just fixed costs in contracting for greater reinsurance coverage?


• The perils of woke governance. Kerry McDonald on some of the dangers in the wellbeing approach. 


• Duncan Greive on Ian Taylor and computer science innovation at Otago Uni


• 100 females for every 72 males in Australian universities in 2016.

Oh Canada

This week's column in the Initiative's newsletter covers the latest Canadian scandal.

Oh Canada

Partisanship is a powerful and deadly drug. Canada is the latest in a too-lengthy list of places badly in need of rehab.

In response to harsh criticism of his involvement in and handling of a corruption scandal, Canadian Prime Minister Justin Trudeau told his Party’s supporters this week that his policy agenda is too important to risk.

Canadian political parties have been too quick to identify the good of the party with the good of the country. As Canadian columnist Paul Wells put it, “a country gets into trouble when it turns every question into an electoral question.”

So what happened?

Last week, Judy Wilson-Raybould, Mr Trudeau’s former Attorney-General and Minister of Justice, testified that the Liberal Party hierarchy, from the Prime Minister down, pressured her to go easy on politically powerful Quebec-based engineering firm SNC-Lavalin.

Facing Canadian prosecution for bribery in Libya, SNC-Lavalin threatened to shift its headquarters out of Quebec. With a Quebec election in the offing and a federal election to come, the loss of a corporate headquarters and associated jobs was too great a political threat. So the Liberals’ enforcers strongly suggested that the Attorney-General enter into a more accommodating arrangement with the firm.

This week, a second cabinet minister stepped down over the same issue, saying she could not defend the Cabinet’s decisions as required under Cabinet responsibility without compromising herself, or the constitution.

On Monday, Prime Minister Trudeau noted that he regretted her decision, that his government was thinking hard about the SNC-Lavalin case, but that it is vitally important to the national interest that the Liberals be re-elected.

In short, good Liberals should be happy to sweep the matter under the carpet to avoid letting the Conservative Party win the coming election.

No price of power is too high to pay if you have convinced yourself that the entire fate of the country is at stake. What is a little erosion of constitutional norms and the rule of law if the nation hangs in the balance?

The question should really be reversed: what is the nation if its political elite quietly condones gross impropriety in pursuit of partisan interest?

We in New Zealand are fortunate that nobody can credibly pretend that a change in government portends the end of days.

But it is up to all of us never to allow our politicians to let partisan electoral ends justify questionable policy means. 

It has long been considered racist, or at best impolite, for those outside of Quebec to point to the obvious corruption problems in Quebec.

During the sponsorship scandal of the late 1990s and early 2000s, Chretien's Liberal government broke standard financial administration rules to funnel money to parts of Quebec at risk of voting for independence. The fall of Paul Martin's Liberal government and three fraud cases ultimately followed.

Maybe you could have then claimed that the country really was at stake.

But that doesn't explain the 2008 Conservative-led prorogation crisis, in which Harper prorogued Parliament to delay a confidence vote, or Paul Martin's 2005 trick in delaying a confidence vote to give give himself enough time to buy a floor-crosser with a Cabinet slot.

America's in far worse shape, sure. But everybody needs to be on guard.

Oh Canada

Time flies in politics. Wasn't it just yesterday that Justin Trudeau heralded a new approach to politics?

Yesterday, Jody Wilson-Raybould, who served as Trudeau's Attorney-General until very recently, testified that the Liberal Party apparatus, from Trudeau on down, pressured her to pursue leniency when it came to SNC-Lavalan - a politically well connected Montreal-headquartered firm. The firm threatened to move its headquarters if prosecuted, in the middle of a provincial election.

Here's Andrew Coyne

It was clear from the first line of Jody Wilson-Raybould’s testimony: the Trudeau government is now officially in crisis, the jobs of several of its top officials hanging by a thread.

The former attorney general did not merely offer her “perspective” with regard to the SNC-Lavalin affair, as the prime minister had airily suggested beforehand. She presented damning evidence, based on verbatim texts, contemporaneous notes, and detailed personal recollections, of “a consistent and sustained effort by many people within the government to seek to politically interfere in the exercise of prosecutorial discretion in my role as the attorney general of Canada in an inappropriate effort to secure a Deferred Prosecution Agreement with SNC-Lavalin.”

This was not just inappropriate pressure by this official or that minister. It appears to have been a whole-of-government effort to wear down her resistance, if not intimidate her into submission, involving 11 different people, 10 phone calls, multiple meetings, emails, text messages, the works.

It was not just a one-time event, but continued for months, long after the decision had been made — after the director of public prosecutions, Kathleen Roussel, had decided against offering SNC-Lavalin a DPA, after Wilson-Raybould had decided against overruling her, indeed even after the matter had become the subject of judicial proceedings, SNC-Lavalin having challenged the DPP’s decision in court.

Here's Paul Wells

The dangerous files are never the obscure ones. Scandals don’t happen in the weird little corners of government, in amateur sport or in crop science. They happen on the issues a prime minister cares most about, because everyone gets the message that the rules matter less than the result.

It’s a constant in politics. In 2016 I took one look at Bill Morneau’s first budget and wrote this: “The sponsorship scandal of the late Chrétien years was possible because it was obvious to every scoundrel with Liberal friends that spending on national unity would not receive close scrutiny from a government that was desperate to be seen doing something on the file. A government that considers the scale of its spending to be proof of its virtue is an easy mark for hucksters and worse.”

It wasn’t a perfect prediction. I kind of expected the hucksters and worse to be outside government. Unless the Trudeau Liberals can produce persuasive evidence that Jody Wilson-Raybould is an utter fabulist (and frankly, I now expect several to try), her testimony before the Commons Justice Committee establishes pretty clearly that the hucksters and worse were running the show. Led by the grinning legatee who taints the Prime Ministers’ office.

When I was a kid in Manitoba, it really felt like the country was run by a corrupt aristocracy along the Ottawa-Montreal corridor, with a handful of family and company names always showing up in anything that mattered. That was part of what fuelled Preston Manning's Reform Party.

Wilson-Raybould's testimony is pretty consistent with how we thought the place really ran.

Wells has another lesson relevant well beyond Canada's borders:

I’ve never met a Liberal yet who doesn’t reliably confuse his electoral skin with the national interest. So much of what Trudeau and his minions have done in the last year stems from that instinct. Take the ludicrous half-billion-dollar bailout for people in my line of work, never explained, sprung out of nowhere in Morneau’s fall economic update—or as I now like to think of it, between Trudeau advisor Mathieu Bouchard’s meeting (yet another one) with Prince and Michael Wernick’s chat with Wilson-Raybould. You can get a lot of op-eds written with that kind of dough. Take the cool billion the Canada Infrastructure Bank coughed up to pay for a politically popular and impeccably well-connected transit project around Montreal. That money appeared, from a brand-new bank that has not funded a single other project and did not then yet have a CEO [Update, Thursday: Wrong! It had had a CEO since last May – pw], on the day before Philippe Couillard launched the Quebec election campaign. It is now impossible to believe on faith that the Canada Infrastructure Bank is not a wholly-owned subsidiary of Ben Chin, Mathieu Bouchard, Katie Telford and Justin Trudeau.

But anyway, back to partisanship. Liberals and their many friends across the land will insist that all this behaviour must have no real-world repercussions because the other side cannot be permitted to gain the upper hand. And similarly, a lot of battle-hardened opponents of the Liberals will call for the jails to be opened up to welcome fresh Liberal meat. Fortunately, there is indeed an election coming up, and I’m content to let voters decide the partisan affiliation of the next government. I offer them no counsel.

But we get to draw our own conclusions as citizens. What the former attorney general described tonight is a sickeningly smug protection racket whose participants must have been astonished when she refused to play along. If a company can rewrite the Criminal Code to get out of a trial whose start date was set before the legislation was drafted, all because a doomed Quebec government has its appointment with the voter, then which excesses are not permitted, under the same justification? If a Clerk of the Privy Council can claim with a straight face that ten calls and meetings with the attorney general, during which massive job loss, an angry PM and a lost election are threatened, don’t constitute interference, then what on earth would interference look like? Tonight I talked with two former public servants whose records rival Michael Wernick’s. Both were flat astonished that he seems not to have pushed back against this deeply disturbing, and plainly widespread, behaviour.

Conflation of the party interest with the national interest is dangerous. This kind of corruption fuels populism.

Those keen on a bit more of the background should read Colby Cosh on the problems Canada gets by having the Minister of Justice also serve as Attorney General:

What does this mean? It means that if you are the prime minister’s trusted old chum who does his dirty work, it is all right for you to visit a mere minister of justice, operating in that capacity, and to tell her what the boss wants done for crude partisan reasons. But it is quite strictly forbidden to do that to an attorney general.

In matters of hiring or statute-writing, you can go ahead, kick down her door, and tell her “Orillia needs more red-headed Hungarian judges!” or “There really oughta be a law against candy.” When it comes to prosecutions — when madame has her attorney general hat on — it is very different. You, as a sunny-ways enforcer, are not even supposed to provide unsolicited advice or hints from the prime minister. The PM may be the minister of justice’s boss, but he is not in the chain of command between the attorney general and the sovereign at all.

And listen to Andrew Coyne here:

Stat Juking revisited

I'd reckoned you'd need a bit of stats-fu to find evidence of police juking of the crime statistics. Turns out there was an easier way. Bevan Hurley reports that the Herald on Sunday got a copy of a report showing that Counties Manukau police had been fiddling the burglary numbers by recoding burglaries as less serious offences. 

About 700 burglaries were “recoded” in the Counties Manukau south area over three years, an internal police investigation has found. It found that about 70 per cent of the time, the offences should have remained burglaries.

The revelations will be an embarrassment for Police Commissioner Mike Bush, who was district commander of the area at the time, although he was not responsible for overseeing the coding.

Police have not said why the statistics were altered, but say staff were not under instruction to do so. Tolley denied police were under political pressure to reduce burglary statistics.

You don't need overt political pressure to get this kind of outcome, just KPIs with strong enough incentives. On the plus side, they were caught. On the down side, I can't see how lower level staff doing the coding would have any incentive to muck the stats around unless they were getting pushed by those whose KPIs did provide such incentive. It would be really interesting to read the full report.

The review listed dozens of examples where break-ins and attempted burglaries were downgraded, including one case where police failed to follow up after a witness gave them a burglar’s registration number.

The review found the burglary recoding rates in Counties Manukau south at the time were 15 per cent to 30 per cent whereas other areas typically recoded about 5 per cent.

So where last week's rumours were about failing to pursue charges, which wouldn't have mattered for stats based on recorded complaints, downgrading the complaints to less serious offences would matter.

I'd be curious to know what kinds of lesser offences were artificially inflated to keep the burglary numbers down.

I hope that the Police stats units have informed any researchers who'd been using the incorrect figures of the updated and corrected series. Anything that relied too heavily on 2009-2012 Manukau data is now going to have to be re-done.

The Herald on Sunday broke the story on the 13th. Their version is gated. The Stuff version, which notes "It was reported" rather than crediting the Herald, is here.

PBRF rorts

Martin Lally of the University of Victoria at Wellington forwards the following email, which I have published here with his permission. I do not know anything about the claims there made, but they are consistent with rumours that floated around concerning the prior PBRF round and ... shenanigans around contracting allowing some universities to count people overseas towards their portfolio.

Dear colleagues  

I am sending this email in the interests of correcting some rumours that I have heard.   Over the past several weeks, I have heard claims from a number of senior staff in the University to the effect that Victoria University management have varied or sought to vary the employment contracts of a number of staff who are not active researchers, so as to ensure their temporary absence from the University at the June 2012 PBRF census date and thereby to improve the University’s PBRF result.  If true, such actions would clearly violate the spirit of the PBRF process and the Tertiary Education Commission requires universities to observe both the letter and the spirit of the process.  In short, any such actions would constitute accounting fraud.  

My first reaction to these (second-hand) claims was scepticism.  However, upon speaking to some people who had direct knowledge of some of these events, I was left satisfied well beyond a reasonable doubt that some such events had occurred.  Accordingly I conveyed my concerns to both the Tertiary Education Commission and the University Council.  As a result, the Chancellor has appointed a QC to investigate the allegations and provide a report to him; naturally I hope to see a copy of the report in due course.  I have been interviewed by the QC and have provided him with an overview of the information in my possession, but in such a way as to protect the confidentiality of my sources.  

Martin

I hope that the QC finds everything at Vic is fine, and that similar diligence is pursued at other universities. Some places would use a QC to find ways of rorting the system; it's a credit to Vic [and, in particular, those on Vic's Council that worked toward this outcome] that they're ensuring that individual units' incentives to rort the system do not work to denigrate the institution's overall reputation.

Battling corruption

The World Bank's CommGAP blog notes a neat anti-corruption campaign in India: withdrawing the consent of the victim.

According to Anand, the idea was first conceived by an Indian physics professor at the University of Maryland, who, in his travels around India, realized how widespread bribery was and wanted to do something about it. He came up with the idea of printing zero-denomination notes and handing them out to officials whenever he was asked for kickbacks as a way to show his resistance. Anand took this idea further: to print them en masse, widely publicize them, and give them out to the Indian people. He thought these notes would be a way to get people to show their disapproval of public service delivery dependent on bribes. The notes did just that. The first batch of 25,000 notes were met with such demand that 5th Pillar has ended up distributing one million zero-rupee notes to date since it began this initiative. Along the way, the organization has collected many stories from people using them to successfully resist engaging in bribery.

One such story was our earlier case about the old lady and her troubles with the Revenue Department official over a land title. Fed up with requests for bribes and equipped with a zero rupee note, the old lady handed the note to the official. He was stunned. Remarkably, the official stood up from his seat, offered her a chair, offered her tea and gave her the title she had been seeking for the last year and a half to obtain without success. Had the zero rupee note reached the old lady sooner, her granddaughter could have started college on schedule and avoided the consequence of delaying her education for two years. In another experience, a corrupt official in a district in Tamil Nadu was so frightened on seeing the zero rupee note that he returned all the bribe money he had collected for establishing a new electricity connection back to the no longer compliant citizen.

The victim of corruption signals that he or she is the type that will report the corrupt official, and the official backs down. Why didn't this work without the note? The note signals that the bearer knows how to report the corrupt official:

Anand believes that the success of the notes lies in the willingness of the people to use them. People are willing to stand up against the practice that has become so commonplace because they are no longer afraid: first, they have nothing to lose, and secondly, they know that this initiative is being backed up by an organization—that is, they are not alone in this fight.

This last point—people knowing that they are not alone in the fight—seems to be the biggest hurdle when it comes to transforming norms vis-à-vis corruption. For people to speak up against corruption that has become institutionalized within society, they must know that there are others who are just as fed up and frustrated with the system. Once they realize that they are not alone, they also realize that this battle is not unbeatable. Then, a path opens up—a path that can pave the way for relatively simple ideas like the zero rupee notes to turn into a powerful social statement against petty corruption.

The notes are distributed by 5th Pillar, who print their contact details on the notes.

HT: Oxfam

Eroding our Clean Green image: corruption edition [updated]

Kiwi readers will already know that former Immigration Minister and Labour Party MP Philip Field was yesterday convicted of corruption. Long story short, he took bribes from poor Thai workers, in the form of unpaid labour on his houses, in exchange for his facilitating their visas. I have little to add beyond what Stephen Franks and David Farrar have already said on the issue.

The bigger scandal for me isn't the corruption; it's that the previous government did everything it could to prevent any kind of serious investigation of charges against Field. Do check the above Farrar post.

Helen Clark couldn't easily fire Field for the same reason that she couldn't fire Winston Peters, whose false declarations of political donations earned him Parliament's censure and should have cost him his position as Foreign Minister - Peters was "stood down" but never fired, letting him keep the Ministerial Baubles of Office.

Labour's coalition governed by a rather narrow margin. In a 121 seat Parliament, Labour (50 seats) plus NZ First (7 seats) plus United Future (3 seats) plus Jim Anderton (1) adds up to 61 seats. Clark kicked Field out not for corruption, but because he signaled running for a new party in the next election. Kicking him out meant that the supply and confidence agreement with the Greens became rather important; it's not implausible that Labour was forced into supporting Sue Bradford's anti-smacking bill because of this. Had Clark done the right thing and kicked Peters out, she would have lost all of NZ First, requiring her to get both the Greens AND Maori on side.

And so we have another pernicious effect of MMP: encouraging corruption, or at least massively discouraging its punishment. Governments in First Past the Post systems tend to be strong enough to withstand losing an MP or two if need be. Not so under MMP; we expect minimal winning coalitions. And so another chalk-mark in favour of John Key's building a broader coalition: he can credibly kick anybody out, and even lose either all of ACT or all of the Maori Party's support, and still govern. While this means that ACT cannot really constrain National against silly things like forcing the superannuation fund to invest ridiculous amounts domestically, it also has upsides.

Kiwis like to go on about their clean image. Transparency International ranks us well, at least for now. I don't expect nonsense of this sort under the current administration, mostly because Key has arranged things such that he cannot be in the pinch Clark was in. We'll see what happens after the next election.

Update: Farrar notes that Labour was winning confidence votes by a margin of about a dozen at the time (ie, Greens and Maori Parties tended to vote with the Government). It does make a difference, though, whether the party's block vote is inframarginal or marginal. In the latter case, the negotiating position changes; wishing to avoid such a change may well have contributed to Clark's not sacking Field.

Vote-buying deal of the day: Mattresses!

Latest reports from Tanzania indicate that both the government and the opposition bought voter cards in areas where they were likely to face greater opposition. The going currency? Mattresses. Trade in your voter card for a new mattress. Reports the Guardian on Sunday:

While CCM was quick to accuse opposition party Chadema of buying voter cards, inside information shows that the ruling party also participated in the dirty politics especially in the areas where it faced stiff opposition.

“I gave them my card in exchange for the new mattress on the condition that after the voting they would return my ID card,” one voter told The Guardian on Sunday. “I didn’t establish whether they were agents for the ruling party or opposition.”

Eyewitnesses from Geita told The Guardian on Sunday that the night before the by-election; hundreds of mattresses were being distributed to voters in exchange for voter cards.

One mattress dealer from Geita town admitted that he had sold more mattresses during the campaign period than he had sold in all of 2008, but he said he couldn’t be sure he had been selling his stock to party strategists.

“It might be true because suddenly the demand for mattresses surged dramatically during the months of April and May,” said the salesman, who spoke to The Guardian on Sunday on condition of anonymity. “I can assure you that, what I sold during that period was more than my annual sells for last year.”

Buying voter cards is not a new trend in Tanzanian elections, but the tactic has been spreading rapidly as of late, and has apparently gone unnoticed by election officials.

While I'd be more than happy to stay home from voting in exchange for a mattress or even a ham sandwich (conditional on quality of course), careful observers would know that this would be pure rent: payment isn't required to induce the desired behaviour. Such ever is the case for the inframarginal non-voter.

Why mattresses though? Isn't cash both less obvious and more fungible?

HT: Jeet Sheth, faithful graduate of my Public Choice class.