- Rt Hon Chris Hipkins
This morning I have advised the Governor-General to accept Michael Wood’s resignation as a Minister.
Yesterday I was alerted to additional shareholdings Michael held in the JM Fairey Family Trust of which he is both a trustee and a beneficiary.
These new shareholdings raise significant concerns around Michael not identifying and managing potential and real conflicts of interest. In particular, the trust holds shares in Chorus, Spark and the National Australia Bank.
As Minister of Immigration, Michael made the decision to include telecommunications technicians on the immigration Green List. This followed representations from the telecommunications industry, including Chorus, seeking those changes to the Green List.
Michael also has a shareholding in the National Australia Bank, the parent company of the Bank of New Zealand.
That was not disclosed in any of the conversations Cabinet had around a market study into banking or other relevant Cabinet conversations.
Despite repeated requests from the Cabinet Office and myself for Michael to manage his shareholdings, he has repeatedly failed to identify, disclose and appropriately manage conflicts of interest.
When I stood Michael down as Transport Minister, I asked him if there was any other relevant information I should know about and he indicated there was not.
It has become evident, therefore, that not adequately managing the airport shares was not an isolated incident and it is not appropriate for Michael to continue as a Minister.
I have also formed the view that the system we have in New Zealand for managing any potential conflicts of interest of Cabinet Ministers needs to change.
When I learned that Michael had failed to sell his Auckland Airport shares despite 12 requests from the Cabinet Office to do so, I asked the Cabinet Secretary to provide advice on practical steps that could be taken to ensure such a situation could not be repeated.
As a result, I have agreed to the following five changes to tighten up the disclosure regime for Ministers:
First, Cabinet Office will move to Quarterly reporting of conflicts of interest to the Prime Minister. Currently Prime Ministers are only advised of new interests as part of the annual review or on an ad hoc basis as particular issues arise.
Second, there will be an escalation process if a Minister is not engaging fully with the process or following advice on the management of a conflict. Cabinet Office will now escalate the matter rapidly and directly to me, to avoid the situation where a Minister can repeatedly ignore their guidance.
Third, there will now be in-person annual reviews with each Minister to discuss their conflicts. At the moment the annual review of Ministers’ interests is conducted by way of a letter at the end of the financial year. An in-person meeting will ensure that any issues can be more directly addressed and resolved.
Fourth, each Minister will have to nominate a dedicated person in their office to support them with conflict-of-interest processes. This means another person in their office is aware of their conflicts and can act as a second pair of eyes to assist them in the appropriate management of them.
Fifth, conflict disclosures will become a standing item at the start of each Cabinet or Cabinet Committee meeting. The Institute of Directors recommends maintaining an interests register as a standing board meeting agenda item but that has not been the past or current practice for Cabinet or Cabinet Committee meetings.
One additional thing. I have also sought advice on a full Restrictions Regime on shareholdings for Ministers.
In Australia, the Code of Conduct for Ministers requires that they divest themselves of investments and other interests in any public or private company or business.
That is, other than public superannuation funds or publicly listed managed funds or trust arrangements where the Minister has no visibility or control of decision-making.
Adopting this approach would be a significant change in the New Zealand position and requires further consultations, but it is my personal view it’s appropriate to take this step.
New Zealanders expect and deserve very high standards from Ministers
While I do not believe Michael Wood has acted with any intent of personal gain, his actions have let himself and the Government down.
He is a talented and hard-working Minister. However, he has shown a serious lapse of judgment and has taken the appropriate action by resigning.
I will today advise the Governor-General to reallocate his portfolios to senior ministers. Carmel Sepuloni will become Minister for Workplace Relations and Safety and Minister for Auckland, Andrew Little will become Minister of Immigration and David Parker will become Minister of Transport. Kiri Allan will become Associate Finance Minister.
Like many others, I have found this episode deeply frustrating.
While I’ve only been in this job for about five months, I’ve taken a number of steps to stop the kinds of behaviour that have not met acceptable standards.
Ministers, for whom it is an honour to have such a role, need to ensure they manage their affairs to the highest standards.
These have been unnecessary distractions from my firm focus as Prime Minister on delivering what is most important to New Zealanders.
