The government’s revolving door for lobbyists

In many democracies, they call it the “revolving door” of influence whereby political insiders shift easily between government jobs or positions and lobbying work in the private sector. It’s considered especially pernicious because it can cause conflicts of interest and inequalities of power in democracies. Essentially, lobbying firms and their clients have become more powerful in the political system because they are able to employ insiders who have all the contacts and valuable information on what is going on behind the scenes. 

The situation has become so serious that some countries are trying to shut the “revolving door” – making it illegal for people to shift so quickly between these roles. It’s common now for officials and politicians to be subject to a “cooling down” period of six to 12 months before they can take up lobbying positions that might relate to the work they carried out in government. 

No such rules exist here in New Zealand but that doesn’t mean they’re not needed. This week a perfect example of the “revolving door” of government officials and lobbying has occurred. A prime minister’s chief of staff has shifted from the Beehive to a lobbying firm. Lobbyist Gordon Jon Thompson has been a political manager – or “spin doctor” – and lobbyist for a long time, and shifts between government and private sector jobs with apparent ease. 

The story about Mr Thompson was actually buried within an article by Laura Walters yesterday, which focused on another interesting – but less contentious – “revolving door” story about another former chief of staff, National’s Wayne Eagleson – see: Former National Party chief of staff joins firm of Labour's top advisers. 

Ms Walters’ story is mainly about how Eagleson was chief of staff for National over the past nine years, first with John Key for eight years, and for the last year with Bill English. Mr Eagleson has now joined a lobbying firm part-owned by Thompson.

But the Thompson story is potentially much bigger, and certainly much more problematic. Mr Thompson, who has been a lobbyist and PR professional for many years, worked with Jacinda Ardern last year, helping prepare her for the TV leaders' debates. And then, when she formed the new government, she invited Mr Thompson to be Labour’s chief of staff, even though he would remain a lobbyist and director of his Thompson Lewis firm. 

Ms Walters’ article states, “Mr Thompson finished a four-month stint as Prime Minister Jacinda Ardern's acting chief of staff, while chief of staff Mike Munro was recovering from illness.” This means Thompson was made chief of staff by the prime minister, with the full knowledge at he would then return to his lobbying business, where he would be involved with clients with an interest on influencing the new government. Indeed, he finished work last Friday in his job as the No 1 adviser to Jacinda Ardern, and resumed his lobbying job yesterday. 

The issue immediately raises issues about potential conflicts of interest. Many questions come to mind, including: Why did the prime minister agree to hire Mr Thompson when she knew he was coming from a position in a lobbying firm, and that he would then be resuming as a lobbyist as soon as he finished in her office? Did she see this as problematic? Did Ministerial Services advise that this was OK? Was the Prime Minister made aware of which clients Mr Thompson was working for? Who were these clients?

NBR’s Brent Edwards investigated yesterday, and he got a statement out of Thompson: “I took a leave of absence from the company while I worked in the Beehive. My time in the Beehive was always on a temporary basis and we took careful steps to manage it” – see: PM's former staffer says he declared potential conflict of interest (paywalled).

Brent Edwards also reports: “Ministerial Services has not yet responded to questions from NBR on how the potential conflict of interest was handled. All lobbying firms make a point of promoting the political and public service experience of their staff, including how that gives them access to the political process not necessarily enjoyed by others.” 

Plenty of questions remain about the situation. It is highly unusual to have a lobbyist become the chief of staff for a government in the full knowledge and declaration that they will then immediately swap sides after the appointment. It certainly puts Mr Thompson and his business in an extremely strong position. After all, Mr Thompson had the role of recruiting a number of the new people staffing the Beehive. He will know the ins and outs of the staff he hired, as well as everything about the new administration generally. 

As Laura Walters puts it in her article, “Mr Thompson left his lobbying job to help set up the new government, before returning to his life in Auckland, meaning he has up-to-date knowledge of and contacts within government.”

In terms of former National Party chief of staff, Wayne Eagleson, you can read his own publicity about the latest venture – see: An Exciting Year Ahead, which was published on Sunday. The lobbyist says: “Over the years I have developed a pretty thorough understanding of how the political and public sector processes work, and the kinds of things that influence those processes.” Now, he says, he is “looking forward to using the experience I have gained in the Beehive and prior to that as a senior corporate affairs manager.”

Blogger No Right Turn has called for more stringent rules around this practice, saying that “these former public officials are seeking to leverage the knowledge and contacts they built up in their highly paid public careers for private profit” – see: Time to lock the revolving door. 

His larger point is worth quoting at length: “Why do we allow this? Many other democracies don't. Australia, Canada, the US and the EU all have cooling off periods for public officials, preventing MPs and senior public servants from seeking to use their networks for private gain for up to five years. Such cooling off periods can be specific to issues in which the official worked (for example, generals can't go and work for defence contractors but can work for tobacco companies), or a general prohibition. The justification is to prevent the distortion of democracy, to prevent conflicts of interest and the abuse of knowledge and networks gained in public service for private gain, and to prevent post-retirement payoffs. All of which seems like something we need here.”

Thompson’s two-way trip through the revolving door is particularly brazen but he and Eagleson are not the only ex-chiefs of staff to make news as lobbyists. Ex-Labour chief of staff Neale Jones didn’t let the grass grow under his feet when he moved from the prime minister’s office to lead lobby firm Hawker Britton. Towards the end of last year I covered Jones’ move to the sister company of rightwing Barton Deakon, run by former National staffer Jenna Raeburn – see my roundup column, The rise of the hyper-partisan lobbyists in Wellington. I also called for a clean-up of some of the problems – see: Unfettered lobbyists under suspicion. 

Last week, another investigation was published about the state of the lobbying industry, with a particular focus on the new “partisan lobbyists” – see Asher Emanuel’s Selling influence: meet the lobbyists shaping New Zealand politics for a fee. This in-depth profile raises the usual questions about the ethical issues and the impact of such lobbyists on democracy. But it also raises the increasingly fraught distinction between all sorts of political insiders who swap jobs from time to time as it’s “a system where advisers become politicians [Jacinda Ardern, Grant Robertson, Chris Hipkins, Ginny Anderson, Chris Bishop, Todd Barclay] and politicians become lobbyists [National’s former MPs Tony Ryall, Katherine Rich and Roger Sowry].”

Finally, of course, there is the issue of former prime ministers going through the “revolving door” to work in the private sector now that Sir John Key has begun working for Air New Zealand and the ANZ bank and Bill English looks to be about to embark on a similar trajectory. This is a problem for democracy and the political system according to former Reserve Bank economist Michael Reddell – see his blog post from yesterday, Retired politicians in demand. His post raises many important issues but here’s his main point: “Whatever the sector, a cabinet minister who legislates/regulates in ways which are welcomed by the regulated industry are much more likely to find the post-politics doors open than one who regulates in a way the industry finds costly or inconvenient. It isn’t just an issue in banking – it could be telecoms, or electricity, or transport, export education or whatever.  I’m no great fan of most business regulation, but it exists – and the community has made a decision that such regulation is necessary or desirable. If so, it is easy to envisage cases of a conflict between the public interest and the private interests of the regulated entities.”