Steven Joyce’s revolving door entry into a $4000/day govt appointment

Patchett - ODT 26 May 2017

Former National Government Finance Minister Steven Joyce is being paid $4000 a day to chair the new Government’s “expert advisory panel” on infrastructure. That’s over twice what Prime Minister Christopher Luxon gets, and makes Joyce New Zealand’s highest-paid public servant. At the same time, the former “Mr Fixit” sits on several property development boards as well as running a lobbying consultancy firm.

Joyce’s political appointment is the latest that could have the Government charged with “cronyism” or creating “jobs for the boys”. Other highly paid political appointees include Simon Bridges, Bill English, Murray McCully, and Roger Sowry.

Joyce’s $4000/day appointment

Joyce’s appointment was announced last week when Infrastructure minister Chris Bishop spoke at a conference being held by lobby group Infrastructure NZ, which represents a wide variety of construction companies. The conference was being sponsored by Australian infrastructure investor Plenary. Bishop said that he had tasked Joyce’s new panel with designing a “National Infrastructure Agency”, which would have a mandate for the “funding, procurement and delivery” of infrastructure.

This new body is expected to amalgamate numerous other state-infrastructure agencies into one mega-body that will distribute government contracts to private developers. Joyce, who is infamous for creating the MBIE government mega-department, is fond of centralisation, and has always been a big proponent of state-business deals. The new mega-agency will be responsible for fixing New Zealand’s infrastructure deficit – which Treasury has recently estimated to be around $210 billion.

How the new agency is designed will therefore be incredibly consequential, especially in how it interfaces with private construction firms and how they are selected and remunerated.

Accusations of cronyism

The Herald’s Audrey Young suggested in the weekend that in appointing Joyce and the others, “the Government could be accused of cronyism”, except for the fact that these political appointees are all clearly “capable” – see: Murray McCully and Steven Joyce roped into advising new Government (paywalled)

In responding to such questions about whether the National-led Government is “getting the gang back together”, Bishop has stated that “due process” has been followed in selecting these candidates for these crucial appointments.

Joyce’s appointment is certainly appreciated by those in the private sector, especially in the road freight industry and infrastructure business. For example, the National Road Carriers Association has put out a press release welcoming the appointment. And Infrastructure NZ, the lobby group for private construction builders, has said that Joyce’s new panel will help get government procurement sorted, stating, “Opportunities for more public private partnership are welcome”.

Revolving door for Joyce

Joyce has been a major figure in National for over two decades. He first emerged when he led the review of the party’s disastrous 2002 campaign and recommended it be run more on corporate than democratic lines. He then ran National’s election campaigns from 2005 to 2017. Coming into Parliament in 2008 he was immediately appointed as a Cabinet Minister, and eventually became Minister of Finance and Minister of Infrastructure (as well as becoming known as The Minister of Everything and Mr Fixit).

His time in politics was not uncontroversial. Joyce was criticised for an approach that many saw as amounting to cronyism – especially because of his deal with SkyCity to build Auckland’s convention centre – and was sometimes compared to Robert Muldoon in his pragmatism and style. Once John Key and Bill English departed, Joyce ran for the leadership, but lost heavily to Simon Bridges, which led to his resignation from Parliament in 2018.

Joyce had been a businessman before entering politics, and returned to this in 2018, setting up Joyce Advisory, a company specialising in business strategy, consultancy, brand management and reputation. In addition, Joyce has been appointed to and employed by an array of businesses, from property development through to engineering. Some of these clients have developed close relationships with the National Party under leader Christopher Luxon.

The most politically controversial business Joyce has joined is the major property developer Winton Land, a company that is currently locked in a legal battle with the Government. Winton claimed Kāinga Ora is stymying its “Sunfield” development plans in South Auckland by not giving the company a fast-tracked development under the new Urban Development Act. In appointing Joyce, the company put out a press release to say that Joyce “has not been appointed for government relations or political lobbying."

The company is associated with some big donations to the National Party. Back in May 2022 the party received $52,000 from a holding company called Speargrass, which is owned by Winton’s CEO Chris Meehan. Then in election year Meehan donated $103,260 to National and $50,000 to Act.

National and Act have both come out publicly last year in favour of Winton in their fight with Kāinga Ora, with the parties’ respective housing spokespeople Chris Bishop and Brooke van Velden issuing press releases pushing Winton’s case.

National had already received the first donation when Bishop went public with his support for Winton, but he failed to declare this conflict of interest when he advocated on behalf of Joyce’s company. In fact, Bishop later told Newsroom that he wasn’t aware of the big donations and could not give further comments due to Winton’s court case. He also told Newsroom that there was no conflict of interest, and any question of whether the property developer would get a meeting with an incoming National prime minister was an issue for after the election campaign.

Joyce’s lobbying firm also did work for Waikato University. RNZ’s Guyon Espiner uncovered how Joyce Advisory was paid nearly a million dollars for helping with “lobbying advice” on issues such as getting a new $300m medical school funded by the government.

As well as giving “lobbying advice” to Waikato University, Joyce is now on the University’s Management School Business Advisory Board. He’s also a company director or independent advisor for several businesses – Icehouse Ventures (a venture capital fund manager), Hammerforce (a technology and IP company), and RCP (a property and construction project management consultancy). The latter has had numerous government contracts, from helping to build a university medical school, to state housing for Kāinga Ora, Joyce’s RCP client is well placed to win the contract if National follows through with its campaign promise to put e-bike chargers on the NZ Cycle Trail.

In most countries any politician in Joyce’s situation wouldn’t have been legally allowed to go into these industries. Rules against the “revolving door” normally prevent politicians or senior officials from leaving public office and going straight into work in industries that they used to regulate. It is common for stand down periods of 2-5 years in which former political figures have a restraint of trade. These rules block political figures from taking their knowledge, connections, and leverage to the private sector for commercial gain and potential corruption.

As a former Minister for Infrastructure and Minister of Finance, Joyce has had access to information about development and the economy that the general public do not. The issue is that he is potentially able to leverage this for the benefit of his clients and, ultimately, himself.

Joyce also writes regularly for the media about politics, adding to his influence.

Joyce’s influence in National and business

In recent years, Joyce has become a useful nexus between National and the business community, advising on policy that bolsters the party’s credibility with captains of industry.

It helps that Joyce is still very close to many in National. Chris Bishop, for example, has always been a close ally of Joyce, starting as an adviser for Joyce when he was a Cabinet Minister.

There’s nothing wrong with Joyce wanting to help his own party develop policy – and parties can better govern if they have expert advice. But usually that is the sort of thing someone like Joyce would do for free when the party is in Opposition, as part of its policy development processes. It raises eyebrows that, in this case, National decided to set up a new National Infrastructure Agency but apparently without deciding what it would do – and now is using up to $20,000 a week of taxpayers’ money to pay Joyce to do the work it should be expected to have done in opposition.

What can we expect in infrastructure from Joyce?

There is no doubt that Joyce has plenty of infrastructure experience and skills. And his time as Minister of Infrastructure and Transport gives some clues as to how he might approach the design of the new government agency.

Joyce is famously favourable to road-building, and equally against rail as a form of infrastructure. When he was in the John Key Government, for example, he opposed Auckland’s City Rail Link being built. Instead, he was the architect of the Roads of National Significance programme (now revived under the Luxon Government).

He continues to oppose rail infrastructure as the way forward for New Zealand’s development. For example, in terms of the recent debate over upgrading KiwiRail’s Interislander ferries, he has argued strongly against any new ferries having rail capacity, saying that the ferries should be working with the trucking industry instead.

Joyce is a major proponent of giving the private sector a bigger role in infrastructure. He is particularly keen on using Public Private Partnerships. In fact, he talked about this two weeks ago in an interview with BusinessDesk editor Pattrick Smellie in a “Sharesies podcast” – see: Shared Lunch: Changing gears – Steven Joyce

Joyce explained how the private sector could be given more responsibility for infrastructure in New Zealand: “I think we need to keep doing things like Public Private Partnerships, and I don’t see any problem with that. And people get worried about that. But what’s wrong with a hospital being on a BOOT arrangement – which is like Build, Operate, Own, Transfer back to the Crown after 30 years. What a deal! You get a brand-new hospital out of it. It’s not all bad is it? And someone else pays for it.”

Joyce’s thinking about the private sector is clearly in line with Bishop’s. In announcing Joyce’s appointment last week, the Minister emphasized that Joyce was going to design an agency that he said would connect “offshore capital with project opportunities in NZ.” In his speech, Bishop said the challenge was to attract these companies to New Zealand with profitable deals.

Bishop also told BusinessDesk last week that under the new Government, New Zealand is ready to attract businesses wanting to build and run profitable infrastructure: “We want to send the message that NZ is open to business, we want more capital here, we want more investment, we want more players from a contracting and delivery point of view here in NZ… NZ has a significant infrastructure deficit. Estimates vary, but let’s call it $100 billion or so. That’s about 80 Transmission Gully motorways” – see Oliver Lewis’ Steven Joyce to chair group looking at new infrastructure agency (paywalled)

Joyce’s potential conflicts of interest

Much of the criticism of Joyce’s political appointment last week relates to the fact that he is a friend and former colleague of many key National Party players past and present – hence allegations of cronyism. There is also likely to be some amazement and outrage about his $4000/day fee. For more on this, see the 1News report by Benedict Collins: Government denies it's delivering 'jobs for the boys'

Criticisms and questions about these facts are fair. However, there’s nothing inherently wrong with governments appointing people from their own political parties to serve on boards and positions that will help them get their agenda progressed. All governments do this to some degree or another. It needs scrutiny, but isn’t intrinsically wrong to appoint former ministers or people from the same party.

However, the issue of potential conflicts of interest are a different matter. As with former National leader Simon Bridges being appointed as the chair of the New Zealand Transport Agency – see my earlier column, Is Simon Bridges’ NZTA appointment a conflict of interest? – the integrity question is about whether the appointees have commercial links that could relate to their new roles. In the case of Bridges, he had been the chair of three different transport-related lobby groups and was now going to chair the government’s transport authority.

So, what has Steven Joyce been doing since he left Parliament in 2019 that might relate to infrastructure? In his podcast interview with BusinessDesk’s Patrick Smellie, Joyce pronounced: “I have a sort of portfolio interests. I have a few board positions – you mentioned the Icehouse and Icehouse Ventures – I'm on the board of Winton Land which is a property developer. I'm an advisor to a couple of boards including RCP which is the project management crowd. I have advisory clients in the tech space and in financial services and education. So yeah it's a many and varied piece, and I'm now thinking that I've forgotten some”.

In order to ensure public trust that Joyce doesn’t have conflicts of interest in his new role, he will need to specify exactly who all these clients of the Joyce Advisory lobbying group are. This will need to include past clients, too – conflicts of interest don’t disappear simply because a person is no longer in the employ of a certain client, as the residual nature of those linkages can be considerable.

Nonetheless, the fact that Joyce is an advisor to the Board of RCP, which works in the infrastructure industry, and is a director of Winton land, means he is working for companies that will be directly impacted by how Joyce sets up the new National Infrastructure Agency. This is especially the case for property developers – as infrastructure is a key enabler of profitable housing development.

This is all a multi-billion-dollar issue of consequence. Treasury’s estimated $210bn of infrastructure deficit is going to mean that whatever Joyce designs is going to be in charge of handing out some huge contracts involving large amounts of taxpayer money. There will be many winners and losers as a result of where the money goes, and how it monitored and controlled. The private sector in terms of the construction and property development industry has plenty to gain from what Joyce recommends. Hence, the fact that he has been – and seemingly continues to be – directly involved with such private sector companies could be seen to create the potential for bias and favouritism.

Joyce has already developed a reputation from his time in government for pragmatic deal-making, and a derision for constitutional niceties. For this reason, he’s often been accused of cronyism, or worse – of “Muldoonism”. And certainly, one of his biggest accomplishments was the Key Government’s deal with SkyCity Casinos in which they agreed to build an International Convention Centre for free in return for being allowed more pokies machines – an infrastructure contract that the Auditor General was scathing about. We should expect more such creative state-business infrastructure deals, but perhaps on a much larger scale.

It won’t be surprising therefore that in running a lobbying firm, and working with all sorts of financial, tech and property development companies, Joyce’s new state position as some sort of Infrastructure Tsar could be viewed as a conflict of interest.

As with his defence of National’s use of an Eminem-sounding song in an election campaign, Joyce might be inclined to say that his new conflicts of interest are “pretty legal”, but that doesn’t mean, fairly or unfairly, that some won’t accuse it of all being “pretty corrupt”.

Dr Bryce Edwards

Political Analyst in Residence, Director of the Democracy Project, School of Government, Victoria University of Wellington

This article can be republished for free under a Creative Commons copyright-free license. Attributions should include a link to the Democracy Project (https://democracyproject.nz)

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