5 Aug 2022

Week in Politics: Chaotic payments spoil government's week

3:29 pm on 5 August 2022

Analysis - The government's cost of living payment descends into a messy controversy, Cabinet decides to urgently fix a serious electoral law problem, and James Shaw won't face any challengers when the Greens hold their next co-leader vote.

David Parker and Nicola Willis

Photo: RNZ

A $350 cash payment for 2.1 million people to help them with the cost of living spike. Simple, easy to understand and the focus of the media's reporting of Budget 2022.

The government was seen to be doing something after taking a beating from opposition parties over rising inflation and the plight of less-than-wealthy families.

It would be paid in three instalments of $116 to non-beneficiaries earning less than $70,000 a year, the "squeezed middle" that National was saying were being ignored.

The first payments went out on 1 August, preceded by numerous "good news" reminders from Prime Minister Jacinda Ardern and Finance Minister Grant Robertson.

That's when it started going wrong.

The payments didn't go to 2.1 million people, they went to about 1.3 million. Inland Revenue, which was administering the scheme, was having problems. It was still processing tax returns to determine annual income, it didn't have bank accounts for about 137,000 eligible people.

So it wasn't going to a lot of people who should get it, and then something even worse - it was going to a lot of people who shouldn't get it.

Revenue Minister David Parker told RNZ he didn't know how many ineligible people might be receiving it, but he believed it could be about 1 percent of the 2.1 million - roughly 21,000 people and a payout of $7.35 million.

Some of them were surfacing. Newshub said it was hearing from people offshore, Kiwi expats and foreigners, who received letters last weekend telling them they would receive the payments.

It talked to one of them, a French national identified as Benoit.

He was in New Zealand for about 18 months before returning to France in June last year.

Benoit said he was here on a working holiday visa and found a job in a Whangārei orchard. He enjoyed his time in New Zealand despite the pandemic.

"Thank you New Zealand people for taking care with strangers like me during this difficult period," he said.

Back in France, he was "really surprised" to receive IRD's email. He thought he had closed his bank account.

"I won't claim the money because I don't need it," he said. "Moreover, in France we already have lots of support."

As the scheme unravelled the media reacted. 'Cost-of-living payment: From political slam dunk to complicated mess' the Herald headline said.

As opportunities for opposition parties go, this one was gift-wrapped. National's deputy leader and finance spokesperson Nicola Willis was everywhere, doing her very best to make it seem as bad as it possibly could be.

"The scope could actually be massive," she said. "We know that there are a million New Zealanders living overseas. The question is how many of them have a dormant bank account that the IRD has just thrown money into."

She told First Up she was trying to find out how many were receiving it.

"I've been inundated by messages from people around the world who have received the payment, who didn't expect it, didn't want it and quite frankly are embarrassed that they have received it," she said.

"In some cases they haven't lived in New Zealand for as many as six or seven years."

Willis later told reporters she was writing to the Auditor-General asking for an investigation to determine just how wide the scale of the problem was and whether taxpayer funds had been used without the proper authority of Parliament.

She said it could be a matter of law, because the legislation enabling the payments stated the main criteria for eligibility included being a New Zealand tax resident and present in the country.

"This muck up is bigger than ministers think" were her last ominous words on it.

Parker put a brave face on it, insisting that payments would eventually reach all the 2.1 million and the number of offshore payments was relatively tiny.

The government had wanted to get the money to people as quickly as possible, he explained, and the alternative would have been for them to apply for it. That would have entailed a huge administrative cost and many would have missed out.

While that was spoiling the government's week, Cabinet decided to urgently fix a serious electoral law problem.

The problem was discovered through the recent court case in which two men charged over the handling of donations to the New Zealand First Foundation were found not guilty.

The details are in RNZ's website item: Cabinet confirms 'shadow entity' loophole will be closed.

In the High Court, Justice Jagose ruled that donations which went to the foundation did not qualify for public disclosure because, technically, they were not paid to the NZ First Party.

The Herald's political editor Claire Trevett explained it like this: "Even though the donations were sought and given as intended for NZ First - and the money was used to pay some party expenses - the money itself was not passed on to the party.

"That meant they were not party donations and so did not fall under the Electoral Act requirements."

Electoral law expert Graeme Edgeler, writing in The Spinoff, said the acquittals rendered the disclosure regime near pointless.

"If this is the law, and a High Court judge has said it is, then it undermines the donation disclosure regime to the point that it may be pointless unless fixed," he said.

Trevett said Edgeler was right, and any party could set up an arms-length entity similar to the NZ First Foundation.

"It is gobsmacking there is a construct that can be used to lawfully avoid disclosure of hundreds of thousands of dollars of donations," she said.

"Just because something is considered legal, does not make it right."

Trevett said those who came up with the NZ First Foundation model might be patting themselves on the back "for being so clever" but it should not sit right with anybody.

"It certainly should not sit right with voters."

This is what Justice Minister Kiri Allan said was going to be fixed.

The law change would be slotted into the Electoral Amendment Bill currently being dealt with by Parliament. It would be "quite succinct" and could be in effect by the end of the year.

National and ACT support closing the loophole but would prefer a separate bill which didn't "lump it in" with other changes which they find objectionable.

They're talking about the changes in the bill as it stands, which are simple.

It drops the public disclosure threshold for donations from $15,000 to $5000, meaning anyone who gives more than $5000 will need to be named.

National and ACT say Labour is trying to skew the rules against them.

That's because the two opposition parties collect more in bigger donations and think their donors will shrink them down to $5000 to avoid being named.

ACT leader David Seymour has crunched the numbers, the Herald reported.

According to Seymour, based on 2020 tallies ACT would lose $300,000, National $600,000 and Labour $170,000.

Stuff quoted Seymour explaining why donors didn't want to be identified.

"People say 'look, I support what you do, I agree with your party, but my business has government contracts and I think the guys in there right now are vindictive."

The "guys in there right now" would no doubt strongly deny any suggestion they were vindictive.

The Greens will have James Shaw to choose from when they hold another vote to elect a co-leader, RNZ reported.

When nominations closed on Thursday night, no challenger had come forward and Shaw was the only name on the ballot.

At the party's AGM last weekend Shaw failed to get the 75 percent of delegate votes needed to re-confirm him as co-leader.

Those who voted against him didn't think he was fighting hard enough on climate change and other environmental issues.

The next vote will take place remotely and must be held by 8 September.

Shaw is widely expected to win the vote next time. If he doesn't, nominations will be opened again and the party will go through the whole process again.

It was reported that one of the reasons he didn't get 75 percent the first time was a poor delegate turnout at the AGM. With a full slate voting remotely, he shouldn't have any problems.

Dissenters may also consider they've made their point and continued instability won't do the party any good.

*Peter Wilson is a life member of Parliament's press gallery, 22 years as NZPA's political editor and seven as parliamentary bureau chief for NZ Newswire.

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