Asset Sales, Ombudsmen, Elections and Official Information #voteNZ

The Ombudsman says the electorate can’t see Treasury advice on the most defining point of difference between parties in this election, the proposed asset sales programme.  The National Party has seen the advice, but no one else is allowed to, at least until after the election.  Is that fair?  Can it be right?

Back in 2005 the National Party, then in Opposition asked the Treasury for their costings of Labour’s just announced policy on interest free student loans.  The Treasury, and the Minister of Finance refused to release that information, for the usual reasons that apply to contentious political advice, sections 9(2)(f)(iv) and (g)(i) of the Official Information Act.

National asked the Ombudsman to investigate, and after evaluating the potential affects of releasing the papers as against the public interest in having an electorate making informed decisions about a key, and contentious policy the Chief Ombudsman John Belgrave recommended the release of the information just days before the election.  To his credit, Finance Minister Michael Cullen accepted the recommendation, and released the papers.  By law he did not have to, he had 21 days to think over the recommendation, by which time the election would have been done and dusted.  That forced release, in the closing days of the campaign almost certainly cost the Labour Government seats.

There are other precedents.  On 11 October 1990, then leader of the Opposition Jim Bolger wrote to the Ombudsman asking for his review of a decision by the Prime Minister Mike Moore not to let him have some briefing papers on the state of the Bank of New Zealand.  The Ombudsman upheld that decision.

The election was held three days later, and Mr Bolger became Prime Minister.  In July 1991, answering a question in the House from his own backbencher Tony Ryall, he said

“….the ombudsman knew of the problems of the Bank of New Zealand after my Official Information Act request to the Prime Minister for the release of Treasury briefing papers …

A decision was made that I should be kept in the dark about the financial catastrophe that would overtake the country should the Bank of New Zealand not receive Government financial support. That clearly raises the question of why the Chief Ombudsman remained silent when he had the opportunity-and, I believe, the responsibility-to disclose the full facts to me under the Official Information Act. Had he done so it would have prevented the Labour Party campaigning on a lie.”

The Chief Ombudsman’s response to this criticism was to make a formal report to Parliament, a fairly rare event.  He said in his report that it was not his job to disclose the information, and that to have required the disclosure of the “startling revelations” the papers contained about the Bank’s position would have, “caused a run on the Bank and disruption in the market place and in forex transactions”, and thereby unreasonably prejudiced the Bank’s commercial position.  He went on to say:

My involvement in this case, and in other reviews over a period of three months prior to the general election, left me in no doubt that the public interest is not served by the way in which the release of financial and economic information is arranged or withheld by the Government and officials to meet political objectives.

This year, Labour, the Green Party and TV3 all sought information about the principal plank of the National Party election policy, the asset sales programme.

The Treasury refused those requests again with reference to ss.9(2)(f)(iv) and (g)(i).  Those sections are so vague as to defy any principled legal analysis, and are often used as a “catch-all” for public servants wishing to prevent disclosure of their advice and analysis, or simply to buy time while the Ombudsman investigates and the sensitivity of the information fades.

Here’s what those sections say:

9  Other reasons for withholding official information
 (1)         Where this section applies, good reason for withholding official information exists, for the purpose of section 5, unless, in the circumstances of the particular case, the withholding of that information is outweighed by other considerations which render it desirable, in the public interest, to make that information available.
 (2)         Subject to sections 6, 7, 10, and 18, this section applies if, and only if, the withholding of the information is necessary to—
 (f)          maintain the constitutional conventions for the time being which protect—
 (iv)        the confidentiality of advice tendered by Ministers of the Crown and officials; or
(g)        maintain the effective conduct of public affairs through—
(i)          the free and frank expression of opinions by or between or to Ministers of the Crown or members of an organisation or officers and employees of any department or organisation in the course of their duty;…


The Official Information Act requires any agency withholding information to articulate some harm that they see as occurring if the information at issue were to be released.  In this case, the Treasury contend that the “maintenance of the effective conduct of public affairs” would be harmed by the release of the asset sales advice, because officials would be inhibited from giving similar advice in the future.  In other words, if you make us release it, we wont do our jobs.

Here’s what the Ombudsman said:

44. Given the context in which the information at issue was generated and the current stage of the policy development process, I accept that disclosure now would not only be premature, but would also undermine the orderly and effective conduct of the advisory and decision-making processes, and thus impair the effective conduct of public affairs.

45. As noted by Cabinet “there are a wide range of execution and other risks that could have a material impact on how the programme proceeds” (CAB Min (11) 18/6).  A key theme of the advice that has been publicly released  is the need to maintain flexibility in programme design and structure in order to manage these risks. 

46. I accept that there is a genuine and valid concern that release of information that commits Ministers too early in the process to particular design elements, or creates expectations about the use of such elements, will detrimentally affect investor participation, and therefore the level of return to the Crown.  Given that the estimated level of return is between $5 and $7 billion, the potential economic impact could be significant.

47. It is with this in mind that I must weigh the likely degree of inhibition that would be caused if the information at issue were disclosed.  Officials have attested that the economic stakes are such that if the information were disclosed, they would need to re-think the manner in which they provide advice to Ministers on the programme on an ongoing basis.  In the context where release of official information could potentially affect the success of the offers and the level of return to the Crown, I accept that officials are likely to feel inhibited in generating, expressing and recording their opinions, and that a degree of protection at this stage of the process is required so that this particular harm does not eventuate.

This analysis raises more questions than it answers.  How would Ministers be committed by the earlier advice, if it were released now?  Would investors really make their decisions on months old information, instead of that available at the actual time of the sale? Everyone knows that policy making is an iterative process, and that Ministers and officials change their minds as their ideas develop, markets and circumstances change and the public and interest groups make their contributions to the policy process.  That last part is what s.4 of the OIA is all about:

The purposes of this Act are, consistently with the principle of the Executive Government’s responsibility to Parliament,

(a) to increase progressively the availability of official information to the people of New Zealand in order

(i) to enable their more effective participation in the making and administration of laws and policies; and

Elections are the primary opportunity for that participation.

And how would the harm the Treasury and the Ombudsman predict arise?  How long would it last?

67. Treasury advised that if newly elected Ministers decide to proceed with an extension of the mixed ownership model, they intend to proactively release further information once the policy and decision-making processes are further advanced.  Legislation will be required in order to remove the companies from the State Owned Enterprises Act, and the select committee process will provide a further opportunity for public examination and debate of the issues.

So the message here is if the Treasury is forced to release the information before the election, they will stop giving robust advice to government.  But not if it is released afterwards, when the Government already has its mandate to do what it says it is going to do, on the basis of, or in spite of, officials advice?

Which of the two precedents is this case closest to?  The assertion that disclosure might affect the price we would be able to get for the assets brings it closer to the BNZ case (in which information was withheld).  But how credible is that assertion?  The report says that the information will come out later anyway (before the sales), and no one would support that if it meant the best price for the assets could not be achieved as a result.

This looks to me to be far closer to the 2005 student loans case, in which the Ombudsman did force the release of the papers. The Ombudsman disagrees:

83. However, there are some key differences between this case and the 2005 case, the outcome of which was summarised at pages 29-32 of our 2006 annual report.   First, and most significantly, the Chief Ombudsman did not accept that sections 9(2)(f)(iv) and 9(2)(g)(i) of the OIA applied in the 2005 case.  Secondly, the information at issue in that case, being costings of a specific policy, was fundamentally different in nature to the information at issue in this case.  Thirdly, the nature of the then Government’s public statements about the costings and the assumptions on which they were based gave rise to a particularly strong public interest in disclosure.

I haven’t seen the information, and the Chief Ombudsman has.  Perhaps, like the Prime Minister’s contention of the contents of the Cup of Tea conversation, the papers are relatively bland, and it is that blandness that has lead to the Chief Ombudsman to not find any compelling public interest in the release of the papers.  I doubt it.  Bland is the opposite of “free and frank”.  Free and frank advice on the merits and risks of an election policy is precisely what the electorate needs to make their own assessment of whether or not to give the mandate the Government seeks.  Like the teapot tapes (which will inevitably see the light of day when the Police inevitably decline to prosecute), we will one day see the Treasury advice to the Government.  It won’t be today. The Chief Ombudsman has made her decision, and there is no appeal from it.  Who can guess what we will or will not be allowed to know about the Government’s plans before the next election?

Governments have a huge advantage over oppositions.  They have access to the entire public service to develop their policies.  But at some stage in the third year of the electoral cycle the Government is just a political party, trying to sell its ideas in the electoral and political market place.  Should they be able to maintain their monopoly on advice and gain a huge advantage over the less resourced parties, and exercise control over how officials see their proposals working?

The late Sir John Robertson concluded his 1990 report to Parliament:

29. In writing, before the election last October, to Messrs Moore and Bolger in connection with the briefing papers case, I gave notice of the need for this type of independent economic review and noted:

‘If this practice was followed prior to an election campaign political parties would not have to make their own assumptions on inadequate data and put forward policies which may be markedly flawed because of incorrect assumptions. The publication of economic briefing papers which contain surprises after a General Election gives a new government an immediate opportunity to modify its electioneering policies in a way that if presented before the election, could have resulted in the public taking a different view at the ballot box. “

In view of the new Government’s revision of policies subsequent to the availability of more reliable economic data after the general election, this point was somewhat prophetic and points to how crucial accurate information is to the public interest.

30. I hope that Parliament will consider redressing this situation by seeking a means by which such an independent assessment of the state of the economy can be brought about prior to a general election. There are several criteria for such a review which are of critical importance-

(i) There should be statutory authority for the review prescribing its independence and its funding. The political environment of the time covering a Government’s political objectives and competing political parties with their own manifestoes will inevitably overwhelm independent assessment unless that independence is protected by legislation:

(ii) The publishing body should be part of the official machinery of government, having authority to access all relevant information in all departments of state:

(iii) The publishing body could be a Commission of about three people which includes the Secretary to the Treasury and the Government Statistician and, preferably, should operate out of the Department of Statistics which already has a history of protected independence in publishing. It could be brought together prior to each general election for this specific task in a similar manner to the Representation Commission:

(iv) The particular subject matter to be covered in such an assessment should be specified in the legislation. In this respect there should be no hesitation in requiring new statistics to be collected in key areas on a continuing basis if they are currently not available, timely, or adequate.

That didn’t happen.  Instead we got Ruth Richardson’s Fiscal Responsibility Act.

The Law Commission is reviewing the Official Information Act.  Perhaps one of the options should be revisiting Sir John’s idea of an independent body to publish information about not only the current state of the economy and public finances, but of information generated by the public service in relation to the Government’s party political election platform.

Until then, don’t forget to vote, using the best information you can find!

Here’s the Ombudsman’s decision




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