New Zealand’s public governance problem.

David Seymour told The Platform's Michael Laws what he was doing with RNZ. "We have appointed most of the people on the board and replaced and refreshed them," he said. "I think it's really critical that we are ensuring that we get better people on the board, and those people will change the management." He went further: "The question is, what can we realistically achieve with the time and resources we have – turning over the board, having the board turn over the management, changing the direction of the organisation."

Anyone with a working knowledge of the boundary between government and public governance knows shareholding Ministers are not meant to say this out loud. Ministers are meant to appoint boards, set public accountability measures and targets, and then stand back in the public interest. They are not meant to direct the board on matters of management or internal staffing.

Of course, the political reality is not so tidy. Using statutory appointment powers to install politically friendly chairs and directors is how governments of all persuasions have historically influenced the strategic and operational direction of Crown entities. What Seymour was advocating is not uncommon. The problem was he said it live and thereby kicked the government into potential breach of the law with his own goal.

There was a moment when David Seymour could have said: I overstated that, staffing decisions are for the board, I should have been clearer. Four seconds of humility and the story would have been gone by lunchtime. But Seymour is so invested in the performance of being right he will deny a reality visible to everyone watching or listening rather than admit a single misstatement.

He compounded his initial error with excuse techniques direct from his political communication playbook. Deflection: "Every day I get people asking what are you doing about the media.” Denial: "I have not given RNZ or TVNZ any direction that would breach either Act. Decisions around staffing, presenter line-ups, and editorial matters are for boards and management." And finally, his trademark wry humour as a distraction: "Anyone who thinks RNZ is taking editorial instructions from me clearly does not listen to RNZ." David Seymour is a gas-lighter par excellence – his innocent facial expression and words designed to make an audience distrust their own ears about what they have plainly heard.

The Prime Minister was left to clean up Seymour’s mess. In Parliament, Chris Hipkins asked whether Seymour had acted consistently with the government's legal obligations. Luxon replied: "The minister explained his comments well and actually I'm quite confident that he did not at any time direct RNZ or TVNZ." This was technically accurate but beside the point. Hipkins had asked the wrong question. The right question would have been: does the Prime Minister consider it appropriate for any future shareholding minister – of any party – to use public commentary to signal that government board appointments will change the management of a Crown entity, given that he has declined to rebuke his Deputy Prime Minister for doing precisely that? That question cannot be answered so easily. Instead Hipkins handed Luxon a get out of jail free card and he used it.

But overt political direction was never the real issue. Seymour is the door. We need to look behind it.

Governance Negligence

New Zealand is obsessed with government and negligent about governance. We debate personalities, parties, and poll numbers endlessly. We pay almost no attention to whether the institutional structures and systems within which our politicians operate is sufficient to constrain them when they decide the rules are politically and personally inconvenient.

Our governance structures and systems were designed in the 1980s, in the flush of corporatisation ideology, when it was believed that applying private sector models to public institutions would produce both efficiency and independence. Forty years on, the model has not been redesigned, only patched, leaving us with a framework that combines the worst of both worlds.

Boards are appointed by the very minister whose conduct they are supposed to be independent from, populated by a rotating cast of chairs drawn from a very small pool, selected through processes amenable to political preference and indifferent to genuine governance expertise.

Over-direction of the state means boards have little room to act independently. They are subject to ministerial letters of expectation and incessant monitoring agency reporting. They have to adhere to Office of the Auditor-General expectations based on External Reporting Board standards that have little to do with the purposes of the agency. They are subject to primary and secondary legislation requirements they cannot touch and required to meet ever-changing government targets with no additional delivery resourcing. They are all vulnerable to funding withdrawal or outright disestablishment on the whim of a single minister.

To exacerbate the problem, the Public Service Commission code of conduct for statutory entities prohibits board members from making statements that might be regarded as political, effectively muting some of New Zealand's most experienced institutional minds at the very moment their critical voice is most needed. The model grows more ossified each year because the people best placed to innovate it are missing in action.

NIFO

The second structural failure compounds the first. New Zealand's small population means we elect members of parliament who become Cabinet ministers who don’t have a professional understanding of the difference between government, governance and operational management. Most are demonstrably unfamiliar with the foundational principle of board governance – noses in, fingers out (NIFO). Directors (Ministers) should stay informed, curious, and strategic – noses in – without micromanaging or controlling day-to-day operations of their agencies – fingers out. It’s a helpful way of remembering the boundary between ownership and delivery. No-one teaches our cabinet ministers this. There are no sanctions on them for not knowing. There is no independent watchdog possessing the standing or the teeth to constrain ministerial or public servant overreach.

It’s all rather bleak!

The change needed

The conversation New Zealand needs to have is not about Seymour's comments on The Platform, or whether Luxon understood what his deputy was doing. Those questions will not change anything in the absence of more contemporary and fit for purpose models for public institutional governance.

New Zealand’s national imagination may have started and stopped in the 1980s with the SOE model, but internationally there are many more updated options that other countries are implementing with success.

Alternative board member selection processes such as structured firewalls and merit-based, multi-gate selection processes that make it difficult for any single government to stack a board with ideologically aligned friends and donors. Independent appointment commissions that assess candidates against published criteria, insulated from ministerial discretion. Including staff-elected employees in the governance structure to act as a check on external political pressure. Cross-party selection committees to ensure an appointee has bipartisan legitimacy, making it harder for future governments to remove them simply because the political winds have shifted.

Alternative funding options not able to be dismantled by incoming governments include ring-fenced multi-year statutory funding settlements or levies set by Parliament rather than annual Budget decisions made in Cabinet. Public interest trusts, governed by boards with no government connection and no ministerial appointment power. Holding companies that focus on a portfolio’s longer-term public value rather than short term political priorities. 

We should be taking inspiration from these different models and adapting them to the unique circumstances of Aotearoa.

The embarrassing truth is that right now New Zealand operates not as a constitutional democracy with robust checks and balances on the abuse of political power, but rather as a small court – where access, appointment, and protection flow from proximity to power, and where the rules hold only as long as the powerful find them convenient.

This has to change. But who outside the court can lead it?