Nine Labour ministers will be forced to divest shares if the Prime Minister sets in place an Australian-style ban on ministerial shareholdings in public and private companies.

Among them are senior Cabinet ministers like Ayesha Verrall who owns a property company with her partner, Damien O’Connor, who co-owns two farming companies and a tourism consultancy; and David Parker who has shares in six forestry, health, tech and funds management companies.

If Chris Hipkins’ proposal was intended to cause discomfort to wealthy National and Act MPs who aspire to ministerial posts after the election, the outcome has been unexpected.

Some senior National MPs – Chris Bishop and Simeon Brown – immediately told Newsroom they would divest their shares if elected to Government, regardless of whether the rules are changed.

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Every Australian Prime Minister drafts their own ministerial code of conduct, which has no legal status beyond discretionary enforcement by the Prime Minister. Anthony Albanese’s code, set last year, bars shareholdings. That’s been challenging for some of his ministers: three senior government ministers had to rush to sell shareholdings in private companies.

Hipkins says in addition to other steps to ensure ministerial disclosure and to manage conflicts of interests, he’s sought advice on a full restrictions regime on shareholdings for Ministers. “Adopting this approach would be a significant change in the New Zealand position and requires further consultations, but it is my personal view it’s appropriate to take this step.”

National leader Christopher Luxon says a bar on ministerial shareholdings “seems quite reasonable”, and he’s happy to consider it. 

“I don’t support the idea that you can’t be a Cabinet minister, if you own shares in something. We don’t want it to be a priesthood where you have to enter unclothed and penniless.”
– David Seymour, Act leader

Simeon Brown says he has about $1000 of shares in National Australia Bank – the same company that got Michael Wood in trouble. The shares date back to when he worked for its New Zealand subsidiary, BNZ. “Regardless, I’ll be divesting myself of those,” he says.

“There are obviously considerations which need to be taken into account because people do come to politics with a range of backgrounds. But at the same time, you are privileged to be in the position and have significant influence. So there’s obviously a balance which needs to be struck. What’s of most critical importance is, whatever the rules are, they must be complied with.”

Chris Bishop’s disclosed shares include 500 in the Wellington craft brewery Parrotdog. “The publicity I get for owning them is comical,” he says. “My plan has always been to divest the small shareholdings I have in a few places the day after we win the election, if we are fortunate to do so. Just so much cleaner.”

Judith Collins has shares in hotel operator CDL Hotels Ltd. "I’ve held them for well over 20 years, don’t trade them and wouldn’t worry if Prime Minister Luxon said I should divest them. After all, I’ve always declared them."

National's Kaikōura MP Stuart Smith is more equivocal about divesting ownership interests. He has shares in 35 companies, most of them publicly listed and, like Wood, including telcos Chorus and Spark.

"I would be prepared to look at the options but would absolutely follow Cabinet Office advice," he says.

"Financially successful people have not ruled themselves out of holding ministerial office as a result of the rule."
– Professor Luke Beck, Monash University

"Quite frankly the Prime Minister is attempting to shift the focus away from his inability to control his ministers. Like most Kiwis I cannot understand how a senior minister could think it acceptable to ignore Cabinet Office advice. He would have lost his job long ago in the private sector."

Labour ministers, similarly, would commit only to following the existing disclosure rules, not to divesting shares. Parker would say only that he'd disclosed all his shareholdings as required by the Cabinet Manual.

Jan Tinetti has disclosed a 50-50 shareholding in Etools, a domain name management company that was operated by her husband. "It is no longer trading and is in the process of being wound down."

Willow-Jean Prime has a three-way family rental property partnership that has no current assets or business, and a beef grazing block partnership with her husband. She has disclosed all her ownership interests as required by the Cabinet Manual, her office says, and has not had to declare the interests in any ministerial decisions.

Newsroom approached seven Labour ministers who have disclosed shareholdings; none committed to divesting them.

While several Act Party MPs have disclosed shares or ownership interests in farms, pubs and other businesses, most would not be contenders for ministerial appointments. Only Nicole McKee, who has an interest in consultancy Firearms Safety Specialists NZ Ltd, and Simon Court, with shares in the non-trading Strategic Engineering NZ Ltd, might be affected.

Act leader David Seymour says he has no shareholdings; only his managed KiwiSaver fund.

"I think it's a case of Labour solving the wrong problem," Seymour says. "The issue is not that we don't have a good regime for declaring interests, recusing yourself from decisions where you might have an interest one way or another, and getting on with it.

"The problem is Michael Wood didn't follow that. And not only didn't follow it, but was really weirdly non-compliant. He had to be asked so many times – the Prime Minister asked him if he had more interests, he said he didn't, it turns out he did. So the problem here is a just bizarre and really astonishing level of non-compliance by Michael Wood.

"I don't support the idea that you can't be a Cabinet minister if you own shares in something. We don't want it to be a priesthood where you have to enter unclothed and penniless. That you live in a monastery for the time you're a minister. 

"It should be that the House of Representatives and the Cabinet should be representative of New Zealand, and it should have people that own shares and trade in shares as well as people with a variety of other skills and experiences."

Professor Luke Beck, from Monash University, says the Australian Government's code of conduct requires that ministers divest themselves of investments and other interests in any public or private company or business, other than public superannuation funds or publicly listed managed funds or trust arrangements where the investments are broadly diversified and the minister has no influence over decisions.

Even then, the fund or trust may not invest to any significant extent in a business sector that could give rise to a conflict of interest with the minister’s public duty.

"This rule does not seem to have had any negative consequences," Beck says. "Financially successful people have not ruled themselves out of holding ministerial office as a result of the rule.

"A general problem with the code is that it has no legal status and its enforcement is pretty much at the Prime Minister's discretion. But it is a politically useful document in setting out the integrity expectations applicable to ministers.

"That said, when the National Anti-Corruption Commission comes into operation next month, some very serious breaches of the code might amount to corrupt conduct."

Newsroom Pro managing editor Jonathan Milne covers business, politics and the economy.

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