New Zealand

Opinion: Agree with Comments

Comment: New Zealand response to TI question:

As an established constitutional monarchy with independent and professional civil service, New Zealand maintains a state system with clear formal provision for effective and independent legislative scrutiny of policy. Under the Constitution Act 1986, the power of government is distributed between three branches: the Legislature (Parliament), the Executive (Ministers) and the Judiciary. Parliament passes the laws of New Zealand on the advice of the Executive branch of government. The Executive administers these laws subject to the scrutiny of Parliament. If Parliament disagrees with the administration of the laws, it can require, by majority vote, the Executive to change its policy. This would be an unusual situation in practice because the Government, which includes the Executive branch, normally has a majority in Parliament and it governs by having the confidence of Parliament.

Ultimately, the power to exert independent legislative oversight over any policy adopted by the government, including defence policy, remains the right of Parliament (the legislature), if it deems it necessary, and if a sufficient majority of parliamentarians wish to do so. If the Government does not have the required numbers in the House to support its policy agenda it may be considered to have lost the confidence of the House and the Government must resign or seek a general election to effect a new political settlement.

Defence legislation goes through normal parliamentary scrutiny in line with parliamentary practice (as detailed in McGee, 2005 and the House of Representatives Standing Orders) and is not exempt from this process. A transparent process of debate and approval or veto occurs for laws, budgets, major arms procurements and other key decisions and is evidenced by transcripts of all proceedings, select committee findings and other relevant material published on the Parliamentary website.

The Transparency International National Integrity System Assessment for New Zealand in 2013 concluded that the New Zealand Parliament was generally free from subordination by the Executive but that the quality of its oversight could be improved, including by focusing on the control of parliamentary business, and the organisation of select committees (see pp.69-70).


New Zealand response to comments in the TI draft assessment:

In the draft assessment it was noted that there is a “marked absence of experience with defence across parliament”, as noted by an unnamed interviewee. A review of the biographies of the current members of the Foreign Affairs, Defence and Trade Committee provides evidence that this is not the case. This committee of Members of Parliament includes a former Minister of Foreign Affairs and Minister of Defence, a longstanding member of the New Zealand Police and security contractor who spent time in Iraq, a former United Nations official with twenty years work experience in Somalia, Rwanda, Liberia, Iraq, Afghanistan and other states, and an international relations academic.

Other Members of Parliament in the past have included former New Zealand Defence Force officers and New Zealand diplomatic staff with a sound understanding of security policy.

Members of Parliament are well served in New Zealand with regards access to information on defence and other policy matters. With an active parliamentary library service and access to specialists within the sector, Members of Parliament have every opportunity to keep informed and access current information on the sector. The Ministry of Defence and New Zealand Defence Force have also run annual activities to further impart knowledge to Members of Parliament on Defence Force activities, including through base visits and through observance of military exercises.


Sources:

General background on NZ system:
-thttp://www.parliament.nz/en-nz/about-parliament/how-parliament-works/ppnz/00HOOOCPPNZ_431/chapter-43-international-relations
-tConstitution Act, 1986, paras 6, 15. Last amended 17 May 2005. http://www.legislation.govt.nz/act/public/1986/0114/latest/DLM94204.html
-tDavid McGee, Parliamentary Practice in New Zealand, 3rd ed., Dunmore Publishing Limited, Wellington, 2005. http://www.parliament.nz/en-nz/about-parliament/how-parliament-works/ppnz/00HOOOCPPNZ_Title1/about-this-publication ; http://www.parliament.nz/resource/en-nz/00HOOOCPPNZ_Contents1/8c3899574fed7f92cef2e91ae2d2e8231bc27acc
Previous Transparency International reports:
-tTransparency International. “New Zealand National Integrity System Assessment”, 9 December 2013. http://www.transparency.org.nz/docs/2013/Integrity-Plus-2013-New-Zealand-National-Integrity-System-Assessment.pdf

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Disagree

Comment: Transparency International’s comments highlight that there is formal provision for independent legislative scrutiny of defence policy for which the New Zealand Government agrees.

Suggested score: 4

Opinion: Disagree

Comment: New Zealand response to TI question:

In the New Zealand parliamentary system, oversight of defence and security is exercised by two separate committees. The defence portfolios (Vote Defence and Vote Defence Force) are overseen by the Foreign Affairs, Defence and Trade Committee. The security portfolios (Vote Communications Security and Intelligence and Vote Security Intelligence) are overseen by the Intelligence and Security Committee.

The Parliamentary Select Committee for Foreign Affairs, Defence and Trade exercises oversight of all Defence related matters under Chapter 4 of the House Standing Orders. The Committee is comprised of members drawn from all major parties represented in Parliament as guided by paragraph 185 of the Standing Orders. The Committee can require witnesses to appear before it, its proceedings are open to the public, and its findings are published.

Each department responsible to the committee undergoes questioning on major matters of business such as annual reports. The questions list and supplemental questions in response to the Annual Reports can be lengthy (of 100 plus questions) and the answers require detail. For example, the 2013/14 review, as available on the Parliament website ran to 130 questions and over forty pages of response from the Ministry of Defence alone.

The Committee’s work was highlighted through the large amount of work undertaken during the Defence White Paper process. The level of interaction between the Ministry of Defence, New Zealand Defence Force and Foreign Affairs, Defence and Trade Committee during this process was extensive and this allowed for effective and inclusive policy formation. The Committee was able to oversee all key documents that contributed to the Defence White Paper 2010 and the broader review process.

It is also important to note with regards procurement and major projects that the Major Projects Report is a document specifically authorised by the Parliamentary Select Committee. This is reflective of the fact that the Select Committee has a keen interest in maintaining close oversight of such procurement and expects provision of a high level of detail from Defence to the Committee.

The flow of information between Select Committee members and Defence is often extensive. Members also often request additional documents through New Zealand’s Official Information process.

The Intelligence and Security Committee is governed by its own statute that came into force in 1996. The functions of the Committee are set out in section 6(1) of the Intelligence and Security Committee Act 1996, namely that the Committee will:

a)texamine the policy, administration, and expenditure of each intelligence and security agency,
b)tconsider any bill, petition, or other matter in relation to an intelligence and security agency referred to the Committee by the House of Representatives,
c)treceive and consider the annual report of each intelligence and security agency,
d)tconsider any matter referred to the Committee by the Prime Minister with security or intelligence implications:
e)tpresent an annual report to the House on the activities of the Committee and make this annual report publicly available on the Internet,
f)tconsider and discuss with the Inspector-General of Intelligence and Security his or her annual report as presented to the House of Representatives.


New Zealand response to comments in the draft assessment:

a) It was noted in the draft assessment that paragraph 185 of the Standing Orders is not binding and that based on the feedback from a researcher that in practice ruling parties have been able to use coalition agreements to weight the committee favourably.

While the Standing Orders are not binding (and rightly so), if a question arises about the application of a standing order, the Speaker of the House can rule on it. Further, coalition agreements are part of New Zealand’s Mixed Member Proportionate-based electoral system and the main party in a ruling coalition rightfully has the ability to call for a coalition partner’s inclusion in the select committee in line with the standing orders.

b) Members of the committee are elected MPs and, as such, are qualified to serve as subjects of the Crown and representatives of the people (see McGee, chapter 1). The New Zealand experience, which is based off democratic principles, is that Members with a range of experiences can add value to the political process. In fact, Members with experiences from outside the Defence sector often make an important contribution to committee business and increasing transparency. In practice, the committee is also balanced by some experienced Members with years of experience in the House, as Ministers in national security portfolios, or experience in the Defence and security sectors. Experienced Members of Parliaments from both sides of the House, who are most often selected on the basis of this experience are present in the committee. The comment “committee members very rarely have significant credible experience with defence policy” and by extension that “it is limited in its capacity to engage critically” is factually incorrect and should be removed. As noted, the committee includes a former Minister of Foreign Affairs and Minister of Defence, a longstanding member of the New Zealand Police and security contractor who spent time in Iraq, a former United Nations official with twenty years work experience in Somalia, Rwanda, Liberia, Iraq, Afghanistan and other states, and an international relations academic. Other Members of Parliament in the past have included former New Zealand Defence Force officers and New Zealand diplomatic staff with a sound understanding of security policy.

c) The statement that the committee has “been predominantly engaged with trade and foreign affairs legislation” is innacurate. As noted, as a matter of process each department responsible to the committee undergoes the same process of questioning on major matters of business such as annual reports. This ensures there is a certain balance amongst issues that goes to committee.

d) The comment that “there is only brief and superficial evidence of the committee scrutinizing defence matters” is also inaccurate. n practice members of the select committee scrutinise the material closely prior to the session and can also follow up on specific points out of session. We would encourage Transparency International to further explore the Select Committee documents on the website, and in particular the record of formal questions responded to by Defence. The questions list and supplemental questions in response to the Annual Reports can be lengthy (of 100 plus questions) and the answers require detail. For example, the 2013/14 review, as available on the Parliament website ran to 130 questions and over forty pages of response from the Ministry of Defence alone.

In response to the final assertion that “there is a lack of public evidence that committees have undertaken significant examination of major defence procurements over the last decade”, a view of the same questions document noted above shows that specific questions are raised on Defence major projects. This is but one of a range of documents on the select committee website containing such evidence. It is also important to note with regards procurement and major projects that the Major Projects Report is a document specifically authorised by the Parliamentary Select Committee. This is reflective of the fact that the Select Committee has a keen interest in maintaining close oversight of such procurement and expects provision of a high level of detail from Defence to the Committee.

In response to the critiques from the media and commentators mentioned, should these assertions have had a strong basis it is in the select committee that they should expect to have received some attention, but such criticism has been limited. This is despite the Committee calling for Defence to produce a ‘Major Projects Report’ with support from the Office of the Auditor-General to provide a high level of oversight of all major Defence capability projects

e) The last paragraph in the draft assessment draws comparison with the level of scrutiny in the UK, US and Australia, “irrespective of comparative spending or activity by those nations’ armed forces”. It is unclear the methodology used in making this comparison, and the meaning of the final statement quoted above. The Committee structure in New Zealand is in fact very similar to that in Australia, with coverage of the same group of portfolios and to a comparable level of detail. Further, spending across those countries is not comparative. New Zealand has a Defence budget ten times smaller than that of Australia, but the country’s Major Projects Report is an example of a Select Committee sanctioned report that in fact provides a level of detail far greater than equivalent Australian report. The report also stacks up well against the UK Audit Office’s version of the report, which covers procurement across a defence budget twenty-five times larger than that of New Zealand. As a result, the level of information provided by the New Zealand report on such features of procurement such as financial payments is to a much more granular level.

As noted in the reponse, the Committee can require witnesses to appear before it. The meaning of the draft comments in the draft assessment on this issue are unclear.


Sources:

-tGeneral info on Foreign Affairs, Defence and Trade Committee:
otStanding Orders of the House of Representatives, 1996, Chapter 4. Last amended 30 July 2014. http://www.parliament.nz/resource/en-nz/00HOHPBReferenceStOrders4/eb7c8b9e4a6c7aa88a47d14dc4100513b2557e60
otNew Zealand Parliament. “Parliamentary business - Select Committees”. www.parliament.nz/en-nz/pb/sc
otNew Zealand Parliament. “Select committee details - Foreign Affairs, Defence and Trade”. http://www.parliament.nz/en-nz/pb/sc/details/foreign-affairs/00DBHOH_BBSC_SCFDT_1/business-before-the-foreign-affairs-defence-and-trade
otNew Zealand Parliament. “2013/14 Annual Report – Questions 1-130. http://www.parliament.nz/resource/en-NZ/51SCFDT_EVI_00DBSCH_OTH_59317_1_A425
-tIntelligence and Security Committee
otIntelligence and Security Committee Act (1996): http://www.legislation.govt.nz/act/public/1996/0046/latest/DLM392267.html
othttp://www.parliament.nz/en-nz/pb/debates/debates/51HansD_20150218_00000020/intelligence-and-security-committee-—-membership
-tPower to scrutinise Defence Ministry/Agency performance:
otAnnual reports reviewed: Review of Defence Policy and process: New Zealand Government. “Defence Review Terms of Reference announced”, 21 April, 2009, http://www.beehive.govt.nz/release/defence-review-terms-reference-announced; Ministry of Defence. “Defence Review 2009: Public Consultation Document”, 26 June 2009. http://www.defence.govt.nz/pdfs/defence-review-2009-public-consultation-document.pdf; New Zealand Parliament. “Select committee advice - Defence Amendment Bill”. Last updated 28 June, 2012, http://www.parliament.nz/en-nz/pb/sc/documents/advice?custom=00dbhoh_bill11160_1
-tMajor Projects Reports: Note that although the public release of these documents is through the Ministry of Defence website, the documents are prepared on the direction of the Select Committee.
otMinistry of Defence. &quoute;Major Projects Report 2012” http://www.defence.govt.nz/reports-publications/major-projects-report-2012-volume-1/contents.html
otMinistry of Defence, “Major Projects Report 2011: http://www.defence.govt.nz/reports-publications/major-projects-report-2011-volume-1/contents.html
otMinistry of Defence, “Major Projects Report 2010:
http://www.defence.govt.nz/reports-publications/major-projects-report-2010/contents.html

New Zealand comments (8 October 2015)
We neither accept the rating nor agree with the comments. We do not believe that the rating accurately follows your guidelines, in which we are clearly a ‘4’ and nor does it reflect a sound judgement of the work of the New Zealand select commitee that oversees Defence matters. We provide specific comment below.

-tPara 3: “…which MOD was obliged to publish…” – The tenor of this paragraph and particularly this text is inaccurate. The MoD took a decision from the outset of the Defence Review to make the consultation process and record of all major decisions public. This action was discussed at all stages with the select committee. To its credit, the select committee worked extensively with officials to make the consultation process happen and was heavily involved in the outreach programme. This practice has also been adopted for the Defence White Paper 2015 process that is now taking place. Select committee members have been involved through joining and addressing all the public meetings and encouraging questioning of officals and defence personnel.

-tPara 4: Our comments on the process of questioning for Departments by the Select Committee have been placed in a position where they are out of context. Our point was that the Select Committee questioning process supported a level of balance in the Committee with regards standing business to which the committee must attend. It does not work in conjunction with the statement that you make that “[M]aterial and transcripts on the Parliamentary website also show that it has been predominantly engaged with trade and foreign affairs legislation.”

-tPara 4: “…, it appears that scrutiny does not always appear to target issues that were politically visible” - This point is poorly worded and we challenge the view that ”political visibility” is an appropriate measure for whether or not the Committee should scrutinise any particular issue, or whether or not it is scrutinising the right issues. The Comittee should not be driven by the issue of the day. Rather, we maintain that the New Zealand system provides appropriate opportunity for regular scrutiny of both budgetary and operational matters, and that in practice the Committee does so to an appropriate level. In short, the fact that the Committee regularly scrutinises other matters is presented in the report as evidence that the Committee is ineffective at defence scrutiny, rather than simply reflecting the relative significance of defence issues in the New Zealand public and political interest. This reference should be removed.

-tPara 5, line 1: “holding the Minister of Defence or Defence chief executives to very close account” – We do not accept this statement for the previously mentioned reasons and the language on these roles is inaccurate. The CDF is not technically a Chief Executive role even though the appointment process is in many places aligned. It would be appropriate to spell out fully the roles of CDF and Secretary of Defence.

-tPara 5: “Source 2 points out that in practice the Minister and CDF are required to attend two scheduled public hearings…” – This statement is incorrect. The CDF and Secretary of Defence are both to attend two public hearings a year, while the Minister is to attend one hearing.

-tPara 5: “significant procurement problems” – This is a leading and unbalanced comment. It is not supported by evidence and it has not been established that any procurement problems are significant.

-tPara 6: This paragraph contains unbalanced language, which does not take into account other views of the issues raised by the author. There are also grammatical issues with this paragraph, which need to be dealt to.

otLine 1: “A 2011 book by journalist Nicky Hager highlights [‘asserts’ or ‘claims’ there was] selective presentation of report by Nicky Hager of data to parliament by Defence (it should be noted this was from previous governments).”

otLine 3: “While t[T]he government contested[‘s’ or ‘disagrees with’] the interpretation Hager took here, [It appears that} nothing was presented to substantively discount the evidence he presented, and that his research has consistently held credibility with independent observers.”

-tReviewer comments: A - The reviewer claims that negative comments judging the effectiveness of the Select Committee are written as risks, rather than as statements. Through our study of the language used this is only the case with regards to where you refer to risks of the select committee not being partisan in paragraph 1. You have qualified some assertions and made them indirect by referencing that issues ‘appear to’ be present, but this is not the same as using risk-focussed language. The subsequent language is still not neutral to the reader and you are still placing in these sentences a judgement.

-tReviewer comments: B – You put forward an argument around the effectiveness and experience of the select committee members. We challenge this argument as well as the strong line of argument that is line with this comment in the report. Particularly, you comment that “It is not contested that any of the committee members are unsuitable to sit on the committee” and then proceeds to do so. We suggest that this line of reasoning is removed as it is subjective and not well supported. Points below:

otAt a principles level, the argument around experience of members is out of touch with the principles of democratic governance in New Zealand and in many jurisdictions internationally. Members of an elected parliament are, first and foremost, subjects of the Crown and representatives of the people (see McGee, Chapter 1). These are qualifications in themselves for Members of Parliament to sit in judgement on Select Committees, in Parliament or other Parliamentary bodies in legal judgement for the people.

otThere is an implied judgement in your comments that ‘time in parliament’, experience directly in the Defence sector, or time on other related committees provides a level of experience that trumps experience in other fields. We reject this assertion. The New Zealand experience is that people with a range of experiences and high-level management expertise can add value to political processes. Experience from outside of defence matters can, in fact, be a benefit for transparency. Select committee matters often involve more management and general judgement-related activities than solely policy-making. The experience that Select Committee members can bring in from business circles or experience in a range of other organisations can add essential perspective that would otherwise not be present. In fact, in recent years the New Zealand Defence sector has been cognisant that externals with experience in leading both public and private organisations and delivering change can be valuable members on a range of defence committees and panels. As a result, externals are used on Defence’s Capability Management Board and are consulted during New Zealand’s Defence White Paper process. No evidence has been put forward that New Zealand’s system of broad based civilian, elected representatives is not effective.

otYour comments doubting the level of experience or suitable experience of New Zealand Select Committee members we find inaccurate and unbalanced. Some research on the former policeman would show, aside from the fact that he worked for a small Police Force that works closely with its Defence counterpart, he grew up in an Air Force family and worked extensively in the area of security internationally. The former UN official has been the opposition’s Foreign Affairs spokesperson and his humanitarian work in conflict areas saw him conducting work alongside international Defence personnel, including NZDF staff, who are often tasked to take part in joint humanitarian and security missions and will continue to be deployed in this context. If Transparency International did further research you would find other examples of experience across the Committee that are pertinent but your current comments do not reflect a high level of research.

otYou assert that the Committee is less effective than counterparts in other jurisdictions. No evidence is presented that these foreign jurisdictions are more effective due to the members’ specific defence experience existing on the relevant oversight body. The comparison with the UK Defence Committee that you raise is a complex one and requires balance that you have not provided. The UK Defence Committee contains 11 members to the NZ FADTC’s 10 members. It is a dedicated defence-related committee whereas FADTC covers two other portfolio areas. You have, however, not factored in that the level of representation that FADTC presents, in a country of four million people is far higher per capita than that of the UK Committee, which is for a country of population 64 million people and has much more extensive strategic defence commitments and history of public interest in defence than in New Zealand. The fact that New Zealand has a Select Committee covering this portfolio to the depth it does, with members with experience internationally and at the highest levels nationally is very significant and is not given due attention. We note that Australia also has a committee with combined areas of responsibility, and for which the membership of thirty MPs is still less per capita than New Zealand’s level of representation. Again, this is for a country with more extensive strategic defence commitments, a much higher per-GDP point spend on Defence and a history of high public interest. We raised the Australian example in our Government response as this has not been addressed. We also looked at work commissioned by these select committees across UK, Australia, and New Zealand, most notably the Major Projects Report, for which the level of detail provided the Select Committee in New Zealand was to a much more granular level.

-tReviewer comments: C - You assert that the Committee has dealt proportionately more with foreign affairs and international trade issues. Aside from the wrong placement of the reference to our earlier comments, your remarks also do not touch on the realities of parliamentary and select committee practice and draw spurious conclusions, including implying that scrutiny of the defence issues raised is ineffective. The current level of coverage of the Committee is appropriate for the particularly duties the committee performs. The Committee has a key role to play in scrutinising and coordinating public comments on international treaties such as FTAs. This is an area of work in which Defence has no business to transact but that is a core component of New Zealand foreign policy and international trade. It is also an area of high public interest as shown by recent Trans-Pacific Partnership Agreement discussions. The balance of work in Defence falls on the side of ‘operational’ commitments rather than ‘policy formation’ whereas MFAT leads a programme predominantly around ‘policy formation’ that requires extensive public scrutiny. That area of policy work is also where the public interest lies, and where there is an expectation that the committee will focus its attention. This is not to say that Defence ‘policy’ issues are not addressed, but that are tackled by the committee with a sense of due balance in where they stand in relation to parliamentary business.

-tReviewer comments: Your references to ‘use of PR firms, spending on products etc. are unclear to us. If these are references to particular FADTC hearings then please reference the documents used and we can follow up.

-tReviewer comments to govt and chapter: Point of clarification – the power of the committee to require witnesses is a convention in standing orders and not provided for in law. In practice, no issues have been experienced in witnesses not attending.

Suggested score: 4

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Disagree

Comment: The TINZ Board supports a 4 for this - while the standing orders are not binding the Speaker of the House can rule on this if a question arises. The power to scrutinize the performance of the Defence Ministry and members of the Committee are chosen based on experience.

Suggested score: 4

Opinion: Disagree

Comment: New Zealand response to TI question:

The most authoritative statement of the New Zealand Government’s Defence policy is the Defence White Paper, which is both available publicly and is developed in a setting that actively promotes public involvement.

This open approach taken during the development of the last White paper was illustrated through the extensive and exhaustive public consultation process that was taken, the record of which was publicly released in November 2010. The White Paper was prepared after the undertaking of the public consultations process. (The public discussion document was published on 5 June 2009).

As part of the consultation process a full academic round-table meeting was coordinated, and Professor Hugh White, a highly respected Professor of Strategic Studies from Australia National University was invited to visited and take part in consultations. The Ministry of Defence also engaged with Returned Service Association branches across New Zealand’s regions and with New Zealand youths through the Ministry of Youth Development. This was the first time that such an extensive public consultation process was undertaken, with over 600 submissions received and 250 people attending public meetings. Notable for a country New Zealand’s size, more public submissions were received than by the Australian Government during their White Paper consultation process.

The other streams of work that support the White Paper include the Defence Assessment 2009 and independent reviews and companion studies. All of these documents are available through the Ministry of Defence website and were scrutinised at the time by Foreign Affairs, Defence and Trade Committee.

As a constitutional democracy with a House of Representatives, Defence policy such as that found in the White Paper is openly debated within the House as well as the Foreign Affairs, Defence and Trade Committee. Transcripts of debates and Committee reports are readily available from the parliamentary website. This process ensures the Minister and his officials are held to account for policy decisions, including the funding of the Defence Capital Plan that supports the policy contained in the White Paper.

Other government policy documents are commonly made public on departmental websites or can be requested under the Official Information Act 1982.

The Ministry of Defence and the New Zealand Defence Force have actively promoted debate around New Zealand defence policy and the strategic environment. Examples of this include:

•tMinistry of Defence financial support and other contributions to the Centre for Strategic Studies at Victoria University of Wellington, which is an independent think tank that provides frequent media comment on a range of defence and external issues affecting New Zealand and the region;
•tSenior Defence officials’ engage regularly with other academic programmes around New Zealand, including with the Foreign Policy School at the University of Otago;
•tSupport of the Centre for Defence and Security Studies programme at Massey University through partnership with the New Zealand Defence Force Command and Staff College and additional Ministry of Defence support;
•tGovernment officials are involved in regular seminar series conducted by the New Zealand Institute of International Affairs, an independent think-tank that covers foreign and defence policy and key security issues facing New Zealand.

There is a growing body of academic literature on Defence Policy in New Zealand, which has come through these and other channels. There is also public comment by the Government in reply to media coverage of Defence and security policy.

Defence is not a portfolio enjoying naturally high levels of public interest in New Zealand, and the Defence agencies have, therefore, maintained an active posture to help promote public debate where possible. The Government has made clear a range of initiatives it has supported to achieve this, including support for academic study programmes, outreach seminars around New Zealand and extension of funding to various public institutions

New Zealand response to comments in the draft assessment:

The process undertaken is rigorous and transparent and is in line with the comments noted in the guidelines for a rating of four. Further, New Zealand has provided evidence on the Defence White Paper to show a level of engagement on the Defence White Paper that surpassed that of larger countries that have previously received a four rating.

It is commented in the draft assessment that “the level of real debate and scrutiny is very limited…” but little evidence is provided for this statement. In the Government response we have provided reference to specific forms of Defence engagement with think tanks and academic agencies that shows this not to be the case.

In the draft assessment one unnamed researcher has been referred to as having noted that “public debate tends to occur late into the decision-making process. The New Zealand response above clearly shows through simple noting of dates and steps in the process that public consultation was held well before decisions were made on the White Paper document, and that the public submissions were all passed through the Foreign Affairs, Defence and Trade Committee. The public consultation process for the White Paper was planned from the beginning to ensure that the public felt informed and could have their say. We request removal of this comment as it is factually incorrect.

Sources:

-tOverall public access to defence policy is on: http://www.defence.govt.nz/defence-review.html
otDefence White Paper 2010 (latest White Paper): http://www.defence.govt.nz/reports-publications/defence-white-paper-2010/contents.html
otMinistry of Defence. “Defence Assessment July 10”. July, 2010. http://www.defence.govt.nz/pdfs/defence-review-2009-released-defence-assessment-july-2010.pdf
otMinistry of Defence. “Defence Review 2009: Public Consultation Document”, 26 June 2009. http://www.defence.govt.nz/pdfs/defence-review-2009-public-consultation-document.pdf
otMinistry of Defence. &quoute;Defence Review: Release of the Defence Review Submissions received from the Public and Youth&quoute;. http://www.defence.govt.nz/review09/submissions-released-oia.html
otAlso released via the Media through internet press release with links: Scoop, “New Zealand Defence White Paper 2010”, 2 November 2010: http://www.scoop.co.nz/stories/PA1011/S00025/new-zealand-defence-white-paper-2010.htm
-tNew Zealand Defence Force policy page: http://www.nzdf.mil.nz/corporate-documents/default.htm
-tOfficial Information Act: this applies to the process and all documents and knowlede created through it. See:
otOfficial Information Act, 1982. Part 2, Para 12. Last amended 01 January 2014. http://www.legislation.govt.nz/act/public/1982/0156/latest/DLM65382.html
-tExamples of Parliamentary Debate on Defence Policy:
otNew Zealand Parliamentary Hansard Vol. 698: Q11. &quoute;New Zealand Defence Force - Budget 2014 and Upgrades&quoute;, 7 May 2014, http://www.parliament.nz/en-nz/pb/debates/debates/daily/50HansD_20140507/volume-698-week-71-wednesday-7-may-2014
otNew Zealand Parliamentary Hansard Vol. 695. &quoute;Dean, Jacqui: Questions for Oral Answer — Questions to Ministers&quoute;, 4 December 2013, http://www.parliament.nz/en-nz/pb/debates/debates/speeches/50HansS_20131204_00000493/dean-jacqui-questions-for-oral-answer-%E2%80%94-questions-to
-tOpen Government Partnership:
otIn 2014 New Zealand joined the Open Government Partnership. The work involves increasing public participation and discussion in relation to government policy, including responding to the 2013 Transparency International recommendations. See http://www.ssc.govt.nz/open-government-partnership

New Zealand comments (8 October 2015)

The rating should be a ‘4’ as New Zealand clearly fulfils the criteria. Of the remaining points of contention in the Index assessment, we feel most strongly that this rating from Transparency International is not an accurate reflection of the situation in New Zealand. We have noted that a key test of the balance of the rating is through comparison with the 2013 ratings provided to Australia and the United Kingdom, both of whose systems New Zealand Defence sector staff are well acquainted. The Government-led and publicised practices relating to defence policy debate and formation in New Zealand have been soundly led, with many of these practices being more transparent and carried out more extensively than in these other jurisdictions.

As noted previously, the Defence White Paper consultation process is a significant one for a country of New Zealand’s size and the government received more submissions during the process than the Australian Government for their process. Defence is now under way in carrying out the Defence White Paper 2015 process and, as with the previous White Paper process, there has been an unprecedented level of contact with the public on the formation of this policy document. Public meetings have been held at all of the major city centres and academic institutions in those centres, but also in a range of other small to mid-sized towns and cities throughout New Zealand including Warkworth, Whangarei, Blenheim and so on. The Returned Services Associated has provided access to their facilities for these public meetings, which have been hosted by local MPs and MPs from FADTC, as well as senior leaders from both the NZDF and MoD. Members of the public have been invited to touch on any matter of interest in these sessions and/or to submit a written submission.

Specific comments on the text:

-tPara 2, line 2: The line finishes with “for example…” with no example given.

-tPara 2: “Other cases such as the recent decision to deploy troops to Iraq received substantial public and legislative critique but were passed nonetheless, while many critiques remain unaddressed at the time of writing” – This comment is not supportable at a principles level and we request that it is removed. As an elected government, the New Zealand Government has the prerogative to take decisions on this and other political issues. As with any issue of state interest, public opinion may be divided but the Government of the day has the right to take decisions. Public judgment on these final decisions is reflected through regular elections or through the Government of the day having to maintain the confidence of the public’s elected representatives in the House. In New Zealand this is a particular concern for the government due to our MMP electoral system, which often ends in the creation of minority governments.

On the matter of ‘critiques remaining unaddressed’, this is an unsupported assertion and should be removed unless evidence can be cited.

-tPara 2: “There was, however, no evidence found to support this.” We provided clear evidence previously that showed that public consultation was held well before decisions were made on the White Paper document. We request removal.

-tPara 2: “One researcher similarly stated…” – As well as our main point above, we note that the wording of this comment and the adverb ‘similarly” is misleading as the first part of the question deals with a different argument.

-tReviewer comments, Para 1: It is unclear what the reviewer is trying to assert with the comment: “…I move that most, but not all, contentious parts of the defence policy have been debated publicly”. Are you trying to assert that the Defence White Paper did not address publicly some contentious pieces of Defence policy? The consultation process for both recent Defence White Papers has been an open process in that members of the public are free to address any areas of interest or concern to them. Defence provides discussion points for the process but these are a support for discussion and not exhaustive.

-tReviewer comments, Para 2: The implication of your para 2, that all feedback from the public consultation process must be acted on by Government is a strange one and both not practical nor compatible with principles of government. As with all Government decision-making, it is the Government of the day’s prerogative to take decisions on such advice in the context of all state business. Advice from the Defence White Paper public consultations process was tendered to parliamentary select committee and government for their judgement. On the practical side, once received, such advice is considered by the government in the context of a range of other policy and fiscal matters within that portfolio, and within the broader state sector.

-tPara 2: In any case, the assertion that several themes from the public consultation process were not prioritised, including improving income and conditions of service, and greater funding for the Defence Force is incorrect. Further comment is provided below that explains the complex policy environment into which these public consultation points were injected:

otImproving income and conditions of service: Addressing conditions of uniformed personnel was part of the larger project of personnel-related work that was outlined in chapter 6 of the Defence White Paper on “A people-centred NZDF”. It is inaccurate to note that this was a) not included in the White Paper b) nor addressed since that time. It was, however, subsumed into a substantial piece of work that was focussed on the ‘total Defence workforce’. The civilianisation process was part of this larger effort and represented an approach to more broadly re-configure the NZDF to optimally deliver on government policy. For personnel staying in uniformed jobs, the White Paper signalled a full commitment to equipping them properly, training them effectively and, as noted on page 63, revising remuneration strategy “so that total remuneration is better aligned to the market. The aim is to retain skilled and motivated personnel in the NZDF”.

otGreater funding for the Defence Force: the reviewer’s comments are not accurate. The Defence White Paper did clearly recognise the strategic requirements of Defence around funding a sustainable capability programme. The White Paper laid out a channel for achieving this in line with the Government’s overall fiscal strategy in what was an extremely tough fiscal environment. There were no ‘Budget cuts’, as incorrectly asserted by the reviewer, but a Government guarantee was given to Defence that savings across a range of its initiatives could be redistributed back into the prioritised capability programme. This was a significant government action at the time given that the state’s books were otherwise stretched due to the Christchurch earthquake recovery and the response to the global financial crisis. By 2013 it was apparent that, despite the savings through the reforms, there would be a gap in the funding required to deliver on the capability programme laid out in the 2010 White Paper. When Defence articulate this to government, it was agreed by government that an investment of NZ$100.9m of operating funding in 2014/15 to achieve this in what was called the Defence Midpoint Rebalancing Review (for which documentation was released under OIA).

-tPara 2: We agree that the level of research is still limited and note that the MoD and NZDF are proactive in supporting further research. At the same time the departments are careful to do so in a manner that does not impinge on researchers’ work. The problem with the point here is that outside of playing such a positive but generally hands-off role there is nothing else the public sector or government of the day can do to achieve this. It is reflection of public interest. It is not a relevant factor in rating the Government for its part.

-tPara 3: Through the Defence White Paper 2010 process a practice was established whereby provision would be made for updating Defence policy on a regular basis and in response to major changes in the security environment. A general guide was that a White Paper should be completed every five years but the extent to which the policy required updating would depend on changes in the intervening period. Defence is now working towards the production of the Defence White Paper 2015. It has been adjudged that there has been significant change in the interceding period and so a full process is being carried out at present. This has included extensive public consultation to support the policy process, with senior NZDF officers and MoD officials visiting a range of cities and even small towns, as well as universities and organisations throughout the country. We enclose information on the process with this document.

Suggested score: 4

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Disagree

Comment: New Zealand response to TI question:

International engagement is very important to New Zealand and the country has a global reputation for having very little corruption. New Zealand is alert to the risks of corruption and for the need to be proactive in preventing corruption to maintain our international reputation and our standard of living and good standing.

In 2013 Transparency International published it’s “Integrity Plus National Integrity Systems Report” on New Zealand. The State Services Commission is having ongoing dialogue with Transparency International (New Zealand chapter) in relation to the recommendations made in that report, including those that relate to corruption risk.

The State Services have been working with civil society to raise awareness and inform them about the risks of corruption. The Serious Fraud Office helped develop comprehensive anti-corruption training, which was launched by Transparency International in 2014. The anti-corruption training can be accessed for free. Anti-corruption workshops were held around the country following the launch, and a training tool was also provided free through corporate sponsorship.

The New Zealand Defence Force and Ministry of Defence have policies of transparency and openness, and encourage engagement with civil society organisations and the New Zealand public in general. The New Zealand Defence Force routinely engages with Human Rights Watch, the International Committee of the Red Cross and Amnesty International.

In New Zealand, civil society organisations have the same legal protections and rights as other New Zealanders. Further, an accord between the New Zealand government and the community and voluntary sector exists, to support effective engagement to achieve social, economic and environmental outcomes for New Zealand. This Kia Tutahi Accord sets out expectations about how government agencies and communities will work together.

In 2014 New Zealand joined the Open Government Partnership. The work involves increasing public participation in government and discussion with civil society. This will include as part of the New Zealand Action Plan a review of Kia Tutahi to determine what is working well and what can be improved.

The NZDF is also a member of the Committee on International Humanitarian Law (IHL), which involves the International Committee of the Red Cross, academics and others. Further information on the work of this committee is available from the Red Cross. Obligations of the committee include meeting at least four times a year to discuss IHL issues

New Zealand legislation (including the Ombudsmen Act 1975, Official Information Act 1982, State Sector Act 1988, Defence Act 1990, and Protected Disclosures Act 2000) ensures that Defence has a policy of openness, balanced with the public interest in maintaining privacy and protecting national security interests. It is compulsory for every public sector organisation to operate appropriate internal procedures to receive and deal with information about suspected serious wrongdoing in or by that organisation. There are special rules that apply in relation to protected disclosures made in intelligence and security agencies.

All Defence Force Orders and corporate documents (such as the Defence White Paper, Statement of Intent, Defence Capital Plan, Four Year Plan, New Zealand Defence Force Plan and the Annual Report) are publicly available to civil society organisations and the public. The New Zealand Defence Force is audited regularly by the Office of the Auditor-General and by Audit New Zealand. New Zealand has ranked in the top four countries in Transparency International’s Corruptions Perception Index since the ranking was first introduced in 1995. After being ranked first equal in 2012 and 2013, New Zealand was ranked second to Denmark in the 2014 Corruption Perception Index, when Denmark increased its Corruption Perception Index by one point. New Zealand’s score was unchanged from the year before.


New Zealand response to issues in the draft report:

The question is aimed at Defence and the security sector but the sources and narrative used in the draft assessment are exclusively Defence oriented. The sources appear dated –most circa 2011. The narrative is focused on negative media reports around military “spin” on media releases and does not address the question concerning engagement with civil society organisations in the context of Defence Security policy and policy transparency.


Sources:

-tNZ state-sector initiatives relevant to CSOs
otAnti-corruption training: http://transparency.org.nz/2014/Anti-Corruption-Training-Tool-Launched.htm
otThe Kia Tūtahi Relationship Accord: http://www.dia.govt.nz/kiatutahi
otOpen Government Partnership: http://www.ssc.govt.nz/open-government-partnership
otComprehensive, national anti-corruption strategy: http://www.justice.govt.nz/publications/global-publications/o/organised-crime-all-of-government-response/a-national-anti-corruption-strategy
otReady Reference Engagement Guide http://www.dia.govt.nz/Pubforms.nsf/URL/ENGAGEMENT_GUIDE_FINAL.pdf/$file/ENGAGEMENT_GUIDE_FINAL.pdf
otThe former Good Practice Participate website resources can be found at: http://www.communitymatters.govt.nz/Promoting-good-practice
otDIA online engagement specialists: https://webtoolkit.govt.nz/blog/digital-engagement-team/
-tTransparency International “Corruption Perception Index 2014”: https://www.transparency.org/cpi2014/results
-tRelevant NZ legislation:
otDefence Act 1990: http://www.legislation.govt.nz/act/public/1990/0028/latest/DLM204973.html
otOfficial Information Act (1982)
otOmbudsmen Act (1975): http://www.legislation.govt.nz/act/public/1975/0009/latest/DLM430984.html
otState Sector Act (1988): http://www.legislation.govt.nz/act/public/1988/0020/latest/DLM129110.html
otProtected Disclosures Act (2000): http://www.legislation.govt.nz/act/public/2000/0007/latest/DLM53466.html

Suggested score: 4

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree with Comments

Comment: NZDF began engaging with TINZ directly in 2012. This is more direct engagement than many other organisations - approximately 20 other government agencies are similarly engaged.

As far as TINZ is concerned we would rate the engagement as significant, however on further investigation we came across the article linked below so now concur with the reviewer’s score of 3.
http://www.radionz.co.nz/news/national/275156/national-action-plan-'vague'-amnesty

Suggested score:

Opinion: Disagree

Comment: New Zealand response to TI question:

New Zealand signed the Organisation for Economic Co-operation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the OECD Convention) in 1997 and ratified it in 2001. New Zealand signed the United Nations Convention Against Corruption (UNCAC) in 2003, but has not yet ratified this Convention.

While New Zealand already complies with most mandatory and optional requirements of UNCAC, New Zealand has a longstanding practice of implementing all mandatory requirements before ratifying a Convention. The legislative amendments required before ratification can occur are contained in the Organised Crime and Anti-corruption Legislation Bill (the Bill). The Bill was introduced on 25 June 2014 and is currently being considered by the Law and Order Committee of the New Zealand Parliament. Submissions on the Bill closed 5 February 2015 and the Committee is required to report back on the Bill by 4 May 2015.

New Zealand is also a member of the Financial Action Task Force. This is an intergovernmental body which sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international system. While the transparency and beneficial ownership requirements of the Financial Action Task Force recommendations are aimed at fighting money laundering and the financing of terrorism, they also support efforts to prevent other serious crimes such as tax crimes and corruption. In 2013/2014 New Zealand provided input into, and support for new Financial Action Task Force Guidance on Transparency and Beneficial Ownership, which was developed in close consultation with the G20 Anti-Corruption Working Group.

The Financial Action Task Force’s leading role in setting standards on beneficial ownership was echoed in the actions taken by the Anti-Corruption Working Group in 2014. New Zealand attended three meetings of the G20 Anti-Corruption Working Group in 2014, as an invitee of the Australian President. New Zealand fully supported the high level principles on corruption and growth, and the high level principles on beneficial ownership and transparency of legal arrangements and persons agreed by the Anti-Corruption Working Group in 2014. New Zealand largely meets the objectives of these principles through our anti-money laundering and corporate compliance regimes. In addition, changes implemented in 2014 to New Zealand’s companies and limited partnerships laws have improved New Zealand’s compliance with the principles.

With regard to Working Group’s proposed priorities for 2015/16, New Zealand supports proposals that would enhance the investment environment, for example by enhancing public and private sector transparency including in procurement processes and international tax arrangements. New Zealand has been doing substantial work over the past two years to address the concerns raised by the OECD Working Group. It is expected by the Government that many of these concerns will be deemed implemented by the Group when the two-year follow-up report is presented in December 2015

Most 'partial shortcomings' in complying with specific parts of the relevant Conventions, will be addressed through the Organised Crime and Anti-corruption Legislation Bill, which is going through Parliamentary process. The Bill was introduced in June 2014 and went through its Select Committee process earlier this year. This process resulted in further legislative amendments being included to increase New Zealand’s compliance with these respective instruments. The Bill passed its second reading in Parliament in May 2015 with broad support from both sides of the House. It has two further stages to pass before becoming law. The Ministry of Justice has been working closely with the Ministry of Foreign Affairs and Trade to ensure New Zealand is in a position to ratifiy UNCAC as soon as the Bill comes into force.


Asia Pacific Economic Co-operation (APEC) Anti-Corruption and Transparency Working Group

New Zealand is a founding member of the Asia-Pacific Economic Cooperation (APEC). In 2004, acknowledging the threat that corruption poses, the APEC Leaders agreed that APEC economies should nurture and sustain good governance, economic development and prosperity by working together to fight corruption and ensure transparency.
To advance this work, Leaders endorsed the Santiago Commitment to Fight Corruption and Ensure Transparency and the APEC Course of Action on Fighting Corruption and Ensuring Transparency.
The following year an Anti-Corruption and Transparency Experts' Task Force (ACT) was established and in March 2011 the ACT was upgraded in status to a working group. New Zealand engages with this working group, the purpose of which is to coordinate the implementation of the Santiago Commitment, the APEC Course of Action and the APEC Transparency Standards. It also promotes cooperation in areas such as extradition, legal assistance and judicial/law enforcement (especially asset forfeiture and recovery).

APEC Network of Anti-Corruption Authorities and Law Enforcement Agencies (ACT-NET)

ACT-NET was established in 2014, when members of the Working Group endorsed its Terms of Reference. The first ACT-NET meeting was held in Beijing on 15 August 2014, where New Zealand was represented by the Serious Fraud Office.
The goal of the ACT-NET is to act as an informal network for sharing information and exchanging best practices and techniques among anti-corruption and law enforcement authorities in the Asia-Pacific region. ACT-NET members are mainly from law enforcement agencies of APEC economies.
The purpose of the first meeting was to allow focal points to meet for the first time, as well as to share information on methods of criminal investigations and operations; policies; mutual legal assistance examples; best experiences on past prosecution cases, assets recovery cases; and to explore areas of possible future cooperation.
New Zealand supports the development of ACT-NET as another tool to facilitate co-operation between states in combating bribery and corruption

The Organised Crime and Anti-corruption Legislation Bill

The Bill was introduced on 25 June 2014 and is currently being considered by the Law and Order Committee. In addition to enabling New Zealand to ratify UNCAC, the amendments in the Bill will enhance New Zealand’s compliance with the Recommendations of the Financial Action Taskforce and the OECD Convention. The Bill:

•tUpdates the definition of “crime involving dishonesty” to provide that those convicted of corruption offences cannot hold positions of trust in the community (Clause 4).
•tAmends the foreign bribery offence in section 105C of the Crimes Act 1961 to ensure that it applies to bribery in relation to the provision of international aid. The dual criminality requirement (whereby bribery must be an offence in the country in which it takes place in order to be an offence in New Zealand) is removed. The circumstances in which a corporate person (e.g. a company) is liable for foreign bribery are clarified (Clause 6).
•tAmends the Companies Act 1993 to require companies to record facilitation payments (payments to speed up an official action to which the payer is already entitled) in their books in a consistent manner. It also clarifies the definition of “routine government action” to ensure that the facilitation payments’ exception in section 105C(3) of the Crimes Act is not open to abuse.
•tClarifies new offences to address gaps in New Zealand’s anti-corruption framework. The Crimes Act is amended to criminalise the acceptance of a bribe by a foreign public official and the acceptance of a bribe in return for using one’s influence over an official (Clause 7).
•tIncreases the penalties for bribery and corruption offences in the private sector in the Secret Commissions Act 1910 to bring them into line with public sector bribery and general fraud offences (Part 2 Subpart 11).
•tAmends the Income Tax Act 2007 to ensure that no bribes are tax deductible (Part 2 Subparts 2 & 7).
•tEnsures that New Zealand can provide international assistance in corruption investigations and prosecutions by amending the Mutual Assistance in Criminal Matters Act 1992 (MACMA) (Part 2 Subpart 9).
•tAmends the money laundering offences in section 243 of the Crimes Act 1961 and section 12B of the Misuse of Drugs Act 1975. The Bill consolidates the offences into one Crimes Act offence, clarifies that “intent to conceal” is not a necessary element of the offence, and removes the requirement that laundered property must be the proceeds of an offence punishable by at least 5 years’ imprisonment (Clauses 12 to 15 & Part 2 Subpart 8).
•tAmends the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009 to improve the ability to detect and investigate money laundering. Financial institutions will be required to routinely report transactions of two prescribed high risk classes to the Financial Intelligence Unit of the Police (international wire transfers over $1,000 and physical cash transactions of $10,000 or more) (Part 2 Subpart 1).
•tAmends the Criminal Proceeds (Recovery) Act 2009 to alter the time frame for restraining assets on behalf of another country and provide for restraint to occur without tipping off the individual concerned. These changes are intended to improve New Zealand’s ability to assist other countries to recover illicit gains (Part 2 Subpart 4).
•tAmends the Policing Act 2008 to expressly provide the Police with a power to share personal information with international counterparts. This amendment will enable New Zealand to implement the agreement with the PCC agreement with the US (Part 2 Subpart 10).
There appears to be broad support from all political parties and submitters to the Select Committee for the objectives of the Bill. As the Bill is currently under scrutiny from the Select Committee, the detailed analysis on its scope and effect is on-going.

Further initiatives to combat corruption

While New Zealand has not yet prosecuted a case of foreign bribery, the Serious Fraud Office opened two formal investigations in 2013, one of which was reported to be ongoing at the end of 2013.

The Government takes all forms of bribery and corruption very seriously and is continually working to maintain its reputation as one of the least corrupt countries in the world. In the past year, in addition to progressing the Bill, the Government has advanced a range of other initiatives to strengthen anti-corruption measures and bring us into line with international best practice. These include:

•tformally joining the Open Government Partnership (OGP), a multilateral initiative aimed at promoting open and transparent government and fighting corruption. As part of our membership to the forum we are required to demonstrate how the government will implement transparency, accountability, technology and innovation and civil society participation in government. In October, the Government published an Action Plan outlining its commitment to implementing the OGP principles;
•tenacting the Companies Amendment Act 2014 and the Limited Partnerships Amendment Act 2014, which implement measures to prevent overseas criminals from using New Zealand’s registration systems for companies and limited partnerships to, among other things, create shell companies;
•timplementing an agreement allowing Inland Revenue to share personal information with the New Zealand Police to prevent, detect and investigate serious crime;
•treviewing New Zealand’s extradition and mutual legal assistance laws to ensure they are efficient, effective, and not overly complex or unnecessarily expensive;
•tthe Serious Fraud Office’s collaboration with Transparency International NZ and BusinessNZ to create a free online anti-corruption training course, which teaches participants how to prevent and resist bribery in their business and comply with bribery laws;
•tintroducing the Crimes (Match-fixing) Amendment Bill, which will help address match-fixing risks presented by New Zealand's hosting of the Cricket World Cup and the FIFA Under 20 (football) World Cup. The Bill is currently awaiting its second reading.
To ensure that New Zealand’s domestic anti-corruption measures remain robust and meet current international best-practice benchmarks, the Government will progress the Organised Crime Bill and proceed with ratification of UNCAC. These measures will enhance New Zealand’s international reputation and signal support for the international fight against corruption.

While New Zealand is perceived as among the least corrupt countries, we cannot be complacent and must continue to work together with other nations to combat corruption. Continued participation in international fora such as the OECD Working Group on Bribery, the Financial Action Task Force and the OGP will ensure that New Zealand takes all necessary measures guard against the ongoing risk of corruption.


Sources:

-tInternational anti-corruption instruments:
otOECD Anti-Bribery Convention – 25 June 2001 http://www.oecd.org/daf/anti-bribery/newzealand-oecdanti-briberyconvention.htm
otUnited Nation Convention against Corruption (UNCAC) signed 10 December 2003: http://www.unodc.org/unodc/en/treaties/CAC/
-tCommentary on NZ system:
otOECD report, 2013: note - at the time NZ was assessed by the OECD there were no reported cases of bribery of foreign officials that enforcement agencies considered had sufficient evidence for a prosecution.
tOECD. &quoute;New Zealand not immune from foreign bribery, says OECD&quoute; 17 October, 2013. http://www.oecd.org/newzealand/new-zealand-not-immune-from-foreign-bribery.htm
tOECD. &quoute;Phase 3 report on New Zealand’s implementation of the Convention of Combating Bribery of Foreign Public Officials in International Business Transactions&quoute;, pp7-8, 10 October, 2013. http://www.oecd.org/daf/anti-bribery/NewZealandPhase3ReportEN.pdf
otTransparency International. “New Zealand National Integrity System Assessment” pp6-8, 9 December 2013. http://www.transparency.org.nz/docs/2013/Integrity-Plus-2013-New-Zealand-National-Integrity-System-Assessment.pdf
-tCurrent proposed update to legislation – NZ is very actively taking steps to ratify the UNCAC. The Bill is due to be reported back from Select Committee on 4 May 2015 and may become law before the end of the 2015.
otProposed: NZ Parliament, &quoute;Organised Crime and Anti-corruption Legislation Bill 219-1&quoute;, pp3-4: http://legislation.govt.nz/bill/government/2014/0219/latest/096be8ed80e67158.pdf
ot&quoute;Organised crime bill progresses&quoute;, Fairfax Media, 4 November 2014. http://www.stuff.co.nz/national/politics/10700870/Organised-crime-bill-progresses
otBell Gully, &quoute;New organised crime and anti-corruption legislation will impact some businesses’ compliance processes&quoute;, Bell Gully Corporate Reporter Issue 29, 10 July 2014. http://www.bellgully.co.nz/newsletters/corporate_reporter/10jul14.asp#crime
otLloyd Kavanagh, Jeremy Muir, Aaron Lloyd, Kara Daly, Darryl Hong and Karen Mace, &quoute;Proposed amendments to organised crime and corruption regime introduced&quoute;, Minter Ellison Rudd Watts Lawyers, 26 June 2014. http://www.minterellison.co.nz/Financial_Services_News_Alert_26_June_2014/
otReissa Su, &quoute;New Zealand Anti-Corruption Bill Gets Support; New Law to Give Police ‘Sharper Teeth’&quoute;, International Business Times Australia, 27 June 2014. http://au.ibtimes.com/articles/557233/20140627/corruption-organised-crime-new-zealand.htm#.VHMBBvmsV8H

Suggested score: 3

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Disagree

Comment: Post the release of the OECD Exporting corruption report we agree that there is more evidence that this has improved and but note that UNCAC has still not been ratified by NZ which is of great concern to TINZ.

Suggested score: 2

Opinion: Agree with Comments

Comment: New Zealand response to TI question:

The New Zealand Government actively supports and promotes independent and informed debate on New Zealand defence policy and the country’s strategic environment.

As noted in response to Question 3, the Defence White Paper process is one that involves close consultation with the public and which happens every five years. The Government promotes interaction by coordinating the public consultation process, sharing key documents with the public such as the Defence Assessment, and recording and reviewing public submissions.

Outside of this Defence White Paper process there is also extensive interaction between the Defence agencies and the public. Examples include:

•tMinistry of Defence financial support, staff time and other contributions to the Centre for Strategic Studies at Victoria University of Wellington, which is an independent think tank that provides frequent media comment on the full range of defence and external issues affecting New Zealand and the region. Officials have regularly been invited to Centre for Strategic Studies events and engaged positively with the programme.
•tDefence officials’ engagement with other academic programmes around New Zealand, including with the Foreign Policy School at the University of Otago.
•tNew Zealand Defence Force and Ministry of Defence support for the Centre for Defence and Security Studies programme at Massey University through partnership with the New Zealand Defence Force Command and Staff College and participation in lecture series by Defence officials.
•tPast and former Government officials’ involvement in regular seminar series conducted by the New Zealand Institute of International Affairs, an independent think-tank that covers foreign and defence policy and key security issues facing New Zealand.
•tThe Ministry of Defence and New Zealand Defence Force each contribute NZ$35,000 annually to the Freyberg Scholarship. These scholarships are awarded for the purpose of encouraging graduate study into areas relevant to national security in the widest sense of the term. On completion of their study it is hoped that the graduates will return to New Zealand and make a positive contribution towards the debate and analysis of Defence issues in the public service, tertiary institutions, or in journalism.
•tA former Principal Advisor in the Ministry of Defence was seconded to the Australian Civil-Military Centre in Canberra in 2010-11 to contribute to the active civil-military work programme of that institution, which promotes debate across the Australasian region.

There is a growing body of academic literature on Defence Policy in New Zealand, which has come through these and other channels. There is also public comment by the Government in reply to media coverage of Defence and security policy, although this is often of questionable quality. The Defence agencies provide information and/or input from relevant officials on request.


Sources:

-tDefence press releases:
otNew Zealand Defence Force, &quoute;Media releases”: http://www.nzdf.mil.nz/news/media-releases/default.htm
-tOrganisational support to Victoria University of Wellington Strategic Studies:
othttp://www.victoria.ac.nz/hppi/centres/strategic-studies
otVictoria University. &quoute;Centre for Strategic Studies - Recent Activities&quoute; http://www.victoria.ac.nz/hppi/centres/strategic-studies/recent-activities
-tParticipants to Otago Foreign Policy School:
ot“Pacific geopolitics under spotlight at Foreign Policy School”: http://www.otago.ac.nz/news/otago043921.html
-tOrganisations/think tanks set up to debate policy:
otNew Zealand Institute of International Affairs, &quoute;After the Missions - Understanding New Zealand’s Security Future&quoute;. Public symposium, 22 May 2013. http://www.nziia.org.nz/Portals/285/documents/lists/259/AFTER%20THE%20MISSIONS%20web.pdf
-tAcademic Articles:
otAustralian Strategic Policy Institute. “Australia-New Zealand 1.5 Track Security Dialogue: Proceedings and outcomes statement”, 13 December 2012. https://www.aspi.org.au/__data/assets/pdf_file/0015/17313/1-5-Track-Aus-NZ-Report-2012.pdf
otRobert Ayson. “An Australia–New Zealand defence gap? Political more than technical”, 18 Jul 2014. http://www.aspistrategist.org.au/an-australia-new-zealand-defence-gap-political-more-than-technical/
otDon Matheson, &quoute;Can't talk now, mate&quoute;: New Zealand news media and the invisible Afghan war. In R. Keeble and J. Mair (Ed.), Afghanistan, War and the Media: Deadlines and Frontlines: 276-288. Bury St Edmunds: Abramis. http://ir.canterbury.ac.nz/bitstream/10092/4532/1/12626809_matheson.pdf
-tMainstream media: Some update stories have been provided as the previous examples referenced in the draft assessment were dated. A range of opinion pieces have been released in the media, particularly on the recently announced deployment to Iraq.
otStuff NZ, “Iraq deployment confirmed by PM John Key”, 24 February 2015: http://www.stuff.co.nz/national/politics/66587118/iraq-deployment-confirmed-by-pm-john-key
otScoop, “Refuting diplo-nonsense”, 4 March 2015: http://www.scoop.co.nz/stories/HL1503/S00029/refuting-diplo-nonsense.htm
otScoop, “John Key discusses Foreign Fighters legislation”, 2 December 2014: http://www.scoop.co.nz/stories/HL1412/S00011/video-john-key-discusses-foreign-fighters-legislation.htm

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree with Comments

Comment: New Zealand response to TI question:

New Zealand has openly stated and actively implemented anti-corruption policy that is applicable to all people employed in the Defence sector in any capacity (full-time, part-time, contract workers). All those employed must conduct themselves in ways that not only avoids a conflict of interest (that could lead to corruption) but that also avoids the appearance of a conflict of interest.

Defence Force Personnel
New Zealand has an openly stated and actively implemented anti-corruption policy with the servicemen and women of the New Zealand Defence Force subject to the New Zealand Armed Forces Disciplinary Act 1971. Section 54 of the Act specifically prohibits corruption and provides for imprisonment for up to seven years for anyone found guilty of corruption.

Defence Force orders provide further specific guidance on accepted practice. In particular, Defence Force Order 03/2004 provides guidance on 'Identification and Management of Conflict of Interest and Receipt of Gifts, Hospitality and Other Benefits. Defence Force Order 09/2003 sets out a Code of Ethics for the New Zealand Defence Force.

Civilians
Civilians, contractors and other workers employed in any capacity the Ministry of Defence or New Zealand Defence Force are also obligated as noted below:

a.tAll State sector employees (this includes all New Zealand Defence Force and Ministry of Defence employees) are subject to the integrity and conduct expectations set out in the Cabinet Manual. These expectations include to: “... ensure that their personal interests or activities do not interfere with, or appear to interfere with, their obligation to serve the aims and objectives of their employer; must seek to avoid situations where there could be a conflict, or the appearance of a conflict, between personal interests and the interests of their employer..”

b.tAll employees of the Ministry of Defence are held to account by:
i.tthe State Service Commissioner’s ‘Standards of Integrity and Conduct’, which requires that staff “decline gifts or benefits that place one under any obligation or perceived influence” and “ensure our actions are not affected by our personal interests or relationships”; and
ii.tthe Ministry of Defence Code of Conduct, which is part of the Ministry’s Corporate Manual. It requires that staff “maintain a high standard of ethical conduct” and contains an indicative list of conduct which is not acceptable and which could result in disciplinary action as outlined in the Corporate Manual

c.tCivilian employees are required under section 60 of the Defence Act 1990 to abide by the New Zealand Defence Force civilian staff code of conduct, which states that employees must be honest, ensure that their actions are not affected by personal interests or relationships and never use their position for personal gain.

These Codes of Conduct are reinforced by policy training and guidance from external agencies. The Office of the Controller and Auditor-General publishes “Good Practice” Guides that inform staff in the public sector about the applicable principles and best practice across a range of the operations of a public entity. These publications also provide a guide against which agencies can be audited. Relevant guides include:
•tSeverance payments: A guide for the public sector (March 2012): This guide is intended to help public sector employers when considering making a severance payment to a departing employee.
•tCharging fees for public sector goods and services (June2008): This guide is intended for all public entities that have statutory authority to charge fees for the goods and services that they are obliged to provide.
•tProcurement guidance for public entities (June2008): This guide outlines our view of the good practice that public entities should use to procure goods or services.
•tPublic sector purchases, grants, and gifts: Managing funding arrangements with external parties (June 2008): The aim of this guide is to help public entities make informed decisions and manage risks when funding an external party...
•tAudit committees in the public sector (April 2008): This guide sets out the principles and good practices needed to set up and effectively operate an audit committee in the public sector.
•tManaging conflicts of interest: Guidance for public entities (June 2007): This guidance provides useful information for all public entities, and is relevant not only to people in governance and management roles, but to everyone who works for or with a public entity.
•tControlling sensitive expenditure: Guidelines for public entities (February 2007): These guidelines are our view of good practice that public entities should use to control sensitive expenditure. The guidelines outline expectations and guidance that we may use when carrying out performance audits or inquiries, or in annual financial audits.

The various internal and external audit functions for the defence sector also ensure that stated policy is followed. Audit reviews are held each year and that Acquisitions projects conducted by the Ministry of Defence are covered in the Major Projects Report, which is reviewed by the Office of the Auditor-General.


Sources:

-tNew Zealand Armed Forces Disciplinary Act 1971.
otFor details see http://www.legislation.govt.nz/act/public/1971/00 53/latest/DLM401063.html
otRelated guidance:
tDFO 03/2004: Identification and Management of Conflict of Interest and Receipt of Gifts, Hospitality and Other Benefits
tDFO 4 for Personnel Administration, Chapter 16, Section 12 in respect of personnel who leave the New Zealand Defence Force who may have potential for conflict of interest or apparent conflict of interest.
-tState Sector Act (1988): http://www.legislation.govt.nz/act/public/1988/0020/latest/DLM129110.html
-tCodes of Conduct:
otCode of conduct for the State Services (Standards of Integrity and Conduct) (2007)
www.ssc.govt.nz/code
otMoD Code of Conduct (provided on request)
otDefence Force Order 9 – Code of Conduct for military personnel (provided on request)
otNew Zealand Defence Force Civilian Staff Code of Conduct (provided on request)
-tThe Office of the Controller and Auditor General - 'Good Practice Guides' to assist staff in Public Entities manage conflicts of interest: http://www.oag.govt.nz/reports/good-practice-guides
-tCabinet Manual (2008): http://www.cabinetmanual.cabinetoffice.govt.nz/summary

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree with Comments

Comment: New Zealand response to TI question:

There are independent, well-resourced and effective institutions within Defence and Security tasked with building integrity and countering corruption. There are a number of structures that are designed to pre-empt corruption and ensure scrutiny at all levels.

The Ministry of Defence is the primary civilian advisor on defence policy, and is charged with major asset procurement and evaluation. If there were concerns about corruption or integrity this would be a major focus for the Ministry. The Secretary of Defence is directly empowered under the Defence Act 1990 (such as section 24(2)(e)) to carry out this function as appropriate. The Ministry’s Evaluation Division can under this section conduct an independent investigation if required. This Division has direct contact with the Minister, Secretary of Defence and Chief of Defence Force, is well resourced, and has been further strengthened in recent years.

As the Assessor has noted, corruption is an offence under section 54 of the Armed Forces Discipline Act 1971 that is punishable by up to seven years imprisonment. Independent internal bodies, such as the Military Police and Defence Legal Services, exist to oversee the application and enforcement of the provisions of this Act. Independent control mechanisms such as auditing, legal oversight and staff vetting to ensure transparency and compliance with its code of conduct. These bodies include the Directorates of Risk and Assurance, Defence Legal Services, and Defence Security.

In the intelligence sector, the Government Communications Security Bureau and the New Zealand Security Intelligence Service are subject to oversight by the Inspector General of Intelligence and Security. The Inspector-General can investigate any matter, no matter how operationally sensitive to the extent necessary for the performance of his or her functions.

The role of the Inspector-General was expanded as part of the 2013 review of intelligence legislation and the resources available to the Inspector-General were consequentially increased. New investigating officers were appointed starting in late 2013 and a new Inspector-General, Deputy Inspector-General, and Advisory Panel were appointed during 2014. This has created an independent oversight office that is more fully resourced in relation to the size of the intelligence community than in some comparable countries. To date, three investigative reports have been completed and published on the Inspector General’s website. The Inspector General’s annual report for the 2013/2014 year has also been published on the Inspector General’s website (see sources below). It details how the expanded legislative mandate for the Inspector-General is being implemented as well as reporting the Inspector-General’s activities during the year. The Inspector-General is statutorily required to report on the effectiveness and appropriateness of the intelligence agencies compliance systems including all supporting policies and practices (see section 11 of the Inspector-General of Intelligence and security Act 1996).

The Auditor-General also provides an independent external assessment of the New Zealand Defence Force’s annual report and conducts specific defence audits on request from the government.


Sources:

-tLegislation: Institutions operate under the following legislation:
otDefence Act, 1990. Last amended 18 December 2013 (See Sec 24(2)(e) on power of the Secretary of Defence to carry out audit): http://www.legislation.govt.nz/act/public/1990/0028/latest/DLM204973.html
otArmed Forces Discipline Act, 1971, last amended 18 December 2013 (see section 54 on corruption): http://www.legislation.govt.nz/act/public/1971/0053/latest/whole.html
otInspector-General of Intelligence and Security Act 1996: http://www.legislation.govt.nz/public/1996/0047/latets/DLM392285.html
-tMinistry of Defence, Evaluation Division
otCarries out the statutory audit function under Sec 24(2)(e) of the Defence Act as noted above. http://www.defence.govt.nz/about-us/divisions/evaluation.html
-tNew Zealand Defence Force: Internal directorates and associated orders that they work to:
otDefence Force Order 03/2004, &quoute;Identification and Management of Conflict of Interest and Receipt of Gifts, Hospitality and Other Benefits&quoute;
otDefence Force Order 09/2003, &quoute;Code of Ethics for the New Zealand Defence Force&quoute;
otInspectors-General of the services
otNew Zealand Defence Force Directorate of Risk and Assurance (reports to the CFO)
otDefence Legal Services
otNew Zealand Defence Force Directorate of Defence Security
otNew Zealand Defence Force Directorate of Defence Intelligence
-tSerious Fraud Office: This agency has corruption investigation powers and also provides anti-corruption training. It has primary responsibility for investigating and prosecuting corruption in New Zealand. The Office also works with New Zealand as well as overseas agencies in sharing information and training in combating corruption https://www.sfo.govt.nz/about; http://www.sfo.govt.nz/anti-corruption-training

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree with Comments

Comment: New Zealand response to TI question:

Perceptions of trust of the state services are surveyed extensively from both the point of view of the public, and from the point of view of the staff working inside the agencies.

The State Service Commission runs the Kiwis Count survey that measures perceptions of public trust. The Kiwis Count survey has become a continuous monitoring survey and the results show a consistent and continuing high level of public trust in New Zealand’s government services.

Kiwis Count measures New Zealanders' trust in, and the perceptions of the quality of, 42 government services. Both perception and experience of trust are measured. Each of the services measured is rated in terms of quality by those New Zealanders who have used it in the past 12 months. Government agencies use the Kiwis Count data to assist with service enhancements and design, and performance improvement

The New Zealand Defence Force’s Public Affairs Unit runs a separate annual survey of public attitudes towards the Defence Force both for the Defence Force as a whole and for the individual services. This survey is run to ensure that the Defence Force understands the general public’s perceptions of the Defence Force and the three Services. The results provide direct evidence of public trust in the Defence Force, with sections in the report on image and brand attributes covering such issues. On image, trustworthiness was the third most common characteristic associated with the Defence Force and Armed Services (after dedication and professionalism), with 74% of respondents in the 2014 survey agreeing that the Defence Force and Armed Services were trustworthy. On brand attributes, 76% of all respondents agreed that the Defence Force was an “ethical, professional military”, which was second only to the attribute that “members are prepared to defend NZ with their lives”. These scores have remained high since the initial survey in 2009.

The State Services Commission also runs the Integrity and Conduct survey, which measures how staff perceive the integrity and conduct of staff working within government agencies. The 2013 survey reported negligible witnessing of perceived serious criminal matters in the previous 12 month period. For example, none of the over 13,000 respondents reported having witnessed someone in their agency taking a bribe in the last 12 months in their agency; only 2% considered that they had witnessed theft or fraud or the leaking of confidential documents; while 3% considered they had witnessed a colleague improperly favouring a third party to get a personal gain.

The perceptions reported in the 2013 Integrity and Conduct survey results are consistent with the low level of criminal offending that has been reported in the media with respect to the Defence and Security sector.

There have been a small number of high profile cases where members of the New Zealand Defence Force have been court martialled and/or disciplined for questionable financial, sexual harassment or other unlawful behaviour. Enforcement through the military justice system is indicative of the fact that the New Zealand Defence Force does not tolerate transgressions in the conduct and integrity of either its officers, or its servicemen and women.

As the Assessor notes, the Transparency international 2013 Global Corruption Report shows that the New Zealand Defence Force has the highest public trust of all the institutions surveyed.


Sources:

Kiwis Count survey
-tKiwis Count survey: http://www.ssc.govt.nz/kiwis-count
-tIntegrity and Conduct survey: http://www.ssc.govt.nz/integrity-and-conduct-survey-2013-report
-tTransparency International. &quoute;Global Corruption Barometer 2013 - New Zealand&quoute;. http://www.transparency.org/gcb2013/country/?country=new_zealand

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree with Comments

Comment: New Zealand response to TI question:

The Ministry of Defence and New Zealand Defence Force proactively manage corruption risk and are well supported by a range of integrity watchdogs and process requirements. If there are any concerns about corruption, or inappropriate processes that may give rise to a risk of corruption, these are identified and then fully investigated.

The defence sector undertakes risk management as part of its everyday business practice. This means that the areas of greatest corruption risk for military and defence force personnel are actively addressed in the work programmes within Defence. External agencies are also engaged to provide audit, assurance, and oversight (see our response to questions 7 and 8).

Internally, the New Zealand Defence Force’s Directorate of Risk and Assurance conducts an Annual Internal Audit Work Programme, which is developed and carried out according to a risk-based methodology. The programme is approved by the Audit and Risk Committee as a sub‐committee of the New Zealand Defence Force Board, the highest governance Board chaired by the Chief of Defence Force with external Board members.

Any concerns that arise and that may relate to corruption or integrity problems are made an immediate point of focus for the Ministry of Defence. The Evaluation Division, at the direction of the Secretary of Defence under Section 24(2)(e) of the Defence Act 1990 provides statutory authority to audit business activities across the Ministry and New Zealand Defence Force.

Externally, the Ministry of Defence itself has also one of the agencies that have been regularly surveyed for perceptions of integrity and conduct in the State Service Commission’s Integrity and Conduct survey (refer to our response to question 9). While the Integrity and Conduct survey results are reported in aggregate form in the main report, the Ministry of Defence and other agencies can access their own agency’s results in more detail through obtaining an “own agency” report on their results.

The Office of the Auditor-General’s statutory mandate enables it to investigate any areas of concern or specific cases of corruption. The Office of the Auditor-General has broad powers under section 16 and 18 of the Audit Act 2001 to examine any aspect of the performance of a public entity and conduct enquiries. The Office of the Auditor-General provides regular oversight and reporting to Parliament through its annual review and assessment of both the Defence Ministry and the New Zealand Defence Force acquisition projects.

The only recent high profile case that the New Zealand Defence Force is aware of that involved lack of financial probity by New Zealand Defence Force personnel involved 'double dipping' of housing allowances by four officers on secondment to the United Nations Headquarters in the period 2001‐06. This case involved lengthy and detailed enquiries by both a Military Court of Inquiry and the Office of the Auditor General. The 2010 Office of the Auditor-General report can be accessed at the link below. The Chief of Defence Force accepted the recommendations of the Office of the Auditor-General. The New Zealand Defence Force through its current investigations is not aware of any other cases involving financial irregularities on the part of Defence Force personnel since the incident in 2010.

An area of risk across the New Zealand Defence Force and Ministry of Defence is procurement, due to the level of expenditure involved in major defence projects. Due to this, a range of measures are in place to mitigate the greatest risks to procurement practice within the New Zealand Defence Force and the Ministry of Defence. These measures include:

•tOfficers working in the area of procurement being subject to Government Rules of Sourcing and the Procurement Principles;
•tSeparation of financial control for projects to ensure costs centres are independently managed;
•tRegular auditing and reporting on major projects by the Office of the Auditor-General and Audit New Zealand through the Annual Reports and the submission of the Major Projects Report to the Foreign Affairs, Defence and Trade Select Committee;
•tAdditional audit reporting on an as needed basis by the Ministry of Defence’s Evaluation Division or through external audit.

New Zealand takes appropriate steps to assess and mitigate the greatest corruption risks proportional to the country’s size and general environment, as well as the size of the New Zealand Defence Force and security agencies, and the general record on corruption.

New Zealand response to issues raised in the draft report:

The draft report provided comments based on media reports that were critical of the number of instances of the Prime Minister utilising Royal New Zealand Air Force assets for personal VIP use. The draft report noted that “the Royal New Zealand Air Force's policies on ministerial and VIP transport did not attract any public review”.

The example given is not an example of corruption and is not relevant to the question, which refers to regular assessments by the defence ministry or another government agency of the areas of greatest corruption risk. The Defence Force’s provision of VIP services is not one of high risk and the media reports themselves were generated as a result of Defence’s standard reporting of its Outputs.

In New Zealand there are no dedicated VIP assets providing services to the Prime Minister and officials. Under Defence Outputs (Output 4.4), part of the New Zealand Defence Force’s budget appropriation is made available for provision of VIP services. Individual taskings are accepted based on them being in line with New Zealand Defence Force policy for VIP taskings in support of national interests. Expenditure and use of this output is reported to the Foreign Affairs and Trade Select Committee every six months for review.

With regards the United Nations case mentioned, the draft comments note the Office of the Auditor-General being called in reflected the level of strength of the New Zealand Defence Force’s risk assessments and anti-corruption measures at the time. Rather, the external audit function in New Zealand is well developed and so can be readily called upon by Ministers and senior officials to provide external assurance in a public setting. An example of this is the Office of the Auditor-General’s report on Defence Force civilianisation, which was released in January 2013. See sections 8.46, 8.83-87 of Auditor-General’s report, which notes full evaluation of policy lapses that led to this issue and subsequent resolution.

Sources:

-tLegislation
otDefence Act 1990 (especially section 24(2)(e): http://www.legislation.govt.nz/act/public/1990/0028/latest/DLM204973.html
otAudit Act 2001: http://www.legislation.govt.nz/act/public/2001/0010/latest/DLM88541.html#DLM88593
-tMinistry of Defence:
otEvaluation Division Annual work programme (note that this is an internal document approved by the Minister of Defence, as well as the Secretary of Defence and Chief of Defence Force)
otMinistry of Defence. &quoute;Major Projects Report 2012” http://www.defence.govt.nz/reports-publications/major-projects-report-2012-volume-1/contents.html
otMinistry of Defence, “Major Projects Report 2011: http://www.defence.govt.nz/reports-publications/major-projects-report-2011-volume-1/contents.html
otMinistry of Defence, “Major Projects Report 2010:
http://www.defence.govt.nz/reports-publications/major-projects-report-2010/contents.html
-tNew Zealand Defence Force Directorate of Risk and Assurance
otAnnual Internal Audit work programme (note that this is an internal document approved by the Audit and Risk Committee as a sub-committee of the New Zealand Defence Force Leadership Board).
-tOffice of the Auditor General:
otAnnual Reports to Parliament on the Financial Performance of the New Zealand Defence Force and other matters. Central government: Results of the 2012/13 audits (volume 2)&quoute;, paras 4.23,25,39. http://www.oag.govt.nz/2014/central-government/part4.htm
otInvestigations performed where required i.e.: Auditor-General. &quoute;Auditor-General's overview: Inquiry into New Zealand Defence Force payments to officers seconded to the United Nations,&quoute; 13 July, 2010: http://www.oag.govt.nz/2010/united-nations
otAuditor-General. &quoute;Central government: Results of the 2012/13 audits (volume 2)&quoute;, paras 4.23,25,39. http://www.oag.govt.nz/2014/central-government/part4.htm
otAuditor-General. “New Zealand Defence Force: the Civilianisation Project”: http://www.oag.govt.nz/2013/civilianisation/docs/nzdf-civilianisation-project.pdf
-tAcquisition: Ministry of Defence (which handles procurement) is subject to Government Rules of Sourcing and the Procurement Principles. These deal with both ethics and managing risk:
otSee http://www.business.govt.nz/procurement/for-agencies/key-guidance-for-agencies/the-new-government-rules-of-sourcing
otThe Ministry of Defence’s Evaluation Division reviews major projects: powers given to arrange assessments and audits under Section 24(2)(e) of the Defence Act 1990: http://www.legislation.govt.nz/act/public/1990/0028/latest/whole.html
otExamples of Evaluation reports: http://www.defence.govt.nz/reports-publications/evaluation-reports-index.html
-tAnnual reports
otNew Zealand Defence Force. &quoute;Annual Report 2014&quoute;, p.48, pp.160-163. http://www.nzdf.mil.nz/downloads/pdf/public-docs/2014/nzdf-annual-report-30june2014.pdf
otNew Zealand Ministry of Defence. “Annual Report 2014: http://www.defence.govt.nz/reports-publications/annual-report-2014/contents.html

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Disagree

Comment: New Zealand response to TI question:

The New Zealand Government has a clear process for acquisition planning, which involves both internal and external oversight mechanisms and for which information is publicly available. In the context of defence, the acquisition process is aimed at the delivery of weapons systems and a range of other smaller procurement items and services for New Zealand Defence Force (NZDF) end use. The process is multi-layered in that it involves adherence to New Zealand state sector legislation and guidelines, as well as international quality assurance standards and Defence sector policies. Capability options are developed by the Ministry of Defence’s Policy Branch and are analysed through the Better Business Cases process, a policy framework developed by the New Zealand Treasury. Each stage in the capability development process must be approved by Cabinet. Once Cabinet has approved the preferred capability, the acquisition of the item is then managed by the Acquisitions Division of the Ministry of Defence under the delegated authority of the Secretary of Defence (see Defence Act 1990 (s.24(d)). In addition to this, the New Zealand Defence Force’s Capability Branch manages a programme of minor projects.

Capability options are developed by the Ministry of Defence’s (MoD’s) Capability Development branch and these are analysed through the Better Business Cases process, a policy framework developed by the New Zealand Treasury. Each stage in the capability development process must be approved by Cabinet. Once Cabinet has approved the preferred capability, the acquisition of the item is then managed by the Acquisitions Division of the MoD under the delegated authority of the Secretary of Defence (see Defence Act 1990 section 14(d)).

The process for defence acquisition planning is systemised in a Defence “Capability Management Framework” (CMF) that is in use across the MoD and NZDF. The agencies make the documentation on this framework available on request. The framework links the current outcomes required by Government under defence policy (as contained in the Defence White Paper (DWP) and NZDF’s Future 35 policy) to concrete Defence Capability and Capital Plans. The framework then further links these plans to the New Zealand Government procurement and Capital Asset Management principles and programmes, as well as the associated oversight mechanisms used to deliver these plans.

Currently the DWP 2010 is the foundational defence policy document referred to in the CMF, and it contains a commentary on defence capability (chapter 5) that sets the overall policy direction for Defence for the next 25 years. The DWP and other core documents from the White Paper process, as noted in previous responses, are publicly available and followed public consultation. The NZDF’s Future 35 strategic policy also lists capabilities, projects and timelines and is publicly available.

The Defence Capability Plan referenced in the CMF further describes the capability sets needed to deliver the Government’s defence policy as well as macro-level requirements for capabilities and acquisition timeframes. The associated Defence Capital Plan provides the forecast of capital expenditure needed to deliver the Defence Capability Plan. Both of these are ‘live’ plans in the sense that they are actively managed and overseen by the Defence Capability Management Board and regularly updated to ensure the Defence capability programme achieves the required outcomes. The latest Capability Plan is publicly available and the Capital Plan is agreed by Cabinet with public access governed by the Official Information Act. (The Capital Plan is not available publicly as a matter of course as it assigns detailed budget information for projects which is commercially sensitive during the life of the acquisitions).

To deliver on the Capability and Capital plans, Defence (MoD and NZDF) procures and maintains assets consistent with the:
•tNew Zealand Government Capital Asset Management programme, and
•tGovernment Rules of Sourcing and the Procurement Principles.

The Government monitors all major projects, including defence ones. This monitoring provides important assurance to government that major and high risk projects are managed well and with specialist support where necessary. The details of these programmes and applicable principles are made available publicly online. Defence’s internal procurement documentation, practice and processes must be in line with the overall Government requirements. With regards to each major Defence capability (aircraft, ship, weapon system etc.) that Defence procures and manages it takes a ‘whole of life’ approach that:

•tInvolves a disciplined, systematic and transparent approach to business case writing at the ‘capability development’ stage of the asset lifecycle;
•tMust comply with the requirements relating to the monitoring of major projects, including the Gateway Process, which provides a robust and critical assurance mechanism for the New Zealand Government as the primary vehicle for external peer review and challenge to the robustness of plans and processes
•tInvolves both internal and external oversight of the acquisition by the MoD’s Evaluation Division and the Office of the Auditor-General, as well as through standard Defence checks and balances;
•tIncludes quality management processes within the acquisition process at the MoD, including certification to IS9001 and adherence to an Acquisition Manual and MoD Code of Conduct; and
•tIncludes the disposal of the asset at the end of its life, which involves management by the NZDF National Disposals Office and Cabinet and external agency oversight.

In addition to these structures for major projects, the NZDF’s Capability Branch manages a programme of minor projects, the Capability Project (CP) Minor portfolio. This portfolio focuses on smaller in-year projects which support the introduction of capability approved under the Defence Capability Plan and the Defence Capital Plan. As dollars are allocated, the CP Minor portfolio is not publicly available to protect the commercial interests of the NZDF and contractors. It does, however, follow all New Zealand procurement rules, including requirements for public tenders and accountability.

The Defence agencies provide updates on their acquisition planning through their statements of intent and annual reports, which are available publicly. The MoD’s Annual Report, in particular, provides a performance statement on the progress made on major acquisition projects, which is reviewed as part of the independent audit by the Office of the Auditor-General. The MoD also actively updates its webpage outlining current and future acquisition projects and information on any forthcoming tenders.

In addition, through the Major Projects Report Defence provides a transparent assurance about the way in which it is managing the Government’s acquisition programme. This report focusses on how well projects are keeping to the approved budget, adhering to the agreed schedule and delivering equipment to the specifications provided for in project contracts. The report is independently reviewed by the Office of the Auditor-General.

New Zealand response to comments in the draft report:

The comments in the draft report do not show an awareness of current New Zealand Government process as outlined above. This is reflected in some of the specific comments in the last two paragraphs on this question. There is no clear evidence to that oversight is not in-depth. NZDF disputes the other claims by the media and commentators, which run counter to previously-mentioned frameworks and reporting.

Further specific examples in the last paragraph are, amongst other things, historic in nature and do not reflect the current framework and practice outlined above, which has been developed extensively since 2010/11.

In the draft report it is noted that oversight is also provided by Parliament and for that matter, it should also be noted in the Foreign Affairs, Defence and Trade Select Committee. As our response notes, there is a high level of detail on the policies, frameworks and processes followed for Acquisitions, which demonstrates transparency from New Zealand Government sources. Further, Defence has noted other forms of oversight in the form of internal MoD Evaluation and reviews of Defence Acquisitions.


Sources:

-tOverall framework for Government Procurement/Acquisition Planning - legislation:
otDefence Act (1990), especially S. 2(e): http://www.legislation.govt.nz/act/public/1990/0028/latest/DLM204973.html?search=ts_act%40bill%40regulation%40deemedreg_defence+act_resel_25_a&p=1
otPublic Finance Act, 1989: http://www.legislation.govt.nz/act/public/1989/0044/latest/DLM160809.html
otCrimes Act, 1961, Part 6. http://www.legislation.govt.nz/act/public/1961/0043/latest/whole.html#DLM328729
-tThe Government Rules of Sourcing: The Ministry of Defence (which handles procurement) is subject to Government Rules of Sourcing and the Procurement Principles. These deal with procurement planning. A refreshed statement of Principles of government procurement was approved by Cabinet in July 2012 [Sec Min (12) 10/5]. Note that compliance with the Government Rules of Sourcing includes complying with various commercial and public law statutes. The Rules are the single source of all New Zealand’s commitments on government procurement, including international agreements and treaties. See:
othttp://www.business.govt.nz/procurement/for-agencies/key-guidance-for-agencies/the-new-government-rules-of-sourcing
othttp://www.business.govt.nz/procurement/for-agencies/key-guidance-for-agencies/principles-rules-and-the-law
othttp://www.business.govt.nz/procurement/procurement-reform/procurement-functional-leadership
othttp://www.business.govt.nz/procurement/for-suppliers/working-with-government/feedback-and-complaints
-tMajor Projects Assurance / Capital Asset Management:
New Zealand maintains both a comprehensive Better Business Cases process for formulating business cases to be provided to Cabinet, as well as a ‘Gateway Review’ process, which provides oversight of the planning and decision-making process. See:
otState Services Commission: http://www.ssc.govt.nz/major-projects-assurance
otNZ Treasury, Gateway process: http://www.ssc.govt.nz/gateway (previously a State Services Commission unit)
otNational Infrastructure Unit, NZ Treasury, Better Business Cases: http://www.infrastructure.govt.nz/publications/betterbusinesscases
otNZ Treasury, Capital Asset Management: http://www.treasury.govt.nz/publications/guidance/mgmt/capitalasset
otCAB Office Circular CO (10)2: For high risk and/or large scale capital investments: http://www.dpmc.govt.nz/sites/all/files/circulars/coc-10-02.pdf
otCAB Office Circular CO (11)6: Request for Proposals with financial implications: http://www.dpmc.govt.nz/sites/all/files/circulars/coc-11-06.pdf
otController and Auditor-General: Procurement Guidance for Public entities: Public Finance Act, 1989: http://www.legislation.govt.nz/act/public/1989/0044/latest/DLM160809.html
-tApplication of this process for Defence acquisition planning:
otDefence White Paper 2010 (latest White Paper): http://www.defence.govt.nz/reports-publications/defence-white-paper-2010/contents.html
otMinistry of Defence. “Defence Assessment July 10”. July, 2010. http://www.defence.govt.nz/pdfs/defence-review-2009-released-defence-assessment-july-2010.pdf
otDefence Capability Plan 2010, revised in 2011, 2014: Ministry of Defence. “Defence Capability Plan (June 2104): http://www.defence.govt.nz/reports-publications/defence-capability-plan-2014/contents.html
otDefence Capability Management Framework, last revised in Jul-14 (internal document used by New Zealand Defence Force/MOD)
otQuality Management: ISO9001 certification: at http://www.defence.govt.nz/acquisitions-tenders/quality-assurance.html
thttp://www.iso.org/iso/iso_9000
otDefence Capital Plan (internal document produced by Ministry of Defence in coordination with New Zealand Defence Force)
otStatements of intent and Annual Reports also contain information on major Acquisitions projects.
tNew Zealand Defence Force. &quoute;Annual Report 2013&quoute;, pp48,160-163. http://www.nzdf.mil.nz/downloads/pdf/public-docs/2013/nzdf-annual-report-30june2013.pdf
tNew Zealand Ministry of Defence. “Annual Report 2014: http://www.defence.govt.nz/reports-publications/annual-report-2014/contents.html
otNZ Ministry of Defence, Major Projects Reports: http://www.defence.govt.nz/reports-publications/major-projects-report-2012-volume-1/contents.html
-tMinistry of Defence website:
otMinistry of Defence. &quoute;Current Acquisition Projects”: http://www.defence.govt.nz/acquisitions-tenders/current-acquisition-projects.html
-tOfficial Information Act: Information on projects can be requested under the Act: http://www.legislation.govt.nz/act/public/1982/0156/latest/DLM65382.html
-tInterviews:
otDeputy Secretary (Acquisition), New Zealand Ministry of Defence
otAssistant Secretary (Acquisition), New Zealand Ministry of Defence
-tOversight:
otThe Office of the Auditor-General can review acquisition planning: For example, see: http://www.oag.govt.nz/2008/defence
otThe Evaluation Division of the Ministry of Defence has a statutory obligation under section 24(2)(e) of the Defence Act for audit and this includes audit of Acquisitions projects: http://www.defence.govt.nz/about-us/divisions/evaluation.html

Government comments (8 October 2015)

It is positive to see a rise in the rating to a 3, but the comments still do not reflect accurately the New Zealand process for acquisition planning. The MoD provided a response that both referenced the key processes, guidelines and documentation that sit behind the acquisition planning as well as provided a description of how these pieces all interrelate. We are concerned that you have not used this description to the extent possible to articulate to the reader how the New Zealand system works. The reader is provided some general judgements on the quality of the system without a frame of reference.

The assertions made in paragraphs 2-3 are not supported by evidence and do not hold without deeper research and understanding of the New Zealand system.

-tPara 1: This paragraph, from our perspective, must at a minimum introduce the key policies and processes followed, which includes The Capability Management Framework, Defence White Paper, Defence Capability and Capital Plans and broader state sector Government Rules of Sourcing and Better Business Cases process. ISO 9001:2008 provides quality assurance but is not in itself an acquisition process.

-tPara 1: You also reference the capability plan as outlined in an old NZDF Statement of Intent (new NZDF one here: http://www.nzdf.mil/nz/downloads/pdf/public-docs/nzdf_soi_2015.pdf) and the 2011 Capability Plan, whereas the 2014 Capability Plan is now publicly available (see http://www.nzdf.mil.nz/downloads/pdf/public-docs/2014/2014-defence-capability-plan.pdf) and is the core document, and the MoD Statement of Intent should also be read alongside the NZDF document (see: http://www.defence.govt.nz/pdfs/reports-publications/strategic-intentions-2014.pdf).

-tPara 1: Should these changes be made they should be attributed to Defence as we have provided a substantial body of evidence in response to this question.

-tPara 2: The current reporting in this paragraph is, at present, hearsay with no details provided. Assertions such as “failure to seek in-depth justifications for individual technical requirements or capabilities…” require backing up or should be removed.

otSpeaking to this point, individual technical requirements are rigorously built up for each major acquisition by joint MoD (Capability Development Unit and Acquisition Division) and NZDF (Capability Branch) project teams. The civilian and military parts of the Defence sector, therefore, build up the requirements but the involvement of the military also provides a civilian check. The core requirements are then tested on numerous occasions through the Better Business Cases process, including through business cases, testing with central agencies and gateway reviews.

ot“failure... to engage in comprehensive debate about how particular acquisitions may best support the government's defence and security strategy” – we do not accept that this is the case, and certainly not without evidence. Evidence should either be provided or the comments removed. As well as debate through parliamentary processes, Defence has engaged with numerous public questions on acquisitions programmes through Defence White Paper consultations, public engagement at universities and other organisations, and through Ministerial correspondence with the public. We welcome this engagement. We do note that acquisitions are all tied carefully to Defence policy as contained in public documents such as the White Paper and Capability Plan.

-tPara 3, line 2: “navy” should be in capitals.

-tPara 3: Again, the comments made in this paragraph are presented in an unbalanced and inaccurate manner. We suggest that Ti either provide evidence or provide some balance by reflecting on Defence’s representation of these issues. If not, it would be appropriate to removed the comments.

ot“such as the purchase of Offshore and Inshore Patrol Vessels (OPV/IPV) that the navy was subsequently unable to crew...” – This comment is misleading as it convolutes two points that should to be addressed separately. First, the procurement of the ships was quite appropriate and according to a Maritime Forces Review (publicly released on the MoD website: http://www.defence.govt.nz/reports-publications/mfr/contents.html) that laid out the policy rationale for the procurement decision. The second issue regards training and retention of naval personnel and this has been an ongoing issue for the service since the mid-1990s, well before the on-boarding of the Protector ships. This issue has, appropriately, been subject to reports and service attention, which over some time has started to address this issue.

ot“major budget- and time-driven contractual issues with the HMNZS Canterbury multirole vessel (MRV)” – The major issues in the case of the Canterbury were ‘contractual issues’ that consisted of a wide range of warranty claims and issues for which the contractor had responsibility. These were subject to a legal mediation process from which the MoD received a settlement that was used to remediate the issues with the ship.

ot“the purchase of eight NH-90 helicopters that at the time of purchase had a range of known unresolved technical and technological problems” – This is not correct. The contract for the NH-90 helicopters was signed in June 2006 and New Zealand had an understanding that it was purchasing a type that was in development. Specific issues with the aircraft did not start to impact on the production programme until March 2009. These issues could not have been foreseen. Comments should reflect a sense of balance that factors in that issues in costly, complex acquisition projects are not always foreseen and that contractors and buyers operate in an area of risk in such projects that have to be constantly managed.

-tPara 3: There is an unsubstantiated comment that “…the retrospective decisions have often also been extremely costly.” In recent times Defence has not had to make retrospective decisions on major capability delivery. The sole case of late delivery of a capability and not to specification was in the delivery of the Project Protector vessels in which legal action was taken and the Crown received substantial reward of costs for remediation of the capability. Outside of this individual projects have largely run to cost, and compare well with major projects in the UK and Australia.

Suggested score: 4

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Disagree

Comment: We believe a 3 is more appropriate as this area has seen a lot of change since 2010, although there is still room for improvement.

Suggested score: 3

Opinion: Agree with Comments

Comment: New Zealand response to TI question:

The defence budget is transparent across all of the aspects mentioned in the above question. Both the New Zealand Defence Force and Ministry of Defence are funded through ‘Votes’ in the annual government budget round, ‘Vote Defence Force’ and ‘Vote Defence’ respectively. Each departments’ Vote is based on Estimates submitted through Treasury to the Parliament and Foreign Affairs, Defence and Trade Select Committee. The Estimates are made fully available to the public through the Treasury website and hard copies are available on budget day.

The Estimates of the Vote are based around Appropriations provided by Parliament to departments for the key Outputs they are to deliver, as well as the other expenses incurred by those departments. There are explanations provided for all lines in the Estimates. Acquisitions-related expenses are specifically detailed under Vote Defence, Appropriation M22. Disposal of assets, construction and maintenance expenditure is also specificially noted where appropriate. Personnel and training expenditure is part of the associated Appropriation.

The Annual Reports for both the New Zealand Defence Force and Ministry of Defence report back on budget expenditure annually and show a further level of detail on all these aspects. Personnel and training expenses are specifically mentioned in the annual reports.


Sources:

-tInformation on the select committee:
otNew Zealand Parliament. “Select committee details - Foreign Affairs, Defence and Trade” http://www.parliament.nz/en-nz/pb/sc/details/foreign-affairs/00DBHOH_BBSC_SCFDT_1/business-before-the-foreign-affairs-defence-and-trade
-tInfo on the provision of information on the Defence budget
otForeign Affairs, Defence and Trade Committee “2012/13 financial review of the Ministry of Defence and the New Zealand Defence Force”, 12 December 2013. http://www.parliament.nz/en-nz/pb/sc/documents/reports/50DBSCH_SCR6040_1/201213-financial-review-of-the-ministry-of-defence-and-the-New-Zealand-Defence-Force
otAnnual reports: audited and provided i.e. New Zealand Defence Force. “The 2012-2013 Annual Report for the year ending 30 June 2013”. http://www.nzdf.mil.nz/downloads/pdf/public-docs/2013/nzdf-annual-report-30june2013.pdf; Ministry of Defence. “Defence 2013 Annual Report”. http://www.defence.govt.nz/pdfs/reports-publications/annual-report-2013.pdf
otStatements of Intent: New Zealand Defence Force. “The 2013-2016 Statement of Intent”, pp51-55. http://www.nzdf.mil.nz/downloads/pdf/public-docs/2013/nzdf-statementofintent-2013-16.pdf
-tBudget Estimates and Supplementary estimates.
othttp://www.treasury.govt.nz/budget/2014/estimates/v4
othttp://www.treasury.govt.nz/budget/2014/suppestimates

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree with Comments

Comment: New Zealand response to TI question:

The Parliamentary Select Committee for Foreign Affairs, Defence and Trade, assisted by the Office of the Auditor-General provides detailed oversight of all aspects of the defence budgets of both the New Zealand Defence Force and the Ministry of Defence. Like members of the public, members of the Foreign Affairs, Defence and Trade Committee have access to relevant budget estimates and supplementary estimates.

The Office of the Auditor-General also provides independent scrutiny, and has authority to influence decision-making. For example, in 2013 the Government took steps to reverse Defence spending cuts in light of the Auditor-General's findings.


Sources:

-tInformation on the select committee:
otNew Zealand Parliament. “Select committee details - Foreign Affairs, Defence and Trade” http://www.parliament.nz/en-nz/pb/sc/details/foreign-affairs/00DBHOH_BBSC_SCFDT_1/business-before-the-foreign-affairs-defence-and-trade
-tInfo on the provision of information on the Defence budget
otForeign Affairs, Defence and Trade Committee “2012/13 financial review of the Ministry of Defence and the New Zealand Defence Force”, 12 December 2013. http://www.parliament.nz/en-nz/pb/sc/documents/reports/50DBSCH_SCR6040_1/201213-financial-review-of-the-ministry-of-defence-and-the-New-Zealand-Defence-Force
otAnnual reports: audited and provided i.e. New Zealand Defence Force. “The 2012-2013 Annual Report for the year ending 30 June 2013”. http://www.nzdf.mil.nz/downloads/pdf/public-docs/2013/nzdf-annual-report-30june2013.pdf; Ministry of Defence. “Defence 2013 Annual Report”. http://www.defence.govt.nz/pdfs/reports-publications/annual-report-2013.pdf
otStatements of Intent: New Zealand Defence Force. “The 2013-2016 Statement of Intent”, pp51-55. http://www.nzdf.mil.nz/downloads/pdf/public-docs/2013/nzdf-statementofintent-2013-16.pdf
-tBudget Estimates and Supplementary estimates.
othttp://www.treasury.govt.nz/budget/2014/estimates/v4
othttp://www.treasury.govt.nz/budget/2014/suppestimates

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Disagree

Comment: New Zealand response to TI question:

The Defence budget forms part of the New Zealand Government’s annual budget. The Defence appropriations (and also those of the security agencies) are included in the Appropriation Bills that are introduced and then debated in Parliament when the Budget is presented. Information is also outlined in the Estimates of Appropriation which are presented in Parliament with the Budget. Budget documents and the Annual Report are made publicly available.

The standard of the New Zealand state sector financial management, and the Budget process, is high and both are well regarded internationally (see Open budget source below). The Act reinforces the chief executive’s responsibility by requiring the chief executive to sign explicit statements of responsibility that must be included in external accountability documents such as the statement of intent and departmental annual report (sections 42 and 45C).


Sources:

-tThe provision of information on the Defence budget:
otForeign Affairs, Defence and Trade Committee “2014/15 Estimates for Vote Defence and Vote Defence Force”, 27 June 2014. http://www.parliament.nz/resource/en-NZ/50DBSCH_SCR56538_1/76d10f17157356991f441fde8447b4c1ba8a693c
otForeign Affairs, Defence and Trade Committee “2012/13 financial review of the Ministry of Defence and the New Zealand Defence Force”, 12 December 2013. http://www.parliament.nz/en-nz/pb/sc/documents/reports/50DBSCH_SCR6040_1/201213-financial-review-of-the-ministry-of-defence-and-the-New-Zealand-Defence-Force
otAnnual reports: audited and provided i.e. New Zealand Defence Force. “Annual Report 2014”. http://www.nzdf.mil.nz/downloads/pdf/public-docs/2014/nzdf-annual-report-30june2014.pdf; Ministry of Defence. “Defence 2014 Annual Report”. http://www.defence.govt.nz/reports-publications/annual-report-2014/contents.html
otOverall budget and appropriations: “Vote Defence Force” In: External Sector - The Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2015, 15 May 2014. http://www.treasury.govt.nz/budget/2014/estimates/v4
New Zealand Treasury. &quoute;Budget 2014 Data from the Estimates of Appropriations 2014/15&quoute;, 15 May 2014. http://www.treasury.govt.nz/budget/2014/estimates/data
-tExamples to show that the public does access and use this information:
otNick Lee-Frampton. “New Zealand to Register Slight Increase in Defence Spending”,15 May 2014.http://www.defencenews.com/article/20140515/DEFREG03/305150041/New-Zealand-Register-Slight-Increase-defence-Spending
otRobert Ayson. “Small number, big signal: New Zealand finds some extra defence money”, 1 May 2014. http://www.aspistrategist.org.au/small-number-big-signal-new-zealand-finds-some-extra-defence-money/
-tBudget Estimates and Supplementary estimates.
othttp://www.treasury.govt.nz/budget/2014/estimates/v4
othttp://www.treasury.govt.nz/budget/2014/suppestimates
-tNew Zealand assessment for Open Budget Index
othttp://internationalbudget.org/what-we-do/open-budget-survey/country-info/?country=nz
othttp://survey.internationalbudget.org/

Suggested score: 4

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree with Comments

Comment: We agree that there are problems with slippage and the timeliness of responses.

Suggested score:

Opinion: Agree with Comments

Comment: New Zealand response to TI question:

All Crown income, including income from the disposal of assets, is reported monthly and annually by the Treasury and is scrutinised by the Office of the Auditor-General and the Finance Select Committee of Parliament. A detailed breakdown of the data is published online.

In addition, where there are issues of public interest Defence has an established practice of providing voluntary public releases. An example is the recent sale of ex-RNZAF Seasprite helicopters to Peru, where information on the sale was provided to the media through the Minister and officials.


Sources:

-tNew Zealand Treasury. &quoute;Budget 2014 Data from the Estimates of Appropriations 2014/15&quoute;, 15 May 2014. http://www.treasury.govt.nz/budget/2014/estimates/data
-tNew Zealand Treasury. &quoute;Financial Statements of the Government of New Zealand&quoute;, last updated 7 Oct 2014. http://www.treasury.govt.nz/government/financialstatements
-tAnnual reports: audited and provided i.e. New Zealand Defence Force. “Annual Report 2014”. http://www.nzdf.mil.nz/downloads/pdf/public-docs/2014/nzdf-annual-report-30june2014.pdf; Ministry of Defence. “Defence 2014 Annual Report”. http://www.defence.govt.nz/reports-publications/annual-report-2014/contents.html
-t3 News, “NZ Government sells Seasprite helicopters to Peru”: http://www.3news.co.nz/nznews/govt-sells-seasprite-helicopters-to-peru-2014121915#axzz3RrLLSLdP

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Disagree

Comment: New Zealand response to TI question:

There is an effective internal audit process for Ministry of Defence expenditure. There is a legislative basis for this, with the Secretary of Defence being accountable to Parliament through the Foreign Affairs, Defence and Trade Select Committee for the Ministry’s performance under the Public Finance Act 1989 (see the link below for a detailed description of the Act).

To achieve this, the Ministry has put in place sound internal controls that provide reasonable assurances that the Ministry’s objectives will be achieved and that undesirable events will be prevented or detected and corrected. The Ministry’s accounting system is arranged in such a manner as to secure the greatest possible measure of internal control in the handling of public money and stores.
From a financial point of view there is clear segregation of duties based on the principle that the concurrence of two or more persons is required to complete a transaction. Furthermore, no one person is able to authorise and certify payments to themselves.
The Chief Financial Officer is responsible for reviewing the procedural and division of duties aspects of the systems of internal control. These aspects are reviewed during the programmes of internal audits undertaken by the Ministry of Defence’s Evaluation Division and, more recently, by the New Zealand Defence Force’s internal audit team. An annual risk‐based internal audit work programme is prepared and approved by the Audit and Risk Committee, an independently chaired Committee of the Defence Force Leadership Board.
The Ministry has in place clear guidelines on and written delegations of authority which provide the essential information to clarify who has the authority to make decisions, commit expenditure, and sign legal undertakings on behalf of the Ministry.
The Auditor-General undertakes an independent annual audit of the Defence agencies. The objectives of the audit are to provide an independent opinion on the Ministry’s financial position statements and performance information, and to report on matters relevant to the Ministry’s financial and other management systems that are material. The Auditor-General’s mandate allows for effective audit and she has wide powers of investigation under the Public Finance Act. (Note also that the 2013 Transparency International National Integrity System Report rated the Office of the Auditor-General very highly). In practice, an external party carries out the audit work on behalf of the Office of the Auditor-General. It is performed in two parts; the interim and final audit. The Auditor-General then finalises the audit report and it is provided to the Foreign Affairs, Defence and Trade Committee.


New Zealand response to draft assessment comments:

The second and third paragraphs of the draft assessment comments are neither directly relevant nor substantiated.

Two unnamed researchers are cited as having made non-referenced allegations that “Defence has often presented selective arguments for expenditure to oversight committees. Both also indicated the Government or the Defence Force may often seek capabilities it could deploy in support of coalition partners; again an area of significant perceived sensitivity given the government's stated intent of engaging foremost in peacekeeping roles. Source 4 cited the case of the NZ$373 million upgrade for the RNZAF's maritime surveillance aircraft (the P-3K2 Orion), where justifications focused exclusively on improving their role in detecting illegal fishing and supporting humanitarian and search and rescue (SAR) missions, while avoiding discussion of its identified military roles, including intelligence gathering, which were perceived sensitive public topics.” This paragraph is factually incorrect on numerous counts.

The sole example given that “Defence has often presented selective arguments for expenditure to oversight committees” is the P-3K2 Orion upgrade example. The actual policy advice provided to the Government and Foreign Affairs, Defence and Trade Select Committee was markedly different to that depicted. The case provided by Defence provided options for the upgrade that covered a range of outcomes, including a base option that would provide purely for maritime surveillance in support of civilian agencies, through to options that provided for this base capability as well as providing levels of defence capability in support of foreign policy objectives. This reflects both standard Defence policy practice in New Zealand for providing Ministers options, but also the relationship between capability and the New Zealand Defence Force’s Employment Contexts, which are directly linked to its Outputs and defence policy through the Defence White Paper.

The first sentence of the last paragraph should also be reviewed. While Defence has initiated a programme in recent years to identify savings, it is incorrect to suggest the functions of external oversight, namely the Audit and Risk Committee and the Foreign Affairs, Trade and Defence Select Committee may have been under long-term pressure. There is no linkage between Defence funding and that of the Committee. In fact, the Select Committee is funded through Parliamentary Services, not Defence, and there is no indication that there has been pressure on Select Committee funding. Further, there has been no indication in any change in process with regards the Committee’s exercising of its standard audit functions.


Sources:

-tAuditor General audits accounts annually as provided by Public Finance Act and Public Audit Act:
othttp://www.oag.govt.nz/our-work
othttp://www.oag.govt.nz/our-work/about-auditing
othttp://www.oag.govt.nz/our-work/about-auditing/performance-audits
otPublic Finance Act, 1989, Part 3, Art. 29B-31: http://www.legislation.govt.nz/act/public/1989/0044/latest/whole.html?search=qs_act_Public+finance+act_resel_25_h&p=1#DLM162045
otThe Public Audit Act 2001 sets out the role, status and functions of the Office of the Auditor-General in relation to public entities, including the Ministry of Defence. See sections 16 and 18: http://www.legislation.govt.nz/act/public/2001/0010/latest/DLM88541.html#DLM88593
otAudited annual reports are available publicly: Externally audited: New Zealand Defence Force. &quoute;Annual Report 2014&quoute;, p.48, pp.160-163: http://www.nzdf.mil.nz/downloads/pdf/public-docs/2014/nzdf-annual-report-30june2014.pdf; Externally audited: New Zealand Ministry of Defence. “Annual Report 2014: http://www.defence.govt.nz/reports-publications/annual-report-2014/contents.html
-tThe Defence Chief Executives are accountable to Parliament through the Public Finance Act, and report to the Foreign Affairs, Defence and Trade Select Committee:
othttp://www.parliament.nz/en-nz/pb/sc/details/foreign-affairs/00DBHOH_BBSC_SCFDT_1/business-before-the-foreign-affairs-defence-and-trade
otPublic Finance Act, 1989, Part 4: http://www.legislation.govt.nz/act/public/1989/0044/latest/whole.html?search=qs_act_public+finance+act_resel_25_h&p=1#DLM162077
otParliamentary Practice in NZ, Ch. 36 “Financial Review”: http://www.parliament.nz/en-nz/about-parliament/how-parliament-works/ppnz/00HOOOCPPNZ_361/chapter-36-financial-review
-tExternal auditors are appointed by the Office of the Auditor-General and in 2012/13 Audit NZ was the external auditor: http://www.auditnz.govt.nz/who-are-we

Suggested score: 4

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Disagree

Comment: This audit has been described by our source as a ‘soft process’. While there is an opportunity of a more detailed review, the time allocated is an hour for each review - the government can then take half an hour to present and then the CEO/ CDF make take up time, so even if there is a serious case, there is limited time for oral questions or interference. A difficulty of not having separation of powers in the Executive is that the Select Committee is unable to be more probing and more independent. Historically, there used to be time for cross examinations - but then new protections come in. Added to this OIA requests are taking much longer e.g. a simple request from anonymous Parliamentarian for two simple documents earlier this year took 6 months instead of the statutory 2 months to be provided.

Media are not a great guardian of constitutional practice. Increasingly, the 4th estate follows immediate and front page stories. The media is poor at keeping the public domain informed about the timing of government decision-making. If there was more openness, there would be less restraint on decision making and better decisions.

Suggested score: 3

Opinion: Agree with Comments

Comment: New Zealand response to TI question:

As noted, the defence agencies are publicly accountable under the Public Finance Act 1989. The Auditor-General audits the financial statements and the non-financial performance of each agency, while the Defence Chief Executives are accountable to Parliament through the Foreign Affairs, Trade and Defence Select Committee for financial performance.

The objectives of the Office of the Auditor-General’s audit are to provide an independent opinion on the Ministry’s financial position statements and performance information, and to report on matters relevant to the Ministry’s financial and other management systems that are material. The Auditor-General’s mandate allows for effective audit and she has wide powers of investigation under the Public Finance Act. In practice, an external party carries out the audit work on behalf of the Office of the Auditor-General. It is performed in two parts; the interim and final audit. The Auditor-General then finalises the audit report and it is provided to the Foreign Affairs, Defence and Trade Committee.

Transparency International has recognised that the Office of the Auditor-General is well recognized across all sectors as a leader in guiding good financial practice (Transparency International, 2013, pp164, 239).


Sources:

-tAuditor General audits accounts annually as provided by Public Finance Act and Public Audit Act:
othttp://www.oag.govt.nz/our-work
othttp://www.oag.govt.nz/our-work/about-auditing
othttp://www.oag.govt.nz/our-work/about-auditing/performance-audits
otPublic Finance Act, 1989, Part 3, Art. 29B-31: http://www.legislation.govt.nz/act/public/1989/0044/latest/whole.html?search=qs_act_Public+finance+act_resel_25_h&p=1#DLM162045
otThe Public Audit Act 2001 sets out the role, status and functions of the Office of the Auditor-General in relation to public entities, including the Ministry of Defence. See sections 16 and 18: http://www.legislation.govt.nz/act/public/2001/0010/latest/DLM88541.html#DLM88593
otAudited annual reports are available publicly: Externally audited: New Zealand Defence Force. &quoute;Annual Report 2014&quoute;, p.48, pp.160-163: http://www.nzdf.mil.nz/downloads/pdf/public-docs/2014/nzdf-annual-report-30june2014.pdf; Externally audited: New Zealand Ministry of Defence. “Annual Report 2014: http://www.defence.govt.nz/reports-publications/annual-report-2014/contents.html
-tThe Defence Chief Executives are accountable to Parliament through the Public Finance Act, and report to the Foreign Affairs, Defence and Trade Select Committee:
othttp://www.parliament.nz/en-nz/pb/sc/details/foreign-affairs/00DBHOH_BBSC_SCFDT_1/business-before-the-foreign-affairs-defence-and-trade
otPublic Finance Act, 1989, Part 4: http://www.legislation.govt.nz/act/public/1989/0044/latest/whole.html?search=qs_act_public+finance+act_resel_25_h&p=1#DLM162077
otParliamentary Practice in NZ, Ch. 36 “Financial Review”: http://www.parliament.nz/en-nz/about-parliament/how-parliament-works/ppnz/00HOOOCPPNZ_361/chapter-36-financial-review
-tExternal auditors are appointed by the Office of the Auditor-General and in 2012/13 Audit NZ was the external auditor: http://www.auditnz.govt.nz/who-are-we
-tExternal audits have been done of military procurement on a regular basis:
otAurecon report: http://www/reports-publications/review-09-aurecon-review/contents.html

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree with Comments

Comment: New Zealand response to TI question:

New Zealand’s defence institutions do not have a controlling or financial interest in businesses associated with natural resource exploitation. Any work or activity by the Crown must comply with the Resource Management Act 1991, although the Minister of Defence can exempt certain work or activity if necessary for reasons of national security (section 4 of the Act).

In practice, Defence does not hold such interests, as confirmed through Annual Reports.


Sources:

-tLegislation:
otResource Management Act, 1991: restricts defence institutions from having such an interest: http://www.legislation.govt.nz/act/public/1991/0069/latest/DLM231900.html
-tAnnual reports: confirm no such interest. See externally audited reports:
otNew Zealand Defence Force. &quoute;Annual Report 2014&quoute;: http://www.nzdf.mil.nz/downloads/pdf/public-docs/2014/nzdf-annual-report-30june2014.pdf;
otNew Zealand Ministry of Defence. “Annual Report 2014: http://www.defence.govt.nz/reports-publications/annual-report-2014/contents.html

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree with Comments

Comment: New Zealand response to TI question:

Through intelligence received in recent times there has been no evidence of the penetration of organised crime into the defence and security sector. If there was evidence of any kind (such as media reports or complaints laid with the NZ Police or the Serious Fraud Office), the Ministry of Defence, the New Zealand Defence Force, the Office of the Auditor-General and the Parliamentary Select Committee would all take appropriate action.

In recent years the NZDF has updated the military justice system to be prepared for contemporary risks, so the NZDF is alert and ready to deal with these challenges. From 2006-07 legislative action was taken to update the Armed Forces Discipline Act 1971 and Formal Rules of Procedure were then adopted in 2008. The Courts of Inquiry process has been strengthened, with tools developed to provide transparency on process as well as a means for educating the public and service personnel of their application. The NZDF Military Police Unit has been refreshed and the role of Provost Marshal strengthened with outside expertise brought in from senior ranks of the New Zealand Police.

There are agencies in place to investigate and prosecute organised crime. Civilian agencies are also ready to take on cases in the defence sector as required. The Organised and Financial Crime Agency (OFCANZ), established in 2008, can address serious organised crime. The agency takes a whole-of-government approach, working with information and resources from a range of other agencies.The Serious Fraud Office can also deal with serious and complex commercial fraud. There is an effective level of coordination for these agencies that includes Defence, through the Officials Committee for Domestic and External Security Co-ordination (ODESC).


While the Serious Fraud Office investigates serious and complex fraud, especially commercial fraud, OFCANZ concentrates on fraud that relates to organised crime. The Serious Fraud Office and OFCANZ collaborate where appropriate when these two types of financial crimes overlap.

OFCANZ activity is ultimately the responsibility of the Commissioner of Police. The Commissioner will seek advice on OFCANZ focus areas (priorities) from the Officials' Committee for Domestic and External Security Co-ordination (ODESC). (This committee includes CEOs from the defence and intelligence agencies, as well as from Treasury).

Applicants for the New Zealand Defence Force and the Ministry of Defence undergo a Police check for past convictions, and background checks are conducted for sensitive roles.


Response to comments in the draft assessment:

The report commented on the theft of weapons and equipment. The New Zealand Defence Force concurs that these incidents were isolated rather than organised, and were resolved through military police investigation. There is no firm evidence of NZDF weapons being unaccounted for or having been stolen by organised criminal entities


Sources:

-tOFCANZ:
otAbout OFCANZ: http://www.ofcanz.govt.nz/about-ofcanz/what-ofcanz-does
-tNew Zealand Ministry of Justice, “Organised Crime: All of government response”, June 2013: http://www.justice.govt.nz/publications/global-publications/o/organised-crime-all-of-government-response/publication

Government comments (08 October 2015)

We agree with rating. We do have comments below, however, that are important to reflect in the final assessment.

-tPara 1: We request the removal of the following comments – “Military recruiting levels may often be higher in areas of the country where gang culture is also more prevalent due to limited employment opportunities, there remains an associated level of risk that some soldiers may have direct or indirect connections to organised criminal groups”. This is speculation with no evidential basis, and it could be interpreted as providing an discriminatory and inaccurate view of recruits into the services. Two key points:

otThe NZDF runs a recruitment process that is completely untargeted. It places no preferences on any demographic group or location, unlike some overseas recruiting programmes that have been shown to target poorer areas.

otDemographics data has been reviewed to test this on the Defence side and there is no evidence to suggest that it is true.

otWe believe it important for Transparency International to review this point as it illustrates our point that comments should be made based on sound research and strong evidential basis. In this case we were disappointed to see the lack of analysis sitting behing these assertions.

-tIt is important to note that in recent years the NZDF has been making a concerted effort to further strengthen the military justice system. Consequently, the Defence Force is alert and well prepared to deal with any challenges. In particular:

otIn the period 2006-07 the military justice system was overhauled, with legislative action taken to update the Armed Forces Discipline Act 1971 through the Armed Forces Discipline Amendment Act 2007. Formal Rules of Procedure were then adopted in 2008.

otThe Courts of Inquiry process has been strengthened, with tools developed to help provide transparency to the process and means of educating the public and service members of its application. Much information is now on the NZDF website at: http://www.nzdf.mil.nz/corporate-documents/coi/default.htm).

otThe NZDF Military Police and the role of Provost Marshal have also been strengthened. We provide a September 2014 Operational Order from the NZDF that provides information on the stepping up of the Joint Policing Unit (now the NZDF MP unit) to provide more effective Service policing. It is also relevant to note that the Provost Marshal role has become an important one within the Defence Force, and in order to improve policing standards has been filled by senior personnel seconded across from the NZ Police.

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Disagree

Comment: New Zealand response to TI question:

The New Zealand Defence Force maintains policing functions, including the ability to investigate allegations of improper behaviour. In addition, if there was an allegation of corruption or organised crime involvement in the defence services then this would be investigated by external agencies.

In practice, if an allegation is received, the Defence Force member’s Commanding officer will decide whether to lay a charge pursuant to the Armed Forces Discipline Act or whether the act could constitute a civil offence and be referred to the New Zealand Police or another civil law enforcement agency (under DM 69 (2 ed.) volume 1 chapter 2 section 7). Some offences, including official corruption (AFDA section 54), false evidence (AFDA section 71), and perjury (AFDA section 74(1)) must be tried in the Court Martial of New Zealand and cannot be tried summarily. If regarded as a matter falling under the Armed Forces Discipline Act, the New Zealand Defence Force Provost Marshal, Joint Policing Unit and the Directorate of Risk and Assurance are all empowered to investigate issues of corruption.
Should it be required or beneficial, external agencies outside of Defence can also be brought in on military cases where necessary. The Serious Fraud Office investigates corruption and treats all suspicions of corruption, whether in the private or the public sector, as matters of high priority no matter how low the value that is involved.

The Organised and Financial Crime Agency of New Zealand (OFCANZ) and New Zealand Police also investigate organised crime where it is alleged to have taken place. The Serious Fraud Office and OFCANZ collaborate in cases where both elements are present (refer to the description in Question 17).

As Transparency International has recognised in its 2014 National Integrity System Assessment report, these agencies are largely effective and independent (section 5.3.1), and that the New Zealand Defence Force has worked with the police on occasion (p.174).

All the objective information indicates low levels of corruption within defence services. Where cases are raised, however, they are investigated and dealt with appropriately.


New Zealand response to comments in the draft assessment:

If we receive evidence (or even the slightest perception) of corruption or involvement of organised crime then such matters would be promptly and thoroughly investigated. Further, the Serious Fraud Office and OFCANZ are active in pursuing intelligence sources, including with overseas partners.


Sources:

-tArmed Forces Disciplinary Act, 1971. section 54 Last amended 18 December 2013. http://www.legislation.govt.nz/act/public/1971/0053/latest/DLM402741.html
-tNew Zealand Serious Fraud Office website, https://www.sfo.govt.nz/what-is-corruptionThe New Zealand Defence Force’s Directorate of Risk and Assurance, Royal New Zealand Military Police, and Directorate of Legal Services are shown in the Corporate Structure page on the New Zealand Defence Force website here: http://www.nzdf.mil.nz/about-us/corp-structure/default.htm
-tThe Royal New Zealand Military Police are mentioned the New Zealand Defence Force Output Plan and as a capability in the Annual Report. See: New Zealand Defence Force. &quoute;Annual Report 2014&quoute;, p.48, pp.160-163. http://www.nzdf.mil.nz/downloads/pdf/public-docs/2014/nzdf-annual-report-30june2014.pdf
-tTransparency International, &quoute;New Zealand National Integrity System Assessment 2013, Chapter 5: Law enforcement and anti-corruption agencies (pillars 5 and 9)&quoute;, pp172-4,187-190. http://www.transparency.org.nz/docs/2013/Integrity-Plus-2013-Pillar-5-and-9-Law-Enforcement-Anti-Corruption-Agencies.pdf

Suggested score: 4

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Disagree

Comment: Given the absence of corruption and organised crime, why is specific policing required? Should the test be that the police would prioritise action as soon as evidence of either is found?

Suggested score: 4

Opinion: Disagree

Comment: New Zealand response to TI question:

Parliamentary oversight over the intelligence agencies is provided through the ‘Intelligence and Security Committee’ (ISC) of Parliament. Information on the committee’s activities is publicly available. The committee is a statutory body, rather than a select committee, established under the ISC Act 1996. The ISC has a broad mandate to inquire into and review a broad spectrum of matters under section 6 of the Act, including:
•tExamining the policy, administration and expenditure of the Government Communications Security Bureau (GCSB) and also the New Zealand Security Intelligence Service (NZSIS);
•tConsidering the annual reports of both agencies; and
•tDiscussing the annual report of the Inspector-General of Intelligence and Security with that individual.
The few exceptions to this mandate focus primarily on excluding sensitive operational matters that come within the mandate of the Inspector-General of Intelligence and Security (as discussed below).

The financial reviews of the GCSB and NZSIS by the Intelligence and Security CommitteeISC are, based on amendments to the Act passed in 2013, required to be held in public. Previously they had been held under the ISC’s normal rule of secrecy that the Act had mandated up until that time. To date two public financial reviews have been carried out. Audio transcripts of the 2013 hearing are available and comments summarising the 2014 hearing are available on the Parliament Today website. Television, radio, print, and social media representatives present at these reviews are free to record and publish proceedings should they so wish.

The directors of the NZSIS and GCSB are required under their respective acts to deliver the Minister an annual report on the activities of their Service during that year equivalent to those stated under the Public Finance Act 1989. The annual reports each contain an independent auditor's report from the Office of the Auditor-General (OAG) on their service's financial statements in accordance with section 45 of the Public Finance Act 1989. Auditing services are independently provided by Audit New Zealand acting on behalf of the OAG and auditors are freely able to scrutinise expenditure as necessary and in accordance with normal auditing requirements. Annual reports dating back to at least 2003 are publicly released on each agency’s websites..

The 2013 amendments to the ISC Act also require the ISC to present an annual report on its own activities to Parliament. The first of these, for 2013, is available publicly on the Parliamentary website.

In addition to the ISC, a role called the Inspector-General of Intelligence and Security (IGIS) was established by Act of Parliament in 1996 to provide independent oversight of the NZSIS and the GCSB. The IGIS is tasked to assist in ensuring that the agencies comply with the law and that complaints relating to them are independently investigated. The IGIS conducts inquiries into matters of concern, including individual complaints, and provides report findings and recommendations to the Minister(s) responsible for intelligence and security agencies. In the course of carrying out these duties the IGIS has extensive rights, including access to security records held by the agencies and also right of access to agencies’ premises, including communication interception stations.

The role of the IGIS was expanded in 2013 as part of the a 2013 review of intelligence legislation. The resources available to the IGIS were increased, with new investigating officers being appointed from late 2013 and a new IGIS, Deputy IGIS, and Advisory Panel appointed during 2014. New responsibilities include review, audit, inquiry and compliance functions, which the IGIS must meet in a robust and credible manner. The IGIS now also has jurisdiction to investigate complaints into alleged breaches of the Privacy Act 1993, with relevant principles of the Privacy Act being brought into the GCSB Act to enable this. The resultant independent oversight office is more effectively resourced in relation to the size of the intelligence community than in comparable countries, with funding of the IGIS currently entailing approximately 1 percent of the entire New Zealand intelligence community budget.
The IGIS is statutorily required to report on the effectiveness and appropriateness of the intelligence agencies compliance systems including all supporting policies and practices (under section 11 of the IGIS Act). To date, three investigative reports have been completed and published on the IGIS’s website. The IGIS’s annual report for the 2013/2014 year has also been published on the website and details how the expanded legislative mandate for the IGIS is being implemented as well as reporting the IGIS’s activities during the year. The IGIS noted in the report that it was intended to provide assurance that intelligence and security matters were open to scrutiny.

Reform has been designed so as to be forward looking and not remedial. The IGIS Annual Report for 2013/14 explains that the IGIS Act provides the legal basis for regular inspections of the intelligence and security agencies so as to assess the effectiveness and appropriateness of their procedures and compliance systems and, ideally, to identify issues before there is a requirement for remedial action. The report carries on tooutline the processes that exist to assist the IGIS to proactively identify useful reforms.

Both the Privacy Commissioner and the Auditor-General also exercise oversight of the intelligence and security agencies in their respective spheres. The Privacy Commissioner is able to report to the IGIS on the GCSB’s compliance with the statutorily-required personal information policy. The Auditor-General exercises the same high standard of financial oversight (including signing-off of the annual financial statements) as for all other government departments.
The reform of oversight mechanisms, most notably the 2013 law reform noted above provide New Zealand with strong oversight of the intelligence sector. There have been a number of criticisms that the decisions to reform the oversight structures have been politically motivated.


Sources:

-tLegislation:
otIntelligence and Security Committee Act 1996: http://www.legislation.govt.nz/act/public/1996/0046/latest/DLM392242.html?src=qs
otInspector-General of Intelligence and Security Act 1996, last amended 05 December 2013 (see s.12: functions of the Inspector-General). http://www.legislation.govt.nz/act/public/1996/0047/latest/DLM392285.html
otNew Zealand Security Intelligence Service Act 1969, see section 4J: http://www.legislation.govt.nz/act/public/1969/0024/latest/DLM391606.html?src=qs
otPublic Finance Act 1989, see sections 45A, 45B, 45BA, 45C, 45D, 45E: http://www.legislation.govt.nz/act/public/1989/0044/latest/DLM160809.html
otGovernment Communications Security Bureau Act 2003, see section 12: http://www.legislation.govt.nz/act/public/2003/0009/latest/DLM187178.html?src=qs
-tInspector-General of Intelligence and Security website:
otInspector-General of Intelligence and Security. “About The Inspector-General of Intelligence and Security”, last updated 29 May 2014: http://www.igis.govt.nz/about/ .
-t2013 financial review of the New Zealand Security Intelligence Service: http://parliamenttoday.co.nz/podcast/full-audio-sis-director-warren-tucker/
-t2013 financial review of the Government Communications Security Bureau: http://parliamenttoday.co.nz/podcast/full-audio-gcsb-director-ian-fletcher/
-tIntelligence and Security Committee 2014 Annual Report to Parliament: http://www.parliament.nz/resource/en-nz/50DBHOH_PAP56732_1/ce7971c8338439179f60fcd6ba2abb0984b9e3f8
-t2013/14 Annual Report of the Inspector-General of Intelligence and Security: http://www.igis.govt.nz/assets/ANNUAL-REPORT-2013-14.pdf
-tNZIC PIF Review 2014, State Services Commission website: http://www.ssc.govt.nz/pif-reports-announcements

New Zealand comments (8 October 2015)

We do not agree with the rating in the draft assessment. Much of the evidence provided in the government response has not been addressed. In particular, the ISC has a much broader mandate than is currently recognised, and we have clarified this in our tracked changes.

We note below issues with the current assessment, some of which are substantive and require addressing.

-tPara 1, line 1: Grammatical issues – we suggest that you put the committee’s name in inverted commas and split the sentence in two before the word ‘information’. That next sentence would better read, “Information on the committee’s activities is publicly available”.

-tPara 1, line 2: Grammatical issues – “in particular” should be in commas. We also suggest the acronyms GCSB and NZSIS be added in brackets after they are spelt in full as this is the first time that they are mentioned in the Index.

-tPara 1, line 3: Grammatical issues – The wording is clumsy and at a minimum the word ‘normal’ can be removed as it is redundant.

-tPara 2: Annual reports – The tracked changes text contains clarifications of this process to note that important issues that audit practice is in line with the good practice used with all departmental reports.

-tPara 2: The green line “Annual reports dating back to 2009…” is not appropriate in the current location. It is not relevant to refer to the Annual Reports of the IGIS in the middle of a paragraph about the GCSB and the NZSIS. Unclassified and detailed annual reports for these individual agencies are publicly available on their websites.

-tPara 2: Suggest deletion of the two final lines, “The 2013 Amendment to the Act…”: A more comprehensive statement is “To date two public financial reviews have been carried out. Audio transcripts of the 2013 hearing are available and comments about the 2014 hearing are available on the Parliament Today website. Television, radio, print and social media representatives present at these reviews are free to record and publish proceedings should they so wish.

-tPara 5, line 1, “The IGIS’s input has driven a number of law reforms…”: This statement is factually incorrect. Law reforms have not been driven by input from the IGIS, though that could occur in the future. Law reforms have been driven by other imperatives – e.g. Kitteridge review of GCSB.

-tPara 5, general comment: This paragraph is based on opinion and no evidence is provided. We request that you provide evidence or consider whether this be removed.

-tReviewer’s Response:

ot“I also draw the TI chapter reviewer’s attention to the issues with retroactive reform”. The statements following this phrase do not indicate retroactive reform.

ot“I also noted the number of issues…” – These topics are currently the subject of investigation by the IGIS. Until the time that the investigation is complete there will not be a sound evidentiary basis for drawing conclusions.

ot“the upcoming intelligence and security review has been commissioned as this is in doubt”: This statement is factually incorrect. The requirement for an independent review of the GCSB, the NZSIS, their oversight and relevant legislation was enacted in legislation because the government saw such periodic reviews as a desirable way of ensuring that the agencies continue to operate effectively, lawfully, and with appropriate oversight.

Suggested score: 4

Opinion: Agree

Comment:

Suggested score:

Opinion: Agree

Comment:

Suggested score:

Opinion: Disagree

Comment: There is a Parliamentary Select Committee with a role for Defence. In a country NZ's size this should be adequate. The test is, would Parliament proritise greater resourcing of oversight if there was a problem - we think it would.

Our sources indicate that improvements have been made in this area in the last year.

Suggested score: 3

Opinion: Disagree

Comment: New Zealand response to TI question:

There is a high degree of transparency as to the criteria and process for selection and appointment to senior positions within the intelligence services. There are numerous protections provided by statute and by constitutional convention that safeguard the processes for appointment, the quality of appointees, and the independence of those appointed to senior roles in the intelligence services.

The merit-based selection criteria, rights of review, notification of a vacancy, and the process for an appointment and any eligibility for re-appointment, are generally set out in the statute that governs the particular appointment. Remuneration and conditions may be set out in other legislation.

The critical importance of getting the right people into senior roles is recognised throughout the state services. Statutory provisions for appointment are supplemented by administrative processes that are regularly reviewed and scrutinised for improvement.

The Director of the Government Communications Security Bureau and the Director of Security at the New Zealand Security Intelligence Service are statutory officers – like the Commissioner of Police, the Chief of the Defence Force and the State Services Commissioner (amongst others). In order to protect the integrity of their role and their independence, statutory office holders generally have specific powers and functions in relation to their role that are conferred by statute, and provisions safeguarding their independence. As such, their appointment processes and criteria are different in some respects from other public service chief executives.

The Director of the Government Communications Security Bureau is appointed according to Section 9 of the Government Communications Security Bureay Act 2003 under which the Governor-General appoints the Director on the recommendation of the Prime Minister for a period not exceeding five years. Section 9A provides that the State Services Commissioner be responsible for managing the process for the appointment of the Director and provide nominations to the Prime Minister.

The Director of Security at the New Zealand Security Intelligence Service, under section 5 of the New Zealand Security Intelligence Service Act 1969 is appointed by the Governor-General under terms and conditions decided by the responsible Minister. Under the Cabinet Manual, State Services Commission staff are to manage this process.

More on the appointment criteria and processes for them is provided in State Services Commission documents publicly available on the State Services Commission website (see sources below). The attached appointments table also contains information on the appointment process for these positions and others in the state sector.

The State Services Commission website provided full information about the appointment of the Director of Security (the Director of the New Zealand Security Intelligence Service) in 2013 (the most recent appointment of an intelligence community Director). These include the position description and the Guide for Applicants. The latter details the appointment process, the consultations that are undertaken (including with the Prime Minister) as part of the process and the roles of the State Services Commissioner and the Prime Minister in making the appointment (see sources below).

The State Services Commission website also contains links to:

•tthe recently advertised vacancy for the position of Director of the Government Communications Security Bureau (see sources below).
•ta number of documents relating to the appointment of the Director of the Government Communications Security Bureau in 2011, including the position description and the Guide for Applicants. The specific processes followed in the appointment of Ian Fletcher as Director of the Government Communications Security Bureau and the Cabinet paper on his appointment (see sources below).

The Inspector-General of Intelligence and Security and the Deputy Inspector-General of Intelligence and Security are other senior positions related to the intelligence services (although necessarily independent of them). The appointment criteria used for these two positions are described in the “Competencies” section of the role description documents, which are available on the Department of Prime Minister and Cabinet website (see sources below).

Senior positions within the New Zealand Security Intelligence Service and the Government Communications Security Bureau are advertised publicly. A detailed position description, including the desired person specification, is provided. One current example is for the appointment of the tier two positions, Deputy Director, Intelligence in the New Zealand Security Intelligence Service, and Deputy Director Protective Security Enhancement, New Zealand Security Intelligence Service is cited in the sources below. The process followed for recruiting these positions is for the position to be advertised externally, applicants are short-listed as per the State Services Commission model, a panel of relevant stake-holders including State Services Commission representatives is appointed to interview the applicants, applicants undergo employment checks and are security vetted to the highest level before any appointment is made.

More generally, all potential appointees to positions within the New Zealand Security Intelligence Service and the Government Communications Security Bureau are required to undergo psychological assessments and to answer questions about their personal circumstances and behaviour, as part of the process for determining their suitability for appointment to the particular role. They are also required to gain the highest level security clearance, a process which includes thorough investigation of their personal circumstances and background. The clearance process and its evaluation criteria are the same for all appointments.


New Zealand response to comments in the draft assessment:

The draft assessment contains comments that appear to be opinion or conclusions drawn based on a misunderstanding of the recruitment and selection process relating to senior appointments, in particular in relation to the appointment of the Director of the Government Communications Security Bureau in 2011. The comments appear to suggest that any role played by the Prime Minister is “an intervention” and improper. There was nothing to suggest the Prime Minister’s involvement in the 2011 process was other than legitimate. The Prime Minister may suggest some person apply for a role but upon application that person’s application is not overseen by the Prime Minister but by the State Services Commissioner as detailed above. The Commissioner assesses the application based on its merit and against set criteria and, with the support of a panel in making that assessment, makes a recommendation accordingly.


Sources:

-tThe New Zealand Security Intelligence Service and the Government Communications Security Bureau are agencies that are subject to the Standards of integrity and Conduct and with sound employment criteria and processes: http://www.ssc.govt.nz/code-organisations
otThe State Services Commission provides guidance on the conduct expectations of all who are subject to the Code: see http://www.ssc.govt.nz/integrityandconduct
otGovernment Communications Security Bureau Employment criteria and processes: http://www.gcsb.govt.nz/working-for-us/the-selection-process/
otNew Zealand Security Intelligence Service employment criteria and processes http://www.nzsis.govt.nz/careers/employment-criteria-and-processes/
othttp://www.nzsis.govt.nz/assets/media/application-forms/Position_Description_DDI.pdf
-tObjective selection criteria in relation to Departmental employees
otSee also: http://www.ssc.govt.nz/node/9679
otAppointment of departmental staff( GCSB, NZSIS) is governed by section 56 and sections 60 to 65 of the State Sector Act. Section 56 requires, inter alia, the impartial selection of suitably qualified persons for appointment, and each chief executive ensure all employees maintain proper standards of integrity, conduct, and concern for the public interest: see s 56 of the State Sector Act 1988.
otSection 60 of the Act requires a chief executive, in making an appointment under this Act, to “give preference to the person who is best suited to the position”. In addition, section 61 of the Act sets out the obligation to notify a vacancy. There is also an obligation to notify of appointments (section 64 ) and a requirement that agencies have a process to enable a review of an appointment by an employee: section 65.
-tInvestigation of candidate’s suitability
otSee statutory requirements above for departmental staff. These are minimum standards.
-tExamples of employment processes:
otDirector, GCSB, job description 2015: http://www.ssc.govt.nz/sites/all/files/director-gcsb-jd-feb15.docx
otDirector, GCSB, Guide for Applicants 2015: http://www.ssc.govt.nz/sites/all/files/director-gcsb-guide-for-applicants-feb15.docx
otDirector, GCSB appointment 2011: http://www.ssc.govt.nz/sites/all/files/Director-GCSB-Applicants-Guide_0.rtf
othttp://www.ssc.govt.nz/sites/all/files/gcsb-appt-002.pdf
othttp://www.ssc.govt.nz/appointment-director-gcsb
othttp://www.beehive.govt.nz/release/new-gcsb-director-appointed
othttp://www.ssc.govt.nz/sites/all/files/gcsb-appt-008.pdf
othttp://www.ssc.govt.nz/statement-appt-gcsb-director
othttp://www.ssc.govt.nz/statement-gcsb-appt-3apr13
otDirector of Security appointment 2013: http://www.ssc.govt.nz/sites/all/files/ce-nzsis-pd-june13.rtf
otwww.ssc.govt.nz/sites/all/files/ce-nzsis-applicants-guide.docx
othttp://www.beehive.govt.nz/release/pm-announces-new-director-security-nzsis
otIGIS appointment: http://www.dpmc.govt.nz/sites/all/files/vacancies/role-description-inspector-general-igis-dec13.pdf
othttp://www.beehive.govt.nz/release/new-inspector-general-intelligence-and-security-appointed
otDeputy IGIS appointment: http://www.dpmc.govt.nz/sites/all/files/vacancies/role-description-deputy-inspector-general-igis-dec13.pdf
othttp://www.beehive.govt.nz/release/deputy-inspector-general-intelligence-named
othttp://www.nzsis.govt.nz/assets/media/application-forms/Position_Description_DDI.pdf

New Zealand comments (8 October 2015)

We do not agree with the TI rating and maintain that this should be a ‘4’. We do not asses that the current assessment for this question takes account of all of the comments and references provided in the government’s submission. There is also much more substantive and relevant material about appointment processes in the public domain than TI has credited.

The response does not draw adequate distinctions between the appointments of chief executives of the majority of government departments and the appointment of statutory officers. Information from the New Zealand State Services Commission was provided to TI on these appointments with our official response. Both the Director, GCSB, and the Director of Security are statutory officers.

New Zealand is concerned that the content does not provide a balanced reflection on the New Zealand system. In particular the report:

otcites a single example and does not make any reference to other and more recent examples.

otmakes the allegations without noting that those allegations are countered in the official documents provided in the government response to this question.

otstates that “no evidence could be found for the appointment process for other senior positions” where the government response directed the reviewer to such evidence on various websites.

Some specific comments are also noted:

-tPara 2, line 2: “The State Service Commissioner subsequently responded to these allegations but the incident nonetheless raised questions…”.

otThis is still not a balanced representation of the situation. We suggest a modification of the text to something like: “As it was an SSC managed process, the State Services Commissioner responded to these allegations. [following sentence]”

otThe sentence does not note ‘who’ raised questions about the process. In rewording this section, therefore, we suggest that you use balanced language to note who raised questions i.e. the media, a source.

-tPara 2, line 3: “The Prime Minister has since made a number of changes…” – There is no clear link between the approach to governance and the appointment of the two directors, which remains subject to the statutory appointment and (for GCSB) performance management processes.

-tPara 3, Line 1: This is not the case and we suggest removal of this paragraph.

otWe provided in our Government response the links to other Executive appointments for IGIS, GCSB, and NZSIS.

otPositions below this are advertised on the Agencies’ websites in line with other State Sector advertisements.

-tTracked changes: We have added information on other senior positions, which illustrates that the processes for these appointments are in line with the rigorous standards across the public sector. In particular, these positions are:
otExternally advertised
otFilled on the basis of objective selection criteria
otFilled following the advice of a selection panel, typically including one or more representatives from the wider public service
otSubject to investigation of their suitability and conduct, including psychometric testing and also periodic security clearance processes, which inquire thoroughly into all aspects of a candidates life and are repeated at regular intervals throughout their time in the agency.

Suggested score: 4

Opinion: Agree

Comment:

Suggested score:

Opinion: Not Qualified

Comment:

Suggested score:

Opinion: Disagree

Comment: Senior positions within the intelligence services are usually filled on the basis of objective selection criteria. However, we have been informed that significant deviations from this practice occur when opportunities arise, particularly when foreign partners offer to provide external expertise for a certain period of time. These positions are neither advertised nor contested. Personnel returning from an overseas post, or a secondment with another New Zealand public service agency, have had new positions created for them within the intelligence services. These positions are neither advertised nor contested.

There is also a historical tendency within the intelligence services to prefer to appoint existing staff to senior positions – sometimes for administrative convenience (as the vetting process can take time), sometimes to showcase career pathways for junior staff, and sometimes simply because it was suspected that outsiders would not fully understand and accept the unique culture of the intelligence community. Recent appointments suggest this tendency appears to be changing.

Senior intelligence officials must undergo the standard vetting process conducted by the New Zealand Security Intelligence Service. This is due to the position’s requirement to routinely handle classified material, rather than the seniority of the position they might seek. During the vetting process, the private life of an appointee is thoroughly investigated, with particular attention paid to: alcohol abuse; mental illness; extra-marital affairs; the use of prostitutes; gambling; among other activities perceived to place the appointee at a high risk of vulnerability to nefarious influence, including inducements and coercion.

While there are ‘five-yearly’ periodical reviews of senior officials holding security clearances, the conduct of senior officials is not routinely and actively investigated between reviews. On occasions where high-risk behaviour is reported, the services have been slow to take appropriate action, tending to not confront the issue and preferring instead to withdraw the security clearance at the time of the regular review. Because holding a security clearance is a necessary condition for holding the post, this effectively terminates the employment agreement.

Suggested score: 3

Opinion: Disagree

Comment: New Zealand response to TI question:

New Zealand ratified the Arms Trade Treaty on 2 September 2014 without the need for legislative changes. New Zealand already complied with, or was able to implement, most of the obligations in the treaty, including the key requirement to establish a national control regime for exports of conventional arms. The exception to this is that New Zealand has no existing legislative framework to comprehensively regulate the brokering of conventional arms. New Zealand intends to introduce more comprehensive controls on arms brokering, and in the meantime an interim voluntary registration scheme for New Zealand-based brokers has been put in place.

New Zealand has amended its criteria for assessment of applications to export strategic goods to conform with ATT requirements, and this includes Articles 7(1)(b)(iv) and 11(5). In relation to Article 15(6), New Zealand’s export controls regime and New Zealand’s co-operation with other states under the ATT and international export controls regimes aim to prevent undesirable transfers of arms, including arms becoming subject to corrupt practices. New Zealand considers that its long-standing membership of the four export control regimes and ratification of the ATT demonstrates its commitment to anti-corruption measures concerning the arms trade

Government and defence industry are sensitive to New Zealand's international reputation concerning arms exports, as evidenced by the Rakon enquiry, which also highlighted government action in respect of sensitive investments by the Government Superannuation Fund.

The decision-making process for applicants seeking to export controlled items is transparent and the assessment criteria are available on the Ministry of Foreign Affairs and Trade website at: http://mfat.govt.nz/Trade-and-Economic-Relations/3-Export-controls/1-NZ-Strategic-Goods-List/09-Procedures-and-Requirements.php#ea. The assessment criteria were recently updated to conform with ATT requirements.

Overall, New Zealand has an extremely limited military export sector, and there is a rigorous process for stopping the undisclosed export trade in weapons. This is the main reason that export controls have not attracted significant Parliamentary or public scrutiny, or required the more extensive scrutiny mechanisms found in the control regimes of significant arms producers. Specific issues which have been raised in Parliament have been addressed. There are robust internal mechanisms concerning the export process through the process led by the Ministry of Foreign Affairs and Trade. There are also mechanisms available for Parliamentary or public information, scrutiny and debate, and the Official Information Act provides an avenue for public scrutiny.


New Zealand response to comments in the draft assessment:

It is not understood in the draft comment what is mean by “each of the three anti-corruption articles in the ATT”, nor is this obvious from the Arms Trade Treaty text itself. Subject to clarification from Transparency International we would then be able to respond to the comment that “There is a lack of further specific evidence of the country taking action to comply with each of the three anti-corruption articles in the ATT”.

In the trade information provided publicly by Statistics New Zealand, a figure of NZ$791,008,783 is recorded for exports in &quoute;Confidential Items&quoute;. It would appear that there were errors of interpretation of this trade information as shown in the draft assessment. The figures provided concern commercial confidentiality and do not pertain to arms/security exports. There is no undisclosed export trade in weapons.

In the draft assessment there is also the comment that “there is a small but profitable sector for specialist componentry which has sought to avoid public exposure through a close relationship with successive governments”. This is a general statement that lacks evidence to back it up. Elements of commercial sensitivity aside, the Ministry of Foreign Affairs and Trade’s dealings with manufacturers in the context of the export control regime have not revealed any such intention to avoid public exposure. MFAT’s dealings with manufacturers in the context of the export control regime have revealed that manufacturers are reliant on openly marketing their products as a function of making sales. Many of them belong to the Defence Industry Association, and have good understanding of the export controls process and its requirements. MFAT also supports transparency by collecting information on export controls as required to provide accurate reporting to international bodies such as the UN for the register of conventional arms.

With respect to Rakon, the characterisation of the issue and its outcome is not accurate. The government was not forced to investigate the matter. As described above the government would naturally respond to export control issues should they be raised; the government did not resist this process. Again, it is not accurate to state that no detailed justification or response published by the government. The findings of the investigation into exports of Rakon’s products were made publicly available through the Official Information Act 1982, as well as through questions in Parliament and press releases. The key finding was that Rakon’s products were not controlled items and therefore not subject to export controls. Those Rakon products that are designed or modified for specific military use are controlled.

Sources:

1.tProcess for arms control decisions:
otMinistry of Foreign Affairs and Trade, “Procedures and Requirements”: http://mfat.govt.nz/Trade-and-Economic-Relations/3-Export-controls/1-NZ-Strategic-Goods-List/09-Procedures-and-Requirements.php#ea
i.tLegislation used to control arms exports is the Customs Export Prohibition Order 2011, promulgated under the Customs and Excise Act 1996 (as amended by the Customs and Excise Amendment Act 2007)... http://www.legislation.govt.nz/act/public/1996/0027/latest/DLM377342.html. Para 56(2A) specifies list of banned exports
ii.tThe whole list of controlled items is called the ‘Strategic Goods List” and is available at: http://mfat.govt.nz/Trade-and-Economic-Relations/3-Export-controls/1-NZ-Strategic-Goods-List/01-Strategic-Goods-List.php
iii.tAny export requires completion of special controlled export forms found here: http://mfat.govt.nz/Trade-and-Economic-Relations/3-Export-controls/1-NZ-Strategic-Goods-List/09-Procedures-and-Requirements.php
otMinistry of Foreign Affairs and Trade. &quoute;Export Controls - NZ Strategic Goods List&quoute;, last updated 18 November 2013. http://www.mfat.govt.nz/Trade-and-Economic-Relations/3-Export-controls/1-NZ-Strategic-Goods-List/index.php
2.tOversight of process
otAuthority for granting an approval for the export of strategic goods rests with the Secretary of Foreign Affairs and Trade. There is no statutory right of administrative appeal against any of the above decisions by the Secretary. The applicant is entitled to seek a review of any of these decisions by writing to the Secretary. Unless further information is supplied supporting the application, however, this review will only encompass issues of process, and not substance.&quoute;
otSituations where an export permit will be refused
MFAT will refuse an application for a permit to export Strategic Goods if:
otThe export would violate New Zealand’s obligations under measures adopted by the United Nations Security Council acting under Chapter VII of the Charter of the United Nations, including arms embargoes.
otThe export would contravene New Zealand’s other international obligations.
otIt has knowledge at the time of considering the application for the export permit that the goods would be used in the commission of genocide, crimes against humanity or war crimes.
3.tAlignment with international protocols:
otUnited Nations, “1540 Committee (UN Resolution 1540)”: http://www.un.org/en/sc/1540/committee/composition.html
otEU Common Position
otWassenaar Arrangement on Export Controls for Conventional Arms and Dual‐Use Goods and Technologies: http://www.wassenaar.org/participants/index.html
otAustralia Group on chemical and biological weapons materials: http://www.australiagroup.net/en/participants.html
otNuclear Suppliers' Group: http://www.nuclearsuppliersgroup.org/en/participants1
otMissile Technology Control Regime: http://www.mtcr.info/english/partners.html
otUN Guidelines for International Arms Transfers
otUN Arms Trade Treaty:
i.tNew Zealand Government. &quoute;NZ to ratify global arms trade treaty&quoute;, 2 September 2014. http://www.scoop.co.nz/stories/PA1409/S00017/nz-to-ratify-global-arms-trade-treaty.htm
ii.tForeign Affairs, Defence and Trade Committee, “National Interest Analysis – Arms Trade Treaty”, 18 June 2014. http://www.parliament.nz/resource/en-nz/00DBSCH_ITR_56467_1/5eabfa942f2370748aea67eb6e082ec0ed36f454

New Zealand comments (8 October 2015)

We disagree with the score, which should clearly be a ‘4’ and we also seek changes to the reviewer’s assessments based on significant inaccuracies in the text. We highlighted these inaccuracies in our previous response and are disappointed that no action has been taken.

In terms of balance of the assessment, we note that this assessment is quite out of line with New Zealand’s reputation on arms control and disarmament issues. This has been an area in which New Zealand has been strongly represented and recognised internationally, including through the United Nations.

Substantive comment on New Zealand’s system is missing, so the tracked changes address this.

We note specific comments to reviewer:

-tResponse to reviewer: Transparency International has sought further detail on New Zealand’s implementation of “each of the three anti-corruption articles in the ATT”, Articles 7(1)(b)(iv), 11(5) and 15(6). As previously noted, New Zealand has amended its criteria for assessment of applications to export strategic goods to conform with ATT requirements, and this includes Articles 7(1)(b)(iv) and 11(5). In relation to Article 15(6), New Zealand’s export controls regime and New Zealand’s co-operation with other states under the ATT and international export controls regimes aim to prevent undesirable transfers of arms, including arms becoming subject to corrupt practices. New Zealand considers that its long-standing membership of the four export control regimes and ratification of the ATT demonstrates its commitment to anti-corruption measures concerning the arms trade.

-tPoint of clarification: Note that Articles 11(5) and 11(6) “encourage” ATT States Parties to share information and to cooperate, but do not impose any specific legal obligations on States.

-tPara 3: “there is a small but profitable sector for specialist componentry which has sought to stay out of the public domain” - This is a general statement that lacks evidence to back it up. This evidence should either be provided or the comment removed. Elements of commercial sensitivity aside, the Ministry of Foreign Affairs and Trade’s dealings with manufacturers in the context of the export control regime have not revealed any such intention. Many manufacturers belong to the Defence Industry Association. In addition, New Zealand manufacturers openly market their products as a necessary function of making sales.

-tPara 3 and reviewer comments: “A total of NZ$791,008,783 in &quoute;Confidential Items&quoute; and NZ$5,827,060 in &quoute;Arms and ammunition; parts and accessories thereof&quoute; exported from New Zealand in 2013 (Statistics New Zealand)” - We noted in our previous response that the quoting of the NZ$791,008,783 in &quoute;Confidential Items&quoute; represented errors in Transparency International’s interpretation of the trade statistics. As we have explained previously, the “confidential items” export category covers all exports with commercial confidentiality, and does not relate to arms exports. There is no undisclosed export trade in weapons. More information on “confidential items” and how this export category is assigned can be found on the Statistics New Zealand website at: http://www.stats.govt.nz/about_us/who-we-are/policies-and-protocols/trade-confidentiality.aspx. We suggest it is important to read this thoroughly and we are happy to provide further information as required.

-tPara 3: “...also suggests there are indeed possible routes for defence-related technology to enter the export market” – This comment is inaccurate and misleading and follows on from the errors in interpretation noted above. We are concerned that this inaccuracy leads to an allegation by Transparency International that there is a clandestine route for arms to enter the export market from New Zealand. Any attempt to export arms without a permit would contravene the Customs and Excise Act 1996. Should Transparency International or any others have any evidence of such illegal exports it would be considered very seriously by the New Zealand authorities for investigation and prosecution.

-tPara 4: With respect to Rakon, the characterisation of the issue and its outcome is not accurate. For a sense of balance the comments should either be removed or counter comments provided based on the following points:

otThe government was not ‘forced to investigate’ the matter. As described above, the government would naturally respond to export control issues should they be raised, and did so in a timely manner (14 days); the government did not resist this process.

otIt is not accurate to state that no detailed justification or response was published by the government. The findings of the investigation into exports of Rakon’s products were made publicly available under the Official Information Act 1982, as well as through questions in Parliament and press releases.

otThe key finding was that Rakon’s products were not controlled items and therefore not subject to export controls.

otThe assertion that “Rakon was not required to seek export permits for componentry despite its products being readily able to be modified for insertion into smart munitions” is incorrect. The Rakon products in question were not modified. Those Rakon products that are designed or modified for specific military use are controlled and permits are required for their export.

Suggested score: 4

Opinion: Agree

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Opinion: Agree

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Opinion: Agree

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