Privilege — Member’s Compliance with Appendix B of the Standing Orders

I move, That the report of the Privileges Committee concerning a member’s compliance with the requirements of Appendix B of the Standing Orders be noted.

I will, as chair of the Privileges Committee, give a summary of the report from the committee. This report relates to the failure by the Hon Michael Wood to properly declare his interests in two companies: Auckland International Airport Limited and Contact Energy. As the report shows, Mr Wood had these interests at the time he entered into Parliament, but he had acquired those shares quite a long time ago, around 1998, and he didn’t declare them until 2022 and 2023. He first entered Parliament in 2017, and, as the report explains—and as Mr Wood explained to the committee—he forgot that he owned those shares. He was, at one time, also confused between the shares in his personal name and shares held by a trust. But in any event, the committee found that his actions in respect of the period between 2017 and 2022 when he did declare the shares, was essentially negligent in that he was in breach of his duties to the House to make a proper disclosure of those shares.

There was also an allegation that shares that were owned by a trust in which he had an interest—also in Auckland International Airport—should have been disclosed. The committee went through in some detail, the—oh, no. Sorry. Before I cover that, I should note that there are a number of members who on occasions make mistakes in their returns on shares or other assets, and those mistakes are not to be taken lightly. But when a mistake is noted, it is a duty upon the member not just to fix the error going forward by making a correct disclosure in a later year, but to cause the registrar to be aware of the error or the omission in earlier returns, and to correct that error by causing the earlier returns to be corrected. And that’s the mistake that Mr Wood made here: both not declaring the shares in Auckland International Airport and Contact Energy in those first five years, but then, once he did become aware that he had made those mistakes, not correcting the earlier returns—instead, he just made correct returns in the years that followed.

The other allegation that was made against him was in respect of shares owned by the JM Fairey Family Trust, and there the committee quite carefully sets out the rules that are in Standing Orders. Those rules say that pecuniary interests that are held by a member in a company or business entity are meant to be disclosed to the extent that the rules require them to be disclosed. The rules, then, make it clear that company interests that are owned by a trust, or indeed another company, don’t have to be disclosed. And that’s made clear by clause 5(2) of the relevant rules, which says that “a member does not have a pecuniary interest in a company … merely because the member has a pecuniary interest in another … business entity”—in this case a trust—“that has a pecuniary interest in [that company]”. And it’s on that issue that the Privileges Committee makes it clear that on our reading of the rules, it’s actually quite clear that interests owned by a trust in a company don’t currently have to be disclosed.

That’s also made clear in the relevant form that members have to fill in, Form 4, which sets out beneficial interests and trusteeships of trust, and the form says “Do not include the pecuniary interests that the trust itself may have, (e.g. the assets of the trust). The exception to [which] is real property held in a trust, which you should declare in Form 6.” Now, the reason that there is a different rule for real property is because the Standing Orders make it clear, with a specific rule covering that, that real interests in land held by a trust do have to be disclosed, but the opposite is the case in respect of shares held by a trust. So one of the recommendations of the Privileges Committee is that if the Standing Orders Committee indeed thinks that interests of a trust in a company should be declared, then the Standing Orders should be changed to make that clear. But at the moment, the opposite is true: it is clear that they don’t have to be. So to that extent, we disagreed with the reference that had been made to us by the Registrar of Pecuniary Interests, because we thought it was clear unanimously across the committee on the face of the rules that those other interests did not need to be declared, i.e., an interest of a trust in a company is not caught by the disclosure rules.

It remains the case, however, that the Hon Michael Wood should have disclosed the interests that he held in his personal name between 2017 and 2022, and that he didn’t—and that once he became aware of that error, he shouldn’t have just corrected the matter going forward, he should have corrected it looking backwards. I would also note that the committee found that this didn’t amount to a contempt. It was a serious breach of the rules that the committee drew to the attention of the House, and our recommendation was that the member be required to apologise.

Thank you, Mr Speaker. Can I acknowledge the chair of the Privileges Committee, who did a good job chairing what was actually—it’s been a busy committee—quite a tricky issue that we had to deal with. I think that the chair has done a pretty good job, actually, of traversing the facts which are actually not that contested—including by the member concerned—and in the public domain as it played out over many days and weeks. Feels like it was last year, but it was actually only a few weeks ago. So he’s done a good job.

I just wanted to pick up on a couple of points. The first is just to make the obvious one, which is that it was and is a serious breach. Members are required to take their obligations to disclose their interests through the pecuniary interests seriously, and there’s a whole lot of guidance from the registrar but also Standing Orders about that. I think the relevant paragraph is at page 7 of the committee report: “It is difficult to conclude that he made a genuine attempt to identify his interests or that he sufficiently turned his mind to them when making his annual return over this five-year period. We therefore find that Mr Wood was neglectful of his duties over significant period of time.”

It’s just worth highlighting that, as I think Mr Wood himself concedes, there was essentially a negligence over quite a long period of time and the appropriate punishment as recommended by the committee is an apology. It’s not contempt. Members do make mistakes when they are submitting their returns. I think almost every pecuniary interest return has had late filings and subsequent amendments. But in this case, Mr Wood did not make—or it’s difficult to conclude he made a genuine attempt to identify his interests. So I think that’s the first point.

If I could just comment on the second point that Mr Parker raised, which is what became known in the committee as the “trust” issue, which was this quite vexing issue of when do you have to disclose interests in trusts? I hated trust law at law school, and I thought when I became an MP I’d never have to deal with it ever again. Then I found myself on the Justice Committee doing the Trust Act review for about three years, and now I’m on the Privileges Committee. We dealt with that, so anyway, here we are.

But I think I will freely admit I—like many members, I suspect—assumed that shares held in trusts had to be disclosed. I think, actually, there’s a bit of a widespread assumption around that: that if you were a beneficiary of a trust that had listed shares in it, that they would have to be disclosed. As it transpires, as Mr Parker has pointed out, that is not the case. We actually went through each of the guidance documents issued by the registrar, and Form 4 is the relevant form as Mr Parker says. It explicitly says, “Do not include the pecuniary interests that the trust itself may have (e.g. the assets of the trust). The exception to this is real property held on a trust, which you should declare on Form 6.” So I think the assumption that many hold—and I suspect many members have, up until now, held—in the House is actually incorrect.

The Privileges Committee has recommended—and rightly so—that this is an issue that needs some more work. This Privileges Committee is very busy, but it’s clearly going to be an issue for the Standing Orders Committee of the next Parliament, and we’ll wait and see who’s on that. But as page 9 notes, “It is crucial the rules are clear and members have a consistent understanding of their obligations.” It’s a fundamental rule of law issue for members of Parliament: we need to know what the rules are so that we can comply with them. So no doubt the Standing Orders Committee of the next Parliament will be having a look at that.

Can I just conclude by saying that we were slightly—perturbed is perhaps too strong a word but we were we were a little bit alarmed at some of the tenor of the language mentioned by the registrar in his report to us. I think the general consensus of the committee—and this is reflected in the report of the committee to the House—is that it’s for the committee and then the House to determine the gravity of the offending and decide upon the way in which the issue of privilege will be dealt with.

Some of the commentary in the registrar’s report to us—well, it was expansive, shall we say, in its commentary on what had happened. Actually, it’s a pretty fundamentally simple matter. Mr Wood was required to disclose a series of shares that he held for quite a long time. He didn’t disclose them. The facts are actually relatively uncontested. There’s a niche issue around the trusts aspect of it, but the actual facts are relatively uncontested, and that’s perhaps not apparent from the quite lengthy discursive commentary that was provided to the committee from the registrar.

So anyway, with those remarks, the National Party and myself endorse the report of the Privileges Committee.

Well, thank you very much, Mr Speaker. I rise to join with other members of the Privileges Committee who have spoken so far to endorse this report back from the committee. I think that the chair and other members worked very constructively through what turned out to be more complex and technical matters than perhaps we might have thought at first. I agree with the comments that have been made so far. If I could put a bit more context around it, because people watching this may wonder what the matter actually is, members of Parliament are required to declare their interests, employment, and things that they own that might be seen to somehow influence their decision making as MPs, and I completely endorse that idea. I think it’s important in an open democracy that people can see where political parties get their donations from, if members of Parliament are receiving benefits from any individual, or if members of Parliament have specific pecuniary or other interests in a particular thing or person that might influence the decisions they have made, or at least be seen to. I think that’s really important.

I think it’s also important to distinguish, for people who may look at this, and recognise that it’s actually quite a separate matter from the declaration made by Ministers in the Beehive. That’s a totally different thing where Ministers have to declare their conflicts of interest. That got a lot of publicity in the guise of Michael Wood—actually, for the same shares. But so much for that. I just think it’s important to put the purpose and the exact matter in a bit of context here.

I agree with what’s been said that it’s pretty much cut and dried. Michael Wood owned shares in Contact Energy and Auckland Airport. Some of us remarked that he was much more of a capitalist than we would have guessed, and some of us admire him for that, to some extent, but nevertheless he had an obligation to report those shares, in as much as he owned them personally. That’s what the Standing Orders require. He did do so from about 2021 onwards, but he failed to follow one of the rules, which is that if you do that, you’ve got to actually update all previous returns while you’re a member of Parliament, so you’ve got to correct everything. I’ve done that. For interest, I’d forgotten to declare—I suspect there wouldn’t be a lot of people here who haven’t either done it, or would be foolish to throw stones from glass houses in case they one day discover they have to as well. But Michael Wood, once he became aware of these shares, he started reporting them in his subsequent returns, but didn’t update his previous ones. So that’s the first issue.

The second issue that arose was perhaps the one that’s been discussed the most, is was he also obliged to report on shares that were held in trust. I think this gets us to quite an interesting point, particularly with regard to the way the registrar has conducted himself through this inquiry. You see, it turns out, and it’s quite clear from reading the Standing Orders, although as Chris Bishop has said, one could easily be confused. It’s quite clear that you do not have to declare shares that are held in a trust. It’s clear because the Standing Orders explicitly say you must declare physical property or land or buildings or houses that you hold in a trust—real property—but it makes no such reference to shares in a company.

Of course, the Standing Orders Committee in the past has tried to be clear that you don’t have to share everything in in a chain of ownership, for example. You know, a farmer might own a farm which might have attached to it co-op shares in a farm supply business. Now, would that, for example, be something they had to report, and what about the land the business is on? So clearly, there has to be a stoppage at some point. They’ve said that you don’t have to declare an interest in shares that you held in a trust, and yet that would seem to be at odds with the purpose of the register, which is to show what sort of entities a person might have an interest in. They could certainly know that they had the interest, it’s just the ownership structure that exempts them from reporting it, and, of course, the same exemption is not made for real property, so there does seem to be quite an inconsistency here.

None the less, Michael Wood was not in any way guilty, because he was not obliged to report shares that he held in a trust, and he was backed up by the notes that are circulated to MPs that say that you don’t have to report shares issued in a trust. However, that was actually contradicted by the registrar, the guy who’s supposed to be responsible for overseeing all of this, who said that members must, under circumstances, declare shareholdings in trust, and, as the committee has found, says that we disagree with that.

I think that points to something I’d like to close my remarks with, which is a certain zealousness on the part of the registrar where, in my view, he’s really overstepped the mark. Chris Bishop mentioned the report into his investigation into Michael Wood, and I just found it was incredibly unprofessional. It, for example, gave blow by blow accounts of playing Michael Wood a video and asking if he could remember saying that. You know, if we want drama, we can go to the cinema; we don’t need it in reports to the Privileges Committee. The Privileges Committee, and I’d like to read this in, says “By way of guidance for future inquiries, we suggest that our committee would benefit from reports on inquiries that contain a clear summary of the facts, as the Registrar has determined them, without passing judgement on them beyond the prima facie test of whether a question of privilege is involved. This would be more consistent with the approach taken by the Speaker in determining whether a question of privilege arises under Standing Order 412. The Registrar’s report contained comments passing judgement on Mr Wood’s actions in critical terms. We consider that passing judgement on members’ actions is a matter for this committee rather than for inquiries conducted by the Registrar.”

I thought that the committee was incredibly reserved and polite in making those comments. I think the committee could have justified going further, given the report we were given, given the, I guess, overzealous assumption that something must be reported when actually the Standing Orders and the registrar’s own guidance show that it doesn’t need to be reported. I think it raises a question about the accountability of that person in this process that perhaps some future Standing Orders Committee or Privileges Committee might like to consider. Because while it’s clear that accountability is important, it’s clear that Michael Wood has done wrong in this instance, I don’t think that that process was becoming of the office of the registrar or of this House, and I’d like that to be recorded.

Without any more to say on that, you know, Michael Woods has made a mistake. He has been asked to apologise to the House, having already apologised to the registrar, and I think that is about where the matter should lie. Thank you, Mr Speaker.

Thank you, Mr Speaker. I rise as another member of the Privileges Committee to speak in support of this report. There isn’t much to say on the facts that hasn’t already been traversed in the report and by others who’ve spoken this afternoon, but I would like to thank you, Mr Speaker, for sending the matter to us, and for sending us so many matters recently. We do appreciate, as the Privileges Committee, the highlighting of our role in this House’s proceedings, and also in the conduct of open democracy in Aotearoa New Zealand.

It is the case that we have rules as members of Parliament that we abide by, and some of those rules that this report touches upon are to do with open democracy. The interests that members may have in financial institutions and real property and in other aspects of their lives are of interest to the public, and I think we all do agree that it’s important that we uphold those rules in both open and efficient reporting that is required of us. But, also, and equally important for the public, is to know that where there have been breaches of those rules, where open democracy or any other of our rules have been breached, where we have fallen short, that there is recourse. That there is a committee, a cross-party—cross-House committee that will take these matters seriously, that will look into the facts, and will make findings that are consistent with the intent of those rules, which I think has been done in this case.

There was no contempt of the House found, but I do want to hold that in terms of the negative findings contained in this report, that they were serious. That it may have been only negligence rather than contempt, but it was negligence of undertaking a duty that’s important, for some time. So we did highlight that, and it was appropriate that that finding, that negative finding highlighted that breach, and in a way a type of misconduct though be it not deliberate in terms of what we found. Looking back and updating those forms was important and it and it did amount to negligence that we wouldn’t want to see repeated regularly by other members.

Then we come to the trust issue, and again, like others have done, without going into too much detail, it is important to send a message, I think, to a future Standing Orders Committee that that is an area that we desperately need clarification on. If these rules, in terms of declaring our interests, are for the benefit of the public, I think we can all agree that out there people would see a beneficiary of a trust that has financial interest and a profit that they may gain from being a beneficiary of a trust that holds shares in various institutions, that that person would be seen as having an interest, a financial interest, that falls under the auspices of these declarations, just as they would if they directly held shares or those interests in property.

We, in fact, in the last Budget, the Government rightly fixed what we what we might call a loophole in our tax system whereby if people hold interests, financial interests, that garner them in income in trust should in fact be taxed. So it’s exactly along those lines that we say financial interests of beneficiaries of trusts come under the same category and should be open to inquiry by the public when they’re held by MPs, or when MPs are the beneficiaries of those trust interests.

So that is something that surprised all of us. It was not something that Mr Wood was in breach of in any way, but it concerns me that that still remains a hole in our system. So again, I want to commend the work of our committee, and I want to commend you, Mr Speaker, for taking matters of privilege seriously enough to busy our schedules in that committee. But I also want to give assurances to the public that we will continue to work together to take the rules that uphold our democracy, in particular where transparency is concerned, seriously, and that this finding was in fact serious, though contempt wasn’t found. So I do commend the report.

Motion agreed to.

Consideration of Privileges Committee Report—Conduct of Member towards Chairperson of Transport and Infrastructure Committee