Politics

Peters and public service chief don’t talk

The unusual case of Winston Peters vs the Crown took a new twist yesterday with revelations the deputy PM and head of the public service have not talked since the Government was formed

The head of the country's public service has not talked to Deputy Prime Minister and sometime Acting Prime Minister Winston Peters since the new Government was sworn in 25 months ago.

Peter Hughes, the State Services Commissioner, revealed in the High Court at Auckland that he and Peters were not on speaking terms since Peters accused Hughes of acting in bad faith before the 2017 election when his superannuation overpayment was disclosed.

Peters' lawyer, Brian Henry, had asked Hughes during the hearing on Monday into Peters' claim of breach of privacy about his "obligation to deal neutrally between all the political groups".

"How are you getting along with Mr Peters now?"

Hughes said: "Mr Peters and I are managing through these circumstances professionally", but then agreed they had not met in person and while Hughes had attended cabinet committees that Peters was also at, they had not met as such.

"No, we have not met in person," the commissioner said.

Henry: "You are not able directly to talk to Mr Peters?"

Hughes: "I have had no need to talk to him directly, thus far."

The exchange underlined how unusual the present case is for a government and its public service.

Peters wants damages of $450,000 from Hughes, the Attorney-General on behalf of the Ministry of Social Development, the ministry's former chief executive Brendan Boyle, and two former National ministers Anne Tolley and Paula Bennett for an alleged breach of his privacy when his $18,000 overpayment became known to media.

Hughes, a public servant for 38 years, and Boyle, who before his retirement last year had been the longest-serving state sector chief executive, both took the stand in the case yesterday.

Hughes was grilled by Henry on why he briefed Bennett and on what basis Boyle told Tolley. Henry repeatedly asked why such a briefing could not have been given without a name of the person who had been overpaid, but being simply referred to as a prominent New Zealander.

Hughes said Peters' very influence and power were part of the reason the ministry had to show its minister all steps had been taken to treat him the same as any other beneficiary. Leaving out his name "would have been too vanilla" to satisfy requirements on the public service to inform ministers of matters of moment in their departments.

The lawyer said: "We can take it you did not leak the information?" and Hughes said "I did not".

Earlier, the commissioner said neutrality was fundamental to his role and those of other senior public servants.

"I'm confident nobody, not even my family, knows what my politics are. This is something I never discuss and I never ever let politics come into the decisions I make. Not once has anyone ever accused me of political partiality or anything close to it.

"I understand Mr Peters says I have acted contrary to the principles of political neutrality, of using the no surprises policy as a sham.

"The allegations that I acted politically are untrue, and unfounded, and I absolutely reject them."

Hughes said Peters was wrong on several elements of his evidence last week, including a practice Peters claimed ministers should follow in applying three tests before accepting 'no surprises briefings' from officials. Hughes said: "This is not how the no surprises briefing works. I've never heard of such an approach being followed."

Peters was also wrong in his belief a caretaker government situation existed for three months before a general election, meaning no surprises briefings were ruled out. "No caretaker provision applied to restrict what I would otherwise provide to my minister leading up to the election," Hughes said.

The Peters superannuation matter had been brought to Hughes via the Deputy State Services Commissioner at the time, Debbie Power, who had been informed by Boyle.

The commission "routinely dealt with far more complex and sensitive issues than this.

"The majority do not ever become public," he said.

Officials were determined that public service systems were applied in the Peters case without fear or favour and the response could stand up to any suggestions it was handled more favourably than any other citizen "because of who he was ... because of his public and political standing".

Hughes defended the decision by Boyle to brief Anne Tolley, as his minister, once the Peters matter had been resolved. The fact of Peters' mistaken application and overpayment - and more importantly the response by the ministry - went to the heart of public trust and confidence in that agency.

Officials knew the publicity at the time about Greens leader Metiria Turei taking a benefit higher than she had been entitled to added a layer of sensitivity to the Peters matter and their handling of it.

Hughes said it was important the ministry's actions could stand up to any allegations of bias or favourable treatment of Peters.

There were risks the information of Peters' overpayment and being allowed to simply pay the $18,000 could leak. "Mr Peters himself might have chosen to make it public for reasons of his own. Given the events with Ms Turei, Mr Peters might decide to pre-empt any leak about himself and how it had been resolved."

Hughes told the court it was possible the matter could be "discussed outside the MSD by an MSD staff member and make it into the media. My experience in MSD is that the frontline staff are very respectful of their clients' information but that they also have a strong sense of justice ... if there's any sense that Mr Peters should have been treated more favourably than Ms Turei".

To a question from Henry on whether he thought it likely it could leak from MSD, Hughes said it was not likely but it couldn't be ruled out.

He briefed his minister, Bennett, the day after Boyle told Tolley under the no surprises policy.

Boyle, the last of the Crown defendants to give evidence, said he had served 38 different ministers from Labour, National, NZ First, the Māori Party and ACT as a chief executive between 2003 and 2018.

The issues at play in the Peters case went to the heart of the public's ability to have confidence in the public service. Neutrality was paramount, he said. "Mr Peters alleges that I breached the obligations of political neutrality, that he believes the use of no surprises was a sham by the officials.

"I totally reject that allegation. I had no political motivation in deciding to brief my minister. My over-riding concern was the accountability of the minister to Parliament, risks to the ministry, and questions about the integrity of the social security system."

Boyle said there was no limit, as Peters argued, on public servants briefing ministers on operational issues in the departments. "That is absurd."

"Mr Peters seems to be confusing ministerial knowledge of operational matters and ministerial involvement in operational matters. They are not one and the same.

"I have never met a minister who did not want to be informed of something significant in their portfolio, either negative or positive.

"The only time I can ever remember a minister genuinely angry was when they were surprised."

He gave the example of a decision to continue the Crown car fleet with BMW when he was Secretary of Internal Affairs. The person responsible for ministerial services was the Prime Minister at the time, Sir John Key, who "was unhappy learning of the contract renewal via his driver".

Boyle said he had never experienced a minister declining a no surprises briefing and had never seen one go through the series of tests that Peters cited in his evidence before receiving a briefing.

He had to trust ministers to keep information confidential. "If chief executives could not trust ministers with that information it would be impossible for either of us to do their jobs. It would be nonsense for a minister to have information from their portfolio withheld from them."

When the Peters issue arose, Boyle "knew this was going to be a tricky issue simply because it involved Mr Peters".

"An error at our end could be a significant matter if Mr Peters chose to make an issue of it ... In the past he's not been slow to criticise government departments.

"It would have been extraordinary of me not to raise an issue like this with the State Services Commission."

After MSD looked into the overpayment and interviewed Peters, it was decided he should pay the extra money back as he had made a mistake. Boyle said Peters later said in news reports that MSD had found he had done nothing wrong.

"That's not accurate. MSD accepted he had not acted dishonestly but he had signed a statutory declaration that was not correct."

Boyle was relieved with the outcome of the inquiry. "We would not be facing a dispute with Mr Peters or public criticism of Mr Peters. It was also a relief we did not need to launch a fraud investigation against Mr Peters three months from an election. This had been unlikely but had not been able to be ruled out."