New Zealand’s Discomfort at the Top of the Corruption Perception Index

Earlier this year, Transparency International released its annual Corruption Perception Index (CPI) and, once again, New Zealand was ranked as the “least corrupt country in the world” – a title it has held thirteen out of the last fifteen years. It may come as something of a surprise, then, that this news was greeted in New Zealand not so much with celebration as with measured caution. Even the most positive New Zealand news outlets led with caveats that New Zealand still faces corruption risks, including “inadequate protection for whistle-blowers, and no register showing who ultimately controls or benefits from companies registered in this country.” Others skipped the congratulatory headlines entirely, preferring headers such as “Government Warned Not to Ruin Corruption-Free Status.” As one New Zealand newspaper succinctly put it: “New Zealand is the least corrupt country in the world, but when that statement is whispered over here it is almost always followed by a ‘however’.”

This near-ubiquitous grimness of New Zealand’s press with regards to anticorruption measures practically begs the outside observer to ask: Why the doom and gloom? What explains the gap between “all major ranking institutions and indexes” and the perception of New Zealand’s citizenry themselves?

As Professor Robert Gregory explained back in 2002, although New Zealand has little in the way of “hard-core corruption,” the final decades of the twentieth century saw the country undergo a series of rapid social and political changes, from market restructuring to a sudden decrease in egalitarianism. These changes, which mirrored a general trend among Western democracies, resulted in New Zealand’s citizens becoming significantly less trusting of both politicians and political institutions, and deeply skeptical that public servants would act in the best interests of the country. Thus, although the classic forms of corruption captured by international indexes like the CPI were (and remain) low in New Zealand, when most of the country’s citizens think about “corruption,” they are more likely to think about general instances of untrustworthy public servants or dishonest behavior in government, whether or not those incidents involved classic forms of unlawful corruption like bribery.

As a result, as Professor Gregory accurately foresaw back in 2002, a significant discrepancy in corruption perceptions has emerged in New Zealand, with international indexes like the CPI and New Zealand’s government itself focusing on the very low levels of corruption as narrowly defined, and a much more cynical public perception that “see[s] corruption everywhere.” While the international anticorruption community may praise New Zealand for its near-absence of bribery or other forms of hard-core corruption, New Zealanders themselves are preoccupied by the government’s “extreme vulnerability to the undue influence of concentrated wealth over political parties, laws, and policies,” and other forms of legalized “rich world corruption,” such as revolving doors and conflicts of interest between the private and public sectors. And while the public’s perception of this sort of corruption may be inaccurate or exaggerated, the perception itself could be a problem, as perception of corruption has been empirically shown to erode the legitimacy of government and lead people to engage in dishonest behavior.

Even more problematic is how slow New Zealand’s government’s has been to respond to public concerns about these more ethically-gray areas. Although New Zealand’s Serious Fraud Office (SFO) has filed charges in cases involving unlawful political donations, the SFO also has complained about inadequate funding and that it is struggling to keep pace with the volume of cases. New Zealand has resisted calls to create an independent anticorruption agency. The country’s conflict of interest legislation is not up to the standard of most OECD countries, nor does it have laws covering “misconduct in public office.”

Ironically, New Zealand’s perpetually positive CPI ranking may be a contributing factor to the government’s inadequate attention to these problems. For one thing, New Zealand’s perennial dominance of the CPI may have created a self-fulfilling loop, in which the experts who assign corruption scores are biased (perhaps unconsciously) not to see existing corruption in “success story” countries like New Zealand. Perhaps more importantly, New Zealand’s government, and many of its politicians and public officials, have strong incentives to ignore or downplay the country’s problems, especially with respect to legal and ethical “gray areas” from which politicians and public servants benefit. Perennial inaction is then annually validated, perhaps subconsciously and certainly unintentionally, by the CPI, which serves as a signal from a neutral observer that any problems aren’t that bad. After all, why should New Zealand’s government invest in costly anticorruption improvements when simply maintaining the status quo is sufficient to preserve the country’s reputation as the least corrupt country in the world?

To be sure, New Zealanders can and should take pride in the extent to which their country has stamped out the hard-core “duffle-bag full of cash” type of corruption that is pervasive in much of the world. Nevertheless, traditional corruption indexes like the CPI, while useful, measure only a narrow definition of corruption. While New Zealand’s citizens may be overbroad in their tendency to label all sorts of unethical or distasteful political behaviors as “corrupt,” the concerns that they raise are real and important. New Zealand needs additional transparency measures to shed light on “dark money” in politics. The country needs to close loopholes in its conflict of interest laws and regulate the revolving door between business and government. The SFO needs better funding, and a separate, independent anticorruption office should be established. Good standing with the CPI is laudable, but should not be an excuse for ignoring areas in need of improvement.

3 thoughts on “New Zealand’s Discomfort at the Top of the Corruption Perception Index

  1. Great post (as usual) Zach. I actually think a lot can be learned from the New Zealand model. The public’s preoccupation with elements of “rich world corruption” seems to be fairly unique — few other rich countries have populace’s that care THAT much about the revolving door between the private and public sectors. In my view, that’s actually a sign of a very healthy and politically engaged society. Hopefully the rest of the developed world can take a lesson from this.

  2. Hi Zach, it’s so interesting to also see the internal discrepancy between the publicly held, broader conception of corruption in New Zealand as compared to the hard “duffel-bag” corruption that is perhaps covered under its laws. Why do you think that might be? Considering that constituents are so worried, their representatives seem remarkably blase about things.

  3. I think that Bob Gregory may well have been thinking of the privatisation programme in New Zealand, which was pursued despite public opinion, and continued to favour merchant banks and companies that were later proved to be dodgy. There was also the fact that the Treasury Department knowingly set up a tax haven (through a loophole in trust law) in the 1980s which has still not been adequately addressed. The governing Labour Party were apparently blissfully unaware of this before coming into office again, and the same old people still offer wealth management services to foreigners through trusts and shelf companies, with the company formation process being the really lax area of New Zealand law.

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