Political scandals often start as comedies before morphing into tragedies, and so Michael Wood may lose his beloved transport portfolio because he failed to sell a handful of shares.
It's not an outcome that an 18 year-old Wood would have imagined when he shelled out maybe $760 to buy 423 shares when Auckland International Airport went public in 1998.
(These are rough numbers, as the airport has done share splits and raised capital several times which makes it hard to know exactly how the minister came to own 1530 shares today).
That year Jenny Shipley’s government sold its majority stake in the airport in an IPO on the New Zealand stock exchange, when Wood was completing his first year at Auckland University.
Shipley’s sale of the airport was a continuation of the privatisation of state-owned assets kicked off by the fourth Labour government in the previous decade.
It was also the year Wood would be politicised by the Auckland power crisis, a five-week long power outage that was partly blamed on the privatisation of electricity providers.
Still, Auckland Airport has prospered as a private company, delivering its shareholders a more than 630% return on investment over the past 20+ years.
Wood’s 1530 shares are now worth about $13,200 on the open market, and his holding has appreciated almost 21% since he first told the Cabinet Office he held the shares.
Prime Minister Chris Hipkins revealed on Wednesday that Wood was asked 12 times to sell the shares since November 2020. During that time, he has accrued a capital gain of about $1,450.
When asked by reporters whether he was waiting for the price to recover from its pandemic slump, Wood denied that was a factor.
“I wouldn’t even know what the price of Auckland International Airport is. I purchased these shares when I was 17 or 18, I’m not a share trader.”
Shovel-ready share sale
It's a laughably small amount of money for a minister to lose their job over; about half a percent of his annual salary before tax.
There isn’t any serious suggestion that such a small amount of money could have influenced his decision making. And yet, he didn’t sell — even when prompted 12 times.
If you call your broker and ask them to sell some shares in a highly liquid asset, they might be sold before you hang up the phone. The whole deal takes five minutes.
It was more complicated for Wood, according to him, both because he had to prove his ownership of the shares and because he wanted to move them to a trust.
The minister would’ve been issued a paper certificate when he bought the shares in 1998, but without that slip of paper would’ve needed to ask for his Common Shareholder Number.
Companies themselves keep track of who owns what shares, and Auckland Airport’s share register is maintained by Link Market Services.
Wood said on Tuesday that he asked for information from the register, which was sent to the wrong email address and he didn’t get around to following it up further.
Then on Wednesday, the minister said he was also shifting the shares into his family trust before making the sale. Proceeds would then be reinvested in a managed fund.
He said this was a more appropriate way for ministers to manage their interests.
“So, that involved getting a number of signatures, filling out forms, and working through a process,” he told the media.
That all makes it more complicated than a five minute phone call, but it was still a job that should not have taken more than a few weeks.
Redemption possible
Prime Minister Chris Hipkins has left the door open for Michael Wood to be restored to the role of Transport Minister once he had sold the shares and corrected his disclosures.
But the opposition wants him fired from all his portfolios. National’s Paul Goldsmith said there should be a thorough independent review of his “conflicted decisions”.
The NZ Herald reported Wood declined North Shore Aerodrome’s application for airport authority status last year. The Aerodrome had hoped to expand its runway and possibly compete for small domestic flights at some point in the future.
Act Party Leader David Seymour had previously dismissed the issue but reversed his position overnight and now wants him to resign.
However it plays out, a handful of shares bought by a teenager during the era of privatisation has caused quite a headache for a senior minister (and possible Prime Minister).
Even now, the fourth Labour government haunts Parliament’s halls in unexpected ways.
80 Comments
We don’t like language that could be considered an insult or offensive.
The word ‘moron’ has been used in the past to describe people with an intellectual disability, which makes it a very poor choice.
Better to say what you actually mean, rather than using colourful insults that only show you have some personal dislike of the person.
Criticism is welcome, insults are not.
Yes it lacks class so apologies. However, after todays revelations it does seem increasingly appropriate, I mean what other word describes a minister being asked 12 times to sell his shares and still not complying? What does that say about the Labour Party, about they was they govern themselves? What does it say about the quality of our Minsters that three have had to be disciplined ?
Interesting response Dan. The fact that calling someone a "moron" can be an honestly held (and reasonable) opinion. And because you think it is a poor choice of words, doesn't automatically make it so. And who gets to decide which language is offensive? You? And worse, on behalf of someone else? After all, offence cannot be given, it is invariably taken, and that is the problem of the person taking it.
That makes no sense, you can say absolutely anything to anyone then. I teach my children to speak nicely, even if you have thoughts like that we maintain a bit of public dignity. What's said in private and with friends having a pint is different.
Also does it pass the wife/husband test say it to their face and see what happens, or say it to a 6 foot 7 random guy at a pub.
You may not think highly of people but people on interest should show a bit more class. I know that doesn't always happen on here, but in general it's not to bad.
Bizarre really - a person of his supposed intellect as a minister (and capacity to problem solve/deal with situations) should have no problem sourcing his shareholder details and arranging such a sale.
I could understand how this might slip off your to do list if you weren't prompted...but if you have been prompted a dozen times over a given period and still haven't done anything I find quite baffling.
If it were a large sum of money it might make sense (greed/self interest) but when it is for such a small sum relative to his income really makes little sense at all.
"Then on Wednesday, the minister said he was also shifting the shares into his family trust before making the sale. Proceeds would then be reinvested in a managed fund.
He said this was a more appropriate way for ministers to manage their interests....."
Shifting them into a trust before selling them? Why?????????????????????
But he didn't own a million dollars worth. He owned about $13k. Do we really think his decisions on the airport were seriously influenced by the risk of his net worth falling by a few thousand dollars, but we turn a blind eye to MPs pushing policies designed to increase house prices after their portfolios fell by hundreds of thousands, if not millions, of dolllars?
It's not that Wood didn't do anything wrong. He's being rightly punished for being an idiot and having a conflict of interest. But there are much, much bigger conflicts out there staring us in the face and we don't seem to care.
Yes those whole debacle about conflict has made me ponder that MPs who own rentals (other than through a blind trust), should be recused from any decision making around land use planning, i.e. National scrapping medium density housing requirements to prop up the value of their rentals. Though Labour have a pretty high percentage of landlords too. That would leave perhaps only David Seymour and Chloe Swarbrick to vote on the laws?
Not Seymour it seems -
https://www.nzherald.co.nz/nz/politics/act-leader-david-seymours-embarr…
Its al detail. Rules are rules and our leaders are expected to set examples by following to the letter.
- If i am a kickboxer and kill an elderly person with a kick - but the power was only 5% the power of a kick in the ring...
- I am a thief but only stole 5% of the massive heist what i did last time so its ok.
A counter way to argue this is that the average salary is say 70k in NZ then after tax would be say $53k left over for bills and all. most renters or FHBs would struggle to save $250 a month from that - so it would take those kiwis kiwi a few years to save $13k. .. and thus is a LOT of money. but for him its easily forgotten as he is loaded.
Loss of touch with the peeps?
Run it like a private company. You know.... Job description, CV, vetted via psychology testing, interviews, IQ testing, KPIs etc... And that's just to stand in your electoral area.
Even better... Make it a voluntary role. Then you will get people doing it for the right reasons
Wait till you see the corrupt abuse of power then implied by how much so many of our politicians are invested in property while working to prevent new supply, cut taxes on property speculation, and hand out welfare subsidies for prices and rental yields. It's ludicrously more lucrative for them.
so if we take this as the new normal then an MP that owns rental houses would need to sell them all to become finance minister or minister of housing, an MP that owns a farm would need to sell it to become minister of agriculture or minister of MPI , a minister that has any interests in a business could not become minister of MBIE and so on, that puts the national and ACT party in a bit of a pickle when they take over the benches end of this year looking at the latest Register of Pecuniary and Other Specified Interests.
as for the decision not to make north shore airport a full airport that was not strange, helen clark tried it with whenupai and the people of the north shore told her a big NO, luxon wanted to do it when he was in charge of air NZ and john key told him NO, the people of the north shore do not want have never wanted and would not allow an airport that can handle more traffic and bigger planes over there.
apart from being useless and not selling them when told so many times i dont see it as corruption as any decision he made would have affected his income or price of share by such a small amount that would not be a first thought, bringing back interest deductibility while owning 7 rental houses would be a much much greater amount of money though and a much different decision
The point missed is that Wood only had to sell them because he failed to declare the shareholding in the first place.
If he had declared his holdings then he wouldnt have put himself in the position of having to sell them.
Tarring other MPs who told the truth and followed the rules is unfair.
As I understand it from the media releases:
He did declare them to the Cabinet Office.
However, he did not declare them as a pecuniary interest, which is required. This was because, in his words, he intended to sell them.
Which kicked off the 12 reminders to sell the shares.
Now he is being investigated for this failure:
https://www.nzherald.co.nz/nz/politics/michael-wood-faces-fresh-probe-a…
Absolutely, the amounts involved are absolute chickenfeed compared to most politicians rental portfolios. He is an idiot for not selling, but equally those rental portfolios need to be disposed of before trying to set housing policy.
Blind trusts all round please.
Arguably, by the same logic, Luxon should sell all his rental properties if he becomes PM. Housing is influenced by so many factors and portfolios that it’s pretty hard to isolate influence. As PM he would be influencing the housing market in many respects across multiple portfolios that he sits above- taxation policy, migration policy, urban planning policy, foreign investment policy
Absolutely, I am far more concerned about his self-interest than I am about Wood's. The money involved is a couple of orders of magnitude larger.
Of course he is far from alone in this, it just leaves a particularly bad taste as so many of his proposed policies would directly benefit him.
Luxon may have interests in $5,000,000 or more in properties (given the number he owns). The changes he is suggesting to property may result in him being hundreds of thousands of dollars better off as the value of his portfolio rises.
It makes a mockery of being concerned about a thousand or so AIA shares and a conflict of interest.
So true. I can’t believe the fuss over $13k, it’s hardly an amount that would corrupt anyone. Wouldn’t even pay for a decent second hand car. Luxon changing all of the property tax settings in his favour when he has 7 houses will lead to significant personal gains for him. Why isn’t this treated in the same way?
Ultimately rules are rules - the West lives in a rules based society with an enviable legal system that we treasure and generally works quite well - unlike the BRICs. A key part of our society is we especially expect our MPs and leaders to set an example by following those rules.
I personally think it really sucks that Luxon owns multiple houses and will openly change the rules so he and his mates benefit financially whilst other kiwis suffer - but if you dont like that then dont vote for National or campaign for some form of law change that would catch it.
However - and whilst i dont like it - part of the National argument for increasing investment in NZ property seems to be that it is drives the economy, we have plenty of land to build on and can support more immigrants (this last part i disagree with as i see infrastructure isnt able to keep up - however i do see that NZ has proven unable to develop much in the way of an alternate economy as yet).
Remains that Wood failed to follow the written rules despite multiple warnings - and (if he is at all bright enough to be a minister) should have known the consequences of failing to find the time to sort it.
Hang on...
1. Our society is good because low corruption, push to keep it that way...
But then
2. If you don't like Luxon pushing for laws to benefit himself don't vote for it...
That looks slightly incongruous. Ah for the good old days when politicians speculating on land while using policy to benefit themselves was seen as dishonourable and reason for them to be gone. How much better NZ society would be without entrenched speculator entitlement mentality.
Shouldn't there be a threshold? $13k is not a material amount, there is no way that it would influence the decision making of anyone on a half decent salary. Whereas the property investments of Politicians are worth more than their annual salaries and are much more likely to influence their policy choices.
This is nothing.
Check out this about actual insider trading by politicians in the US:
https://www.youtube.com/watch?v=Z3D6pGc7nHw&t=1320s
It's not the amount of money, it's the 12 reminders and no action: a perfect exemplar of the behaviour of the people who govern us, and emblematic of how we are governed.
Oh: and if he can transfer ownership of the shares to a family trust, surely he must have the information that would enable a sale.
Are ACC really the regulator of airports in Auckland? I think not.
It's a valuable strategic asset owned by Auckland rate payers, it will perform better than anything else ACC do. It's egregious it may be sold to pay down their profligacy, incompetence and inability to deliver.
In terms of incompetence, I don't have an issue Te Kooti, we are on the same page. In terms of it being strategic though, selling it won't make it any less strategic. Just strategic in someone else's hands. The question that should be answered is, should local Government be investing in airports and ports? Or fresh and waste water? If you are a rate payer in say Auckland, what should you be getting for a tax on your land and capital? The pleasure of subsidising other people's transport?
At least the Airport shares are listed and therefore theoretically sold at fair value, in sharo contrast to the state asset sales of the 80's which made a few well connected Kiwi's very wealthy. The Airport is a hedge on Aucklands growth and somewhat immunises ratepayers from poor execution/decisions by the Council. I fear the proceeds will be squandered.
Is the dividend income from the 2.27 billion worth of shares (59 million in 2019) more or less than the projected cost to service 2.27 billion of debt for near term?
Remuera Golf Course sits on 60 hectares of land worth 1 billion dollars. The Remuera Golf Club pays $130,000 a year in rent. Funded by their members who have exclusive use.
If it's worth selling the airport shares then it's worth selling the Remuera golf course.
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