The whole, inglorious mess of the 2019 Budget smuggling

2019-05-31 01:34:19

They are calling it the Budget Smuggling Incident.

Whatever the truth of the premature disclosure of Treasury papers, the whole, sorry saga will go down as one of the most memorable Budgets in New Zealand political history.

And that was before anyone even turned a page of the glossy 'Wellbeing' brochure.

So, how did we end up here?

As with any good story, we must first establish the characters.

Finance Minister Grant Robertson's inexperience and a prevailing narrative that Labour is economically reckless has dogged his tenure. This was to be the Budget that proved his critics wrong: a world-leading programme that favoured warm and fuzzy 'wellbeing' measures over dry, economic targets.

Straggling in the polls, and trying to contain a restless caucus, Opposition Leader Simon Bridges also desperately needed to stave off his detractors after a series of poor judgment calls. Stealing Robertson's thunder in his big week would probably do it.

In the middle of this bitter political rivalry we have Treasury Secretary Gabriel Makhlouf. Already half-way out the door, to a new role leading Ireland's Central Bank, his last big job was to deliver the Budget.

For these three men, the week beginning May 26th was already a high-stakes one.

Robertson and his team of advisors were locked in their Beehive offices putting the final touches to the speech he would deliver to analysts and the media to explain the new Budget.

Across town, Bridges was enjoying a relaxed evening, dining at the tasteful Two Grey brasserie with US tax reform advocate Grover Norquist, and lobbyists Jordan Williams and Barry Saunders.

One observer described him "holding court" in the group. He had 2000 reasons to be cheerful.

Over the weekend, National researchers prepping for the Budget had stumbled across a breathtaking security breach.

On Treasury's website, his aides had simply entered 2019/2020 into the search engine. It gave them access to a treasure trove of supposedly secret, and potentially market-sensitive, information.

A test version of Treasury's website with new Budget documents was accidentally indexed and some of them were discoverable using the public search bar.

Over and over again - 2000 times over two days - National's team bashed economic jargon into the search bar, and trawled through the resulting indexes. The team couldn't believe their luck: this was point-scoring dynamite.

Information is power, and in the most important week in the political calendar, Bridges thought he held all the cards.

Had wiser heads prevailed, National would have gone public with the breach, referred the details to the relevant government agencies and stolen the moral high ground.

Embarrassing for Treasury and Robertson, worth a day of stinging headlines, but not mortally wounding. By Wednesday, and the launch of a suite of mental health policies, the Government would have regained the agenda.

Perhaps, National could have kept their powder dry and used the info as a head-start on putting together a blistering post-Budget response.

Instead, Bridges went nuclear, opting to drip feed the details they'd uncovered and frame them as gains for NZ First at the expense of Labour's "wellbeing" goals.

By Tuesday morning, his team was tipping off the Press Gallery that something was about to break. Many of the media pack was on its way back from a printing press in Petone, Lower Hutt, where Robertson had shown off the front of cover of the Budget, for the cameras.

Tuesday mornings are typically frenzied for journalists and MPs. Both main parties hold their caucus meetings in Parliament's Old Building. As MPs make their way down the stuffy, hot corridors, a media scrum crushes around them, barking out questions as they pass.

It was the perfect time for Bridges to drop the documents, catching Robertson and Prime Minister Jacinda Ardern unawares as they faced down a pack of journalists. Both looked flummoxed, unable to respond.

MPs must surrender their phones when they enter caucus, but a furious Robertson was spotted leaving the room early. Behind the scenes, officials were frantically trying to work out what was going on.

With all parties ensconced in their caucus rooms, reporters began to analyse National's press release, simply titled: "National reveals Budget details."

They had attached figures for several different "votes" (or appropriations) for the financial year 2019/20. This information was matched with the estimates for 2018/19 which were already publicly available. It looked convincing - and National already had form for obtaining papers on budget priorities, and a secret cabinet paper on the upcoming cannabis referendum.

It was immediately obvious to Robertson's team that the info wasn't a political leak, because it didn't come in a form available to Beehive staff.

Treasury officials were summoned to the Beehive for a 'please explain' and a witch hunt began.

By lunchtime, Robertson was able to front media with some answers: and he gave the first clue.

Treasury had told him the information had not been uploaded onto the "public facing" website, but some place holder content had been.

He was calm, insisting National wasn't giving away any spoilers on the big-ticket items, but very obviously frustrated.

Bridges continued to have his fun, bellowing his way through Question Time and drip feeding more details in two more press releases throughout the day. National also slipped out a workplace culture review, launched after accusations of bullying, harassment and electoral fraud rocked the party last year.

The tech community - and amateur Twitter sleuths - were also having a field day. Some had found the cached documents online and were concluding a Treasury bungle.

That was until 8:02pm when Makhlouf dropped a bombshell.

"The Treasury has gathered sufficient evidence to indicate that its systems have been deliberately and systematically hacked," he said in a written statement.

​Makhlouf had called in the GCSB's National Cyber Security Centre. They told him to bring in the police.

It was followed, 17 minutes later, by a statement from Robertson. Makhlouf had struck the match, and Robertson threw it on the bonfire.

"We have contacted the National Party tonight to request that they do not release any further material, given that the Treasury said they have sufficient evidence that indicates the material is a result of a systematic hack and is now subject to a Police investigation."

Robertson had deliberately and directly linked National's 'leak' to hacking. There was no backing away from this. Bridges responded with a defiant tweet - and demanded Robertson resign.

On Wednesday morning, Makhlouf gave an interview to Radio NZ - and there was barely anyone in a quarter-mile radius of the Beehive that wasn't tuned in.

He claimed "multiple and persistent attempts" to gain unauthorised access to Budget information and gave a clumsy analogy about a bolt.

Over and over, he insisted the information hadn't been publicly available.

Politicians are never scared of a bit of scare-mongering, if it suits their purpose. But in the age of cyber terrorism and Russian hackers, this was alarming (and it turns out ill-advised) from a senior public servant.

Bridges didn't cover himself in glory either. He called a press conference but categorically refused to explain where the information came from.

He was flanked by deputy Paula Bennett and finance spokeswoman Amy Adams, their tight smiles not quite meeting their eyes.

"There has been no hacking under any definition of that word. There has been nothing illegal or even approaching that at any time from the National Party," Bridges insisted. He accused Robertson of trying to gag the Opposition and again demanded he resign over the "smear."

But he would not clear up the mystery, enjoying the theatre and drawing out his explanation to the very morning of Budget Day. Labour responded by halving the number of National staff allowed an early peek at the Budget.

Bridges called Robertson a liar, who responded that these were the actions "of a desperate man."

It was tribal politics at its ugliest.

Bridges gleefully called a press conference for 8:45am. Treasury had no option but to come clean. The confession dropped into journalists' inboxes just as the clock ticked past 5am.

While a flaw in the website was exploited, this was not unlawful. Unlike previous statements, it was not attributed to Makhlouf. The State Services Commission would begin an investigation.

The weight of judgement that came down on the Secretary of the Treasury was immediate and harsh.

As he and his team headed to the Beehive's Banquet Hall for the Budget lock-up, there were multiple calls for his resignation.

It's an inglorious end for the man who was once principal private secretary to the UK Chancellor of the Exchequer, Gordon Brown.

But Makhlouf​ was already on his way out the door. What will linger longer are questions about the judgement of Bridges and Robertson.

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