29 Jul 2022

Political donations law changes: Clock ticking ahead of election

6:18 pm on 29 July 2022

Opposition parties are crying foul over a donations law change, while the government is considering a separate fix to prevent big foreign funders secretly influencing elections.

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Electoral donations laws have been under particular scrutiny following the end of the New Zealand First Foundation court case, and the start of the Labour-National donations case.

Each case raises different concerns about New Zealand's current electoral donations laws.

Auckland University legal academic Tim Kuhner told Morning Report the cases were showing electoral laws were unfit for purpose and in need of an overhaul.

"If we're talking about political representation, political accountability, transparency and so on - democratic integrity - then no, the laws aren't fit for purpose," he said.

Prof. Tim Kuhner

Tim Kuhner Photo: University of Auckland

The government meanwhile is pushing ahead with a short-term law it wants passed before next year's election, and is also working on a review of electoral laws that aims for more permanent change before the 2026 vote.

Such reviews are common after general elections but have a low track record of leading to widespread changes.

Experts also want a fix to a glaring problem exposed by the NZ First Foundation case to be slipped into the bill currently going through Parliament. The government has been seeking advice on how it could do that, but has not yet confirmed its approach.

Opposition decries lower transparency thresholds

The National and ACT parties are pushing back after the government introduced its Electoral Amendment Bill, which makes changes including expanding on donations disclosure requirements, and temporarily expanding access for voters who are overseas.

One particular change lowers the threshold before parties must publicly declare who the donor is from $15,000 to $5000.

ACT's leader David Seymour argued that would unfairly benefit Labour and the Green Party compared to ACT and National, and it would damage parties' ability to engage with the public.

He suggested people would donate less if the rule was brought in - about $1.2 million less going by the 2020 election numbers.

"That 1.2 million less means less advertising, less meetings, less promotion and less debate for New Zealanders in an election," he said.

"It also falls very unfairly - ACT would have lost more than Labour and the Greens together. Labour, the Greens and ACT ... together would have lost less than National lost alone."

It would be screwing the scrum, he said.

Leader of ACT party David Seymour

ACT leader David Seymour Photo: RNZ / Angus Dreaver

"There's no justification for doing it other than it's going to advantage two parties over two others."

He said he made clear to all ACT donors their money could not buy policy.

"If anyone seriously believes there's a problem that giving someone $15,000 can buy influence over a political party and you should know about it, that's less than 1 percent of the cost of running a half-credible political campaign in New Zealand these days. It's just not credible to say they're making us more democratic."

"You give ACT money because you like what we say not because we say what you like. That's a bottom line for us but, you know, whatever the limit is for other parties it's certainly not 1 percent of their funding."

Kuhner was dismissive of Seymour's criticisms however, saying the change would not the amounts people could donate - they would just have to be more transparent about it.

"We absolutely have to watch out for political self-dealing, but I don't think that's what's going on here," he said.

"The proposed reforms just increase transparency. Labour is not looking to ban any particular donations, they're not even looking to limit donations, they're just looking to help restore public confidence by increasing disclosure."

The Green Party said it was supporting the bill, saying it wanted to "get big money and their influence right out of politics".

"We don't share that concern that it will put people off because if people want to donate they absolutely can - and they can stand on the values of why they're donating," co-leader Marama Davidson said.

Green party co-leader Marama Davidson

Green Party co-leader Marama Davidson Photo: RNZ / Angus Dreaver

The party wanted the threshold to be as low as possible without making the administrative burden on parties unworkable - calling for a lower threshold of $1000.

"We think it should be low as ... we realise of course there's the pass-the-bucket-in-the-pub sort of action, so for practical reasons that may not always be possible, but we just think the transparency threshold should be low as."

But the National Party's Justice Spokesperson Paul Goldsmith argued the solution being put forward did not deal with the concerns raised by the court cases.

"The minister is sort of pointing to a problem and then introducing a bill that deals with other matters, as if it's some kind of solution to the problem, which it isn't," he told Parliament last night.

"The broad purpose of it, Mr Speaker, is to make it more difficult for political parties to raise funds."

He suggested the lower threshold would greatly increase the work of parties' volunteers in administrating smaller amounts of funding and, with less funding coming in there would be an incentive to move towards a taxpayer-funded model.

"That's where this government is trying to take us, it's where the Green Party certainly wants to take us, and we don't agree with it - we fundamentally don't agree - we don't think it is better for taxpayers to be funding parties."

He said such a system would be very difficult to design without favouring incumbent parties.

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Paul Goldsmith Photo: RNZ / Dom Thomas

Minister defends bill's progression amid trial

Seymour also criticised the timing, the first reading having begun last night just days after the start of a trial of seven people accused of deception relating to National and Labour Party donations.

National's leader Christopher Luxon was also frustrated by the timing, but for a different reason.

"There is a broader conversation going on about electoral law in general and electoral law reforms, but we've got this sort of financing piece that sort of is separate, trying to be jammed through before the election.

"We'd sooner have it all considered as one big part of the legislation."

Justice Minister Kiri Allan said the timing was appropriate considering the timeframe the government was working to.

"It's absolutely the right time to be putting through this bill, we introduced this piece of legislation into the house last week and we clearly signalled what was going to be in this bill ... this needs to come in force before the next general election and we've made it very clear that's what we're doing."

Kiri Allan

Photo: RNZ / Samuel Rillstone

Government weighing options to close loophole

Kuhner also echoed the warnings of other legal experts about a more serious threat to democratic systems, exposed by the NZ First Foundation case.

"It's important to note that in this New Zealand First case, the justice determined that the money in play wasn't a party donation and therefore wouldn't need to be disclosed by the party secretary anyhow," he said.

"So we can reduce the disclosure limits - which would be a good thing, make disclosure more robust - but we also have to redefine the meaning of 'political party donation' under the [Electoral] Act."

In essence, the judge's findings suggested large sums of money could be funnelled through an organisation not directly connected to the party itself - like the New Zealand First Foundation - without having to be declared at all because it did not fit the legal definition of a party donation.

It means foreign interests with deep pockets could have, at a minimum, indirect influence over New Zealand's politics during an election by funding

The justice minister expects to receive advice today on whether that definition could be clarified in a late addition to the current Electoral Amendment Bill.

When questioned about the problem early in the week, Prime Minister Jacinda Ardern raised concerns that if further significant changes were needed to electoral laws, they may not be achievable before the 2023 election.

She said there are previous examples where changes have been done "quickly and badly" and she wanted to build consensus.

"Is there will? Yes, absolutely ... if we have court cases that demonstrate there are issues, we would absolutely deal with them."

Lucky, then, that unlike the thresholds such a move would likely have support from all parties in Parliament.

"If there is genuinely a loophole, we shouldn't have people hiding money for election donations," Luxon said yesterday.

Seymour concurred: "I don't understand how you have $750,000 here, political party over here, and that money got from A to B with no declarations. I actually don't understand how they can do that but the judge thinks they can and if that's what the judge says, then that loophole should be closed."

Davidson said the Greens were also on board: "We absolutely think it should be addressed as soon as possible. It's something that only became revealed to us as a result of that case, it's not something that had been obvious to many of us before that."

Kuhner acknowledged it would be unwise to rush such a move, but "it's not rocket science".

"The law could be rewritten in just a slightly more general way to accomplish its clear purpose and intent," he said.

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