Outwitting the rules for political donations is bad for democracy. Photo / NZME
OPINION
When Act and National cried foul about Labour's move this week to change the rules for political donations, it may have been tempting to crack out the tiny violins.
The provisions of the law change that went before Parliament on Thursday will drop the public disclosure threshold for donations from $15,000 to $5000, meaning anybody who gives more than $5000 will have to be named.
Act and National have cried foul on two grounds: that changes are being pushed through without wider consensus or consultation, and because they believe Labour is trying to skew the playing field against them.
The latter is not a claim that Labour is trying to do anything to plump up its own coffers – but rather it is trying to diminish theirs.
In fact, Act leader David Seymour's argument is that all parties including Labour will lose donations from it. But National and Act will lose more, because they traditionally collect more.
Seymour claimed it would mean donations between $5000 and $15,000 would completely dry up because people who did not want to advertise who they supported would simply shrink their donations down to $5000 to avoid it.
Based on the 2020 tallies, he calculated Act would lose about $300,000 and National $600,000 while Labour would lose $170,000.
What the change they are proposing will do in the short term is send political parties rustling up their medium-sized donations early – urging donors to get in before the new threshold passes into law at the end of the year.
The little violins come into play when you look at the Electoral Commission's record of donations of more than $30,000 - Act has raised about $1 million and National more than $2m in large donations this year alone, all from named donors. The full tally will come out next year and will be larger. But those are already astronomical amounts in a non-election year. They are also all publicly disclosed.
Seymour's other point is that disclosure is to try to ward against money influencing politicians. He argues that $15,000 is not enough to buy influence. He may be right – we would hope so anyway.
Justice Minister Kiri Allan and Prime Minister Jacinda Ardern have said the changes are needed now, rather than waiting for a broader review of electoral laws, to improve trust ahead of the 2023 election.
The reason trust had been eroded was being played out in a court room in Auckland on the very same day politicians were debating the law changes for the first time.
It was the Serious Fraud Office case over donations to Labour and National, alleging donations from one person were split among a number of people for payment to avoid the existing $15,000 disclosure limit.
It does Labour no harm to be seen to be trying to do something about it while the court case is under way.
The trouble is that what it is doing is not necessarily the fix to the bigger problem.
The bigger question when it comes to trust and transparency of the system was shown up in an earlier court case relating to the NZ First Foundation on a very different point.
NZ First leader Winston Peters has claimed vindication from the acquittals of those charged in that case, and is crowing from the rooftops.
He issued a statement decrying the media who exposed the workings and donors to the Foundation and the SFO, boasting that it was legal all along.
At one point he said "the victims in this situation are the New Zealand people and our democracy".
He was right, but not for the reasons he gave.
It is gobsmacking there is a construct that can be used to lawfully avoid disclosure of hundreds of thousands of dollars of donations. Just because something is considered legal, does not make it right.
The Serious Fraud Office is yet to say whether it will appeal the High Court decision.
The basic tenet of donations law is that the public know who is giving large amounts of money to political parties or candidates – no matter how they made the donation or how it was handled once made.
The existing laws are easy to abide by and fairly comprehensive. Act and the Greens have coped admirably.
Yet for some reason, it is taken as a challenge to outwit donations laws and go to great lengths to do so.
The court ruled the donations that went to the NZ First Foundation did not qualify because they were technically paid to the NZ First Foundation – not to the NZ First party.
Even though the donations were sought and given as intended for NZ First - and the money used to pay some party expenses – the money itself was not passed onto the party.
That meant they were not party donations, and so did not fall under the Electoral Act requirements.
Green MP Golriz Ghahraman called for Parliament to use the bill that is now before Parliament to quickly to close the apparent loophole in donation laws, which was exposed by that court case. Ardern was lukewarm about that, saying it was doubtful it could be done in time.
Ghahraman is right – it does need an urgent fix and is more urgent than changing the thresholds for disclosure.
There is no doubt that had the lawmakers in 2007 considered such a scenario, they would have included it in the law.
Electoral law expert Graeme Edgeler wrote on the Spinoff that if that was indeed the way the law, as the High Court had now ruled, then it effectively rendered the entire donations regime as useless.
He is right - any party could now set up a similar arms-length entity and no donors would have to be named at all.
The law is not the only check on the behaviour of parties in this respect, although it is the most powerful. The other check is public opinion.
It will come at a political cost to a party which copies the NZ First Foundation model – and result in endless questions about whether they were trying to hide donors.
Other things that are legal, or were legal in the past, have caused political parties more trouble than they were worth. Those have included fundraising programmes that look suspiciously like cash-for-access to ministers, to National's previous use of the Waitemata Trust to take donations which it subsequently "donated" to the party.
The latter has not been able to happen since the 2005 law changes, which now require the disclosure of the identities of the original donors in a case where a donation was taken and then passed on to a party.
Those who came up with the NZ First Foundation model may well be patting themselves on the back for being so clever.
But it does not and should not sit right with anybody. It certainly should not sit right with voters.
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