Andrew Geddis: Laws on political funding need some attention

Trevor Mallard's recent remarks about the funding of the National Party, whether or not they were accurate, do highlight some basic inadequacies in our current laws regulating the funding of political parties.

There are virtually no restrictions on who may give money to a political party, nor on how much they may give. The only legal control is the criminal law's general prohibition on bribing MPs, which covers an explicit agreement to exchange money for some promised action.

However, not only would this be extremely hard to prove in the case of a donation to a political party, it also fails to cover the more insidious cases where the donation creates a general favourable attitude towards the donor's interests. My point is that this gap in the law enables not only individual citizens of other countries to make unlimited donations, but it also entitles overseas companies and other organisations to fund our political parties.

We might contrast this open-door policy on funding political parties with the legal controls on other ways of participating at election time.

Only New Zealand citizens and permanent residents can vote. Only New Zealand citizens can run for Parliament.

What is more, New Zealand citizens or permanent residents who have lived overseas for a certain period lose their right to vote in New Zealand elections, until such time as they return to New Zealand.

These rules reflect the basic principle that only those with an active stake in the future of New Zealand should be able to participate in choosing who will govern.

Many other nations extend this principle to political funding, and ban donations from foreign individuals and organisations. Perhaps ironically, the United States is among these countries; only US citizens may contribute to federal election campaigns.

It is strongly arguable that New Zealand should do likewise. It is hard to see why anyone from outside New Zealand should be allowed to try to influence, even if only indirectly, the outcome of our elections.

The second inadequacy in our funding laws revealed by Mr Mallard's claims is the fact that the public has no guaranteed access to information about how any party is raising its campaign funds.

The law requires that all political parties annually disclose any donation of more than $10,000. The idea is that this information will allow the public to spot any possible influence that large donations may have on a party's policy positions (the argument that "sunlight is the best defence against corruption").

But this laudable aim is undercut by two major shortcomings in the legal framework.

First of all, disclosure only takes place at the end of each financial year, meaning we will not see a list of each party's major donors for this election until May 2006. This belated disclosure is of little use to a voter in this current campaign.

Second, the legal regime governing the disclosure of donors' identities is so riddled with loopholes that it is, in effect, voluntary.

Anonymous donations of any amount may be given, as long as the party can legitimately claim that the identity of the donor is "not known" to it. Parties may lawfully establish trusts into which donors pay money, with the trust then funnelling the cash to the party proper. All that then need be disclosed is the name of the trust.

I am not claiming that New Zealand's political parties are corrupt, or that donors are seeking to avoid disclosure for nefarious purposes. But when large amounts of money are passed over to political parties, often in ways which are deliberately kept secret, questions will arise as to who is giving what and why.

We have an enviable international reputation for clean government. It would be a shame if we were to lose this just because our laws regulating political funding allow such suspicions to flower unchecked.

* Andrew Geddis is a senior lecturer in law at Otago University.