Government backtracks on electoral finance law

National raised the election spending cap. Photo / Martin Sykes

Political parties have finally reached a consensus on electoral finance laws with both sides compromising on public disclosure of donations and spending caps on lobby groups.

Justice Minister Simon Power yesterday announced changes to the rewrite of electoral finance laws, including a $300,000 spending limit on "promoters" or "third parties" who wish to campaign for or against political parties or candidates in elections.

The Electoral (Finance Reform) Bill originally contained no spending limit but has come back from the electoral legislation select committee with a spending cap.

By way of a trade-off, MPs' own spending limits have been increased and donations to a party will now only have to be publicly disclosed if they are more than $15,000 - up from $10,000. Spending limits for candidates and parties will be increased from $20,300 to $25,000 and a maximum of $2.4 million to $2.8 million respectively.

When in Opposition, National was highly critical of the $120,000 spending limits on third parties in the Electoral Finance Act and the lengthy election period, describing it as a gag on freedom of speech.

Yesterday, Justice Minister Simon Power said the changes were a robust compromise on an issue that bitterly divided the two major parties in 2007.

He said while National had wanted a higher cap for third parties, other parties had wanted less - $300,000 was the compromise and he was satisfied with it, given it applied only to the three-month pre-election period rather than an entire election year, as was the case under the Electoral Finance Act.

"We decided a balance could be struck between freedom of expression and making sure elections couldn't be unduly influenced by large sums of money."

Other rule changes were intended to ensure all election advertising was paid for out of the party's own coffers rather than out of public funds, in a bid to stop a repeat of such things as Labour's 2005 pledge card.

Now, only electioneering which explicitly seeks votes or membership subscriptions is forbidden under Parliamentary Service's funding rules - a far narrower definition of election advertising than that used in the Electoral Act. Under the new law, for the three pre-election months no election advertising can be paid for by Parliamentary Service, regardless of whether it is explicit or not.

National was highly critical of use of public funds last election, and Mr Power said it was inappropriate use of public money.

Yesterday, opposition parties praised the spending limit for lobby groups but made it clear lifting the threshold for donations disclosure was the price they had to pay to secure it.

Labour's justice spokeswoman Lianne Dalziel said it was a "workable compromise" and while the new donations regime was not Labour's policy, it would be supported as part of the package. The critical factor for Labour was the spending limits on third parties. She said the $300,000 limit should be sufficient for "the bottom end of the range for a medium-level nationwide advertising campaign".

Green Party co-leader Metiria Turei said she also had grave concerns about lifting thresholds on donations disclosure. However, spending caps for those involved in the election and those campaigning on the referendum next year would help ensure New Zealand politics was kept honest.

"An election should be a battle of ideas, not a battle of who has the most money."

Mr Power repealed the Electoral Finance Act soon after National came to office in 2008. In the interim, the old Electoral Act has applied but a new, more transparent regime for donations and higher penalties for breaches of the law was retained.

The new law is expected to come into effect in January and will apply at the next election, unless an early poll is called.

ELECTORAL FINANCE ACT

* Election period from January 1 in election year.
* Parliamentary Service funding could be used for advertising policies or MPs unless it explicitly sought votes, money or party membership.
* Third party spending cap was $120,000 overall in any election year or up to $4000 on any one candidate. Had to register if spending more than $12,000.
* Spending caps of $20,000 for candidates and $2.4 million for parties standing candidates in every electorate.
* Disclosure of donations of more than $1000 for candidates and $10,000 for parties. No anonymous donations of more than $1000.

NEW

* Election period starts two years and nine months after previous election (unless early election called).
* Parliamentary Service funding cannot be used for any election material promoting policies or candidates, even if there is no explicit electioneering. Any amounts that break the rule must be repaid.
* Third parties (now "promoters") have spending limit of $300,000 during three-month election period. Must register if spending more than $12,000. The limit will increase with CPI (similar to caps for parties and candidates).
* "Anti-collusion" measures to stop groups breaking into two or have members acting as individuals to avoid the spending cap.
* Spending caps of $25,000 for individual candidates and $2.8 million for parties standing in every electorate (CPI adjusted).
* Donations of more than $1500 for a candidate and $15,000 for a parties must be disclosed. Anonymous donations allowed up to $1500. Parties must also disclose the number of donations received of less than $15,000 in $5000 bands, but not the donors.