Herald on Sunday Editorial: End secret political donations

John Banks. Photo / Mark Mitchell

The Act Party's leader (and sole MP) has never seemed the kind of fellow to make political history. But any learned tome of the future, picking over the records of our system of electoral financing, will surely include the name "Banks, John Archibald" in the index.

If, as now seems likely, campaign finance rules are overhauled, it will be because of what has become known as the John Banks anonymous donations affair.

The name is imprecise, since the anonymity of the problematic donations extended only to the way they were described in his election return - the name given to the formal declaration of where the money came from for his campaign for the new Auckland City mayoralty in 2010. They were far from anonymous in the generally accepted sense of that word, which is that nobody knew where they came from.

The police, whose inquiry Banks has praised on the Act website as " professional and diligent", found that he solicited money from the now-famous Kim Dotcom and personally received a donation from SkyCity's chief executive. Both donations were recorded as anonymous. But they concluded he had not broken the law because the return was filed by a campaign volunteer and Banks had sought and received confirmation that it was accurate - all he needed do to satisfy the Local Electoral Act. What mattered was not what he knew about the source of the money but what he believed to be the content of the electoral return, which he signed. The general public might consider that the murky space between the letter and the spirit of the law is an unacceptable place for a politician to seek refuge, but for the police the law is the law.

It is tempting to suggest that the whole affair - in particular Banks' inability to recall being given large amounts of money by the country's most newsworthy billionaire - will mean the end for Banks and Act at the next general election. But the voters of Epsom, whose support is the only thing standing between Act and political oblivion, have shown a remarkable capacity for looking the other way and holding their noses up to now, so anything remains possible.

What is plain is that the law, which Prime Minister John Key said "anyone can drive a bus through", is hopelessly inadequate. Local Government Minister David Carter confirmed this week that the Local Electoral Act will be amended before next year's local body elections - but it seems the intention is only to bring it into line with the rules of the Electoral Act (which covers MPs). The local version sets no limit on the number or size of anonymous donations. Nor does it stop the use of trusts to ensure donors' anonymity.

But it is time to go further and stop anonymous donations altogether. Nobody expects disclosure of the source of each coin thrown into a plastic bucket at a meeting. But it is fundamentally inimical to the idea of democracy that people can donate large amounts of money to political campaigns without voters' knowing about it. Generous donors don't give money to politicians without expecting something in return, and we should know who is giving what, not for the hell of it, but so that politicians' behaviour can be assessed in the light of the largesse.

In 2006, the Greens called for the establishment of an independent inquiry into campaign financing as a basis for a fundamental reform package. That idea remains as good as it was when they put it forward. And when the resultant legislation is passed to change the system, it could be usefully called the Banks Law - even if no one remembers who Banks was.