Political donations: Justice Minister Kiri Allan - Govt will close NZ First Foundation loophole for election year

Justice Minister Kiri Allan says the Government will close a loophole in electoral donations law exposed by the court case on the NZ First Foundation, which allowed an entity at arms-length from the NZ First party to take donations without disclosing the donors.

Allan has confirmed the Government will introduce measures to prevent a similar situation happening again, and pass it by the end of the year so it is in effect for the 2023 election year.

"This is a loophole that needs to be fixed."

The High Court acquitted two people charged over donations received by the NZ First Foundation that were not disclosed as party donations. The court ruling said that was because the donations were never passed on to the party, so did not meet the definition of being a "party donation" under electoral law.

Allan said she was advised it could be closed by changing the definition of "party donation" to ensure it covered such a scenario, and making it an offence for someone who collects a donation for a party or candidate not to pass it on to the party secretary.

There is currently a legal obligation to do that but no offence attached to it under the Electoral Act.

Allan asked for urgent advice on it last Monday and said the Justice Cabinet Committee had now agreed to push urgent changes through to try to fix it before 2023.

Once agreed by Cabinet, the changes will be put in as an amendment to a bill already before a select committee which changes other aspects of election donations rules, including lowering the donations disclosure thresholds.

Allan expected that to happen in the next four weeks, leaving time for public submissions on the proposed amendment before the committee reports back in early December and it is passed by the end of the year.

She was confident it would have cross-party support – the Greens have called for it and both National and Act have agreed the loophole needs to be closed although both have said they will not support the whole bill because they disagree with moves to lower the donation disclosure threshold from $15,000 to $5,000.

Electoral law expert Graeme Edgeler said the proposed changes should ensure that donations to an entity such as the NZ First Foundation would have to be disclosed in future.

He said most people had assumed that donations given in such a fashion were already covered by the existing law- and if it was not rectified it would render the current donation disclosure regime useless. There would be nothing to stop other parties setting up similar models to avoid disclosure.

"We kind of need to know who is giving money to political parties. If people can give money and not disclose them, there is little point having donations disclosure rules."

In press releases since the ruling, NZ First leader Winston Peters has claimed the court decision vindicated NZ First and the Foundation, and showed it had done nothing wrong.

On Monday he took aim at those claiming it was a loophole:

"If following strictly the disclosure requirements for donations to both New Zealand First, or the Foundation, is a loophole could they please lend their expertise and tell us exactly what that is."

He ended his statement with an old quote by the late Sir Michael Cullen after an election: "We won, you lost, eat that."

Asked for her response to that, Allan said, "I'm glad to hear the former deputy prime minister is well engaged in the political landscape of New Zealand and look forward to any further comment that he has to make in due course."