Reality check for big spenders in Parliament

National MP Bob Clarkson, right, with Don Brash. Picture / Mark Mitchell

Fred Bloggs, successful dentist, is standing for Parliament in Auckland Central, and he is spending big.

He rents three large streetfront offices on Queen St for the election campaign, hires a fleet of coaches to ferry eager party volunteers into town and puts them to work pasting posters of his gleaming grin to every wall, window and awning on the street.

Bloggs has spent hundreds of thousands of dollars, he's impossible to ignore and the bedazzled constituents duly vote him in. But when he fills in his official declaration of election expenses, he fails to declare the bulk of the money he has spent in this exercise, instead listing a few buckets of industrial-strength glue ($33.94) and the printing costs for the posters (only $534.50, thanks to a special buy-in-bulk deal).

At the same time, he submits his fundraising tally to the electoral authorities, including a $100,000 donation from a source known only as the "Help Bloggs Win Trust".

Outrageous fiddling of the system? Chequebook politics? No: all legal, under New Zealand's electoral rules, which is inconsistent, complicated and outdated. In the past few months, police, the High Court, the Auditor-General, electoral officials - even politicians themselves - have struggled to unravel its tangles, but the Government still has not acted on countless recommendations for fundamental reform.

In the aftermath of last year's election, police are investigating claims of overspending against both major political parties.

The Electoral Commission accuses Labour of breaching its campaign spending limit of $2.38 million by spending $446,815 of taxpayers' money on electioneering brochures.

It accuses National of overspending its own limit of $2.24 million by failing to include GST in some of its calculations. Labour (which is also in the gun for allegedly misusing taxpayers' money to promote its political interests in the brochures) is blaming the "confusing" system, and National says the GST problem was a genuine "communications mix-up" between party officials and an advertising booking agency.

Meanwhile, a High Court decision last year exposed loopholes in the law which surprised politicians, analysts and even electoral officials.

Defeated Tauranga member Winston Peters brought an election petition against his victorious National Party opponent, Bob Clarkson, accusing Clarkson of vastly overspending his $20,000 limit and failing to properly declare money he had spent on hoardings, newspaper advertisements, a telephone push-polling campaign and posters plastered to the outside of his campaign headquarters on busy Chapel St.

In its finding, the court declared Clarkson's spending was just over $18,000, confirming he was obliged only to declare expenses strictly associated with his campaign.

Clarkson was entitled to promote himself in any other capacity, said the court - so the posters which declared "You are Entering Bob Clarkson Country" were legitimate as they did not mention the election.

Likewise, the court found that although Clarkson might have gained publicity from sticking posters on the outside of his Chapel St headquarters, he had only to declare the posters themselves, not the value of the wall-space on which they were emblazoned.

Auditor-General Kevin Brady last year slated the Government's plan to spend more than $21 million on advertising its Working for Families budget package, saying he was disappointed in the level of scrutiny applied by Treasury officials to the plan and "would have expected a more robust process".

In response, the Government cut the spending by $6 million.

Brady went on to criticise the entire system for managing political publicity and advertising as "weak, and needs to be reviewed ... There is a need for new and more consistent guidelines, better centralised oversight of publicity practices, and more transparent and effective funding and administrative arrangements".

Even parliamentarians want change; the Justice and Electoral Committee recommended a "fundamental review" of the system in its report on the 2002 election (presented to the House nearly two years ago), but the Government is still delaying.

Some of the committee's recommendations (mainly related to broadcast advertising budgets) have been adopted into law, but Justice Minister Mark Burton is waiting for the committee's report on last year's election before deciding on a course of action.

The electoral rules have a serious purpose; to make every election a fair fight. That means ensuring seats cannot be bought by wealthy candidates, restraining the ability of the major parties to crush smaller rivals and attempting to stop parties peddling influence or contracts to rich patrons.

Everything about the system is complex, starting with the three layers of bureaucracy (the Electoral Commission, the Office of the Chief Electoral Commissioner and the Electoral Enrolment Centre).

The watchdogs set maximum campaign spending limits of $40,000 for independent candidates and $20,000 for party electorate candidates, while each party may spend a total of $1 million, plus $20,000 for each electorate it contests.

Sounds strict, but the definition of "election activity" in the Electoral Act 1993 is narrow, applying only to acts which encourage (or appear to encourage) members of the public to vote a certain way, such as advertisements, pamphlets or billboards.

Outside that, candidates and parties can spend as much as they like.

The vastly expensive process of opinion polling is exempt from the electoral rules, as are travel and volunteer labour. Non-election promotion is also allowed: that is, candidates may spend as much as they like promoting themselves in any capacity outside politics (for example, by appearing in advertisements for a new toothpaste, or putting up billboards promoting their private businesses) as long as these do not try to influence voting either for or against any candidate or party.

Parties do not have to declare any donations below $10,000 (for a candidate, the threshold is $1000) and may accept anonymous donations, or money funnelled through a trust.

Broadcast ads are allowed only between writ day and polling day; but print ads can run any day of the year (although they are only counted as election expenses for the three months before election day).

Lobby groups and third parties are allowed to promote a candidate as long as they don't do it on television or radio - and the candidate must declare this as campaign expenditure, even if it did not come out of his own pocket.

The exception to this rule is that lobby groups can freely run issue-based campaigns as long as they do not overtly endorse any particular candidate or party - such as the Exclusive Brethren's anti-Green pamphlets at the 2005 election, which tacitly endorsed the National Party.

Is the system confusing? Not at all - that's just an excuse for when parties get caught, says National deputy leader Gerry Brownlee.

"I think it's very simple. The general public may not have much knowledge of the electoral law, but politicians do and to say it's all confusing and we didn't mean it, we didn't know - that's garbage. Ignorance of the law is no defence."

Brownlee says there's a crucial difference between the two cases being investigated by police; he says National identified its own GST error and reported it to the authorities immediately, but Labour deliberately tried to fund electioneering from the $4.98 million it is allocated in a Parliamentary Service "leaders' fund" (designed to be spent only on running MPs' offices).

One of the most authoritative calls for change comes from Dr Helena Catt, chief executive of the Electoral Commission, a former politics professor from Auckland University who has written several books on local and international voting systems.

The Government should appoint the Law Commission to conduct an independent review of the whole system, says Catt, pointing out that the murkiness is partly because of the absence of comprehensive case law relating to the electoral system, simply because of the expense and logistical difficulty of taking court action.

Some of the High Court's rulings in the Peters/Clarkson case even surprised the authorities, she says - for example, by taking a new approach to the formula for dividing a candidate's local expenses from overall party spending.

"What is needed is a fundamental review. It's not a case of amending this or that little bit of the law, the law has already been amended and amended.

"We need to streamline it and get back to the fundamental questions; it's about everyone having a go, about ensuring the smaller parties and non-parliamentary parties can put their views."

A review must happen now, before the system is exposed to a "crisis" of overt corruption, such as the recent Canadian scandal of politicians receiving kickbacks in return for lucrative contracts, says Andrew Geddis, electoral law expert at Otago University.

"The holes in the spending limits are so wide you could drive a bus through them," says Geddis, adding the system does even prevent parties from advising donors on how to hide their identities, or using trusts to "launder" donations from unnamed supporters.

"The public has no real idea as to who is funding those seeking lawmaking power," Geddis says.

"It makes the very existence of the current disclosure rules completely pointless."

He wants to see a ban on anonymous donations over $50, the outlawing of donations funnelled through "faceless" trusts, and a change in the definition of "electoral expenses" to scrutinise all campaign spending, not just advertising and promotions.

The rules ignore the expensive and powerful business of opinion-polling and even seem to permit parties to push-poll (promoting themselves under the guise of taking a survey), says Auckland University political scientist, Associate Professor Raymond Miller.

It "beggars belief" that the political parties are making genuine mistakes through confusion, he says.

"The reality is they use the grey areas and ambiguities to their own advantage.

"Ordinary citizens have to obey the laws and it's no excuse to say 'Gee whiz, I was ignorant'.

"Political parties and governments have as much obligation to obey the law as private citizens - we all have to pay our GST, we all know how the law works," he says.

"The political parties have used taxpayers' money through the Parliamentary service for all sorts of things; advertising, billboards, pamphlets and it seems as though virtually anything goes.

"It's not a fair deal for the smaller political parties, especially those who are trying to get into Parliament, and it's certainly not fair to the public at large because they really don't know what's going on."

Miller says the only chance of change is review by an extra-parliamentary body such as the Law Commission.

"There's no point putting it in the hands of a select committee because the politicians are too self-serving."