The Electoral Finance Bill

WHITE NOISE
The Great Battle Over The Electoral Finance Bill

- Quentin Findlay

If there was one political piece of legislation before Parliament in 2007 that generated much heat and no little noise, it was the Electoral Finance Bill (now Act). Hailed by its supporters as a great step forward for transparency and openness in the political process, it was equally and viciously denounced as the harbinger of dictatorship by its opponents. Opponents of the Bill and the new law are vocal in their assertion that the legislation limits the right of democratic participation and obstructs political representation. Supporters contended that democratic participation has been made stronger with the Bill’s passing and that people have been empowered by the “level playing field” now in operation which limits political donations and spending, especially by third parties.

CAFCA’s Submission

CAFCA drafted a submission to the Justice and Electoral Parliamentary Select Committee which was considering the Bill. In its (very brief) submission, CAFCA primarily dealt with four areas:
Transparency in the electoral process
Anonymous donations
Election donations by overseas interests
Penalties
CAFCA largely supported the concepts behind the Bill of a more open and transparent electoral system and, in particular, the more stringent enforcement of regulations and restrictions to prohibit interests from “buying” elections. However, in its submission CAFCA was more supportive of the Canadian legislation. One of key components of that is that only political donations from those people who could vote in Canadian elections are allowed.

CAFCA was also supportive of some the reforms suggested by the Royal Commission on Electoral Reform in 1986. In its comprehensive report on the electoral system, the Commission advocated changes to the manner in which donations were provided to political parties and Parliamentary representatives. The Commission noted that the way in which donations were given could have the potential for corruption by “vested interests with substantial funds”. The revised Bill (now Act) did make changes to those sections about which submitters had expressly expressed concern. In particular, the rules around electoral and, especially third party spending and anonymous electoral donations.

Opponents of the Bill stated that imposing stringent limits on political spending by third parties and political parties amounted to a curtailing of democratic rights, specifically the right of freedom of expression. ACT New Zealand, as the political (and persistent) voice of neo-liberal interests, advocated this perspective in its minority viewpoint presented as part of the Committee’s report. “Any limit on expenditure for either registered political parties, or for so called third parties constitutes an abhorrent suppression of this fundamental expression”. Supporters of the Bill responded that freedom of expression in this situation amounted to little more than freedom of moneyed interests to significantly and substantially outspend their opponents to promote their views. Democracy in such a situation they counted was merely who had the most money and could hire the better public relations firm. Helen Kelly, President of the NZ Council of Trade Unions (CTU), noted that: “Freedom of expression, or freedom of speech through expensive mass advertising, are not freedoms that everyone can exercise” (Dominion Post, 3/12/07, CTU Column).

It has been argued that democracy is about the power and wishes of the “people”. This proposition might be best summed up by the idiom “[Democracy is] … of the people, by the people, for the people”. In a democracy, political power is perceived to be transparent. Citizens in a democracy can expect transparency both from those politicians who are elected to office and from the process that elects them. In a modern democracy an important part of that process is money and having access to money. Money is used to publicise political messages and to convince the voting public to support your policies. Money can be channelled through the political process in the form of direct funding or from donations either from individuals, groups and organisations.

What’s That Old Saying About The Golden Rule?

While New Zealanders have liked to think that their political process is free from the sort of monetary influences that are practiced in some other western countries, such as the US, the fact is that the New Zealand political process has been funded by money in the form of private/personal donations from its inception. At various times it has been more obvious, a case in point is the pork barrel politics practiced by some 19th and early 20th Century politicians. In the 1930s, business interests funded both the Reform and United parties. Some business people, such as Sir Ernest Davis, even provided financial support to the Labour Party. Nonetheless, it has been widely accepted that unions and those groups or organisations campaigning for social justice supported Labour, while their opposite numbers in the business and farming communities supported National.

In the 1980s, this support switched as some business leaders, who were benefiting (often directly) from the New Right politics being pursued by Roger Douglas, started to support Labour. This relationship between the neo-liberal business community and the neo-liberal politicians was a source of much contention and conjecture in the 1980s and 1990s. The extent and manner of the support between the politicians and the business community was the focus of several television documentaries, one of which was the victim of a law suit and a number of books and articles. Leftwing political commentator Bruce Jesson, in particular, scrutinised the (unhealthy and close) influence that some within the business community exercised over the political process during this period through his various articles for Metro and the former Republican. His seminal book on the subject, “Behind The Mirror Glass: The Growth Of Wealth And Power In New Zealand In The Eighties” offered considerable insight on the close personal links between those in the business community and the manner by which those links were then transferred to the political community, primarily to the Labour Party through Roger Douglas.

In 2006 author and activist Nicky Hager similarly observed the political and financial connections between some people in the political community, primarily in the National Party and others in the domestic and international business community. Published amidst a great deal of controversy, Hager’s book, “The Hollow Men” offered a comprehensive and detailed account of the wheeling and dealing of neo-liberal “third party” and political party acolytes as they sought to circumvent New Zealand electoral rules so as to make New Zealand, “the way they wanted it” (Jeremy Agar’s review of “The Hollow Men” can be read in Watchdog 114, May 2007, online at http://www.converge.org.nz/watchdog/14/03.htm Ed).

In both situations, in both time periods, donations and support were provided largely from business interests to those politicians who were intent on pursuing and furthering a neo-liberal agenda. In the 1980s, this was the “Rogernomes” who inhabited the Labour caucus. In the 2000s donations were apparently made to those on the Right wing of the National Party. As Hager noted most of these political donations were conducted in secret or sourced anonymously and while such actions might be considered morally repugnant, they (the donors and those who received the donations) largely operated within the grey areas of the law. Transparency was never an open and/or honest process in this relationship. There was no element of transparency in the dealings between the Exclusive Brethren and the National Party or between senior members of that Party and other business backers. If Hager had not conducted his research and written his book, none of their actions would have been brought to public notice.

The commentary from the Select Committee highlighted this concern about the lack of transparency in the electoral process. It noted that “…at the last election a number of problems emerged to show that these rules contain[ed] a number of loopholes that political parties and third parties were able to exploit to get around the intent of the law”. The intent being that political parties have set limits for spending and that third parties should not be able to covertly subvert those limits by acting as de facto sections of those political parties.

Rightwing Hysteria, Aided & Abetted By Media

It is no accident that those who were the most vociferously (and actively) opposed to the Bill represent moneyed interests. It is these interests who have benefited most from the loopholes in the laws and regulations surrounding electoral finances that have previously been enforced. They ambushed the debate over the Electoral Finance Bill, turning it into a debate over the rights of third parties (mostly them) to participate in the electoral process as opposed to a debate as to the transparent nature of that process. This ambush was made simpler due to the culpability of the New Zealand media, which largely presented the viewpoints of those opposed to the Bill as being justified, without really questioning their reasons behind it (a similar course of action is being followed by the media in relation to the issue of tax cuts).

The biggest media culprit was the New Zealand Herald. Its transnational owner, APN News and Media, was one of the finalists for the 2007 Roger Award for the Worst Transnational Corporation Operating in Aotearoa/New Zealand. In their Judges’ Statement, the Roger judges wrote: “We would have added the Herald’s 2007 ‘Democracy under attack’ campaign against controls on third party election spending and anonymous party funding (the Electoral Finance Act) to the charges. It’s one thing to take an editorial line and another to so blatantly use news stories and page space to promote it”. Ed.

Additionally, the deregulation and privatisation of the New Zealand economy since the 1980s has increased the number of international companies either owning substantial sections of New Zealand’s infrastructure and/or economically operating within the New Zealand economy. Such a change has seen significant control shifting from the New Zealand public into the hands of directors of transnational corporations. It is perhaps therefore not surprising, as many of these companies and/or individuals have an economic and hence political stake in the New Zealand economy, that they were not slow in the 2005 election to protect their interests by channelling their finances toward those parties that endorsed their policies.

Fortunately, this type of activity has been curtailed by the new legislation. The new Act imposes more restrictions on overseas donations. This was an issue that was raised in CAFCA’s submission. In its submission, CAFCA noted that: ”It is CAFCA’s opinion that overseas donations have become a major concern in relation to their influence on the New Zealand electoral process. CAFCA notes that in the last election substantial donations from overseas business interests were channelled toward those groups and parties that had policies that favoured the furthering of the neo-liberal agenda. CAFCA notes that these organisations or individuals have no direct voting rights within the New Zealand political process and that these donations were crude attempts to gain further political and economic leverage” (CAFCA Submission to Justice and Electoral Select Committee).

The Select Committee noted the influence that overseas donations could have on the electoral process and inserted new clauses in the Act to limit the ability of people overseas to make donations to electoral campaigns. Under the new legislation donations of more than $1,000 by individuals residing outside the country would only be allowed when the donor was a New Zealand citizen or a registered elector. More importantly, donations from overseas corporations will not be permitted. Further, any wilful circumvention of the legislation of the type outlined by Hager’s book would be labelled as corrupt practice.

22 Years Later, And Counting

While supporting the need for more controls on donations especially for third parties and restricting overseas donations, the Act however still allows for the right of anonymous donations up to $1,000 to political parties. Further, donations over $1,000 can be made to a political party and the donor is only required to provide their details to the Electoral Commission, “and the Commission would not be allowed to pass these details on”. This creates a rather lopsided criterion, which was not lost on several organisations who subsequently commented on this abnormality. In its minority report the Green Party noted that: ”Any donation above $1,000 should be identifiable as to its true source including those of trusts that donated heavily last election”. The Coalition for Open Government (COG) was more straightforward, stating in a media release that it was ludicrous that while there were more rigorous controls on donations to third parties, the same was not expected of political parties. Steven Price, COG Spokesperson noted that “…who funds our political parties is far more important than knowing who’s bankrolling third parties” (Coalition for Open Government, 24/7/07).

The debate over the Electoral Finance Bill has also highlighted the glacial slowness of implementing policy reforms suggested by the 1986 Royal Commission on Election Reform. It is now 22 years since the Commission considered its report and made its recommendations in relation to the deficiencies it had noted in New Zealand’s electoral system. In that time many of those recommendations have been opposed by the same interests who sallied forward to oppose the Electoral Finance Bill. While the electoral system has undergone substantial change, despite the ferocious opposition of groups like the Campaign for Better Government, there is still significant room for reform especially in the areas of public funding and campaign finance laws. One hopes that future reforms will not require yet another commission or another two decades to see the light of day.