NZ POLITICS DAILY: One electoral finance law to rule them all?

Applying the parliamentary election rules on donations has been touted by many as a solution to the lax local body rules at the centre of the Banks/Dotcom donation controversy. But is it really the answer?

Yesterday the Electoral Commission released the Party Donation Returns 2011 for all registered New Zealand political parties (for a good summary see Claire Trevett’s National's $2.6m in election year twice sum given to Labour. The tighter rules on anonymous donations have certainly made a difference to what is reported in the returns. Gone are the massive amounts funneled through trusts so as to disguise their real source (the still legal strategy used by Len Brown in his 2010 mayoral campaign).

Anonymous donations to parties are currently allowed in two ways: Donations under $1500, or those made through the Electoral Commission under provisions designed to prevent parties knowing the identity of the donor. The controversy over donations made by the Vela family to NZ First showed how, by receiving split donations over time, and from different legal entities, large amounts can legally be accumulated by a party without having to reveal their source. The disclosure limit is now lower but there is theoretically nothing to stop a party receiving numerous ‘anonymous’ donations just under $1,500. As long as it wasn’t proven that the party knew they were from the same source all would be ‘legal’ and they would not have to be declared.

Similarly the John Banks controversy illustrates just how difficult it could be to prove that the source of a large donation (even if made through the Electoral Commission) was actually known to the party receiving it.  A quick phone call, a few words whispered in someone’s ear, even a wink and a nod, would probably be enough to reveal the donor’s generosity to a politician. It would be very difficult to prove knowledge beyond reasonable doubt in court, particularly if both parties are determined to conceal it. The only reason Banks is under fire is because his donor has gone public.  

Radio New Zealand reports that last year National received $195,000 in anonymous donations through the Electoral Commission, so the amounts involved are still considerable While the parties argue that too lower a threshold for having to identify donors would be administratively difficult, the fundamental importance of transparency should take precedence. Lowering the limit for anonymous donations dramatically or even banning them altogether would be a real solution. No doubt parties, candidates and donors may look for other legal (or illegal but difficult to prove) means to avoid disclosing some of their funding sources ($5,000 a plate dinners anyone?) but at least it would establish a principle in law that all political funding needs to be out in the open.

For more analysis see No Right Turn’s Party donation returns and David Farrar’s 2011 Party Donation returns.

For better or worse, however, John Banks’ fate will be determined by the existing local body electoral law. While he probably needs all the friends he can get at the moment he could undoubtedly have done without the Act Party President’s help yesterday. Chris Simmons was forced to retract and apologise for saying on Radio New Zealand’s Checkpoint last night that Banks had, in fact, suggested Kim Dotcom split a $50,000 donation – listen to the original Checkpoint interview here and the follow up report here.

In another development, Banks has come out swinging against Trevor Mallard over claims made in Parliament that the Epsom MP received a discount for a hotel stay in Hong Kong which Kim Dotcom assisted with. In stark contrast to the reticence and memory loss displayed about the donations, Banks has angrily denied he received a discount and made the relevant invoices and receipts public – see: David Fisher and Adam Bennett’s Banks defends HK hotel room cost.

Scott Yorke at Imperator Fish asks what would Banks have to do before he is stood down as a minister (see: Destroying Everyone Around Him) and finds it astonishing that Banks has completely failed ‘to grasp the completely untenable position he is in and the position he has left the Prime Minister in’.

Other important or interesting political items today include:

*  Labour has humiliated Murray McCully by revealing a leaked paper about the Mfat restructuring that hadn’t even made it to Cabinet yet – see: Tracy Watkins’ Search for MFAT leak source. The leaked document confirms that job losses and cuts have been more then halved from the original proposal.

*  Steven Joyce has confirmed today that the student loan repayment rate will be increased to 12% in the Budget and the parental income threshold for student allowances will not be adjusted for inflation for four more years – see: John Hartevelt’s Student loan repayments hiked.

*  Nothing to see here, more right along to the Budget is David Beatson’s message as he looks at current political controversies in Scandals and sideshows, sleaze and slurs

*  Finally, on World Press Freedom Day, the Herald Editorial rejects government oversight of media standards, especially for private sector print media– see: Centuries of press freedom under threat.