Local Electoral Amendment Bill (No 2)

I move, That the Local Electoral Amendment Bill (No 2) be now read a second time. This bill amends the rules for local authority elections. The bill’s amendments are designed to instil high levels of public confidence in the integrity of elections. In particular, the bill recognises the strong need for increased transparency and accountability around candidates’ campaign donations. It brings the level of transparency and accountability applied to local electoral candidates closer to that applied to parliamentary candidates, such as us. It also recognises a need to streamline pre-election processes. The public rightfully expects high levels of transparency and confidence in the conduct of all public elections. For this reason, the Government is keen to progress this bill in time for the next local authority elections. These will be held on 12 October this year.

Local authority elections cover the elections of representatives to regional councils, district councils, city councils, unitary authorities, community boards, local boards, district health boards, licensing trusts, and community trusts. The scale and diversity of local authority elections is indeed impressive. At the last elections, in 2010, over 2.9 million postal voting packs were delivered to electors, and electors voted for more than 1,800 representatives on more than 250 local authorities.

The bill’s changes to the Local Electoral Act and regulations are threefold. Firstly, the bill tightens and increases transparency in the rules applying to candidates for receiving, recording, and reporting their campaign donations. It brings these rules closer in line with the rules for parliamentary elections, as I mentioned earlier. Secondly, the bill streamlines a range of pre-election processes. These changes are about bringing greater efficiency and effectiveness to the electoral process. Thirdly, the bill improves the quality of publicly available information about candidates to help electors cast an informed vote and to increase candidate accountability.

I will now briefly highlight some of the changes that are proposed in this bill. The current definition of “anonymous donation” in the Local Electoral Act is unclear. The bill addresses this issue by requiring greater accountability from candidates. A donation cannot be treated as anonymous if a candidate knows the identity of the donor or the candidate could, in the circumstances, reasonably be expected to know the identity of the donor. If a person handling a candidate’s donations knows the identity of any donor, the details must be passed on to the candidate. The bill also limits the value of anonymous donations from a single donor. There is currently no limit to the amount of an anonymous donation in the Local Electoral Act. The bill stipulates, therefore, that if a candidate receives an anonymous donation greater than $1,500, they will be able to keep the $1,500 but will have to forfeit the excess.

In addition, the bill streamlines a number of important pre-election processes. Many of these changes reflect improvements recommended by councils, electoral officers, and others involved in the running of local authority elections. The changes are based on the practical experience of these people who submitted to the select committee. Specifically, the bill gives unitary authorities, city councils, and district councils greater flexibility to set ward boundaries in a way that better encompasses local communities and communities with common interests. It also streamlines candidate nomination processes and provides electoral officers an extra week to produce high-quality voting documents.

The bill makes other changes. It requires candidates to inform electors whether or not they live in the local government area—for example, in the ward or constituency to which they seek election. It will also require candidates to inform electors of all positions that they are contesting. With the Justice and Electoral Committee’s amendments, the bill also provides the public with clear rights of access to candidates’ returns of electoral expenses and donations. Electoral officers will be required to publish all returns and to make copies available to the public when requested to do so.

These changes will make real and noticeable improvements to local authority elections. The changes are broadly welcomed by the local government sector and others involved in the running of local authority elections.

I acknowledge the contributions of the New Zealand Society of Local Government Managers and Local Government New Zealand to this bill. Can I thank them for their submissions on this process. I note that most submissions were also positive about the bill’s changes. I also wish to thank the Justice and Electoral Committee, chaired by Scott Simpson, for its thorough examination of the bill. Thank you to members involved. The committee operated under tight time constraints, and I appreciate its support of the need to implement the bill’s changes quickly.

The committee, through its amendments, has clearly sought to ensure, firstly, that the new rules are robust and enforceable; secondly, that local electoral rules are aligned as closely as possible with those for parliamentary elections; and, thirdly, that the law strikes an appropriate balance between transparent processes and compliance obligations. In particular, the committee’s amendment to replicate the Electoral Act’s approach of excluding goods and services with a value of $300 or less from the definition of “electoral donation” appropriately balances transparency and compliance obligations. The change will mean that candidates will not need to keep records of lower-value goods and services such as donations of cakes, biscuits, and stationery. This provides consistent rules for both local and parliamentary elections, and will reduce administrative obligations. The new rules will also be simpler to enforce, which is good.

To summarise, the Local Electoral Amendment Bill (No 2) will strengthen the integrity of the Local Electoral Act and local electoral regulations. It will enhance the transparency and efficiency of local authority elections, beginning with this year’s 2013 elections. It will enhance the representation of electors, and as a result of these changes it will increase the public’s confidence in the local electoral system as being efficient, democratic, and transparent. For these reasons, I commend this bill to the House.

I want to congratulate the Minister of Local Government on his address to the House in relation to this bill, the Local Electoral Amendment Bill (No 2), as the new Minister taking over this particular responsibility. I really wanted to endorse the words that he used. There were two words. They were “strengthen integrity”—strengthen integrity. That is actually what this bill is about. I just want to remind people about answers to a series of questions that were put to the Prime Minister last year. He said: “the issue of ethical standards applies to Ministers when they are holding their warrants.” He said: “As the member should know, the Cabinet Manual makes it quite clear that when it comes to ethics it is at the time the person holds their warrant.” He said: “I am satisfied that the Minister has given me an assurance, which is the test, that he has done everything in accordance with the law.” He said: “There is quite a wide definition of ethics … The test I have to apply is the law.” Well, I just want to remind this House why we are debating the Local Electoral Amendment Bill (No 2).

Sue Moroney: Yes, why is that?

Hon LIANNE DALZIEL: It is because somebody could not define the difference between “compliance with the letter of the law” and an understanding of what “ethics” might actually stand for.

Let me quote from the police report into the John Banks affair: “The Police investigation established that on 24 May 2010 Mayor John Banks met with the Chief Executive Officer (CEO) of Skycity Entertainment Group Limited. At that meeting Mayor Banks received a sealed envelope containing a $15,000.00 cheque written out to ‘Team Banksie 2010’.”

Denis O’Rourke: Why was it in an envelope?

Hon LIANNE DALZIEL: Well, I think it was in an envelope because that enabled things to be sort of—well, I think it allowed brain fade to take effect. I have actually renamed this bill the “Brain Fade Bill”, because what it does away with is the capacity for individuals to suffer from brain fade. Anonymous donations beyond $1,500 will actually be referred to the Electoral Commission. The police report said: “Team Banksie was the name given to Mr Bank’s campaign organisation. This donation was subsequently recorded in the Electoral Return by the Treasurer for Team Banksie as anonymous.” Did Mr Banks know where the money had come from? Yes, he did. Did he know that it had been recorded subsequently as anonymous? No. That is where the grey area was, and that is how he wriggled out of that particular prosecution.

What the police said was that they were “therefore of the view that there is insufficient evidence to consider a prosecution”—not because they did not think that Banks knew where the money came from; he just did not know that they had recorded it as anonymous. We believe that. The police report said: “Police have established that in September 2010 Mr John Banks personally solicited a request for help from a Donor who prefers to remain anonymous for the purpose of this correspondence.”—quoting from the police report—“As a result of a discussion between the two it was agreed that the Donor would help with a donation of radio advertising for the campaign. The donation was recorded on the return by the Treasurer for Team Banksie as an ‘Anonymous’ donation … Police were unable to establish that Mr Banks had the necessary knowledge that the donation had been recorded as anonymous in the return before he signed and submitted it.”

Let us quote a little bit further. It says “Police have established that on 09 June 2010 Mr John Banks personally solicited a donation from Mr Kim Dotcom. This request resulted in Mr Kim Dotcom paying two $25,000.00 donations … Both donations were subsequently recorded … as anonymous.”—and here is the quote again, from the police report—“Police were unable to establish that Mr Banks had the necessary knowledge that the donation had been recorded as anonymous …”. We are here debating this legislation on a subject that the Minister of Local Government completely failed to mention. We are here because John Banks failed to act in an appropriate way when he was standing for the mayoralty of Auckland—and, actually, he did not win the mayoralty of Auckland, and Aucklanders are very grateful for that fact. But he has come to Parliament and he has found that it does not matter how he behaved when he was a candidate for the mayoralty, because our Prime Minister thinks it is OK to behave that way when you are a candidate for the mayoralty, as long as you do not have a ministerial warrant in your hand. Well, I do not think that that is acceptable, and the people of New Zealand do not think it is acceptable, either.

I still find it utterly extraordinary that John Banks cannot remember flying in a helicopter to a large, ostentatious property owned by a large, ostentatious multimillionaire. I do not know any ostentatious multimillionaires myself, but the reality is that this is not an everyday activity for anyone, and yet he has completely and utterly overlooked the fact that nobody can accept that. If we think of the amount of time and effort that Parliament has had to invest in addressing this particular matter, one has to ask whether this is the best use of Parliament’s time if we are not even prepared to front up and talk about the real reasons why we are here.

We had a Prime Minister who campaigned from one end of the country to the other in 2008 on holding a referendum on MMP. He said: “We are going to have a referendum on MMP. We are going to let the people of New Zealand kick the tyres.” I remember him saying “kick the tyres”, because it is an expression that he used to use quite a bit. He said we were going to kick the tyres on MMP. The referendum was held. What happened with the referendum? Did we get rid of MMP, as he wanted? No, we did not. We kept MMP. So what was the trade-off for keeping MMP? We were going to have a review of MMP because there were elements of it that people knew they wanted to see changed. What has happened to the review? Well, the Electoral Commission held its own review because the Government refused to provide it with any terms of reference. It went to the Government and said: “Have you got any terms of reference for us?”, and the Government just did not even reply. So the Electoral Commission, feeling that it had a responsibility, went ahead and held its review of MMP, and it came up with some suggestions.

A pretty major suggestion also comes back to John Banks, and the major suggestion that it came back with was that we had to fix the thresholds. We had to reduce the threshold from 5 percent to 4 percent, but, more important, that was the quid pro quo for getting rid of the one-seat threshold—the John Banks threshold, the cup of tea threshold—that everyone now knows the people of New Zealand do not want. But the Government has not introduced any legislation to address that issue. We are dealing with the other John Banks issue: the issue of brain fade. I think it is really important that this Government actually looks at what the real recommendations are in this area, and at what we need to be doing in order to ensure that we have a robust electoral law system in this country. If the Prime Minister wanted to address those real issues, we would not be addressing this now; we would be addressing those other issues, so that when we get to the general election next year we deal with those fundamental changes that people want. John Banks has rorted one system after another. That is what John Banks is responsible for. That is his legacy to this House.

We are fixing one of those rorts tonight, and, yes, we will support this legislation for that reason. It does need to be addressed. We do need to align the general election law with the local body law. That is what we need to do, but there is another law that needs to change as well and that is our general election law. We need to make sure that the rort that John Banks also stands for on the other side of it is dealt with as well. We have to find ourselves addressing the excesses of behaviour on both sides of that spectrum, and I believe that it is absolutely irresponsible of the Prime Minister of New Zealand not to front up to this most basic of issues in the House.

As the new chairman of the Justice and Electoral Committee it is a great pleasure for me to rise in support of the second reading of this Local Electoral Amendment Bill (No 2).

But before I get into the detail of the bill in terms of its second reading, I just want to respond to a couple of the points made by the previous speaker, the Hon Lianne Dalziel, because today of all days it ill behoves that member and members of her party to be talking about brain fade in any way, shape, or form. This is a day when her leader, her current leader—and the aspirant leader is sitting smiling beside that last speaker. There is a real problem in the Labour Party with brain fade—a real problem—and the delicious irony for members on this side is that the amounts involved appear to be similar, except that we do not know the maximum upper limit of the Leader of the Opposition’s secret bank account. It might be US$100,000 or it could be a million dollars. We do not know what is in that secret bank account, and he should come clean.

But this is a good bill. Can I just for a moment talk about the proceedings at the select committee. I came a little late to this bill. I took over the chairmanship of the select committee after submissions had been heard, but I want to say that from the point when I got involved, I thought that this committee worked very, very well. It was, I think, a good example, notwithstanding the speech from the Hon Lianne Dalziel, of the select committee process working well to achieve a good outcome—refining a bill that was presented to the House and making a few amendments that were good, practical suggestions in a way that had broad support across the House.

The Greens have presented a minority report, and they make particular reference to matters concerning third-party donations. That is a matter that the committee simply did not have time to consider in its full complexity or detail. We hope that the Government will see fit to discuss that by way of discussion during the Committee of the whole House, because it is an area that does, I think, need some addressing.

So what we have here is a piece of legislation that, effectively, brings candidates for local body elections into line with the same donation regime system that applies to candidates seeking parliamentary elections to this House. I think that is a good thing, and I think it has broad appeal across the House.

As the Minister of Local Government said, the purpose of the bill is threefold. It is to improve provisions for the conduct of local elections. We know that, ready or not, we have elections in October of this year, so the intention is that this bill should be passed and enacted by the end of May, and that is why we are discussing it now. The second point is to increase transparency and accountability in relation to those candidates and the donations that they receive, and in particular in relation to anonymous donations. The third point that this bill seeks to identify and strengthen is the integrity of the local electoral system. Those are three worthy causes. This bill seeks to address those things.

On behalf of the committee and members on this side, I want to acknowledge the work of the committee and thank members for their constructive participation and their collegial approach to this bill. I commend it to the House.

Malo le soifua, Mr Assistant Speaker. I rise to speak on this bill, the Local Electoral Amendment Bill (No 2), and to say that Labour will support this bill at its second reading.

I think we all know the reason why the Government has introduced this bill, and I think it is worth us reciting again that the introduction of this bill is timely, given Mr Banks’ undeclared donations. I think most people would have made judgments that there is a high possibility that Mr Banks has broken the law regarding donations to his mayoral campaign. Most people would have made judgments that his dealings with Kim Dotcom are mired in half-truths, that he had to change his declaration in the Register of Pecuniary and Other Specified Interests of Members of Parliament when he was pressed on donations and gifts that he received from Kim Dotcom, and that, furthermore, John Key has refused to ask him about his actions.

Most people I have come across have already made judgments on Mr Banks’ situation and believe that an action that requires police investigation would be an issue of ethical standards. They believe that Mr Banks has repeatedly shown through his convenient memory losses that he has not behaved in a manner that upholds, and is seen to uphold, the highest ethical standards as required by the Cabinet Manual. If John Banks is charged and convicted, National faces even fewer support partners in Government and a by-election is hardly the strong, strong, stable Government that that Government there promised.

When will the Prime Minister ask John Banks directly about his relationship with Kim Dotcom and his knowledge of the Skycity donations? And is it OK to deliberately mislead the media? There are many questions that Mr John Banks should answer for the public. Has he read the Local Electoral Act? Did he tell Kim Dotcom to split the $50,000 donation into two cheques? What did Kim Dotcom want in return, in admitting that Mr Banks was advocating for him—when, to whom, and on what subjects? Did he give the Prime Minister the same untrue explanations he has given the media?

Similarly, there are questions that the public would want to know from the Prime Minister. Why did he accept John Banks’ word without personally talking to him? Is he satisfied that John Banks has answered media questions about donations with the fullness and frankness he expects of his Ministers? Does he stand by his statement: “There is quite a wide definition of ethics … The test I have to apply is the law.”? If so, is he intending to amend the Cabinet Manual? Does the fact that grossly unethical behaviour took place in a mayoral election make the perpetrator acceptable as a Minister in his Government? For how long is he prepared to allow John Banks to remain a Minister while he is being investigated by the police for electoral fraud? Does he find it credible that one of his Ministers cannot remember a private helicopter ride that landed at Dotcom’s mansion? And is it acceptable that someone with such a poor memory is a Minister in Parliament?

Why in April 2012 did John Banks say that he hardly knew Kim Dotcom, that his contact was limited to a total of 20 minutes’ conversation, and that he had been to Dotcom’s mansion in Coatesville only once for dinner—

Iain Lees-Galloway: He knew about the donations, too.

Su’a WILLIAM SIO: That is right. Yet in April 2010 he took Dotcom’s helicopter from Mechanics Bay to Dotcom’s mansion, where he asked Dotcom for a $50,000 donation, which was to be split in two. He allegedly rang Kim Dotcom a few days later to thank him for his donation, later claiming that the phone call related to a $500,000 donation from Kim Dotcom towards the New Year’s Eve fireworks held 6 months later. He attended Kim Dotcom’s birthday party at his mansion, where he proposed a toast. He lobbied Maurice Williamson—

Hon Kate Wilkinson: I raise a point of order, Mr Speaker. This is the second reading of the Local Electoral Amendment Bill (No 2). I do not know whether that member has even mentioned it. He seems to be focused on Kim Dotcom and I think he should confine his—

The ASSISTANT SPEAKER (H V Ross Robertson): No, no, no. Order! The member will be seated. It is not a point of order.

Su’a WILLIAM SIO: So this electoral reform bill is therefore timely, given the John Banks fiasco. Labour believes that reform is needed to avoid a situation where someone like John Banks can claim they have not technically broken the law, when clearly they have breached the spirit of transparency that New Zealanders expect around political campaigns.

Labour had a bill in the ballot for months to address the ridiculous situation we have seen regarding John Banks and his so-called anonymous donations. So it was good to finally see this Government presenting something. Interestingly, the Government bill also says that as a result of its changes, public confidence in local elections will increase! Confidence has fallen to the level that it is, because of the Government’s action or rather inaction in relation to John Banks and the Kim Dotcom affair.

John Key and John Banks are not in a position to criticise anyone’s ethical standards. It is also not the test the Prime Minister applies. When Mr Key was asked by Metiria Turei: “When the Prime Minister said ‘I expect high standards from my Ministers,’ … was he applying a legal test or the test of the highest ethical standards as set out in the Cabinet Manual?’, Mr Key replied: “A legal test.”

Labour had a member’s bill in David Cunliffe’s name in the ballot, for a couple of months before this bill was introduced, that would have aligned the Local Electoral Act with the Electoral Act. Labour’s bill aimed to prevent a repeat of the situation we have seen with John Banks. The bill would have placed the same requirements on candidates in local elections or polls—for donations and their disclosure, and the filing of electoral returns—as those that are already in place for candidates in parliamentary elections. This was to ensure consistency on these matters between the Local Electoral Act 2001 and the Electoral Act 1993. The provisions in the Electoral Act 1993 are stronger and clearer in terms of the accountability required of the candidate in an election.

The Prime Minister’s so-called high ethical standards are in tatters today. On the basis of his memory lapse alone, John Banks is not fit to serve as a Minister. John Key has handled this issue badly from the beginning. He failed to ask John Banks the hard questions about the donations. He refused to stand him down while the police were investigating him and it now looks like he will continue to stand by him because he has got off on a technicality.

My colleague raised the point earlier, which I want to repeat, about what the police found. The police investigation established that on 24 May 2010 Mayor John Banks met with the chief executive officer of Skycity Entertainment Group and at that meeting Mayor Banks received a sealed envelope containing a $15,000 cheque written out to Team Banksie 2010. Team Banksie was the name given to Mr Banks’ campaign. I raise that because this bill that we are discussing here—this sort of situation that Mr Banks found himself in, aided and abetted by Mr Key and his Government, should never have happened. It should never have happened. The police are therefore of the view that there was insufficient evidence to consider a prosecution. Yet everybody in New Zealand knows that what he has done is wrong—and this Government here continues to stick by them. The police were unable to establish that Mr Banks had the necessary knowledge that the donation had been recorded as an anonymous return. How can you believe that? He receives an envelope of cash in his hand and then he does not remember that that happened.

Hopefully that sort of goings-on is not going to happen again, but I have serious doubts. As long as this Government is in power, it appears to the public and certainly to this side of the House that it will continue to have this sort of goings-on, with the likes of John Banks continuing to take donations, pretending as if he had never received anything, and calling those who had given the donations to ask that it be anonymous.

I want to say that it is timely that this bill came through. The Government should have listened to us in the first place, and supported the bill that we put forward in the first place, instead of playing all these silly games. What it has got to show for it, is that its credibility has gone down. I think that every person who supported that Government—who supported that Government—in the last election will be sorely disappointed, sorely disappointed because this sort of goings-on just reveals that this Government is about protecting its mates and it is about protecting its friends, despite the fact that everybody knows the unethical behaviour that has occurred, the underhand tactics that have occurred, and its failure in living up to the standards, particularly the standards required of Ministers of the Crown. So, yes, we support this bill—it is timely—but everybody needs to know the background behind why this Government has rushed in to introduce this bill. Thank you.

Tēnā koe, Mr Speaker. Tēnā koutou e te Whare. The Green Party is pleased to support the modernisation of our local electoral law and to support greater transparency about candidate donations in local body elections. Clearly there are unfortunate gaps in our existing legislation, which have allowed candidates to exploit the so-called anonymous donation provision, and thanks to the Hon John Banks we all know about this and are finally doing something about it. I am not going to spend a great deal of time talking about John Banks in my contribution this evening, largely because, as he is the single member of an irrelevant party, I think it is really not a great use of this House’s time. We have heard at length from our Labour colleagues about what gave rise to this bill and why it became apparent to the Government that we needed to update and reform our local electoral laws. And after this bill passes I think we will agree that we will have a significant improvement to those local electoral rules and processes. After it passes, anyone who works with a candidate and knows the identity of someone who makes a donation of over $1,500 must declare the identity of that donor to the candidate. That is a good change and it is one that the Green Party supports, and for that reason the Green Party will continue to support this bill.

However, the bill, unfortunately, is a missed opportunity to even more closely align the rules for local body elections with those governing general elections and the ones that govern us as parliamentary candidates. Both the Minister and our Labour colleagues have identified that one of the aims of this legislation is to bring the provisions governing local body elections more closely into line with those governing general elections. We in the Green Party agree, but, unfortunately, this bill does not go very far towards doing that, apart from the change it makes to the rules around anonymous donations. It has been designed to clear up what was identified as the mess that John Banks left, but it actually has not taken much of a wider view on what else needs tidying up in our local electoral law.

The Green Party also has a member’s bill, in the name of my colleague Denise Roche here, that would do exactly that. It would actually align the provisions governing local body elections much more closely than this bill does with the provisions governing general elections. That would include a $5,000 cap on donations by any person or group to a candidate. It would include a lower $500 limit on anonymous donations. It would include a ban on overseas donations. It would include penalties—which I think is very important in the context of the example we have heard—for avoiding rules relating to donations. Very important, it would include regulation of third-party spending in local body election campaigns, and I will return to that in a moment. It would include a pecuniary interest register for members of local authorities. In an era where, unfortunately, we are seeing a trend towards greater council amalgamations—and certainly in the era of the Auckland super-city, as the John Banks example has demonstrated—campaigning for local election is a big deal and it deserves the same level of scrutiny and public transparency as that for a general election. There is a lot at stake for someone campaigning for the Auckland mayoralty, and the public has a right to the same level of transparency about the conduct of those candidates for the Auckland mayoralty as they do for us as parliamentary candidates.

So when the time comes we intend to move amendments in the Committee stage to implement some of these more substantive changes, which would achieve the effect that the Minister himself identified of actually more closely aligning the provisions for local body elections with those of general elections.

However, if there is one area that the House could pull out of what I have just outlined and adopt—if it turned its mind to it in the Committee stage—it would be the regulation of third-party spending in local body campaigns, as it seems clear that this is a major gap in this bill. This bill does not change any of the rules relating to how third parties can engage and campaign in local body elections. Just to outline the problem with the current provisions, which this bill does not change, the current provisions, for example, would allow for unlimited spending by third parties that campaign against certain candidates. In that situation it would give no obligations for those third parties to disclose what they have spent, would impose no cap on what they could spend, and would basically require them to meet no regulation at all. I believe that a campaign of this nature—and we heard about this at the Justice and Electoral Committee—is actually planned in 2013 in Hamilton. An individual with the means to do this who does not like any of the incumbent candidates has declared his intention to campaign against the re-election of any of the incumbent councillors in Hamilton. There is absolutely nothing in the current provisions around third-party spending in local body elections to prevent that person from doing that, to place any restriction on how much money they can spend doing that, or to place any disclosure requirements on that person on what they do, and that seems a clear problem in the context of provisions that do impose spending caps in local body elections.

Similarly, third parties may choose to make donations to a campaign ticket. Increasingly, it is a common thing in local body elections for candidates to stand under a common ticket. If a third party decided to make a donation to that ticket, but not to the individual candidate on that ticket, that, again, would be subject to no additional scrutiny. There is no requirement to disclose the donation and no cap on the spending. That could be spent on general advertising for the ticket, effectively promoting those candidates, but as long as it was not assigned to one of them in particular, it would not be captured by the provisions in this bill. That seems clearly unfair and clearly against the spirit of having campaign spending caps in local body elections. It is my view, and the view of the Green Party, that this issue should have been given greater attention in this bill, but I was pleased to see that it was recognised by the committee in its report, which noted that the regulation of third-party spending is “absolutely necessary to prevent inequities in the future.” I want to congratulate my fellow members on the select committee on this item, and I am really pleased to see it recognised. It is just a shame that we could not get that provision into this bill in time for it to come back at the second reading. I was encouraged, however, to hear the chair of the committee, Scott Simpson, in his contribution earlier express the hope that the Government might consider regulating the spending of third parties through a Supplementary Order Paper in the Committee stage, and I hope very much that we will see that in this House.

Another area of concern to us in this bill is the new powers given to the Minister of Local Government to adjourn local body elections in the case of a natural disaster or similar disruption. Currently, the electoral officer is allowed to adjourn the close of voting by up to 14 days, and certainly in light of the experience in Christchurch with the devastating earthquakes, we can see that there is a rationale for granting some greater flexibility to suspend for longer and to suspend other parts of the election as well as just the close of voting—nomination day, for example. But we do not see why it should be the Minister of Local Government, through Order in Council, who has this discretion to do that, particularly given the current Government’s enthusiasm for postponing local elections at Environment Canterbury. It is not especially encouraging to give this power to the Minister, and it is our submission that that power should be exercised not by the Minister of Local Government but by the electoral officer, who is the proper person to make that judgment and to suspend the election. If we have to give extra powers, it should be to the electoral officer and not to the Minister. Again, we intend to move amendments to that effect when the time comes.

There are other provisions we support in this bill that we have heard a little bit about from the Government members. Greater information about candidates will be made available, including whether they live within the boundaries, although a useful clarification from the select committee is to point out that they do not have to disclose their address in order to disclose that. The exclusion of goods and services of a value of $300 or less—again, a sensible amendment made by the select committee. Broadly speaking, we support the provisions of this bill, but, to sum up, the basic change made by this bill is an improvement on the status quo, and we support it. But it could have done so much more, perhaps most important to regulate third-party spending in local body elections. It is a missed opportunity to achieve what the Minister himself has said was the aim of this legislation to bring it into line with the provisions for general elections. It is a great shame that it does not do that, but we do support the bill.

Kia orana, Mr Assistant Speaker. I rise to take a call on the Local Electoral Amendment Bill (No 2) in its second reading. I just want to acknowledge the previous speaker, Holly Walker, who is a constructive contributor to our Justice and Electoral Committee. I also want to acknowledge our previous chair, the honourable Tim Macindoe, who ably led us through the electoral amendment legislation and also through the submissions.

There is one thing, though, that I must say about our Green member and about transparency and accountability. If I recall, it was last year when the Green Party did not have transparency and accountability when it did not disclose that some of its paid staff members were paid to solicit signatures from the public for the referendum. Again, there was a lack of transparency and accountability there. It just somewhat confuses me a little bit about that. In fact—

Hon Member: They were caught.

ALFRED NGARO: No, I have got it just fresh off the boat that they were caught out—they were actually caught out. They were not transparent, and they were not accountable.

The Justice and Electoral Committee and its changes have been significant. There is growing public pressure and concern about transparency and accountability, especially around candidate donations, and particularly around anonymous donations. We are clear about that. But the thing is Labour passed the current loose provisions around anonymous donations and had 9 years to fix them. Instead, they waited until they were in Opposition before saying anything. The thing is changes around the local electoral donations will bring the Local Electoral Act closer in line with the Electoral Act. But Labour seems to forget somewhat that both major Auckland mayoral candidates were able to receive substantial anonymous donations under Labour’s legislation. These changes will improve that transparency.

These changes also reflect the recommendations from the Local Government Commission’s review of the Local Electoral Act. We feel that as a select committee we have put these amendments through, we have listened to the submissions, and we feel this adequately reflects the concerns of the public, and, most important, the value of trust that we in this Parliament have heard the issues about transparency and accountability and they will be addressed in this Local Electoral Amendment Bill (No 2). I commend this bill to the House.

This bill, the Local Electoral Amendment Bill (No 2), should probably be renamed the “John Banks Problem Avoidance Bill”, because that is a big part of it. The other main provisions of the bill amend the Local Electoral Act 2001 to improve consistency with the Electoral Act 1993 regarding electoral donations and expenses, limit the amount or value of anonymous donations, refine the definition of “anonymous” and “donation”, enhance the obligations of candidates for the disclosure, reporting, and recording of electoral donations—something I think Mr Banks should note very well if he can remember to do so—and introduce penalties for non-compliance. But, as I will say later, it does fail to address some important issues, and a previous speaker has mentioned some of those.

Something else that the bill does do in clause 15 is require that a candidate profile statement include whether or not the candidate’s principle place of residence is in the local government area in question. That is something that people have wanted to see for quite a long time. The word “area” means a ward or a similar division within a local council’s boundaries. It does not preclude, of course, a candidate from standing if living outside the area and it does not preclude him or her stating what connections he or she has with the area. In fact, it would encourage people with a connection other than residence to make it clear why they should be elected to represent the area in question. Of course, some people who do live within the area may, in fact, have been there a very short time and not have a genuine connection with it. Voters will need to be aware that just living within an area is not necessarily a genuine longstanding connection with it.

But the most important new provisions concern anonymous donations. This has been the source of continuing problems, as we know—especially John Banks’ issues with claimed anonymous donations to his last Auckland mayoralty campaign. As a result there is widespread concern about what appears to have taken place concerning Mr Banks’ return and anonymous donations. The bill contains several new sections about donations. We now have a new definition of what an “electoral donation” is in new section 103A inserted by clause 27. This section clarifies what goods and services are to be included and establishes a threshold of $300 for the purpose. It excludes labour provided free of charge, as of course it must. The Justice and Electoral Committee has recommended another provision in schedule 1 requiring candidates to disclose a return of electoral donations and expenses for each office for which the candidate has stood in the election and also that the candidate should be required to specify the campaign to which an anonymous donation of over $1,500 was designated.

The bill as introduced does not specify any particular limitation period for prosecuting offences under the Act. Because the offences of filing a false return and arranging to circumvent the $1,500 limit on anonymous donations involve elements of fraud and dishonesty, a relatively long time frame for investigation and prosecution is needed. The select committee has therefore recommended amending clause 36 by adding a new section 138AA that specifies the time frame for prosecuting the new offences in new sections 112D and 103I as 6 months from the date on which the prosecutor is satisfied that there is sufficient evidence to warrant the commencement of proceedings, but, of course, no later than 3 years after the offence was committed.

The Banks situation demonstrates why that time frame in needed. Concerning the John Banks problem—at least the one we can address is this bill—the bill does address the one matter that John Banks’ electoral return for the 2010 local body elections has highlighted. It has revealed a gap in the existing legislation allowing persons acting for candidates to call donations anonymous that they did know or ought to have known were not, in fact, anonymous donations. Clause 27 inserts new section 103F, which says: “If any person involved in the administration of the affairs of a candidate in relation to his or her election campaign knows the identity of the donor of an anonymous donation exceeding $1,500, the person must disclose the identity of the donor to the candidate.” I do worry a little that it will be necessary to prove actual knowledge under that section, which may be difficult, and that perhaps the words “or ought to have known” should also have been included, but the select committee did not agree with me on that. Nevertheless, this is a satisfactory new provision, which will help solve the “Banks problem”, as I think of it.

The bill also provides in new section 103H inserted by clause 27 that an anonymous donation may not exceed $1,500 and that “(1) If an anonymous donation exceeding $1,500 is received by a candidate in relation to an election campaign, the candidate must, within 20 working days of receiving the donation, pay to the electoral officer responsible for the conduct of the election to which that campaign relates the amount of the donation, or its value, less $1,500.” Section 103H(2) also states: “If an anonymous donation exceeding $1,500 is received by a candidate who is seeking election to more than 1 office, the candidate must—(a) designate 1 election campaign for election to 1 office for which the donation will be used;”.

Section 103I provides for offences relating to contravention of section 103H, and it says that “A person who enters into an agreement, arrangement, or understanding with any other person that has the effect of circumventing section 103H(1) or (2) commits an offence and is liable on conviction to a fine not exceeding $5,000.”, and that a candidate who contravenes the section would also commit an offence and be liable to a similar fine. So that is a good step forward. It does help solve, I think, the Banks problem.

The bill provides for postponement of a local election. I note that the Green Party has expressed concern about the new powers given to the Minister of Local Government to adjourn elections in the case of natural disasters and other such emergencies. The bill would allow the whole election to be postponed by Order in Council by up to 6 weeks at the discretion of the Minister. The Greens’ concern is that it gives the Minister excessive powers, but I note that new section 73A(6) in clause 21 says: “Before recommending the making of the Order in Council, the Minister—(a) must be satisfied, on reasonable grounds, that the order is necessary to ensure that the adverse effects of an emergency (whether local or national) or of anything referred to in section 73(1)(a) to (d) do not deny electors a reasonable opportunity to cast a valid vote, nominate a candidate, or accept nomination as a candidate in relation to the election; and (b) must have consulted every local authority and electoral officer that will be affected.” So I think that section 73A(6) does sufficiently limit the Minister’s discretion about postponement and would preclude the sort of Environment Canterbury situation that the Greens seem to be most concerned about.

There is, however, one very serious defect in the bill—and it is the one mentioned by other speakers—and that is the gap concerning third-party campaigners being able to receive donations and to promote a candidate without that candidate’s permission. There has not been time to address that so far, but I do trust that before this bill comes into force the Government will see that that matter is addressed and is included in the legislation. Overall, the bill is a good one and does deserve support, but I note that there it is still work in progress. It is a shame that that work has not been done already. However, assuming that it will be, New Zealand First will be happy to continue to support the bill as amended by the select committee.

Can I say it is a real pleasure for me to take a very brief call in support of the second reading of the Local Electoral Amendment Bill (No 2). As a recent attendee at the Justice and Electoral Committee, can I commend what I think is now a very collaborative and usually bipartisan or multipartisan approach. The irony is that the last time I was on the Justice and Electoral Committee temporarily was for the Electoral Finance Bill, and I would have to say that that process was a shocker and an embarrassment to the select committee process. I think, and I would hope, and I am optimistic that Parliament has learnt from those mistakes, because I have the view that constitutional reform and electoral reform require a high threshold of consensus rather than party politics.

Can I also say in supporting this bill that laws alone cannot, however, bring integrity to our electoral system. We had in my own electorate a $20,000 donation—admittedly, it was disclosed—in return for help with a subdivision. Whether that is money for policy I do not know, but there will be some who think that there is a huge stench in that. The difficulty with that is that once that donation is disclosed it is too late because the vote has already been passed. Some will say that $20,000 for help in a subdivision is not right. It is not illegal, but integrity is more than the laws.

So it is up to us as representatives in this Parliament to ensure not only that we obey the law but that we obey the spirit of the law, and that we show good leadership so that our community can have trust and confidence in the integrity of our electoral system. This bill goes a long way towards that, but it is not all of it.

It is a pleasure to take a call on the Local Electoral Amendment Bill (No 2). What a pity that in a debate that has been free of the usual sorts of recriminations and acrimony that sometimes characterise debate in this House, the last member who spoke, Kate Wilkinson, should descend into vague, non-specific allegations on matters concerning her electorate. It was also disappointing that the honourable member Alfred Ngaro should retreat to the age-old cries, which, frankly, are becoming a little boring now, that Labour had 9 years to do something but did not. Then he said that both mayoral candidates for the 2010 Auckland mayoralty received donations, and he completely overlooked the fact that the origins of this bill have one place—one place—and it starts with a member who sits on the benches opposite me. The grubby, nasty actions of that member have prompted the enactment of this legislation.

You know, the pity of it is—and it is disappointing that the members opposite do not recognise it—that once upon a time we had a culture in this country, whether it was around elections or whether it was around the running of businesses, that people did not comply just with the letter of the law but with the spirit of it. People understood that in a civilised society we have rules and we have laws, that they are there for good reason, and that they are about respecting each other and therefore respecting the law. In the last few years, the last couple of decades, that value and those principles have gone out the window. We now have a culture where that is regarded as acceptable, usually by people who flutter on the right, politically, and who no longer care about the spirit of the law. It is just a black letter. The first question to be asked by those on the right is “What can I get away with? What can I do that is on the margins of the law, because I don’t have to worry about values and principles and the spirit of the law any more?”. This legislation, this bill tonight, has as its origins actions that have that flavour written all over them.

The thing is that it is bad enough that in our history we have seen some pretty bad shenanigans when it comes to central government elections, but we never had local body elections infected and contaminated as badly. We never saw the chicanery, the double-dealing, and the manipulation that we saw in the 2010 Auckland mayoral election. It was that event, and that event alone, that has prompted this House to have to give its time and attention to this legislation. It all changed in 2010. It all changed. We have crossed the Rubicon and we will never go back. So we have now had to do what I think probably eventually, historically, will be seen as a sensible change, which is to align the electoral laws covering local government elections with those covering general elections.

But let us not forget that it all started in Auckland. This bill owes its existence to one person who sits in this House, and that is John Banks. He forgot about and did not properly declare donations from Kim Dotcom, the largest, most colourful figure involved with New Zealand politics in a generation. John Banks did not think to properly declare his Skycity donation that he received, in cash, in envelopes, personally.

What we have seen is that our ethical standards have dropped. You know, the pity of it too is that when members of the Government and members representing this Government, including the Prime Minister, had the opportunity to indicate that they actually did want to see better ethical standards, they fluffed the opportunity. They failed the test. When the Prime Minister, John Key, was confronted about what sort of ethical standard we are operating at now he said: “There is quite a wide definition of ethics. The test I have to apply is the law.” What a disappointment. It is no longer about principles and the spirit of the law; it is about the black letter of the law. This is in contrast to what the Cabinet Manual says, which is that “Ministers are expected to act lawfully and to behave in a way that upholds, and is seen to uphold, the highest ethical standards.” So we now have to introduce this legislation to try to get some flavour of that into local government. That is why we are doing this bill.

There have been some good changes recommended, coming out of the select committee process—things like the residence disclosure. For example, if you do not live in the ward that you are standing for or in the area that you are standing for, you will have to disclose that. It does not prevent you from being a candidate in the ward, but people should know. It is good to have the warning on the voting documents about interference in the way people vote. It is good to not have the costs of hoardings, particularly the timber involved in hoardings, accounted for, because we know that that is material that is used and recycled from election to election. It is good that we now have the rules clarified, at least for local government elections, on the publication of returns, and that they can be published online. It is good also that the time frames about prosecuting breaches of electoral laws in local government elections are clarified. Maybe, perhaps in the Committee stage, we might debate whether or not the prosecution of breaches of electoral law might also be open for private prosecution.

There is, however, still a gap in all this, and it was a problem raised before the Justice and Electoral Committee by Alan McRobie, who is an expert in this country on local government elections. It was a problem that he observed in an election, whereby the goods and services that are offered on a recurring basis for below market rates and also below the threshold of $300 might actually lead to an abuse. The example he gave was of a small community newspaper. It happened to be in Kaiapoi—and we know how important Kaiapoi is to the New Zealand Labour Party, because that is where one of our greatest leaders, Norman Kirk, got his political head start—where there was this rort played out. Selected candidates who were regarded with favour by the editor of a small community newspaper were given heavily discounted advertising space. On each occasion it was a small-value transaction, but they all flew under the radar, and even in aggregate terms the value of that contribution from that editor was not declared and did not have to be declared. We need to make sure that a rort like that is captured under this legislation. I am not confident that it is captured in the wording of the legislation now, but that is a matter that we can deal with in the Committee stage. Given the general consensus that we are arriving at around this legislation, I would hope that that would be given a good audience.

On that basis, as my colleagues have said, we support this legislation. It is timely. The circumstances under which it has had to arrive in this House and we are having to debate it are disappointing, but it will be good law. It will have the support of the House, and Labour will support it, too.

I am pleased to speak to the second reading of this Local Electoral Amendment Bill (No 2). It does modernise local electoral law and improve the transparency of local electoral donations.

We admit there has been growing concern over transparency and accountability of candidate donations, particularly anonymous donations, and this bill addresses those concerns. It improves the provisions for the conduct of local elections, increases transparency and accountability in relation to donations, and strengthens the integrity of the local electoral system. Of course, this legislation is planned to be passed by May this year, in time for local authority elections by October this year.

The Justice and Electoral Committee made some pragmatic changes and they include the candidate profile statements. They will have to state whether the candidate’s principal place of residence is within the local government area in question. We know, from the last local body elections, that there were some individuals who stood for multiple positions, and I think it is fair enough that the voters know where that individual resides. This is a good bill, and I commend it to the House.

I call the honourable member Carol Beaumont and inform the House that this is a split call. Is that correct?

I rise to speak, as my colleagues have, in favour of the Local Electoral Amendment Bill (No 2). This bill amends the Local Electoral Act 2001 and includes, as others have perhaps mentioned, limiting the size of anonymous donations; expanding the existing definition of anonymous to include situations where the candidate could not reasonably know the identity of the donor, unlike situations we have talked about tonight with Mr John Banks where, quite clearly, he knew the identity of the donor; requiring third parties receiving donations on behalf of candidates to disclose their identity; and various other disclosure and reporting obligations. They are all positive things and, as the speaker from New Zealand First said, probably this should be called something like the “John Banks Memorial Bill”. It is probably one of the few things I can think of that we have got to thank John Banks for, because, after all, he has not done too many other positive things.

This bill was originally proposed as a Labour member’s bill. David Cunliffe had a bill that tried to, basically, look at provisions of the Electoral Act coming across and being applied in the local electoral situation, and I think it is really important that we do that. Democracy requires us to have a process that gives voters confidence. That confidence has been absolutely undermined by the behaviour of people like John Banks and, indeed, the Prime Minister, in the way that he has handled this mess. What it makes people think is that politicians lie, that they are deceitful, and that they hide things when they obviously know about them. Democracy requires us to have a process where there is transparency and where limits are placed on campaign funding.

The behaviour over 2011 and 2012 around the Skycity donation, the Kim Dotcom donation, and all of that was absolutely disgraceful, and it did undermine the integrity of our democracy and public confidence. It smelt bad and it was bad. There were a lot of double standards at play in that period of time. The Prime Minister and his lack of requirement for accountability, his failure to address this with John Banks, and his methods of trying to hide what was really going on—all of that was part of the bad smell around this. As others have reminded the House, the police report did not really clear John Banks; it was pretty clear that there just was not—

Chris Hipkins: He did it.

CAROL BEAUMONT: That is right, indeed. So I think that that is something that is important.

I just wanted to note that, in reading the select committee report, I think the Justice and Electoral Committee obviously did the best it could with the time available, but, as others have said, there are many other areas that do need addressing. I think that, obviously, this needs to be done in the time frame available because of the local government elections this year, but there are ongoing improvements we need. There were some very helpful contributions made around, for example, the unpublished roll, which have not been mentioned but are important. We have to be vigilant to protect our democracy. We need transparency. People need to know there is a level playing field for all candidates. There is much more work to do. Thank you.

I am pleased to take a short call on the Local Electoral Amendment Bill (No 2). The Green Party is pleased to be supporting this bill, because of its purpose of ensuring that there is more consistency between local authority elections and general elections with regard to electoral donations and expenses. Certainly the Local Electoral Act is out of step with the Electoral Act, which regulates parliamentary elections. Although both pieces of legislation were developed in 1993, the Electoral Act has been revised three times in 5 years, to strengthen and clarify its provisions in relation to campaign financing and to provide some additional checks and balances, but the donation provisions of the Local Electoral Act have been reviewed only once, in 2001. So this bill is timely.

It is timely, of course, because of the John Banks saga in 2010 and the fact that the saga highlighted that the controls and obligations in the Local Electoral Act on candidates, third parties, donors, and officials were much less robust. Given that in 2010 we had nearly 4,000 candidates standing for 1,900 positions on regional councils, the Auckland Council, community boards, and district health boards, it is really important to ensure that there is public confidence in the electoral process and that there are robust controls around donations. So this bill is really important in improving that transparency, through measures such as the cap of $1,500 on the amount for anonymous donations. It will certainly be a strong incentive for these donations to stay at $1,500 when any excess has to be paid to the local electoral officer. The bill also improves the definitions of words like “anonymous” and “donations”, and it certainly strengthens the candidate disclosure reporting and recording requirements.

We would like to congratulate the Justice and Electoral Committee. It has done quite substantive work on the bill, and the changes that it has recommended certainly improve the bill. Where there has been this cap of $1,500, that is one example of getting more alignment between local authority elections and parliamentary elections. Another of the changes in the bill requires a transmitter, a third party who receives a donation on behalf of a candidate, to disclose to the candidate the identity of the donor if she or he knows it. That certainly would have been helpful in the John Banks case. Another of these areas of alignment ensures that “electoral donation” covers things where you have got a difference between the market—

Debate interrupted.

Sitting suspended from 10 p.m. to 9 a.m. (Thursday)