Electoral Amendment Bill

I move, That the Electoral Amendment Bill be now read a first time. This bill delivers on the Government’s election promise to repeal the Electoral Finance Act 2007 within its first 100 days in office. As an interim measure, the bill reinstates the relevant provisions of the Electoral Act 1993 that deal with electoral finance, while retaining the donations regime from the Electoral Finance Act. The interim regime is needed to ensure that a fair and workable electoral law is in place should there be a by-election while a more enduring regime is being developed.

No one can deny that the Electoral Finance Act 2007 was enacted without the broad cross-party support that has historically characterised electoral reform. That is because the Electoral Finance Act seemed less about levelling the playing field and more about settling supposed political scores. I cannot disagree with those who say that the electoral system belongs to the people and should ultimately be decided by the people. But political parties should not be removed from that process. Regardless of whether people supported or opposed the introduction of MMP, it was at least the first significant recognition in law that modern elections are primarily about voting for parties. Political parties have to deal with the rules surrounding elections on a practical level, and from the experience of the past 18 months we know what happens when those rules do not have buy-in from parties right across the spectrum. The law in that case simply lacks legitimacy.

The 2008 general election and, indeed, the 10 months of the regulated campaign period that preceded it, highlighted, in the Government’s view, the inadequacies of the Electoral Finance Act. The Act resulted in unnecessary legal action because of confusion about who was, and who was not, a third party, and about what does, and what does not, constitute election advertising. Even the Electoral Commission has said publicly that the Act had “a chilling effect” on political participation.

This bill repeals the Electoral Finance Act. Gone is the heavy regulation of what were referred to in the Act as “third parties”. Gone will be the regulated period, which started on 1 January in an election year, for expenditure of political parties and candidates. Instead, the bill returns to the 3-month period prior to polling day that was previously the case under the Electoral Act 1993. Those two measures imposed a significant restriction on the ability of individuals and groups to exercise their freedom of expression and to participate in the democratic process, and they justifiably earned a rebuke from the Human Rights Commission. Gone, too, will be the concept of “financial agents”, as the obligations regarding donations and expenditure will be transferred to constituency candidates and party secretaries.

This bill will amend the Electoral Act 1993 to reinstate the election expense and campaign advertising provisions that governed the 2005 general election. Let me say this: although aspects of that Act might not have been ideal, it did at least enjoy the level of consensus that is required for electoral law. Compared with the Electoral Finance Act, the meaning of those provisions from the 1993 Act is certain and all participants in the electoral process know what is expected of them.

Having said that, I tell the House that the Government recognises that the donations provisions of the Electoral Finance Act have provided greater transparency. Unlike most other aspects of the Electoral Finance Act, these changes enjoyed broad political and public support. So this bill reinstates or reinserts those provisions, because they were moves in the right direction. The bill also retains the stronger compliance and enforcement regime that was a feature of the Electoral Finance Act, including increased penalties for corrupt and illegal practices and serious electoral finance offences, and, of course, an extended time line over which electoral finance offences can be prosecuted. Again, these changes enjoyed broad, cross-party support, and we are retaining those provisions because they increase public confidence in our electoral system.

Transitional provisions in the bill will retain the rights and obligations of political parties, constituency candidates, electoral agencies, and others, arising from the rules in force at the time of the 2008 general election—an extremely important point. Essentially, this means that returns for the 2008 general election—with many still having to be filed—and any offences resulting from the 2008 general election can still be investigated and can still be prosecuted; it is only right and just that actions committed under one law are accounted for under the same law.

Finally, the bill makes some minor drafting modifications to ensure consistency, primarily of language, between the reinstated provisions of the Electoral Act and the provisions of the Electoral Finance Act that are being retained. As I have previously said, the purpose of this bill is simply to implement an interim regime before work starts on a new electoral finance law to be put in place before the 2011 general election. It is my intention, and the Government’s intention, that all political parties and interested members of the public will have an opportunity to have input at more than one stage in this process, both before and after a bill has been introduced.

In the past week or so I have been encouraged by the willingness of all parties in the House to meet with me, and to discuss this bill and the way ahead. I am delighted that even those parties that I understand intend to vote against this bill today have indicated that they want to be part of the next phase of reform. The participation of all parties in that process is the path most likely to lead to enduring solutions. I am not going to pretend that we are all going to agree, but everybody must have the opportunity to have their say. In more ways than one, this bill, and the subsequent consultation process over the laws for the 2011 election, will return democracy to our electoral finance law. I commend this bill to the House.

I think it is clear that the National Party, having campaigned pretty intensively on this issue, and having told the electorate that it would repeal the Electoral Finance Act and go back to the status quo, has a mandate to do just that. I agree that it is desirable, and the Labour Party agrees that it is desirable, that if we can achieve a consensus as to appropriate electoral law, then we ought to try to do so. For those reasons primarily, the Labour Party will be supporting this legislation at its first reading. In doing so, we concede there are imperfections with the existing law, and that it produced an overly complicated regime that can be improved. So we will be supporting this bill at its first reading. I note, though, that that does not mean to say that we resile from the principles that were intended to lie behind the Act that we are today repealing. In my opinion, the first and most important concern in electoral law is that we ought to be maintaining public confidence in our electoral system. That, after all, is the primary objective, I think, of electoral law. That requires us to maintain the population’s confidence by having an honest and transparent system. The prior law, the law before the one now being repealed, had totally inadequate provisions relating to the transparency of donations. Indeed, improvements could still be made to the donation regime, but I think that it is pleasing that the National Government has conceded that the revised Act passed by the last Parliament did improve transparency provisions, and that the status quo transparency provisions in the Act, as introduced a couple of years ago, will be continued during this period of review.

Transparency is fundamentally important. Without transparency we cannot have an assurance that policy is not being paid for by major donors. That imputation is easily made but very hard to prove; it is very hard to disprove when the imputation is made wrongly. We need to protect the integrity of our system, and the trust of our voters in our system, by ensuring we have transparency of donations. In order to have transparency of donations, though, some difficult issues are thrown up that will need to be considered by the review being embarked upon by the Government. These relate to third-party involvement. It is a fiction to pretend there can be transparency of donations applying only to named political parties, while having no control beyond political parties and pretending there is real transparency. Without reaching further than political parties, transparency is a fiction; those who want to find a way around the intent of the law can easily find one. And that really is at the nub of where this policy gets quite difficult. How do we control against inappropriate behaviour while we are also appropriately protecting the rights of people to engage in political activism, in support of causes they believe in, or against Governments they do not believe in?

I, for one, believe in the right of the Exclusive Brethren to criticise the Labour Party, so long as they do so transparently, so long as they are accountable for the money they spend, and so long as they, too, are subject to some reasonable limits on their expenditure. I think it is inappropriate for the Exclusive Brethren, or any other group, to be able to spend unlimited amounts of money in pursuit of their political causes, just as it is inappropriate for the Labour Party or the National Party to be unlimited in the amounts of money we spend in pursuit of our political beliefs. To do otherwise than have some controls leads to the position that I think most people in this Parliament believe is undesirable, which is the approach taken in the United States, where up to billions of dollars were spent in the last presidential campaign—which is excessive. If we allow that sort of approach to be uncontrolled in today’s world, we cannot avoid the conclusion that rather than there being fair and equitable participation in campaigning, we could have wealthy interest groups having disproportionate influence on an election outcome.

These are the issues that will need to be worked through. We accept the Government’s statements that it has a genuine commitment to an inclusive, all-party process; we will contribute constructively to that process. We will work towards finding a durable outcome that can have cross-party support—

💬 Hon Dr Jonathan Coleman: You were wrong first-time round, then?

Yes, I have already admitted that, I say for Mr Coleman’s benefit; I am happy to do mea culpa, mea culpa, mea culpa, again. There were imperfections, but I maintain a commitment to the principle that we must maintain the faith of our electorate and a fair democratic process. That requires both transparency around donations, and some limit on the ability of people to buy elections by spending disproportionately, or unseemly, large amounts in pursuit of their viewpoints. I reinforce the fact that we will contribute constructively to this process. I am not sure that we will be able to reach unanimity in respect of all things. I note that the Minister seemed to suggest that anything more than a 3-month control on expenditure going—

💬 Hon Simon Power: No, no—I didn’t say that.

No? I picked that up wrongly. I think that the question of how long the election period ought to be is a genuine issue for debate. Should it be 3 months or a year? We, in reality, know that election campaigns are conducted over more than a 3-month period. I look forward to the debate.

I think the member missed out mea maxima culpa, because this was a grievous error on the part of the Labour Party. Actually it should not be “mea”; it should probably be “nostra”. But it is good to see that the member is repenting.

History has shown us that the only possible way to make a major change in electoral law is to have an element of agreement between political parties. That statement is as true today as it was when Ralph Hanan said it in this House over 50 years ago, during the passage of the Electoral Act 1956. Sadly, the idea of a consensual, non-partisan approach to the amendment of New Zealand’s electoral law was a foreign concept to the previous Labour Government. That Government joined with New Zealand First and the Greens to force through this House, with the narrowest of margins, legislation that contravened the New Zealand Bill of Rights Act and was totally unacceptable.

Today this Government is taking the first steps to repair the conventions that were trampled over by the previous Labour Government, and is restoring the tradition of consultation and consensus on electoral law that Governments should always have. It is in the public interest that there be cross-party consensus on electoral law, and that is why I was so impressed by Mr Parker’s contribution. It revealed a level of maturity and decency that was not present in 2007.

We have been in this situation before, of course. National Governments have periodically been forced to deal with the electoral amendment disasters that have been inflicted on us by Labour over the last 60 years. In 1945 Labour altered the composition of the Representation Commission, to stack it with Government appointees, and we had to fix that up in 1950.

💬 Chris Auchinvole: How old were you?

I was a gleam in the eye of my parents!

In 1975 the Labour Government forced through a range of changes to screw the scrum in its favour. The entrenched provisions of the Electoral Act stopped it from getting some of those changes through; the rest we had to tidy up in 1976 and in 1977. Now, in 2009, we have to deal with Labour’s latest error of judgment. In doing so—and it is important to note this—we will behave better than the previous Government did. We will not keep on the statute book legislation that we said—and I repeated this on numerous occasions during the Committee stage of the electoral finance debate—confers massive advantages on the Government and on incumbent members of Parliament.

Labour passed the Act in order to shut the National Party out of Government, but there will be no utu from the National Party, because it is in the public interest that we band together to get back to a situation where there is proper discussion between all parties on these very important issues. It was indeed a wake-up call for me, as a tyro MP, to see that the safeguards that exist in our constitution to prevent the passage of laws like this one are inadequate.

As the House will know, earlier this week I provided a section 7 report, under the New Zealand Bill of Rights Act, on the Criminal Investigations (Bodily Samples) Amendment Bill. Under this Government the Attorney-General will be prepared to make those reports. The previous Government made a total mockery of the system. My predecessor failed to table a section 7 report on the Electoral Finance Bill; even though that Government knew that the legislation breached the New Zealand Bill of Rights Act, and even though we had a number of submissions from the Human Rights Commission to the Justice and Electoral Committee saying the bill severely trampled over rights of freedom of expression.

So we stand here today to rectify the situation caused by the very Act that the now deputy leader of the Labour Party said does not restrict free speech and Mr Chauvel called a very good bill. I agree with the Leader of the Opposition that Labour did not have the consensus it should have sought out when it passed the Electoral Finance Act, and I hope the Labour members who in 2007 spoke in support of this insult to democracy will support their leader’s willingness to engage in a bipartisan manner on the reform of electoral law.

I go back to what a senior public servant said to the Justice and Electoral Committee. He said during the committee consideration that in the early 1990s it was Mr McCully for the National Party and Mr Caygill for the Labour Party who worked together to get law that was enduring. Basically, it was a two-party Parliament and they worked constructively together. I am certainly heartened by the words of Mr Parker that, going forward, all parties in this House will work constructively to get election law that endures. I think that many of the issues he has raised are very helpful and I look forward to playing my part.

I welcome the bipartisan approach that the Minister has taken to reviewing the Electoral Finance Act and the undertaking he has given to bring all parties together to get broad agreement on a new Act. If I have any regret about the legislation we are repealing, it is that there was not a consensus around it. It was highly undesirable to have great controversy around the rules surrounding elections, of course. To be fair though, the reason for that lack of consensus was not all one-way traffic. I think some of the people who led the attack on the Act—the one we are repealing now—would have had a lot more credit if they had been much more willing to acknowledge the ugly practice we experienced in the 2005 election.

Let me give members one example of that from my electorate. The day before the election two newspapers published full-page advertisements from a fictitious promoter, using a fictitious address in my electorate, practically accusing me of mass murder. It went to every home in my electorate, and it was much too late for me to do anything about it—some of it was being delivered just before midnight on the day before the election. How was that fair? Why did we not hear nearly as much outcry over practices like that as we have heard about the Act? The police, I have to say, did not even act on my complaint. Actually, to be fair, my majority went up by 150 percent, so perhaps I should say: “Make my day!”. But the principle behind the legislation has to be looked at very carefully.

There are two basic principles in the Act that we are repealing that I think need to be kept. The first is that the name of the promoter of a political advertisement should have to be clear. It should be obvious who is taking responsibility for a statement made in an election context. The second principle is that there should be a fair limit on the amount that can be spent to buy an election. We all know that money makes a difference in elections; that is why we spend so much time trying to raise it. When elections are decided more by money than by the clarity and strength of ideas, however, then our democracy is in trouble. That is why nearly every country in the world has some kind of cap on election spending. It stands to reason that if we have a cap on the amount that can be spent to buy an election, then we have to identify the people who are spending the money. We cannot have secret expenditure, if we want to have a reasonable cap on election spending. We cannot have people quietly coordinating their spending in backroom deals, if we are going to cap election spending.

Having said that, I say I actually support an increase in some of the caps in the current legislation. One example is a spending cap of $20,000 per electorate. The sum is, of course, $40,000 for a by-election. But those limits were set in 1995, and it is fair to say the cost of election expenses has risen a bit since then. In today’s money, $20,000 in 1995 is worth $27,000 now, and the by-election cap of $40,000 would be worth around $53,000. So in real terms we should address those limits. I would like to see those limits on election spending, at least at electorate level, increase from where they are set today. I think that is reasonable.

I want to mention one other area that will have to be improved, and that is the administration of the Act by the Electoral Commission. I believe that the commission somehow simply lost the plot before the last election, and it did not approach the administration of the Act in a calm and considered way. I have already expressed my frustration with having been referred to the police twice, when I was confident that the issues I was being referred for would not remotely result in a prosecution. Indeed, that is exactly what the police decided, too. But they investigated the issue and determined after the election that no offence had been committed. Of course, I had suffered all the reputational damage of being referred to the police, when it turned out that no offence had been committed, nor was it ever likely that had been. Emails with press releases in them could hardly be seen as a nefarious offence against the Act.

And why would we have committed an offence, anyway? The Progressive party was the only party that observed the law strictly in 2005. We were the only ones who did not have to pay anything back. So all of the people who were sneering at me, and saying it served me right for voting for the Act in the first place, might have considered those facts. There was no offence committed.

I had no idea, when the Act was passed, that the commission would be so obtuse in administering it. It is very unusual for a State agency to set out to frustrate its own Act, but here is an example of how obtuse the commission could be. On 19 June the commission wrote to me, stating: “The commission has observed some items on the Progressive website which might be considered an election advertisement.” It told us: “The website does not appear to contain any promoter statement”. We wrote back to the commission, pointing out that the promoter statement was highlighted in bold type in the middle of the page. It was the high-tide mark of silliness, and I put it to this House that no legislation, no matter how sensible, could withstand an agency that was so careless or belligerent, and so determined to avoid intelligently applying the law. Whatever Act replaces the one we are repealing, it will need to be administered with a lot more caution and a lot more care and intelligence than the Act we are repealing was administered.

Electoral law, of course, never seems to be universally admired—even by politicians in this House! I remember, when I was in this House on my own, representing a party that had polling support higher than that of any other political party, and I had a polling percentage higher than that of any other leader, that the electoral law then was carefully tailored to fit the two major parties. I do not recall that there were screaming campaigns by the New Zealand Herald then, declaring that democracy had been gagged. I do not recall that members of the National Party rushed to declare the arrangements were “odious”. So I ask for some reflection on that point, as the current law’s opponents reflect on the most recent Act’s repeal tonight.

There has been a long history of using electoral law tactically, often with reasonable intentions—which, of course, the road to hell is paved with—even if they just happen to suit the major party of the day. I accept that members of the Government felt aggrieved by this law, and I have come to the conclusion that it is right to repeal it and look for a better one. I largely agree with the holding arrangements that the bill puts in place while we pass the new law. Just as we have come, on this side of the House, to this view, I ask members opposite to be constructive too and to look at the way in which we can actually improve the law and cover ourselves against some of the excesses that have been committed in recent years. The Minister has certainly given an undertaking to do that, and I am pleased to acknowledge that.

The influence of money on politics is one of the greatest threats to freedom and to democracy. Political parties necessarily need money to run election campaigns but we know that that money can be a source of undue influence on our democratic process. There are numerous examples. In addition, wealthy non-political-party actors can intervene in the election process, by buying advertising and distorting the process, in favour of their agenda. For that reason Western democracies all around the world have introduced many rules to try to limit the influence of money on politics.

As the 1986 New Zealand Royal Commission on the Electoral System said, it is not fair “if some in the community use their relative wealth to exercise disproportionate influence in determining who is to govern and what policies are to be pursued.” In New Zealand over the years we have introduced a series of laws in order to attempt to reduce the impact of money on our democracy. For example, parties are to some extent required to publicly identify the source of their donations over a certain threshold. They are not supposed to declare donations as anonymous when they are not. Parties cannot spend their own money on TV and radio advertising, but have to spend the money allocated by the Electoral Commission. This is an attempt to restrict the influence of money on politics. There is a cap on how much parties can spend. One of the best aspects of our current system is that there is a cap on how much political parties can spend in election campaigns. I agree with the Hon Jim Anderton that that cap needs to be adjusted. It is certainly something that we advocated during the negotiations with Labour over the Electoral Finance Act, and I am sorry that we did not get that in there. None the less, the cap itself is a really good idea and one of the most important parts of our system.

However, the origins of the Electoral Finance Act were that a number of problems emerged in our system in the 2005 election. A number of loopholes that needed to be addressed became apparent, and they were around two particular issues. There were a lot of issues, but there were two in particular, one of which was the avoidance of the rules requiring disclosure of the true identity of donors. We found that National, by using the Waitemata Trust, which it had set up, and Labour, which had a lot of anonymous donations, were hiding the true identity of the sources.

💬 Hon Trevor Mallard: Which trust?

A huge amount of money was going through the Waitemata Trust. We did not know the true source of that money, but it turned out, when one reads Nicky Hager’s book The Hollow Men: A study in the politics of deception, that the National Party did. That was a getting around of one of the key rules.

One of the other problems we discovered was the role of third parties—the role of non-political parties. The problem is that when we have a cap on what political parties can spend, which makes a lot of sense, one can get around that rule by having a non-party actor who basically says: “Vote for this party”, and spends a lot of money, but that money is not incorporated within the cap of that party. Of course, that is exactly what the Exclusive Brethren did. The thing about the Exclusive Brethren is not that they are an unusual religious sect. That is completely irrelevant to the argument, and I think too much focus goes on that. We are not critical of the Exclusive Brethren because of some of their religious practices, though one may well be. The issue is this: they effectively ran a “Vote National” campaign in the 2005 election, and spent $1 million in doing so, and avoided the spending caps. That was the key issue that the whole third-party regime was trying to address.

It is really difficult to set in place a bunch of rules that contain third-party spending—every country in the world has struggled with it. The Canadians have a regime that is much stricter than the Electoral Finance Act but with a much shorter time period. The UK has a similar regime to ours in terms of restricting third-party spending, in an attempt to protect democracy from the influence of money. I want to quote from the royal commission again, because it conducted one of the most extensive investigations into this issue in 1986. “It is illogical to limit spending by parties if other interests are not also controlled. Supporters or opponents of a party or candidate should not be able to promote their views without restriction merely by forming campaign organisations ‘unaffiliated’ to any party ... Nor should powerful or wealthy interest groups be able to spend without restriction during an election campaign while [the parties] are restricted.” This is a difficult regime, or set of rules, to put in place, as we saw with the Electoral Finance Act. None the less, if we do not try to put in place a regime around non-political party intervention in elections with spending caps, then the spending caps on the political parties become irrelevant.

The Electoral Finance Act, for all its problems—and they were numerous and we all experienced them—was an attempt to deal with these fundamental principles: the principle around reducing the influence of money on politics and the perception of the influence of money on politics. That is why the Green Party supported it. We do not resile from voting for the Electoral Finance Act. The principles were sound, even if there were real problems with the bill. At the time, when we were negotiating with Labour, we were not happy with the fact that it was not a multiparty approach, and I commend the Minister for his negotiations with other parties so far, and for the comments he has made about taking a multiparty approach to electoral finance reform. I commend the Minister for that.

However, there is another aspect to consultation that is missing here, which the Greens put in around the Electoral Finance Act, and that is the citizens’ assembly idea. The thing is that everyone in this House has a vested interest in these rules. We are all political parties. We have a vested interest in trying to get the rules that suit us best, but they are not necessarily the rules that suit the voters of New Zealand. The voters of New Zealand have a different perspective, and it is their democracy, not our democracy—they own it. The citizens’ jury that the Greens negotiated, which, sadly, the incoming Government has abolished, was an attempt to include ordinary people in the decision making around their electoral system. Just as we give a jury the ability to send someone away for life, why is it that we do not trust ordinary citizens to make recommendations about campaign finance reform? If a jury is able to get its head around whether someone is guilty or not guilty of a particular crime, and to make a decision that will affect the rest of someone’s life—such as sending that person to jail—surely the citizens of our country are perfectly capable of making decisions about what their electoral system should look like, not our electoral system, their electoral system. Yet they are being excluded.

I say to the Minister that although it is true that there will be public input—and I accept his reassurances that he will put out an issues paper to the public and the public will have an opportunity to make submissions on that—it is not the same thing as a deliberative process whereby a group of randomly selected people have the chance to be informed and provide informed feedback as a group back to the people who will ultimately make the decision, who are the people in this room. A citizens’ assembly is a much more deliberative process. It is about interacting—informed debate—and I encourage the Government to revisit the getting rid of that.

Of course, it would be extremely politic of the Greens not to be out of step with every other party in this Parliament and to vote for the repeal of the Electoral Finance Act. However, I have to say that we oppose this bill to repeal the Electoral Finance Act. We oppose this bill because we supported the principles of the original Electoral Finance Act even though we understand the problems with the Electoral Finance Act. We supported why it came in. The purpose of the Electoral Finance Act was to limit the influence of money on democracy. We stand by that purpose. We could not come into this House, was it a year and a bit ago, and defend it day after day after day, then turn up today and suddenly run away from it. That is not the kind of party the Green Party is. We recognise the problems with the Electoral Finance Act but we support the fundamental principles, and that is why we are not going to vote for the repeal of it. There is no reason to repeal it now. There is no urgent election about to happen. We could actually have a proper process, improve the Act, and then we could have an advanced and better system of electoral finance control rather than going back to the old Electoral Act 1993 and we could move forward.

Once again I acknowledge the efforts of the Minister to involve other parties. I hope we can have a deliberative process and I once again encourage the Minister to involve the citizens of our country. It is their democracy.

I move, That this debate be now adjourned.