Local Electoral Amendment Bill (No 2)

I move, That the Local Electoral Amendment Bill (No 2) be now read a first time. I nominate the Justice and Electoral Committee to consider the bill. At the appropriate time I intend to move that the bill be reported back to the House on or before 11 March 2013.

The Local Electoral Act 2001, which sets the rules of the conduct of local elections every 3 years, has as one of its principles that the public have confidence in and understand the local electoral processes. The Act also provides for fair and effective representation for individuals and communities, and aims to provide people with a reasonable and equal opportunity to cast an informed vote and to accept nomination as a candidate.

There have been significant changes since the Local Electoral Act was enacted, in terms of both the changing landscape of the local government sector and amendments to the Electoral Act—the legislation that regulates parliamentary elections. Simply put, the legislation governing local government elections has not kept pace with the changes imposed on central government political candidates. This bill strengthens the Local Electoral Act, to ensure that it meets its principles and to bring it closer into line with the provisions of the Electoral Act.

A number of amendments in this bill implement the Government’s response to the findings of the Justice and Electoral Committee in the conduct of the 2010 local authority elections. The amendments also reflect the Government’s response to the Local Government Commission’s 2008 statutory review of the Act. The bill improves the balance between requirements for fair and effective representation of communities by territorial authorities. Councils will have more flexibility in setting ward boundaries that reflect existing communities. The amendments also streamline technical aspects of the representation review process. In short, the bill will give electors more effective democratic representation.

This bill will also ensure electors have better information when deciding whom to vote for. Candidates will need to declare if they are standing for more than one elected position. Candidates will also have to declare whether they live in the local area for the positions they are contesting. In addition, the bill will streamline the production of voting documents and candidate nomination processes. This bill will also increase openness and accountability in local elections through new and enhanced provisions for the receipt, disclosure, reporting, and recording of donations, especially anonymous donations. Legislation surrounding anonymous donations has needed to be improved for some time. As it now stands, the current legislation has unnecessarily created uncertainty and confusion in the local government elections. This bill provides that certainty.

The bill contains provisions that are modelled on existing checks and balances in the Electoral Act, which covers, of course, parliamentary elections, but they are adapted to apply to local elections. Having similar provisions across both the parliamentary and the local electoral systems will make it easier for candidates, for donors, and for others involved in local elections. The key changes proposed in the area of donations include the expanding of the definition of “anonymous” to mirror the descriptions in the Electoral Act—that is, to include situations where the candidate could not reasonably know the identity of the donor. In addition, where a donor gives a donation to a third party to pass on to a candidate, and the third party knows the identity of the donor, the third party will have to disclose this information to the candidate, so the donation cannot be treated as anonymous.

Anonymous donations will also have a limit of $1,500—the same as is in the Electoral Act. If a candidate receives an anonymous donation over that limit they cannot keep the excess but will have to give it to the electoral officer appointed by the local authority to conduct that election. The bill also increases the obligations on candidates to record and report on the donations they receive. I do not consider the obligations to be onerous as most would be reasonably expected from efficient financial and administrative practice. New penalty provisions will accompany and enforce the new obligations. Those who are found guilty of breaching the law will be held accountable and could be liable on conviction for a fine.

The Local Electoral Amendment Bill (No 2) will strengthen the integrity of the Local Electoral Act, enhance the transparency and efficiency of the local electoral system and the representation of electors, and, as a result, increase the public’s confidence in the local electoral system as being efficient, democratic, and transparent. I commend this bill to the House and hope that it finds good support from all parties across the House.

The Labour Party will be supporting the Local Electoral Amendment Bill (No 2). As we have heard, this bill amends the Local Electoral Act 2001 and the Local Electoral Regulations 2001 to implement the Government’s decision on amendments to the legislation. I think it is important to point out what the purpose is—it is threefold—“It will improve provisions for the conduct of local elections; increase transparency and accountability in the provision, receipt, disclosure, recording, and reporting by candidates of electoral donations; and strengthen the integrity and efficiency of the local electoral system. As a result, public confidence in local elections will increase.”, according to the explanation on the bill we are talking about tonight.

I have also looked at the regulatory impact statement on this bill. It says this: “In the Department’s view, the analysis and consultations it undertook to develop the proposals meet the adequacy standards. The analysis provides a sound basis for decisions to amend the Local Electoral Act. The proposed amendments will provide clear, consistent, robust and reasonable legislation.” Well, let us be honest about what the sound basis for this bill is. It is mentioned but not named in the regulatory impact statement. This bill should be called the “John Banks Bill” because this bill is about straightening up the behaviour of one of the National Government’s Ministers.

You see, Labour had a bill in the ballot for months that addressed the ridiculous situation we have seen with John Banks and his so-called anonymous donations. It was in the name of David Cunliffe. It was a bill that does just what this Government bill does.

💬 Hon Simon Bridges: It’s David Carter.

It was in the name of David Cunliffe, for the member who has obviously got bad hearing. It was set down by the Labour Party for months. For months the Government took no notice of it, mainly because it was an Opposition bill. Of course, nothing the Opposition ever does could be good enough for this Government. It was set down for us to be able to debate such a bill. It was ignored. It was not good enough. And then, hello, we have got a Government bill that is almost identical to the one that was set down by Labour. I wonder why the Government could not have picked up the bill that was already there.

When you have a look at the timetable from the Government announcing that it was going to have a bill, there is a little discrepancy. In Parliament, when the Deputy Prime Minister was asked whether he would support such a bill by Grant Robertson, Bill English said that, yes, in fact, he would. Bill English said: “Yes, the Government would be likely to support such a law. It seems to make sense that the disclosure laws for local government political donations would be similar to those for central government political donations.” Grant Robertson then sought to table the Labour bill. Hello, it was turned down by the National members. But later that day, in what the media described as a surprise announcement, the Minister of Local Government, David Carter, said that work was already under way and the Government was making good progress on a Government bill. Well, 6 weeks later Mr Carter’s announcement on the Wednesday did not include a new bill but said that it would be introduced early next month in order to enact the changes by May 2013. What it showed was that, in fact, no work had been done on a bill from the time of the surprise announcement through to the time when he announced that there would be a bill later on. To me that was not quite honest, because announcing that work was being done, that good progress was being made, and that the Government was already on top of this issue was an effort to cover up what John Banks had been doing.

Well, in fact, the Government was not on top of this issue, and so what we have had, I think, has been something that has been bad for this Parliament and bad for local government—that is, the behaviour of one of our members in this House, a member who knowingly received, and has been shown to knowingly receive, donations and then forget that he received them. We cannot have a system where one person can bring so much odium on the rest of us because he cannot remember whether he got those donations.

And then we have the Prime Minister. The Prime Minister said: “Well, you know, there is a wide definition of ethics.”, when it came to John Banks. That is a direct quote from the Prime Minister. He said: “There’s a wide definition of ethics.” Well, I would say to Mr Key that there is one definition of ethics that ought to be applied to members in this House, and particularly to Cabinet Ministers, and that is that they ought to be able to remember whether they received donations. These donations for John Banks came when he was standing for Mayor of Auckland. These donations he did not make transparent. He did not declare that he knew they existed, although he took a cheque from Skycity in an envelope. He instructed Dotcom as to how he ought to pay these donations. We had a candidate, a candidate of long standing—a person who had been a member in this House and who had been a former Minister of Police—who was prepared to forget that he had donations. Well, that is not good enough. We needed this legislation some time ago. It is not appropriate for a Prime Minister to allow that sort of behaviour from a local government candidate to be brought into this House and bring the rest of us into disrepute. That is exactly what has happened.

I deplore the double standards that have been applied over the years, particularly by the Prime Minister. Some of us can remember John Key saying in 2008: “It is no longer acceptable or credible for Helen Clark to assert a facade of confidence in her Foreign Affairs Minister and to fail to ask the plain questions of him that she has a duty to the public to ask.” That is a direct quote from John Key about Helen Clark and Winston Peters in 2008. Then we come to 2012 and to John Banks and his donations that he received knowingly. John Key said: “It’s not my responsibility to ask questions. If someone thinks John Banks isn’t telling the truth, it’s a very simple remedy: go to the police. It’s not my job to do a forensic examination.” That is not what he said about Helen Clark. He said: “… Helen Clark must stand Mr Peters down as a Minister. That is what I would do if I were Prime Minister.” Well, Mr Key has failed to stand down a Minister who knowingly received donations, who by the police’s own admission knows he received those donations, and who has brought local government and this place into disrepute.

This bill goes some way to fixing those problems in terms of donations. There is going to be a much more transparent process for the future. It aims to prevent the situation we have seen with John Banks. It aims to have the same requirements for candidates in local elections or polls in relation to donations, their disclosure, and the filing of electoral returns as those that are already in place for candidates in the parliamentary elections. It is also going to ensure that there is consistency between the Local Electoral Act 2001 and the Electoral Act 1993. The provisions in the Electoral Act 1993 are stronger, and they are clearer in terms of accountability required by a candidate in an election. So we will support this bill, but it ought to be called the “John Banks Bill” because it relates to the Government hastily trying to fix something that the Prime Minister said was not a problem—that John Banks had—

I am sorry to interrupt the honourable member. Her time has expired.

Not for the first time we have just been treated to crocodile tears and what could be described as creative rewriting of history by the member Annette King, who has just resumed her seat. I grant you that she does mock outrage incredibly well, but let us just recall and point out to anybody who may be listening to this debate—and I know of at least two in Ōrākei at this moment—that the 2011 local body elections were held less than 2 years after the current Government had come into office, and they were based on very loose provisions that had been enacted in 2001 by the former Labour Government of which the member for Rongotai was a Minister. Those particular provisions remained in place for the next decade, during which time the Labour Government and that member could have at any time moved to improve them, but they said and did nothing—absolutely nothing—for all of that time. Only when those members came into Opposition did they start to show an interest in making some reforms.

I want to acknowledge the current Minister of Local Government, the Hon David Carter, who had been in his current role for only a matter of weeks when he announced a couple of months ago that the Government would move to fix an issue that we all acknowledge has been a matter of public concern. It has attracted considerable media scrutiny and comment in the public arena in recent times, and I think all members of this House would acknowledge that change is needed. So I do welcome the Labour Party’s expression of support for this bill, the Local Electoral Amendment Bill (No 2), and I hope it will receive similar support from the minor parties, which we will hear from later in this debate. But, as I say, let us put on record the bunkum that we have just been exposed to, because for a decade or so Labour could have done something to prevent the situation and it did nothing.

I am the chair of the Justice and Electoral Committee and I look forward to receiving this bill. The Minister has indicated that it will be directed to our committee. I point out that it modernises local electoral law and will improve the transparency of local electoral donations. The whole purpose of the bill is to help restore and build public trust in the local electoral system. By and large, what we are trying to do is to achieve the same degree of public trust as exists for central government electoral laws of this type. It is not possible entirely to blend the two, because some of the provisions for central government electoral law just do not fit round local body electoral laws, but as much as possible this particular bill will blend the two together. I believe that that is to be welcomed, and, indeed, I know that many people have already commented on the fact that it is a change that should be broadly supported.

So I simply reiterate that the donation amendments will bring the Local Electoral Act closer into line with the Electoral Act for central government, and that the concern that is out in the public arena at the moment about transparency and accountability of candidate donations, and particularly surrounding anonymous donations, is squarely tackled under this bill and should be rectified. I believe that this bill is a timely and appropriate measure. I again commend the Minister for bringing it forward and for the alacrity that he has directed to the task. I commend the bill to the House and I hope it will attract widespread support.

I guess that I was a little bit surprised to hear that the Minister of Local Government was described as having brought this bill, the Local Electoral Amendment Bill (No 2), to the House with some alacrity, because I would have thought that any member of that Government would be embarrassed as to why we were bringing this matter before the House now. I think it all goes back to a certain cup of tea, when a certain Prime Minister sat down with a certain leader of a certain party in order to make certain that it was represented in Parliament after this general election. That was one Mr John Banks, and the reason that Mr John Banks is so pertinent to this particular debate is a certain set of transactions that he remembers nothing about.

I am absolutely gobsmacked that somebody with such an incredible role of responsibility in this Parliament cannot remember receiving the kinds of donations that he received from one Mr Kim Dotcom, but nobody remembers Mr Kim Dotcom. I do not know about anyone else in this House, but when I first heard his name, which was actually quite some time ago, I thought how prescient his parents were to have a surname like Dotcom, not knowing that one day it would come to mean something quite different from what it meant in those days. But it certainly did strike me as a name that you would not forget. So if anyone ever heard the name Dotcom, you would remember the name Dotcom, would you not? It is just one of those particular names. But in actual fact—

💬 Hon Annette King: What if he was 6 foot 9 and 240 pounds?

Well, yes, he is sort of the guy whom you would not forget meeting either, unless you were somebody who could not remember a significant donation from somebody like a certain person whom you could not remember meeting, such as that.

But the point that I am trying to make is that I think the Government is playing ducks and drakes on this particular piece of legislation. The reason we did not turn our attention to the financing rules under the local electoral legislation is that there was not a case that had been brought to anyone’s attention in this Parliament until this very recent case in relation to Mr John Banks. That is why it behoves the House to address this issue and bring the legislation in line with the electoral finance rules that apply in a general election. So I think we would be dealing with this in the same order of events, had that occurred at an earlier stage. We still would have addressed this issue in line with the general election rules, if in fact this had arisen at the time. And, of course, it had not been brought to anyone’s attention.

We think that it is a good idea to change the law to bring the local electoral rules into line with the central government rules, but I do not think anyone in this House can pretend that any of this is particularly ideal, because, of course, we all know that there are people in this House who have approached people to ask for anonymous donations, and to have those anonymous donations immediately under the threshold—$1,500 for an individual, and $15,000 for a party. An amount of $14,999 is written out as a cheque to the National Party as a donation, of course anonymously, not having to be disclosed, because that was the point at which the non-disclosure would have prevailed.

So I believe that we have to face up to the fact that in actual fact there are a number of instances where there are attempts to avoid the donation rules, wherever they apply. But this particular one, I guess, does raise some serious concerns, and I am actually glad that it is coming to the Justice and Electoral Committee because I think we need to face up to the reality that people in this situation have actually worked to technically stay within the rules of the law, but when they have breached the spirit of transparency that New Zealanders expect around political donations, I think people can feel justifiably let down.

I think people have been justifiably let down or have felt disappointed in the way that the Government has responded to this particular issue. A lot of people felt that when John Key stood in front of the people of New Zealand in 2008 and said that he wanted to achieve things for this country, they believed in him, and I believe that a lot of people are disappointed in what he has failed to deliver, and the way that he stuck up for John Banks, I believe, adds to that sense of disappointment in a very, very particular way.

People felt that there was no reason for the Prime Minister to stick up for Mr Banks when it became absolutely crystal clear that he had received donations in his role as a mayoral candidate, even though he was not a Minister at the time. To accept that that person could remain a Minister with that lack of integrity in the way that he dealt with donations at that time, I believe, is absolutely relevant to whether he should be a Minister today. There is not actually a person in New Zealand who disagrees with that, with perhaps the exception of Mr John Banks.

I believe that most New Zealanders are absolutely committed to the idea that the integrity in that role traverses the experience of when he was standing for the mayoral candidacy and when he is in a ministerial position. If the people of New Zealand cannot trust one of their own Cabinet Ministers or Ministers outside Cabinet to actually have that degree of integrity in his role as a mayoral candidate, then I believe that they are quite justifiably sceptical about the degree of trust that they can put in his role as a Minister. I think it is a shame that there has been no acceptance on the other side of the House that this has come about because of the circumstances that were revealed in a way that would not have come to the public attention if it had not been exposed in the way that it was.

We put legislation into a member’s bill at the time that this became an issue, so that we could align the Local Electoral Act with the Electoral Act, and it was raised as a particular point of view, I think, by one of my colleagues, Grant Robertson, who was commenting on the lack of consistency, saying quite clearly that what we have seen in Mr Banks’ case is that although he might be able to claim that he has not technically broken the law, he has clearly breached the spirit of transparency that New Zealanders would expect around political campaigns.

So despite the fact that we had legislation in the name of one of our Opposition members, the Government really was not taking this seriously until it felt that it really could not back away from it any further. So there has been a degree of—and I am not allowed to use a certain word to describe what it does look like, but it does seem—

💬 Andrew Little: You can have a hypocritical position.

Can you have a hypocritical position?

💬 Hon Annette King: Yes, you can.

OK. I think that there have been hypocritical positions adopted in this particular matter, and that there are issues that I believe the Government has to front up to on this point.

I think that there has been too much memory loss over this particular matter. First of all, we had the memory loss relating to Mr Banks himself. He could not remember various things that had happened. Then there was the deliberate decision, I think, of the Prime Minister not to read certain information, or not to have advice provided to him on certain information.

💬 Andrew Little: Wilful blindness.

That is called wilful blindness. So we have memory loss and wilful blindness, and I believe that that is not good enough. I think that the people of New Zealand actually require of their politicians that we have a corruption-free environment, and that we do not have the degree of undisclosed interests that dominate the environment in other countries, and we are observing an election in another country at the moment.

Of course, the amount of money that people see being collected and spent in that environment is something that we would never want to see in this country. Part of what protects us from that is absolute, upfront disclosure. That is why we will be supporting this bill.

I am pleased to take a call on the Local Electoral Amendment Bill (No 2), and I think the “John Banks Bill” would be a very good title for it. The Green Party will be supporting this bill because it was the so-called anonymous donations from Mr Kim Dotcom and Skycity to Mr John Banks in the 2010 Auckland mayoral campaign, where Mr Banks allegedly cannot recall the donors’ identities, that highlighted the significant gaps in our electoral law. The bill requires that candidates declare any donation over $1,000 if they know the source, yet Mr Banks’ convenient memory lapses allowed him to circumvent this. That is why the Green Party is giving qualified support to this bill, because it certainly takes some steps to improve the law and increase the transparency of local elections and candidates’ disclosure, recording, and reporting of donations. But we will be looking to achieve some significant changes at the Justice and Electoral Committee to strengthen the bill, particularly so that it better regulates electoral financing.

The provisions in my colleague Denise Roche’s member’s bill, which is currently in the ballot, are wider in scope and would be a very good guide to some of the changes that the Green Party is seeking. They put a cap of $5,000 on donations by any person or group. The bill puts a ban on overseas donations. It would regulate third-party spending and it would establish a pecuniary interest register for members of local authorities—those things that we do not see in this bill.

But there are some useful changes in this bill, and one of those is ensuring that donations are clearly considered an electoral expense. It is also a good change that anyone who works with a candidate and knows the identity of a donor who gives more than $1,500 must declare the identity of that donor to the candidate. This should certainly help Mr Banks with his memory lapses. The bill also creates a disincentive against anonymous donations, because where a purported anonymous campaign donation to a candidate exceeds $1,500 the excess has to be given to the local authority’s electoral officer. Another improvement in the bill is that the return of the donations has to have more detail in it, it does increase the disclosure reporting and recording obligations, and it introduces some penalties for non-compliance—all good things.

The bill also makes some wider changes, which I would like to comment on briefly, and that is to change the balance between fair and effective representation and to increase the criteria where the local authority can adjust the boundaries of wards or constituencies and not have to comply with the 10 percent plus or minus rule—the fair representation rule. This is so that there is more of an emphasis on fair representation. Two circumstances where that could occur are where there would be communities of interest that would be separated or where two very different communities would be joined in the same ward. Those changes were certainly recommended by the Local Government Commission in its 2008 review of the Local Electoral Act 2001. The commission in its review thought that it was very important to ensure that the representation arrangements in local government were configured so that the ward and constituency boundaries went along the lines of recognising communities of interest, and that electors were therefore able to identify with the area concerned, and that that could assist voter participation in elections.

The commission also thought that this flexibility was needed to promote fair representation so that the boundaries would ensure that there was convenient access to local authority services, and that it would avoid grouping communities that had little in common. It is puzzling that, on the one hand, the Government in this bill is promoting fair representation, yet its proposals in the Local Government Act 2002 Amendment Bill, its push to super-sized councils around New Zealand, and its belief that big is better cut right across this whole principle of local government being about local democracy and local councils representing local communities, which the Local Government Commission thought was important in its review of the local electoral legislation. It is the amalgamation provisions in the Local Government Amendment Bill that will make it so much easier to push through super-sized councils regardless of whether communities that are adjacent to each other want to be lumped together, because they are going to be denied the right to have a poll on those amalgamation proposals—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! The member is far outside the scope of the bill. This is about—

I will come back, Mr Speaker.

The ASSISTANT SPEAKER (Lindsay Tisch): Yes. Do so.

The Green Party also has concerns about the new powers in clause 21, because that would allow the Minister of Local Government, through an Order in Council, to adjourn elections. The current Local Electoral Act allows the electoral officer to adjourn the close of voting for up to 14 days in certain situations, such as a natural disaster, but the new bill allows the postponing of the whole election for up to 6 weeks, and that can be rolled over. Given that this Government has postponed elections for Environment Canterbury until 2016, we are not confident that the Minister will not abuse this power and will not use it to postpone elections. So given that this Government does not trust Cantabrians to elect councillors to the regional council who can provide “stable, effective, and efficient” government, because it has a one-eyed focus on maximising irrigation on the Canterbury Plains, what confidence is there the Government will not use the provisions in this bill to postpone elections in other circumstances? So we will be supporting the bill, but we want to see it strengthened at the select committee and we have reservations about some of the provisions in it.

It is a pleasure to rise and take a short call on the first reading of the Local Electoral Amendment Bill (No 2), and I am delighted that so far support seems to be unanimous in the House. The bill combines the changes of the Local Electoral Amendment Bill, which was tabled in 2011, with further changes to electoral donation laws, reflecting public concern about transparency and accountability of candidate donations, particularly anonymous donations.

The purpose of this bill is threefold. It will improve provisions for the conduct of local elections. It will increase transparency and accountability in relation to candidate donations, particularly anonymous donations, in response to the aforementioned concern, and it is interesting to note at this point that Labour passed the current loose provisions around the anonymous donations. The National Government is rectifying this matter. This bill will strengthen the integrity of the local electoral system.

It is our belief that improved transparency will help build public trust in the local electoral system. These local electoral reforms are part of National’s drive for better local government, which also focuses on councils operating more efficiently and helping them to be more fiscally responsible.

As well as limiting the size of an anonymous donation, a candidate can retain up to $1,500. In other provisions around donations the bill also increases flexibility for city and district councils to set ward boundaries to better reflect communities and prominent geographical features. As part of our drive for greater transparency, candidates for local election will also be required to provide information about whether they live in the area and whether they are seeking election to more than one position.

These changes reflect recommendations from the Justice and Electoral Committee’s inquiry into the 2010 local elections and also the recommendations from the Local Government Commission’s review of the Local Electoral Act. I commend this bill to the House.

New Zealand First will support this bill, the Local Electoral Amendment Bill (No 2), but with some reservations. I would like to begin by recommending a more descriptive title, the “John Banks Honesty, Transparency, and Accountability in Local Government Candidacy Memorial Bill”, a title that, fittingly, nobody will remember.

New Zealand First will be happy to support the main provisions of the bill, and I will go on to mention some of those parts that we have some concern about. But, first of all, we do think there is some good sense in what a large amount of the bill covers. First of all, clause 5, which allows territorial authorities and regional councils to make minor alterations to boundaries, is very sensible. Especially we like the idea that they would go to the Local Government Commission first for it to uphold them. That is a good check on whether those alterations would be suitable. Similarly, we agree with clause 8, under which communities of interest must be considered by the territorial authority or regional council, and it is required to specify the ratio of population to proposed members for each proposed ward; and, again, with clause 10, in which there are two situations added: wards and subdivisions of a community may be defined either by dividing a community of interest between wards or subdivisions, or by uniting within a ward or subdivision two or more communities of interest with few commonalities of interest. Those are two situations where special attention should be paid to communities of interest. Again, reference to the commission is a good idea.

We agree also with clause 21, which inserts new section 73A to add a power to adjourn an electoral process by Order in Council in certain situations. Those, of course, are the sorts of situations that we found in Christchurch. They did not actually require any action there, because there was no local government election at that time, but it could have happened that way, and then it would have been necessary for some action to be taken. This provision will make it possible for up to 6 weeks’ deferral of any of the important dates for an election to be made. That is just common sense. We are glad to see it there, as well.

But some of the provisions we have concerns about. The first of these relates to the vexed area of donations and expenses under Part 5 of the Local Electoral Act. I might say, first of all, that one of the omissions that I see here, and that is also in the Electoral Act for general elections, is the omission in respect of loans made in the same sorts of circumstances as a donation, loans that are not repaid or forgiven before election day. These, I believe, should be recorded as a donation, as well, because it is simply too easy, through the mechanism of making a loan, to get round some of these requirements. So that is something I would like to see the Government look at as part of this bill before it goes too much further.

I would like to also refer to new section 103A in clause 27, where it refers to the circumstance in which it may be reasonably expected for a candidate to know whether a person has made an anonymous donation or not. The words “reasonably expected” need to be taken seriously; they have not been, I believe, by some members opposite, and they should be. So we hope that those words will be sufficient for the purpose; we will wait and see. We disagree, however, with new section 103A(b), where it refers to goods or services being “provided to a candidate, or to any person on the candidate’s behalf, under a contract at 90% or less of their reasonable market value,”. We say that it would be difficult to prove such a value, and that a 10 percent discount is really not a donation, and should not be regarded as such. That is one of the things I think should come out of the bill. It is just not practical, and it is certainly not necessary.

I would like to move on to new section 103E in clause 27 and certain other sections of the same kind that refer to penalties. We in New Zealand First believe that a $5,000 penalty for offences such as intentionally concealing the identity of a donor is insufficient. It should be at least $20,000. It certainly is not a large enough fine to be a deterrent. The same applies to section 103G, for a person concealing the identity of a donor. That is too low at $5,000, and it should be at least $20,000 as well. Similarly, in section 103I, that penalty should be $20,000, and not $5,000. These are all the sorts of offences that really do need a heavy deterrent, and $5,000 just does not get there. Another one is new section 112D—in clause 31—“Filing a false return of electoral donations and expenses”. That requires a stronger deterrent, as well, and New Zealand First says $20,000, and not $10,000, or, as in paragraph (b), 5,000. Neither of those is anywhere near sufficient.

So New Zealand First will be happy to support the bill, but we would like to debate further some of those provisions that I have mentioned, and especially the inadequacy of the penalties that have been provided under some of those sections that I have mentioned.

I am very pleased to speak to the first reading of the Local Electoral Amendment Bill (No 2). It will modernise the Local Electoral Act 2001 and improve the transparency of local electoral donations. The changes to the electoral donations will bring this Act closer in line with the Electoral Act, which central government candidates work to. The changes reflect the recommendations of the Local Government Commission and the review of the Local Electoral Act.

The legislation is planned to be enacted by May 2013, in time for the election in October 2013. There will be a number of changes to donation provisions, such as limiting the size of anonymous donations that a candidate can retain to $1,500. This bill will strengthen transparency and accountability, and strengthen the integrity of the electoral system. I commend it to the House.

I take pleasure in rising to speak on the Local Electoral Amendment Bill (No 2). Saying that, the mere fact that electoral practices must be free from corruption goes without saying. It is essential for our democracy, the sort of democracy that we are used to and that we celebrate here, that electors must know that the people who are standing as candidates and who are seeking public office are people of integrity, and free from hidden constraints, promises, or connections. That has been the tradition in New Zealand both at the central level and also at the local government level. But the sad reality is that our reputation is under threat. Our reputation for a corruption-free electoral system and corruption-free electoral environment is under threat. There have been the odd alleged transgressions at the central level. I remember a flyer, produced when I was the national secretary of a union, which was referred to the police once. The police were so embarrassed about it that they rang to apologise for wasting my time. And then there was the National Party, which has always concerned itself with corruption issues, suing me and the union I belonged to for being involved or having a connection with the Labour Party in the 2008 election. It took it twice to the High Court. In the end, the High Court judge got thoroughly annoyed and threw the whole thing out.

But when it comes to local government elections, there is no question. We have reached the high-water mark. We reached it in 2010 in the Auckland mayoral election, with the candidate none other than a member of this House, John Banks. That must surely be a source of huge embarrassment to members of this House, who have watched the tawdry affair unfold in this House; to every Aucklander, and to most New Zealanders to watch what happened: to watch every effort made to conceal what went on; eventually, a police investigation; and then a huge effort to get the police file disclosed to the public on a matter of considerable public interest, and eventually it was. What we saw in that campaign and what we saw with the conduct of John Banks was an act of courting donors, one in particular—a very large donor. And when I say a “large donor”, the donations, of course, were large, but so was the donor. We saw extensive contact between the candidate, John Banks, and the donor, Kim Dotcom. That contact involved meetings, parties, dinners, complimentary remarks to his wife, trips on his helicopter, observing fireworks displays—I could not imagine a more extensive range of memorable experiences, and yet in the inquiry and the ensuing public disclosure—

💬 Hon Lianne Dalziel: I’m struggling to think of the last time I took a helicopter to a meeting!

Listen, I travel on helicopters with my donors every day, of course! Maybe it is a novel experience to John Banks. But how affronting to the intelligence of the Auckland voting public that he should declare that he could not remember any of those activities. And then with the allegations of soliciting donations, that is what the police found in their inquiry. As the police said in their report: “Police have established that in September 2010 Mr John Banks personally solicited a request for help from a Donor who prefers to remain anonymous”, and yet Mr Banks was able to get away with a declaration that did not disclose the identity of that donor, because the legislation in place then, and in place now, did not require it. How could you have an anonymous donor who was known to the candidate? That is not anonymous; that is a nonsense.

I think the pity of it is when we look at people in public office. Someone like Mr Banks who has occupied high public office—not just an MP, not just a leader of a party, albeit a one-man party, but a former Cabinet Minister—knows the story about ethics. He knows that the expectation of the New Zealand public is that people and those in public office do not just comply with the letter of the law, but should comply with the spirit of the law. He has totally failed in that standard. It is even more disappointing that, of course, the Prime Minister of the day, who held out great hope to the public of New Zealand that he would have high standards in public office, at least in his Cabinet, has not been able to follow through. The Prime Minister has defended Mr Banks’ conduct on the grounds that he technically complied with the law, not that he complied with the spirit of the law. Well, that is just not acceptable. At this point, when we know all the information that has now come out, however grudgingly and however it has to be prised out with a crowbar in this dreadful inquiry, it leads us to one conclusion, and that is that we all smell a giant rat. We all smell a giant rat and it is not very pleasant. It has led to this law change, notwithstanding Grant Robertson’s own member’s bill. The Government has produced its own to achieve the same effect. So this bill represents a new spirit, at least—a new spirit that we should be holding all candidates to in local body elections, regardless of where that local body election is.

I just want to draw attention to one problem, however, that I see in the legislation, and the select committee, no doubt, in its deliberation, its consideration, and inquiries will look more closely at. It is in clause 27. There are two particular sections, and the first I will talk about is new section 103H. This talks about anonymous donations, which must not exceed $1,500. It refers in that section throughout to an anonymous donation not exceeding $1,500. But, try as I may when I read that section, and the other sections that are around it as part of clause 27, I cannot see that that section deals effectively with what I would call the Dotcom cheque-splitting problem. It does not prevent a candidate or a candidate’s campaign staff saying to a donor who wishes to remain anonymous “Don’t give us $3,000; give us two cheques for $1,500. The candidate won’t know and we won’t need to tell anybody.” It does not stop that from happening. So the select committee will need to look very closely at that.

Then, in new section 103F in clause 27, it talks about those involved in the administration of the affairs of a candidate, that if they know the identity of a donor they are required to disclose it. But there is nothing in that clause—and in any other section in that clause—that requires a candidate who knows the identity of a donor to disclose it. That went to the heart of the issue with John Banks’ Auckland mayoralty campaign. He knew who some of the big donors were. He knew Kim Dotcom was a donor. He knew that Skycity was a donor. It handed him an envelope with cash in it or a cheque in it made out to “Team Banksie”, and then he claimed subsequently that he did not know who the donor was. Well, these provisions do not go far enough in that regard to remedy the problem that the John Banks Auckland mayoralty campaign threw up—and made us all throw up as a result. So those issues will have to be addressed as the select committee deals properly with it.

I come back to my opening comments, and that is that all electoral law, whether central or local government, needs to require of the candidates and those working with them and those administering those campaigns to work to the highest standards of integrity. The New Zealand public expect nothing less. Our law must reflect public expectations and we must make sure, as this law goes through the House, that it properly reflects the expectations that New Zealanders now have of those who seek public office. Those standards, those expectations, I suggest, have probably risen a notch or two now because of the embarrassing affair that was the John Banks mayoralty campaign. As my colleagues have said, we will support the bill because it will achieve a great leap forward, in terms of electoral law and electoral integrity. But there is some work that needs to be done, and we look forward to the select committee doing that work and bringing back a bill that will cover off all the issues raised by that tawdry, nasty little affair.

I stand and take a call on the Local Electoral Amendment Bill (No 2). There has been increasing public concern that the Local Electoral Act 2001 does not require candidates for local authority elections to provide the same degree of transparency and accountability in regard to donations as that required of parliamentary candidates. This bill forms part of the Government’s response to the recommendations of the two reports of the Law Commission, and recommendations by the previous Regulations Review Committee.

The Law Commission has rightly said that our statute law as a whole currently lacks coherence, is untidy, and can be difficult to understand and use. The Legislation Bill supports the efforts of the Parliamentary Counsel Office—

💬 Charles Chauvel: I raise a point of order, Mr Speaker. I think somebody might point out to the speaker that he is speaking about the Legislation Bill, which is yet to be debated.

The ASSISTANT SPEAKER (Lindsay Tisch): I am listening very closely.

This bill aims to modernise and improve the law relating to the publication, availability, reprinting, revision, and official versions of the legislation.

💬 Hon Lianne Dalziel: I raise a point of order, Mr Speaker.

The ASSISTANT SPEAKER (Lindsay Tisch): Yes. We are actually talking about the Local Electoral Amendment Bill (No 2). It might pay if the member concentrates on that and spends some time on that. If the member does have this bill in front of him, he is way wide of the mark.

What this bill does do is limit the size of anonymous donations that a candidate can retain, requiring any candidate not to retain an anonymous donation of more than $1,500. We do realise that this is something that is important to the public, giving them confidence and the ability to be able to trust. I know, as my first foray into politics was actually in the 2010 Auckland City elections. It was there that what was most important—

💬 Hon Member: Here’s the confession.

Well, not so much a confession, but actually just declaring the fact that I was there in those elections. It was about confidence. But the confidence we are talking about is not just in terms of the amount of the donations; most important, the bill is actually about declaring that candidates are local candidates, and it is about the work that they do. I think, if anything, the rats are around the donations. The true aspect the public want to see is candidates who are trustworthy, and candidates who are actively working in their local community, and the provisions of this bill absolutely commend that. I think that is what is going to be absolutely important.

I commend this bill to the House. I commend the Government for taking this step. I commend the efforts of the Minister of Local Government, and also the Justice and Electoral Committee, which is ably chaired by my colleague Tim Macindoe, and the committee members who are there. I look forward to the debate in the House on this bill. Thank you.

I understand the next call is a split call. Charles Chauvel—5 minutes.

Labour has actually had a bill in the ballot for a number of months that would substantially achieve the ends that this legislation would. I know because I wrote it.

💬 Louise Upston: Did you write all of them?

Well, I know that the junior Government whip likes to circulate the myth that I write all members’ bills, but as is her wont she is just being too kind. The reality here is that we have heard all sorts of extraordinary claims from across the House, including from the chair of the Justice and Electoral Committee, that the Government has moved with alacrity to deal with this situation. I think members might like to just remember the time frame here. On 1 August John Key said that the Local Electoral Act in its current form was literally an ass in this particular case. What happened? Well, Grant Robertson got up in the House and sought leave to introduce the member’s bill that I mentioned, and, lo and behold, the Government refused leave for that to occur. So this bill could have been introduced to the House in substantially the same form 2 months ago, but it was not, because some petty member on the opposite benches decided that it had to be done by way of Government measure rather than by a member’s bill. It could have been read and sent off to a select committee. We could probably have had the legislation back by now and dealt with. Instead, it has dragged on until now.

Later that day, after leave was refused, in what the media described as a surprise announcement, the local government Minister said that work was already under way and it was making good progress on a Government bill. It was 6 weeks later that David Carter announced, on Wednesday, that although he did not have a bill ready, it would be introduced early in the next month, in order to enact the changes by May 2013. Lo and behold, today we have the first reading of this bill. That is this Government’s “alacrity”—a very interesting definition of the term.

An earlier speaker, Eugenie Sage, mentioned that the problem here arose not in the term of the previous Labour Government but when those members opposite, or those of them who were here in the previous Parliament, rushed the Auckland super-city legislation through under urgency. That member hit the nail on the head, because that was the legislation that caused this problem. That was the legislation, rushed through this House, that saw mayoral candidates in our first, and hopefully our only, super-city start to spend the sort of money that political parties in and of themselves spend in an entire general election. Well, of course there was the need to foresee that and to provide for proper regulation when the circumstances were created to allow that situation to arise. But it was not dealt with, and we have now seen the consequences of that. We saw the fiasco that occurred over the Banks and Dotcom financing that other members have mentioned. So not only do I reject what we have heard about the Government proceeding with alacrity, but it is absolutely unfair to lay blame for the situation that has arisen at any door other than the previous Government, which rushed that super-city legislation through without thinking through the consequences of having super-city mayoral campaigns that would cost the sort of money that they ended up costing.

I want to make one or two other points in conclusion. I think there have been a number of contributions about how this bill might be improved in the select committee process. I certainly look forward to that. I think the area of penalties does need a closer look. I think the issue that my colleague Andrew Little raised about whether this deals with the sort of split cheque donation issue also needs careful consideration. I think the issue of whether or not overseas donations ought to be permissible in local elections is one that the committee also ought to consider. But with those concluding words I do commend the bill to the House. I wish that it could have been before us earlier, but we are at least now able to make some progress on this vexed issue. I hope we move with true alacrity to restore public confidence in the electoral process.

The Greens will be supporting this bill, the Local Electoral Amendment Bill (No 2). It is weak in parts but it is a step in the right direction, and that is a direction that the Greens feel very passionately about. It is about ensuring there is transparency and accountability in elections.

The Greens have got a really good track record of creating bills and legislation that ensure transparency in our democracy. We believe that local government elections should be subjected to the same scrutiny as general elections. We have always resisted any attempts by the wealthy to buy elections. We have just had an example in Auckland recently where the Communities and Residents trustees of the Auckland Energy Consumer Trust changed the rules of their organisation, which is owned by the public, so they could post out a $320 dividend to every electricity account holder in Auckland, and they also posted a nice pictures of themselves. The voting papers arrived within a few days. Needless to say, the same Communities and Residents trustees were re-elected. This bill will not fix that, but it will go some way towards creating a system where there are some limits on the amount of money that can be donated to a local government election campaign anonymously, and that is the part we agree with.

For some time now we have had our own bill in the ballot, the Local Electoral (Finance) Amendment Bill, which puts a cap on donations by individuals or groups at the sum of $5,000 and removes the ability to have anonymous donations for any amount over $500. It also has rules for the regulation of third-party spending and penalties for avoiding the rules relating to donations. As well as that, as my colleagues have already said, it ensures there is a register of pecuniary interests for members of local authorities, and that would be open to the public. Amongst other things, in my bill the preamble says that the purpose of it is to maintain public and political confidence in the administration of local body elections. It also says it will prevent the undue influence of wealth on electoral outcomes, and provide greater transparency and accountability on the part of candidates and other persons engaged in election activities, in order to minimise the perception of corruption. We have had this bill in the ballot since before the last election.

Public confidence is certainly something that we need a lot more of now, and we are more justified in wanting a bill like this now because of the behaviour, as others have stated, of Mr John Banks during this campaign to become mayor of the super-city in Auckland. The legislation that forced the amalgamation of the seven councils in Auckland is partly to blame for the fact that there is now more than ever a need to mend our political system so that we are more transparent. The legislation that created the super-city created the super-mayor and it created the super-allowance, the super-spending allowance, with more than half a million dollars being allowed for each mayoral campaign candidate. This is why there was so much forgotten soliciting or forgotten donations during Mr Banks’ failed campaign.

The second point of my Local Electoral (Finance) Amendment Bill is to prevent the undue influence of wealth on electoral outcomes. This bill says that only donations of $1,500 or lower can be anonymous and that a donation from Skycity, for example, would not have been anonymous. Under this system, which we support, Mr Dotcom would have to split his cheques not into two $25,000 sums but into 33.33 cheques, which I think would give him overuse syndrome.

When you consider that this bill is really an attempt to remove the wriggle room that allowed Mr Banks to fudge his campaign returns and to get away with it, we need this bill more than ever. We will be supporting it. The Prime Minister is on record as saying that the existing legislation is an ass. Well, we think this legislation could be stronger, but we agree that this is probably about covering the one that belongs to Mr Banks.

I am pleased to take a call on this Local Electoral Amendment Bill (No 2), and I am pleased that I am hearing from the Opposition that there is a level of support behind the bill. It does bring about more transparency. It does bring about some changes to the electoral expenditure and donation rules, which are welcome. I am looking forward to also hearing back from the Justice and Electoral Committee after it has examined the bill through the public submissions process.

I was sitting up in my office listening to some of the debate, and I heard Opposition members talking a little bit about memory loss—some might call it a crystal set that I was listening to; I call it a television—but if anyone is going to talk about memory loss, then we should talk about those who cannot remember who passed the actual legislation that led to the expenditure issues in the 2010 local body elections, because, actually, that legislation was passed in 2001, and it was the Labour Party that was in Government in 2001.

Labour members have the cheek to try to blame the super-city legislation for the problems that they say arose through the local body elections in 2010. Actually, it had nothing to do with that legislation, because the expenditure and donation legislation they are working under was the 2001 Local Electoral Act.

The other bit of memory loss I would like to mention is the fact that the other side cannot remember that there were two candidates who took large anonymous donations. We do not hear about the second candidate, because the second candidate happens to be a Labour Party member, but the second candidate, Len Brown, my good friend from Manukau City—the Mayor of Auckland currently—took half a million dollars of anonymous donations as well. It was funnelled through a trust, an anonymous trust, where the public of Auckland knew nothing of this half a million dollars.

If we are going to talk about anonymous donations, if we are going to talk about memory loss, let us talk about the people who cannot remember who passed the legislation that led to the issues in the 2010 local body elections. Let us talk about the people who cannot remember that there were two candidates who took half a million dollars in anonymous donations, one of whom happens to be a Labour Party member. We do not hear about that from them, because they do not want to admit the truth.

This piece of legislation will resolve many of those issues. This piece of legislation will tidy up the donation problems of the 2010 local body elections. I look forward to it being passed, and I look forward to some more constructive comments coming through from the Opposition in the second and third reading debates. [Interruption]

Order! Order! Members, order! Members, this debate has concluded.

Bill read a first time.

Bill referred to the Justice and Electoral Committee.

I move, That the Justice and Electoral Committee report the bill to the House on or before 11 March 2013.

Motion agreed to.