Analysis by Dr Bryce Edwards.
Political Roundup: Time to take political donations law seriously
There is no corruption in New Zealand. At least that’s what authorities want the public to believe. For decades now our system of political finance regulation has been portrayed as highly rigorous, ensuring our politicians cannot be bought.
Unfortunately, that’s just not true. Although politicians and officials have claimed tight rules around transparency of large donations prevent the selling of policy by politicians, it’s really just resulted in a false sense of security.
Scholars of political finance such as myself have been unconvinced that the system works. As I’ve pointed out, often donation loopholes exist but are undiscovered by authorities. In this regard, we’ve ended up with a worst-case scenario in which the rules to prevent corruption are ineffective, yet the public is encouraged to have illusions in the rules working.
The New Zealand First Foundation trial has exposed a giant loophole
Thankfully, in 2022 we now have two landmark High Court trials proving that our laws are an ass and need significant reform.
The first trial, involving large donations intended for the New Zealand First party, showed how donation disclosure rules were easily avoided by having a system set up where cheques are deposited into a bank account of a separate legal entity called the New Zealand First Foundation. In this case, the judge ruled that these large gifts – about $750,000 in total – did not qualify as “political donations” under the Electoral Act. Therefore, the donors weren’t disclosed, and although the Serious Fraud Office viewed this as a violation under the Crimes Act, the judge acquitted the defendants.
The public doesn’t know how much this technicality has been used by other political parties to evade disclosing their links to wealthy donors. This particular trial only came about due to a whistleblower inside New Zealand First. Otherwise, authorities had no idea about the donations and the use of the dodgy fundraising mechanism.
The Government is now proposing that the loophole can be easily fixed by adding two small amendments to the current Electoral Amendment Bill, which is currently being considered by select committee, and is intended to be passed into law by the end of the year. Effectively the Minister of Justice, Kiri Allen, is proposing to make an “amendment to an amendment”, which she says will be “urgent” and “quite succinct”.
Allan states that two changes are necessary – the creation of a new more expansive definition of what a “party donation” is, and making it a crime for those receiving party donations not to inform the party secretary who is responsible for disclosing large donations.
The problem, of course, is that this is piggybacking on an existing piece of legislation going through Parliament that is designed to deal with very different problems with the Electoral Act. And the changes being made in this existing amendment bill – particularly lowering threshold levels for disclosure of donations – are strongly opposed by the National and Act parties. This means the crucial closing of the “NZ First Foundation loophole” is being inserted into a contentious bill that won’t have cross-party consensus. So although all the parliamentary want to close the loophole, not all of them will be able to vote for it.
This is a muddled and dangerous way to carry out political donations reform. It would be much wiser to make the changes to the loophole in an entirely separate bill that isn’t muddied by partisan disagreement. While it might be convenient for the Government to piggyback the changes onto the existing bill, taking a shortcut on such a crucial and complicated loophole might actually cause more problems.
As Prime Minister Jacinda Ardern correctly said last week, there is a risk that by rushing the loophole fix through quickly there might be unintended consequences. Hence, this appears to simply be another case where the Government would be wise to heed the aphorism of: “legislate in haste, repent in leisure”.
The Labour and National donations trial is exposing more loopholes
A second trial, currently taking place in the Auckland High Court, concerns large donations to the Labour and National parties that were also hidden. We are hearing that, as with the NZ First trial, these large donations were easily disguised under the current law and were undisclosed.
As with the NZ First Foundation, the prosecution is arguing that people inside the Labour and National parties helped manipulate the rules to keep large donations secret from the public. We now know one wealthy individual is accused of giving both Labour and National very large donations, with the SFO alleging these were broken down into smaller amounts given by various “sham donors” so that they wouldn’t be disclosed to the public. The prosecution alleges that Labour and National MPs had lobbied for the wealthy donor to receive a royal honour and this was the motivation for hiding the donor’s identity from the public.
Also in common with the NZ First trial, the dodgy donations to both Labour and National only came to light via whistleblowers. In National’s case, it was due to an unusual meltdown in the usually tightly-controlled party, when MP Jami-Lee Ross fell out with leader Simon Bridges. It then turned out that the same donor had made large donations to Labour in secret.
In the case of the Labour and National donations, the loophole is simply that our donations regime is based on a “high trust model” in which authorities expect parties and donors to follow the rules. There is no policing of these rules as no authority is charged or resourced to monitor what is happening. Instead, the public only learns about dodgy donations when there is a whistleblower. One of the basic foundations of our democracy, that political power isn’t for sale, should not have to rely on the development of a guilty conscience or a desire for revenge inside a political party.
Governments continue to play catchup with piecemeal and poor reform
Governments often regard the reform of political finance as simplistic when in reality it’s always much more complicated than they expect. Furthermore, wealthy donors and party fundraisers will always try to find ways to get around the rules. Academic scholars of this regulation compare the money given to politicians by the wealthy to underground spring water trying to get to the surface – we can try to block secret money from getting through, but there is a strong hydraulic nature that pushes it through, and once authorities dam up one outlet, the water finds its way up through another leak. The problem should not be underestimated.
Hence there is no place for complacency about money and politics. And yet that’s been the official setting for many years. And authorities often come up with quick fixes to try and stem the latest discovered loophole. But inevitably there are then unintended consequences arising from those simplistic fixes, sometimes making matters worse or driving the political money through a different loophole.
The ultimate example of this was the Helen Clark Labour Government’s Electoral Finance Act 2008, which caused more problems than it sought to fix. Labour themselves voted to repeal the hated legislation, which had been rushed into power without proper scrutiny or care.
Governments continue to play catchup with political finance reform, and are obviously not motivated to have a proper investigation into how to run the system of money and politics – it might threaten their own interests. Working groups are put together, normally without proper scope to examine the problems, and fixes are inevitably put forward that avoid some of the big problems and the public is yet again assuaged that there is no corruption in New Zealand.
Government using a self-serving reform process
There’s also the problem that fixes are often also used to either improve the financial position of the parties in power, or to hurt opponents. Furthermore, reform can sometimes involve a cartel of parties in Parliament who increase their own financial advantage with new rules that also seek to disadvantage fledgling or outside parties trying to break into Parliament.
Self-interest is therefore the major flaw to watch for in the design of donations reform. Already, the National and Act parties have argued that Labour’s latest proposals to lower the threshold for disclosure of donations are designed to hurt opponents and favour the incumbents themselves. Of course, this argument probably also reflects the self-interest of the parties of the right.
Nonetheless, it’s never a good look in this area of reform for changes to donation rules to look like it’s being a partisan football game. This reduces public confidence in the changes, and also threatens to make them less enduring. When such laws are made on a partisan basis, and often without much consultation with the public or opponents it discourages consensus – which is highly desirable when working on the rules of democracy.
We need donations reform processes that are more removed from self-interested politicians. This is a good point made yesterday by an editorial in the Otago Daily Times which suggests a Royal Commission, and points to inadequacies in the Government’s plans for an independent panel to propose reform. Without a more rigorous and truly independent mechanism for donations reform, the newspaper warns that “we are left with piecemeal changes to the law designed to convince the populace that something is happening even if that something is not much.”
Nonetheless, the most pressing issue is that the Government needs to properly close the “NZ First Foundation loophole”. There now needs to be pressure applied on the Government so that they don’t carry this out in a way that makes the problem even worse.
The other risk is that in closing this one loophole, the Government gets to declare that the problems are mostly fixed, and the public might too easily believe that the problems identified in the current high court trial have also been dealt with.
There will be a temptation for the parties currently in the dock – Labour and National – to simply patch up the hole that the NZ First verdict has revealed, tweak a few donation thresholds and tick box forms and declare the problem fixed. Until a proper process is set up by a government that takes money in politics seriously, then we have no right to be complacent about corruption in this country.
Further reading on political donations reform and the high court trial
Thomas Manch (Stuff): The fight over political donations and what the Government plans to change
Andrea Vance (Stuff): Ministry of Justice forced to ask for $10m in extra funding for ‘rushed’ electoral law review
Tim Murphy (Newsroom): Political donations trial: Eavesdropping on a WeChat scheme
Catrin Owen (Stuff): Jami-Lee Ross’ ex-wife hopes for acquittal in donations trial for children’s sake
Amy Williams (RNZ): Andrew Little and Michael Wood to take stand in political donations trial
Catrin Owen (Stuff): Labour Party wanted to be ‘transparent’ after double up in donors found
Claire Trevett (Herald): Political donations: Justice Minister Kiri Allan – Govt will close NZ First Foundation loophole for election year
RNZ: Cabinet confirms ‘shadow entity’ loophole will be closed
Newstalk: Justice Minister: Closing electoral donations loophole a relatively simple fix
Other items of interest and importance today
COST OF LIVING PAYMENTS
Damien Venuto (Herald): How the cost-of-living payment became a complicated mess
Claire Trevett (Herald): Money doesn’t buy Labour happiness in cost-of-living payment pickle (paywalled)
Peter Dunne: Aspirations are all very well, but it’s getting it right that counts
Susan Edmunds (Stuff): Cost of Living payment made to 780,000 fewer people than expected
RNZ: Cost of living payments: Call for government to help low income earners on benefit
Ireland Hendry-Tennent (Newshub): Christopher Luxon says Government has ‘lost the plot’, lashes out over cost of living payment issues
RNZ: National urges investigation over foreign cost-of-living payments
Heather du Plessis-Allan (Newstalk): You can only really get angry at cost of living payments if you expected better
Herald: Editorial: Cost of living payment a blunt but effective tool (paywalled)
Katie Scotcher (RNZ): Government in dark over numbers getting cost of living payment overseas
Jem Traylen (BusinessDesk): Cost of living payments – IRD warned govt it’s not sure where people live (paywalled)
Susan Edmunds (Stuff): National: Government underestimating scale of payment errors
Sam Olley (RNZ): Cost of living payment: IRD staying mum on overseas recipient numbers
Brad Lewis (Today FM): Former revenue minister says Governments Cost of Living Payment scheme good idea, poorly executed
Melanie Carroll (Stuff): Cost of living payment will add temporary fuel to inflation: Economists
1News: How far can the cost of living support payment go each week?
Michael Neilson (Herald): Cost of living payment: Questions over ‘targeted’ nature with people overseas receiving money
Jean Edwards (RNZ): Expats, foreigners told they’re getting cost of living payment intended for struggling Kiwis
1News: Govt’s ‘duty’ to support Kiwis amid cost of living crisis – Ardern
Gordon Campbell: On why we should pay kiwis living abroad
ECONOMY, EMPLOYMENT AND INEQUALITY
Chris Trotter (Interest): Fifty wasted years
Melanie Carroll (Stuff): By the numbers: The billions of dollars that drive NZ’s economy
Katie Bradford (1News): Low unemployment a chance to reset job market
Tom Pullar-Strecker (Stuff): So far, Reserve Bank governor Adrian Orr deserves a second term
Ella Somers (BusinessDesk): Most pokies money comes from the most deprived (paywalled)
Lauren Pattemore (Stuff): Emergency food parcels numbers skyrocket since pandemic
Michael Reddell: Reviewing Covid monetary policy – Part 1
Melanie Carroll (Stuff): How rich are New Zealand’s supermarket owners?
Liam Dann (Herald): Why we won’t be celebrating record low unemployment (paywalled)
Jonathan Mitchell (NBR): Will the Government give motorists an election year sweetener? (paywalled)
Damien Venuto (Herald): The Kiwis being digitally excluded in a changing world
Dan Bidois (Stuff): Two things we should do to make everyone better off
PARLIAMENT, GOVERNMENT AND ELECTIONS
Branko Marcetic (Democracy Project): Who knew James Shaw had so many fans in the media?
Rachel Smalley (Today FM): Jacinda has chosen to step away when she is needed most
Dave Armstrong (Stuff): A guide to wrecking left-wing parties in NZ
Richard Harman: National goes to conference on back foot (paywalled)
Steven Cowan: Jacinda is John
Anne-Mette Holmgård Sundahl (The Conversation): Does Jacinda Ardern’s popularity really qualify as a cult of personality, as some critics claim?
David Farrar: Roy Morgan poll July 2022
Thomas Coughlan (Herald): Gerry Brownlee retiring from Ilam race next election, hints at Speaker
Critic: Aotearoa’s politicians if they were your flatmates
CO-GOVERNANCE AND THREE WATERS
Thomas Coughlan (Herald): Councils propose Three Waters fix without co-governance (paywalled)
Julian Ludbrook (BusinessDesk): Three Waters co-governance: more of the same or different? (paywalled)
Don Brash: One of the world’s most successful democracies at risk
Chris Trotter (Daily Blog): A Grand coalition for peace, unity and democracy
Lisa Tumahai (Herald): Ngāi Tahu final step to permanent representation on Environment Canterbury
Tracey Roxburgh (ODT): 3 Waters: Mayor lauds council over approach to submission
Will Trafford (Māori TV): We’ll roll back co-governance – National
Ireland Hendry-Tennent (Newshub): Christopher Luxon backtracks on promise to match health funding with inflation if elected despite repeated assurances
Tova O’Brien (Today FM): I’m not sure Shortland Street is the answer to our nursing shortage
Emma Russell and Rachel Maher (Herald): Healthcare crisis: North Shore Hospital near capacity, woman ‘left in own urine for 14 hours’
Louise Ternouth (RNZ): NZ healthcare workers feel sidelined as govt seeks recruits
Bridie Witton (Stuff): More financial support needed to keep nurses and doctors in New Zealand, industry leaders say
Tova O’Brien (Today FM): 166 skilled migrants want to come here, nine of them nurses… Slow clap Prime Minister
Stephen Forbes (Local Democracy Reporting): Govt plan to boost healthcare workforce is ‘light at the end of the Covid tunnel’
RNZ: Shortland Street, TVNZ nursing campaign funding to be kept secret
Jean Edwards (RNZ): Government warned against relying too heavily on overseas health workers to fill shortages
Jenny Ruth (BusinessDesk): Aged care sector to health minister Andrew Little: we’ve heard it all before (paywalled)
Anna Whyte (1News): Health crisis: New measures to attract overseas staff
Bridie Witton (Stuff): Cheat sheet: The plans hoped to ease the health workforce shortages
Luke Malpass (Stuff): Health Minister Andrew Little stands firm on DHB ‘crisis’ letter timing
David Farrar: ED waiting times at record lengths
Tony Farrell (Herald): Punched-in-the-face and stalked GPs are exhausted and overloaded (paywalled)
Rowan Quinn (RNZ): Hospitals’ winter illnesses spell long waits for heart and cancer surgeries
Samantha Murton (Herald): We can’t magic away the chronic GP shortage (paywalled)
Alex Spence (Herald): ‘Utterly overwhelmed’: Child psychiatrists plead for urgent action to fix mental health staffing crisis (paywalled)
Alex Spence (Herald): Great Minds: Mental health staffing crisis – Andrew Little promises ‘more boots on the ground’
Grady Connell (Today FM): ‘Definitely in a health crisis’ – says anonymous overworked nurse
Aden Miles Morunga (Local Democracy Reporting): Call to improve health inequities for Pasifika, Māori after fluoride order
Georgia O’Connor-Harding (Herald): GP shortage: Rainbow community struggles to find the right health care
Thomas Manch (Stuff): Beijing takes notice of more New Zealanders viewing China as a ‘threat’
Thomas Manch (Stuff): PM Jacinda Ardern urges China to oppose Russia’s invasion of Ukraine
Andrea Vance (Stuff): MPs warned Chinese Government could access TikTok data
Tess McClure (Guardian): New Zealand MPs warned not to use TikTok over fears China could access data
Richard Harman: Ardern backs off White House China statement (paywalled)
Glenn McConnell (Stuff): The excitment and unity seen in Apia is vital as the Pacific deals with multiple crises
Glenn McConnell (Stuff): Jacinda Ardern and politicians show united front on tour to Samoa
Giles Dexter (RNZ): Jacinda Ardern stresses unique nature of New Zealand-Samoa friendship
Sam Sachdeva (Newsroom): ‘Self-serving’ powers must tackle nuclear threat
Russell Palmer (RNZ): Chinese ambassador touts openness, regional ‘peace and stability’
Oliver Lewis (BusinessDesk): Jacinda Ardern on the complicated, important NZ-China relationship (paywalled)
RNZ: Media manager lands on Russia’s banned list after commenting on embassy prank
1News: Hundreds living in cars as winter chill bites
Dileepa Fonseka (Stuff): The meeting that shows why housing is broken and never gets fixed
Rob Stock (Stuff): Cry of protest from Auckland’s ‘kauri suburbs’
Tamsyn Parker (Herald): Nation of debt: Housing debt jumps 7pc – can we afford the rising cost of it? (paywalled)
RNZ: Decline in house prices gains more traction but crash not expected – CoreLogic
Tina Grumball (Herald): Calls to stop Christchurch housing intensification – ‘Build them where they are needed’
Rachel Moore (Stuff): Motel millions for emergency housing are ‘guaranteed’ Government cash, Hamilton motel leader says
Kate MacNamara (Herald): Affordable housing agency Kāinga Ora bids up Ferncliffe Farms price on inflated valuations (paywalled)
Kelvin Davidson (One Roof): What could harm house prices the most right now – job losses
Carmen Hall (Herald): Bay of Plenty developers say government policies continue to lock land for houses (paywalled)
Fiona Rotherham (NBR): House price falls likely only half-way through, economist says (paywalled)
Diana Clement (One Roof): House price recovery: When will it happen, which city will bounce back the fastest?
Tim Hunter (NBR): How banks fuel house price inflation (paywalled)
RNZ: Auckland council saving estimated $1m housing intensification consultation
1News: MPs’ views on multiple property-owners getting extra local votes
Simon Wilson (Herald): The mayoral hopefuls and the future of the port (paywalled)
Tom Hunt (Stuff): The good, the bad and the weird: Wellington council report cards in
Bernard Orsman (Herald): Efeso Collins confirmed as frontrunner in Auckland mayoral race (paywalled)
Chris Keall (Herald): Auckland mayoralty: Person behind rogue ‘Efeso Collins’ website revealed (paywalled)
Todd Niall (RNZ): Auckland mayoral candidate rubbishes claim he backs $785m cycle bridge
Stephen Forbes (Local Democracy Reporting): Former National MP Maurice Williamson seeks Auckland Council seat
Samantha Gee (RNZ): Former National MP Nick Smith eyes Nelson mayoralty
ODT: Editorial – Tripping over each other
Heather du Plessis-Allan (Newstalk): Māori ward legislation change is clever politics from Nanaia Mahuta
Kiri Gillespie (Herald): Tauranga City Council moves forward in key CBD co-ownership bid with Māori (paywalled)
Lianne Dalziel (Herald): One size does not fit all (paywalled)
JUSTICE, LAW AND ORDER
Damien Grant (Stuff): The fall of a disgraced lawyer in the age of #MeToo
Damien Venuto (Herald): Guns, rage and racism – Has NZ become an angry nation?
Dylan Asafo (Herald): Why we need to abolish prisons and honour te Tiriti o Waitangi (paywalled)
Dita De Boni (NBR): New Law Society head being investigated for ‘behaviour concerns’ (paywalled)
Andrea Vance (Stuff): Law Society launches review over concerns about ‘behaviour’
Michael Neilson (Herald): Reports of retail crime nearly double in 5 years – National’s claim of ‘soft’ approach rubbished by expert (paywalled)
Deena Coster (Stuff): Victims at risk as justice stalled due to ‘exorbitant’ court delays
Jarrod Gilbert (Herald): Evidenced-based policing gives science a seat at the table (paywalled)
Martyn Bradbury (Daily Blog): The ram raids are a symptom of a much deeper malaise
CLIMATE AND ENVIRONMENT
Jamie Mackay (Herald): Gloves off in climate fight over He Waka Eke Noa (paywalled)
Thomas Coughlan (Herald): Fuel tax cuts will increase emissions, but Government still plans to hit climate targets
Marc Daalder (Newsroom): Climate targets at risk if carbon market isn’t fixed
Will Trafford (Māori TV): Govt axes controversial forestry shake-up
Tina Morrison (Stuff): What’s good for the planet is good for business, survey finds
Jamie Gray (Herald): NZ corporates lag offshore peers reporting climate risk – PwC (paywalled)
Moana Ellis (Local Democracy Reporting): ‘We need to act’: NZ can’t slow down on climate action – Mahuta
Christine Rovoi (Stuff): Greenpeace urges alliance against ‘rush to open deep-sea mining’
David Williams (Newsroom): NZ on the cusp of a rivers revolution
Waatea News: Name game distraction from Māori development
Karanama Ruru (Stuff): 35 years ago te reo Māori became an official language, but experts say its survival still isn’t guaranteed
Ashleigh McCaull (RNZ): Celebrating 35 years of te reo Māori as an official language, but the danger of losing it remains
Amelia Wade (Newshub): Greens, National, ACT, former Reserve Bank chairman call for major Covid-19 inquiry
Akula Sharma (Herald): Protest threat: More Freedom and Rights’ marches in August, Parliament plans unveiled
John Tamihere (Herald): This Covid hangover is not going away until we find something else as a scapegoat’
John Roughan (Herald): It feels like we have a national case of long-Covid (paywalled)
Jo Moir (Newsroom): Govt awaiting advice on isolation and test-to-work
Rachel Smalley (NBR): Prime Minister missing as face of our Covid response (paywalled)
Claire Trevett (Herald): Time for the Covid-19 review? The borders are open and Ashley Bloomfield has left, but the ‘what next’ question lingers (paywalled)
Jamie Morton (Herald): Omicron wave: Why NZ hasn’t seen a worst-case scenario (paywalled)
MEDIA AND COMMUNICATION
Duncan Grieve (Spinoff): Willie Jackson has big plans for the media – and social media, too
Siouxsie Wiles (Stuff): Disinformation campaigns a danger to us all
Marc Daalder (Newsroom): A new wave of anti-LGBT hate
Critic: Free speech debate looking for student voices