New Zealand's political party funding rules and governance need an overhaul, as is further evidenced by recent revelations about political parties’ funding. Legal, but ethically questionable examples exist. One is the $150,000 donation to the National Party from a New Zealand-domiciled but entirely foreign-owned company (note: the Serious Fraud Office has been investigating that and will make an announcement about its investigation in the coming weeks). Another example is the New Zealand First Foundation backed by wealthy investors which funds the political party.
Less questionable but still relevant is the tradition of political fundraising by successive governments, involving high-fee functions for businesspeople to meet the Prime Minister of the day and their colleagues.
Valued fourth estate
New Zealanders have been regularly reminded of the need for this overhaul due to New Zealand having one of the freest media in the world. Allegations of fund splitting and at-risk sources of funding, including overseas billionaires and possible foreign governments, have plagued our political process. We are fortunate to have an active and courageous fourth estate that challenges irregularities and helps us to avoid cases of grand corruption.
A challenge with the media, though, is that it lacks resources. As a result, the media can be quick to cover a headline story. The deeper series of articles required to bring about real change are harder to maintain in a resource-limited media business. Any serious review of political party funding needs to include a media policy.
Legal reform needed for political party funding
Transparency International New Zealand (TINZ)'s Integrity Plus 2013 New Zealand National Integrity System Assessment strongly recommended a complete review of the funding of political parties and candidates’ campaigns. TINZ has re-emphasised this need in its Building Accountability: National Integrity System Assessment 2018 Update.”
Political parties claim nothing illegal has been done. While this may be the case, there are plenty of factors to suggest investigation is needed if only to confirm the legality of what was done. In progressing its investigation, the Electoral Commission has found it has limited powers for collecting the evidence required for an investigation (and hence for enforcement).
Current practices challenged by the media and public, may prove to be legal. This confirms that a review of the laws is very timely. While particular funding practices are claimed to be perfectly legal under current laws, they beg the question as to why the public continues to be perturbed when such issues emerge.
Legal or not, we expect higher standards from our leaders
In the spirit of “Noblesse Oblige”, the test of what is required and expected from those who lead a country sets higher thresholds than simply complying with the law. It is reasonable to expect that those who lead should have the understanding and sense to act morally beyond the laws of the land, and lead by example.
These current examples raise pertinent questions about the thresholds of duties that should be expected, especially where one of the key actors is an appointed judicial professional. "Tone at the top" is recognised to be a major driver and indicator of behaviours throughout an organisation. Leaders, whether political or public sector, are expected to set the ethical direction for others to emulate and aspire to.
It may be timely for political parties to start emulating the same governance standards they have collectively demanded from the private sector, as enshrined in increasingly stringent legislation globally and in New Zealand. For example, procurement splitting – analogous to split party funding - and excessive entertainment expenses in return for favours, can lead to charges of fraud, corruption or other misconduct. These would certainly lead to heavy sanctions in a corporate environment.
Codes for guidance
If all political parties had a Code of Ethics, their stated commitments to higher moral standards would build public trust (as well as political support). Furthermore, formal Codes of Conduct would guide the behaviour of their party members, including rules around accepting funds, gifts and invitations to social events and entertainment. And once political parties have these codes, they can provide assurance that these are adhered to and regularly reviewed.
It may also be an opportunity for private sector donors to not only provide funding to influence the direction of political debate and decision making, but also to influence the standards to which our political parties and officers should aspire to rise.
Recent political expediency
Parliament took urgency on 4 December 2019 to reform party donations laws. The Electoral Amendment Act (No.2) lowers the threshold of disclosure for foreign donations from $1,500 to $50.
Most regrettably, it has been widely condemned across the political spectrum as being ineffective for ignoring many loopholes. For example, opaque political funding sourced from companies, trusts or foundations, has not been addressed to make more transparent.
Furthermore, the anti-democratic urgency accorded this legislation is poorly justified. It was argued, if this is to meet the convention whereby changes to election rules should not be made in the actual year of an election.
For broad commentary on the Electoral Amendment Act (No.2), refer to Political Roundup: What’s driving the urgent clamp down on foreign donations? (Bryce Edwards, 4 Dec 2019)