Back to Basics on Election Funding

Back to Basics on Election Funding

Seldom has a bill received such vehement and widespread criticism as the Electoral Finance Bill currently before parliament.

Opposition to its main provisions has come from lawyers, the Human Rights Commission, business organisations, unions and many other groups.

Fundamentally, the bill restricts in draconian ways the ability of private citizens to criticise public institutions and political candidates and to debate matters of public interest during an election year.

It does so by placing extraordinary limits on election-related advertising by citizens or associations of citizens and requiring them to register as a “third party” with the Chief Electoral Officer. An election advertisement is broadly defined to include taking a position on a policy associated with one or more parties.

So an expression of support for, say, free trade with China is an election advertisement irrespective of whether the person or group taking that position wishes to promote the electoral prospects of one political party or another.

A breach of the proposed law would be deemed a “corrupt practice” and result in a sentence of up to one year’s imprisonment or a fine, or both.

The Business Roundtable did not make a submission on the bill. It would be difficult to add to the volume of damning commentary on it.

Moreover, contrary to the conspiracy theorists, the Business Roundtable is a-political and has never supported any political party, financially or otherwise. Its interests are in promoting good policies, regardless of who supports them. It does not seek political favours, knowing that a proliferation of subsidies and protections almost brought the economy to its knees in the 1980s. None of its research studies or submissions would be caught by any sensible election laws.

Businesses also know they have to deal with whatever government is in office. Corporate election funding is on a declining path, and is often split between parties. At the last election some of the Labour Party’s largest donations came from business sources.

In this, organisations representing businesses are different from the union movement. At the last election, unionists such as Andrew Little campaigned overtly against National. How can they expect a sympathetic hearing from a National-led government? The reality is that governments change, which is healthy in a democracy.

The teachers union the PPTA has been reported as spending $130,000 to promote its views in the last election campaign. Union support for the Labour Party has helped secure a number of favours, such as the union monopoly on collective bargaining. However distasteful this may be, few would argue that unions should be constrained in the lawful expression of their views.

The evidence that private funding threatens to hijack the country’s election process is weak. The main problems surround taxpayer funding. Contrary to the recommendations of the 1986 Royal Commission on the Electoral System, public funding has supplanted private funding as the main funding source. The Labour Party’s use of taxpayer funds for its pledge card was found to be unlawful.

We need to go back to basics on this issue. The right to freedom of political speech should be strongly protected. The secret ballot is jealously guarded because it protects supporters of a losing political party from potential victimisation.

An argument in favour of disclosure of political donations above a certain sum is that a party may be beholden to its supporters. But a counter-balancing argument is akin to the principle behind the secret ballot, namely that privacy is breached and donors may be singled out for retaliation.

There are other considerations, as the legal scholar Richard Epstein pointed out in a Business Roundtable publication The Concealment, Use and Disclosure of Information.

One is that regulating the resources available to parties is notoriously complex, given the many forms of assistance (such as in-kind services) that can be supplied.

Another is that there are quasi-market remedies to the problem of influence. As Epstein says, we can ask a candidate repeatedly: “Did you receive money from Brown when you ran for office last time?” If the candidate says, in effect, “I’m not going to tell you because I have something to protect”, voters can draw their own conclusions.

The other side of the return to basics should be a close look at public funding and related support. This protects incumbent parties, disenfranchises grassroots supporters and is clearly more open to abuse.

There is a good case for withdrawing the Electoral Finance Bill and starting over. It is a classic example of bad regulatory practice which the Regulatory Responsibility Bill currently before parliament aims to curb.

The Royal Commission said that parliament should not make significant changes to political finance legislation other than on the recommendation of an independent body or inquiry. Public confidence in democracy is undermined if the party in government changes election rules to its own advantage. The government should heed the Royal Commission’s advice.

Roger Kerr is the executive director of the New Zealand Business Roundtable.

ENDS

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