National says political donation reform will have ‘chilling effect’ on NZ election

The National Party has strongly opposed plans to overhaul New Zealand’s political donations regime, warning of a “chilling effect” on democracy.

The government has proposed sweeping changes to the electoral law. Changes would include lowering the threshold for disclosure of donors by political parties from $15,000 to $1,500 and requiring political parties to make their annual financial statements public.

National, Labor and New Zealand First are currently embroiled in legal cases centering on donations – and critics have long argued the law needs to be strengthened to prevent abuse.

The Justice Department has sought comment on political fundraising ahead of a review by an independent panel of experts and academics. The National Party has published its brief on the changes. Labor “politely declined” to do so.

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Former National Party MP Jami-Lee Ross is facing serious charges from the Fraud Bureau over donations to the party.

Ricky Wilson / Stuff

Former National Party MP Jami-Lee Ross is facing serious charges from the Fraud Bureau over donations to the party.

A plan is under consideration to lower the threshold for public disclosure of party donations from $15,000 to just $1,500. This would bring it in line with the candidate limit.

Critics of the current regime argue that the gap allows donors to give money to a party without disclosing it, with the money then flowing to a candidate.

But National says officials underestimated “donors’ aversion to being publicly identified.”

The party says only a “small fraction” of donors who currently give between $1,500 and $15,000 would still be willing to do so if their privacy were not protected. The submission points to recent election records, which showed that only 14 donors gave amounts over $15,000 to the National Party in 2020, and 25 to the Labor Party.

“The chilling effect (…) will have a significant impact on the ability of parties to support candidates, meet regulatory requirements and conduct effective election campaigns, without any alternative funding mechanism being offered or implemented. in place to compensate for this loss of income”, the party argues.

And it would be a “step forward” toward party reliance on state funding, National says.

The submission also says the proposal would make it more attractive for donors to channel money through registered third-party organizations, which are less regulated.

National also “strongly” opposes the move from an annual to a quarterly report on donations. He says the current scheme takes around three months, including significant work from 65 volunteers and external auditors with a donation record of over 30,000 lines.

“Replicating this process four times in a year would impose a significant regulatory and administrative burden on all parties.” The party would need to hire an additional full-time employee to do the work and increase verification costs. He says semi-annual reports are “more acceptable”.

The party supports removing the requirement to disclose large donations (greater than $30,000) to the Election Commission within 10 days.

He does not object to the suggested new requirements for disclosing non-cash gifts, but would like more clarity on the rules around events, for example raffles or movie nights.

And he does not oppose a plan to ban anonymous small donations – where the donor is not disclosed to the party or the public.

Jacinda Ardern and Christopher Luxon.  Their parties are both reacting to the proposed changes to the rules on political donations.

David White / Stuff

Jacinda Ardern and Christopher Luxon. Their parties are both reacting to the proposed changes to the rules on political donations.

The submission was made by the party’s former national secretary, Greg Hamilton, who left the post at the end of last year.

Hamilton said that because the organization was “volunteer-run”, any potential changes to an already complex regime were of concern. The existing rules system does not need “significant changes”, he said.

Ongoing court cases have shown that the parameters “actually work, being effectively enforced by regulators”.

National was also concerned that new rules would come into effect in 2023, an election year. The proposed changes would have a “significant effect” on parties’ ability to raise funds, he said.

He also questioned cross-party support for the changes, which would jeopardize the longevity and legitimacy of the new rules.

National does not want new donation rules to come into effect in an election year.

Sungmi Kim / Stuff

National does not want new donation rules to come into effect in an election year.

On Sunday, Stuff revealed that Labor had charged wealthy business leaders $1,750 a head to chat with Prime Minister Jacinda Ardern at a conference in Wellington.

And National is approaching high-profile donors — asking at least $1,000 per person — to dine with chef Christopher Luxon.

National received nearly $3 million in major donations in the last election year, 2020, nearly double the Labor tally.

The Justice Department’s director general for civil and constitutional policy, Kathy Brightwell, said the independent review would take into account current political finance parameters, which included donations to parties and candidates.

The department hoped to proactively release a summary of the submissions “soon”, she said.