Photo: Getty Images
Photo: Getty Images

OPINIONPoliticsMarch 10, 2020

The rot may be so deep we need a wholly new generation of political leaders

Contributing writer
Photo: Getty Images
Photo: Getty Images

The donations scandal looks very different if we see ourselves not as Labour supporters or National voters but as citizens of a country whose politicians are selling us all out, argues Danyl Mclauchlan in the conclusion to our series on electoral funding, Money Talks.

This series is made possible thanks to Spinoff Members. Join Members to support more of this sort of carry-on.

With four separate Serious Fraud Office investigations implicating some of our most high-profile parties and politicians in donations scandals, this is new territory for New Zealand voters. And it feels like the scale hasn’t quite sunk in. Maybe we’re all too busy reading coronavirus conspiracies and panic shopping for toilet paper to absorb it. But four in a month is unprecedented. What is going on?

There are various theories. The one I find most plausible is that the New Zealand police have always been reluctant to pursue political donations and political issues generally (with the exception of issues that justified raids on Nicky Hager’s house). And over time – the theory goes – this created a climate in which our politicians felt they just didn’t need to follow the law at all, because it wasn’t enforced. And so the nature of political donations and noncompliance became more and more egregious.

Then came the Jami-Lee Ross revelations, in which he accused the National Party of accepting large donations linked to the Chinese Communist Party. These were solicited by Ross, who was then the party’s senior whip, and were, it is alleged, structured in a manner designed to conceal the donation.

Politicians always insist that donations are made because the donors support the party and its values, which is often true, especially for smaller donors. But it doesn’t explain why so many of these large donors repeatedly donate to rival parties with opposing values, as is the case with two of the men being charged by the SFO. Our traditional allies are said to be aghast at all this. National already has a list MP – Jian Yang – with historic links to China’s military intelligence. In 2018 the US Congress was told that “China had penetrated New Zealand’s political networks”, and advised that we should be excluded from the Five Eyes network on this basis. So you can see why elements of the New Zealand state, especially the justice and security sector might want to send a very strong message to our political class that this is not acceptable behaviour.

But once you’re investigating those donations it becomes very hard to overlook the activities of the New Zealand First Foundation. And then consistency of the law means an obligation to look into the other breaches. So here we all are, with multiple active investigations implicating some of the most powerful politicians in the country.

There’s an argument – suddenly very fashionable in New Zealand political circles – which is that all of this proves that the system is working as designed. People are suspected of breaking the law, and there are investigations ongoing, so everything is obviously fine. Here’s the problem with that: the only reason anyone knows anything about the National Party donation is because Jami-Lee Ross sought to incriminate his own leader by phoning him up, discussing the donation and recording the conversation, then releasing the recording to the media, which wound up with not Bridges but Ross and the donors facing charges.

Nothing that stupid has ever happened in New Zealand politics before, and it will probably never happen again. If we’re relying on highly unlikely events to disclose evidence of illegal activities and prompt investigations then the law is not “working as designed”. How do we know there aren’t hundreds or even thousands of similar donations that haven’t been brought to the attention of the public or the authorities because none of the other political parties ever had a senior whip as erratic as Jami-Lee Ross?

A similar case can be made for the New Zealand First Foundation donations. These leaks seem to come from disaffected former party members. It is not a once-in-a-century event for Winston Peters to suffer a catastrophic falling out with someone he works with: this is a regular, highly predictable occurence. But it is still not the system “working as designed” if former party members are tipping journalists off to hidden wine-boxes filled with documents in order for the public and the police to be alerted to them.

Politicians and political operatives like to think of themselves as basically decent people, and the way they deal with the cognitive dissonance of being implicated in our obviously rotten donations system is by convincing themselves that the system is actually good, or at least defensible. But it is not. It’s clear that we need a Commission of Inquiry into political donations: the incidents which come to light through a dumb sequence of hilarious accidents are unlikely to be the only breaches of the law. It’s also clear that neither National, New Zealand First or Labour have any interest in such an outcome or in any meaningful change to the status quo.

Most people who follow politics and pay attention to political stories see things through the prism of party politics. We support one party or leader and oppose their adversaries, along with their supporters. But we don’t seem to know how to react to scandals in which the whole system – including the parties and people we like – are implicated.

The donations scandal looks very different if we see ourselves not as Labour supporters or National voters but as citizens of a country whose politicians are selling us all out, and that we can try and fix this problem by critiquing our own parties, not the ones we oppose. No matter what your politics and beliefs are, they are almost certainly not the values of the corporate fishing industry, or the racing industry, or the Chinese Communist Party, and none of us will get the country we want if our political leaders were to be secretly beholden to those interests instead of ours.

How do we fix political donations? Some argue we need state funding of political parties. But, as Bryce Edwards points out, our politicians already enjoy massive taxpayer funding. Edwards estimates that the parliamentary parties receive about $120 million dollars per year, on the dubious grounds that this money enables them to “represent the voters”, which in practice looks an awful lot like permanent political campaigning. So we currently have the worst of both worlds in which parties are fundraising on a massive scale, with all the problems that entails, and they already have stealthy but vast levels of taxpayer funding as well. They don’t need more money.

Other commentators think we need blind, anonymous donations. You give some money to the Electoral Commission, or some other body and they forward the payment onto the party that you nominate, who has no idea of the origin of the donation. A few smart people whose opinions I respect think this sounds like a good idea, so maybe I’m missing something here, but wouldn’t this be an enormously empowering system for lobbyists (who are already disturbingly powerful). If you wanted to buy a favour or policy from a political party, wouldn’t you just pay that party’s law firm or friendly lobbyist, who’d then pay it to the Electoral Commission and confirm with the party leadership that a donation had been made?

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This year is an election year, so letter boxes around the country will flood with junk mail from politicians promising us that they’re “passionate about the future”, or some equally meaningless slogan and almost all of us will toss them in the bin, unread. Our junk mail folders will fill with electronic direct mail messages nobody reads. Our social media feeds will be bombarded with inane memes and algorithmically targeted ads that our ad-blockers filter out. Our streets will be cluttered with billboards that nobody looks at. None of this adds any value to our democracy, and almost all of it is paid for via anonymous donations.

Our political parties don’t need to produce any of this garbage: they think they do because all of their opponents do and they’re afraid they’ll lose if they don’t. And in fundraising to afford it they compromise their integrity and constrain themselves to the policy preferences of our  richest individuals and largest corporations, so that they can’t actually do anything meaningful when they win.

It hasn’t been a great year for our political class. Whoever wins in September, the political donations system will probably not change. Maybe the best we can hope for is that the next generation of political leaders, not yet contaminated by the current regime, can see it for what it is, and realise that that the system that our politicians have designed is a conspiracy against the public, but that it doesn’t even work for them, and that almost all the change they want is downstream from taking money out of politics. And that it will cost them nothing, because most of what it pays for is worthless.

Keep going!
The Canadian parliament in Ottawa. Photo: Getty
The Canadian parliament in Ottawa. Photo: Getty

OPINIONPoliticsMarch 9, 2020

The two-step solution to fixing our donations mess

Contributing writer
The Canadian parliament in Ottawa. Photo: Getty
The Canadian parliament in Ottawa. Photo: Getty

Max Rashbrooke makes the case for reforms based on the democratic principle that we should each have the same influence over politics. We could do worse than starting by looking at Canada, he argues.

The Money Talks series explores the rot in our donations system and ideas to fix it. It is made possible thanks to Spinoff Members. Join Members to support more of this work.

In the light of recent donations scandals involving the New Zealand First and National parties, just the latest in a long line of controversies, it is broadly agreed that we must curb the undue influence wealthy people are able to exert.

My own answer has two elements: a tough limit on the amount that can be donated privately, and a profoundly democratic new way to fund parties publicly.

All regimes for political donations try to balance two principles: free speech and democratic equality. Giving a party cash is a way to express your opinion.

But more important, in my view, is the idea that each of us should have – as much as possible – the same influence over politics. That is the ideal of democracy, and the last few centuries can be seen partly as a slow global climb towards that ideal. This climb encompasses the expansion of voting rights to all men and then all women, the extension of education to help citizens participate more fully in politics, and a panoply of official information acts and other mechanisms to help people hold politicians to account.

The next step in this steady ascent, it seems to me, is to address the imbalance inherent in the fact that wealthy people can donate far more to political parties, and thus gain more influence, than the rest of us can. Many countries already limit donations to an amount roughly within the reach of the average voter. In contrast to our system, which places literally no limits on donations, the Canadians allow their citizens to give just $1,625 a year (around $2,000 in our money) to any party. Only Canadian citizens – not companies, not trusts, and not foreigners – can give.

This, to me, strikes the right balance. Ordinary people’s ability to support the party of their choice is preserved, while curbs are placed on the excessive influence otherwise open to the wealthy. Of course the latter can still split a large donation into sub-$2,000 amounts and get friends and colleagues to anonymously donate each chunk separately. But with such a low limit in place, they would have to get ten people involved in their conspiracy just to give $20,000, in the process exposing themselves to a large risk of being ratted on. Scamming, in other words, is made more difficult.

In New Zealand, these curbs would create a large shortfall in parties’ funds – somewhere in the realm of $20 million over a three-year electoral cycle, according to my calculations. Parties might make good some of that shortfall by raising more small donations, but that is hardly a full solution.

The standard response, as in Canada, is to increase state (or public) funding. And despite the fuss that this suggestion often creates, we already have enormous state funding of political parties in New Zealand. Around $50 million every three years is paid to parties through their parliamentary appropriations. In theory, these funds are not used for “political” purposes, but in reality they are, because the boundary between political and non-political is almost impossible to police.

Political parties are, in any case, an essential part of democracy: they develop policies, put forward coherent platforms, and give voters predictability about outcomes. So it is appropriate that we all fund their activities.

One option would be to simply increase the parliamentary allocations. But this would be politically unpopular, and has definite downsides. It encourages party hierarchies not to turn outwards, towards voters and members, but inwards, to master the art of extracting money from a relatively opaque and technocratic process.

A better way to allocate that money would be through a democracy voucher, an idea gaining currency worldwide and now being trialled in America. In essence, the amount needed to fund political parties is divided up and turned into a voucher for each citizen to allocate to the party of their choice. This amount – potentially $20 per voter  – would be sent in the form of an electronic (or paper) voucher, perhaps in the midpoint between elections.

This approach has clear advantages. It would create major incentives for parties to propose policies with mass rather than elite appeal. It would help them reconnect with members and voters. It would allow smaller parties to compete on a more even footing with larger ones. And it would get around the political problem of people’s taxpayer dollars going to parties they despise. Various technical questions – such as the security of the vouchers, and the basis for allocating unspent ones – would have to be resolved. But they do not seem to me insurmountable.

This is, of course, a relatively new idea, and should perhaps be piloted before being fully rolled out. And if the whole idea seems too radical, there are alternatives, such as allocating funds based on party membership or a one-vote one-dollar system. Further ways to tilt funding towards new parties should also be explored.

My two-part proposal does not resolve every detail of the donations issue; there are other ideas I would happily support if my own achieved no traction, and it is probably true that we need a complete overhaul of the laws governing undue influence in politics, including lobbying and election spending. Whatever the approach, though, something simply has to be done to clear up this mess.

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