The new rules represent small but meaningful steps to correct a system that had spun out of control, writes law professor Timothy Kuhner. But will Labour have the courage and the strength to go the distance?

Citing the need for greater public confidence and participation in New Zealand’s democracy, justice minister Kiritapu Allan just announced changes to electoral law. The new rules will increase transparency for political donations and lengthen the period of time during which citizens and permanent residents may continue to vote while residing overseas. Labour is now committed to passing an electoral amendment bill prior to the 2023 general election. 

Are these changes principled and meaningful, as the announcement from the Beehive suggests? Or are they a desperate attempt by an endangered party to clutch the last strands of support still dangling from a worn and battered electorate? 

Under today’s unusual conditions of a Covid pandemic and a corruption pandemic, the distinction between these two answers is elusive. There is now a desperate need for principled action on democracy issues, as explained below.  

Citizens and residents of New Zealand based overseas have been worn and battered by a strict and sometimes unjust regime governing their return to the country, and by countless other hardships arising from other nations’ laws and the disease itself. Under the old rules, their eligibility to vote expired after three years (in the case of New Zealand citizens abroad) or after just one year (in the case of New Zealand permanent residents abroad). Under the new rules, citizens may continue to vote up until the end of their sixth year abroad and residents up until the end of their fourth year abroad – a 100% and 400% increase, respectively. 

These meaningful increases in time are simultaneously a principled effort to restore participation in unusual circumstances and a desperate effort to appease people whose right of return has been encumbered by Labour’s policies. It is both principled and desperate for the government to help these people exercise their right to vote. The pandemic has brought about a desperate need for principled action. (Something similar could be said about citizens and residents driven to go abroad or to remain abroad by New Zealand’s housing crisis. The mismatch between the cost of living and salaries at home is exactly the sort of political issue that expatriates ought to be able to vote to correct.)

Whether based at home or overseas, citizens and residents of New Zealand have also been worn and battered by an unprecedented string of high-profile corruption cases. The Serious Fraud Office (SFO) has brought to light scandalous fundraising practices employed to benefit National, Labour and New Zealand First. These prosecutions revolve around the same ostensibly corrupt purposes of concealing the identity of political donors and the amounts of political donations from the Electoral Commission and the general public. Various means were allegedly employed towards these ends: the use of art auctions to obscure the value of donations to the Labour Party, the splitting of six-figure donations into smaller chunks to avoid disclosure by the National Party, and the use of the New Zealand First Foundation and a still suppressed corporate vehicle to keep nearly one million dollars in political donations to NZ First in a law-free zone. 

The new rules announced by Allan take small but meaningful steps to correct a system that has gotten out of control. Under the old rules, political parties only had to disclose the details of political donations over $15,000. Under the new rules, that threshold will go down to $5,000 – a 66% reduction. This will make it harder to evade public scrutiny by splitting large donations into smaller ones that don’t have to be reported. Parties will also have to disclose information on the “total value” or “proportion” of other forms of political financing – including non-monetary donations (such as the paintings at the heart of Labour’s art auction scandal), small donations, and loans given to political candidates by non-registered lenders. 

These stricter disclosure requirements represent a change in degree. New Zealand’s political parties have long been in the habit of filing annual returns on some loans and donations to the Electoral Commission, which then turns that information over to the public. Thanks to the new rules, however, the general public will soon have more information on loans and donations than it had before. And corrupt efforts to circumvent disclosure requirements will be more fraught with difficulty. 

The recent announcement from the Beehive also promises that all registered parties will soon have to make their general financial statements publicly available on a yearly basis. This aspect of Allan’s plan represents a change in kind, not merely a change in degree. If the electoral amendment bill makes good on this promise, the general public may soon have entirely new types of information about political parties on their hands – information that may cover parties’ income, parties’ holdings, and parties’ use of different corporate vehicles to accomplish both their ordinary activities and election-related activities. It all depends on how the electoral amendment bill is drafted and which aspects of it survive committee.

In sum, yesterday’s announcement contains the results of the “targeted changes to political donations rules” that then justice minister Kris Faafoi promised midway through 2021. Greater systemic changes may now be in the works pursuant to the “Independent Review of the Electoral Act”, also promised last year and foreshadowed by Labour’s 2020 Election Manifesto. The independent panel of experts appointed last month will review the larger issues underlying – and fuelling – the scandals emerging today. That, ultimately, is where we will see whether principled, meaningful change is to occur, or whether today’s constitutional moment will only yield small, albeit principled, steps to appease a frustrated electorate.  

With the independent review, attention may finally shift from bad apples to the bad barrel – that is, from individual corruption to systemic corruption, from plutocrats to plutocracy. With all due respect to the old adage about one rotten apple spoiling the bunch, the SFO’s evidence suggests the existence of a rotten barrel. Why wouldn’t party leaders, big donors and interest groups exploit the considerable legal loopholes at their disposal? If they fail to do so, they would clearly suffer a major disadvantage in today’s expensive political marketplace.

In a permissive regime of electoral law in which corporations, lobbyists and individual donors may all give unlimited sums to political parties, is it realistic to expect political operatives inside and outside of the parties to show restraint? It’s common knowledge that Labour and National have routinely traded privileged access to ministers and party leaders for donations that ordinary New Zealanders could rarely afford to make. It’s common knowledge that New Zealand’s high economic inequality routinely translates into high political inequality. In a laissez-faire regime of political financing, adherence to basic democratic values becomes disadvantageous. Representation, responsiveness, leadership and accountability begin to work through economic means, not democratic ones. That, ultimately, is what any meaningful review of electoral law must face up to. 

This week, Labour has taken several steps in the right direction. What remains to be seen is whether they have the courage and the strength to go the distance, and whether other parties will join them in affirming basic democratic principles of political representation and participation for all New Zealanders, not only those who possess significant financial power. And whether New Zealand’s political parties themselves will choose to reform themselves – a tricky proposition to be sure, but the only proposition available if they wish to re-adhere to foundational commitments of channeling and expressing the popular will, and exercising independent leadership towards the common good.

Follow our politics podcast Gone By Lunchtime on Apple Podcasts, Spotify or your favourite podcast provider.