Electoral Finance submissions close tomorrow

Submissions close at 5 pm Friday on the Government’s proposed electoral finance reform.

I have included below my submission.

I would urge as many people as possible, regardless of your views on political finance, to do a submission. The last Government did not allow you to say what you think the law should be, until after it introduced a bill into Parliament – by which time it is much harder to get changes. You have an opportunity here to have your say and influence policy before Cabinet makes final policy decisions.

This is especially so, in the areas where the Government has not yet indicated a preference, but has put a number of options.

You can e-mail a submission to this address. The Government’s electoral finance reform page is here, and a pdf of the proposal document is here.

If you don’t want a compulsory system of registration and limits for “parallel campaigners”, then make a submission – don’t complain about it later, if you don’t submit.

If you do not want a seven month regulated period, make a submission.

If you think political parties should be able to spend their own money on broadcasting advertisements, then make a submission.

Politicians have vested interests in electoral finance law. Some want state funding. Others want to cut off private funding to their opponents. Many don’t like citizens being able to spend their own money criticising them.

Regardless of your views on the issues, have your say. The more submissions people make, the better. They don’t have to be anywhere near as long as mine. You can just state your opinion on one or two issues such as should there be compulsory registration for parallel campaigners and the length of the regulated period with a paragraph or two backing up each issue.

Submission from David Farrar in response to the Government’s Electoral Finance Reform Proposal Document


1. The Government proposes that the following principles both guide the development of electoral finance law and be incorporated in the purpose section of the new legislation: clarity, equity, freedom of expression, participation, transparency, accountability, legitimacy.

I support the addition of the new principle of clarity.

I did not see a need for the principles to be incorporated into the Electoral Act itself, but if they are, they should not be relied on as a substitute to clarity in the legislation itself.

State Funding

The Government is consulting on three options for reform of the broadcasting regime in Part 6 of the Broadcasting Act 1989. Under each option, the Government does not propose to change the total amount of funding that was allocated to political parties at the 2008 general election ($3.21 million) or the arrangement where the total amount of funding is set by Parliamentary appropriation.

I would ask the Government to reconsider that the amount of funding be set by Parliamentary appropriation. This would allow a future Government to increase the funding with no public consultation and as part of a Budget which is effectively guaranteed to pass.

I believe the amount of funding should either be set by statute, and then inflation and population adjusted, or be set at a level recommended by the Electoral Commission.

Status quo option – parties can only spend funds on election broadcasting, and can not purchase any broadcasting advertisements with their own money

Moderate reform option – parties can spend funds on any election advertising, and can purchase broadcasting advertisements with their own money

Significant reform option – parties can spend funds on anything they like (including admin), and can purchase broadcasting advertisements with their own money

I strongly support the moderate reform option, specifically both the provision to allow parties to decide what mediums they advertise in, and the provision to allow a party to purchase broadcasting advertisements with their own money.

Taking the latter point first, I believe the current law is an unjustified restriction of access to the airwaves. A minor party gets a far smaller allocation than a major party, and the current law doesn’t allow them to use their own funds to match the major party. This is not a level playing field. The restriction on buying broadcasting advertisements is a legacy of the past, when it was a much more relatively powerful medium.

The current law also prevents a party that forms just before an election, not only missing out on a broadcasting allocation but they also lose the opportunity to have any advertising in broadcast media.

In terms of what the allocated amount can be spent on, I think the moderate reform is sensible. The significant reform option would introduce full taxpayer funding of political parties. This is not something with public support, and nor it is desirable or necessary. Even worst, the fact the allocation is done by parliamentary appropriation, would allow governing parties to easily vote their parties more funding.

The current taxpayer funding is provided to parties specifically for the purpose of communicating with voters at election time. I submit allowing the parties the flexibility of deciding what medium to spend it on, is sensible, so long as it is spent on election advertising.

Finally, in this section I would repeat a point I made in my earlier submission. Parliamentary parties have a huge advantage over parties not currently in Parliament. They receive considerable free media over the electoral cycle, have MPs working to promote them, and benefit from parliamentary staff and parliamentary budgets. It would be desirable to increase the amount of funding available for parties not in Parliament, and decrease the amount of funding for parties in Parliament due to their considerable advantage.

Parliamentary Service funding

The submissions received in response to the issues paper showed that opinions were divided on whether the relationship between Parliamentary Service funding and election advertising needed to be clarified and how this should be achieved.

The Parliamentary Service Commission is considering these issues as part of the process for developing a permanent definition of funding entitlements for parliamentary purposes in the Parliamentary Service Act 2000. In addition, the Speaker of the House has recently convened a cross-party committee that has developed a public disclosure regime for Parliamentary Service funding.

The Government proposes to ensure consistency between the Parliamentary Service Commission‟s work and the work undertaken as part of the electoral finance reform by raising the suggestions made in the submissions with this cross-party committee for further consideration.

I reiterate that the simple solution here is for the Parliamentary Service to not allow expenditure on advertising for MPs or parties during the regulated period.

MPs and incumbent parties already have a huge advantage. They should not be able to spend parliamentary budgets on advertising during the regulated period, and most of all any advertising they do undertake should be counted as an election expense unless it is totally mundane such as electorate office hours.

Private Donations

The Government proposes to retain the regime governing donations to constituency candidates and political parties that was developed as part of the Electoral Finance Act 2007, and now forms part of the Electoral Act 1993.

In my earlier submission, I advocated a number of changes such as repealing the ability to make anonymous donations through the Electoral Commission, lowering the level for anonymous donations to $100, requiring more frequent disclosure, and requiring a party to publish its total income from donations, in bands.

I still regard these changes as desirable.

However I note that the regime introduced in the Electoral Finance Act two years ago has not yet been through a full parliamentary cycle. I am comfortable with the proposal to make no significant changes at this time. After the 2011 election, the donations section of the law should be more fully reviewed to see if further changes are necessary. Many submitters have made the mistake of concluding the regime does not work due to the low level of disclosed donations in 2008. This overlooks that it is likely significant donations were made in 2007, prior to the law change. Only after we have had a full cycle (2009 – 2011) of donation disclosures, will we be well placed to judge what level of changes, if any, are needed.

Campaign Expenditure Limits

The Government proposes to increase the expenditure limits that apply to constituency candidates and political parties (the Government is seeking submissions on the level of expenditure limits that should apply) and that expenditure limits be adjusted every general election to keep pace with inflation through a formula set in legislation.

As previously submitted, the current expenditure limits have not even kept pace with inflation, and are set so low that they actually prevent candidates and parties from effectively communicating to electors.

Ideally I would like the limits to be based on the cost of an effective advertising campaign to 2.5 million adults for parties, and 40,000 adults for candidates. The Electoral Commission asked an ad agency to calculate such things for its advice on the Electoral Finance Bill, so this can easily done. An empirical approach to setting limits is far preferable to just debating numbers without a context of what they can purchase in terms of advertising effectiveness.

I would note that in an electorate campaign you would expect a candidate to be able to do at least two direct mail letters, a couple of unaddressed pamphlets, a series of ads in local newspapers, and 100+ hoardings. I believe a spend of $50,000 to $60,000 (excl GST) in the regulated period is necessary for a new candidate especially to achieve adequate name recognition and profile. A low spending limit protects incumbents.

I support having a formula set in legislation for future increases. I would submit that the formula should take account of both inflation and population growth. Much of today’s marketing is personalized direct mail, and every extra voter is an extra cost.

For electorates, in the absence of detailed empirical research,  I would submit the formula should be $1.20 per adult in the average electorate. The number of adults would be based on number of residents aged 18 or older in the last census, divided by the number of electorates.

So for example the 2006 census had 3,103,360 adults, which spread over 70 electorates is an average of 44,334. At $1.20 this would be a spending limit of $53,200 for the 2011 election.

If population growth remains steady the adult population in the next census would have 3,370,640 adults. If, as is likely, there are 72 electorates that is 46,814 per electorate. In inflation has been 2% a year from, then the limit would go from $1.20 in 2011 to $1.27 in 2014 for a total limit of $59,600.

The national limit of $2.4 million was set in the early 1990s. Since then inflation has been 27% and population growth 14%. Adjusting solely for that would suggest the limit should be a minimum $3.5 million. If one also adds in the maximum allocation given by the Electoral Commission for broadcasting, that suggests a limit of at least $4.6 million for a party (including the broadcasting allocation) contesting all 70 electorates.

If one takes the current formula of $1 million plus x per electorate, and keeps x the same as the electorate limit, this would be $1 million plus $53,200 per electorate (for the party vote) which would be $4,724,000 limit for 2011 – very close to what it would be inflation and population adjusted.

I would then inflation adjust the $1 million, and inflation and population adjust the amount per electorate.

Regulated Campaign Period Options

commencement on writ day (i.e. a likely regulated period of approximately four to five weeks)

commencement on 1 August in the third year of the election cycle (i.e. a likely regulated period of approximately three to four months depending on the date of the election)

commencement on 1 May in the third year of the election cycle (i.e. a likely regulated period of approximately five to six months depending on the date of the election)

retain the status quo where the regulated period commences three months before the date of the election.

I do not support the status quo. This means that no one knows when the regulated period starts, until the election date is announced, which is often after the start of the then retrospective regulated period. Certainty is welcome.

A regulated period commencing writ day has problems also. It gives the incumbent Government a significant advantage as they know in advance when Writ Day will be, and can tailor their spending around this.

The proposal to start on 1 August is supported. It has the benefit of a fixed date, known in advance, but also means a regulated period of around four months which is in keeping with the traditional length.

I do not support a 1 May start date, and would prefer the status quo to this. This would see regulated periods of around seven months and for a three year electoral cycle, this would be over the top – almost 20% of the cycle. It would also mean that the Budget would get caught up in the regulated period, and parties should be able to promote the budget, and respond to the budget, without it being deemed an election expense.

If there is an early or snap election, then the regulated period should start on writ day, to avoid retrospective application of the regulated period.

Election Advertising

I am not responding in detail to this section, as the devil will be in the detail. I am broadly supportive of the intention to exclude as advertisements:

news and comment published or broadcast by the news media
personal correspondence between private individuals,
low cost merchandise,
personal opinions published on the internet, and certain websites

The Government proposes that on every election advertisement promoters are required to disclose their true name and full street address and suburb or locality (not a PO Box number) of either their residential address, or an address at which the promoter can usually be contacted during the day. Promoters are not required to disclose a private home address if they choose not to.

I support the requirement for transparency, and also that a private home address need not be used. I would propose that a name alone is sufficient on advertisements, if the promoter is registered with the Electoral Commission and their full contact details can be accessed on their website. This would encourage more people to become promoters. They can still be contacted for reasons of transparency should people wish, but don’t have to have their address on billboards and pamphlets all over town.

Parallel Campaigning

I do not support the option to have a “proportionate” regulatory scheme for parallel campaigners. Introducing scheme a scheme will be deeply resented by many as MPs restricting the ability of citizens to spend their own money criticizing them.

There is no documented problem to be solved. The case of the Exclusive Brethren in 2005 is not rationale enough. First of all, their spending was largely deemed to be counter-productive. The public, aided, by the media can be trusted to make their own judgements about the appropriateness of a parallel campaign.

Secondly any parallel campaign limits, would not have necessarily prevented the Exclusive Brethren campaign. They could have had all seven spokespersons register and spent say $100,000 each.

Thirdly the experience in the United States of political finance reform, is that more regulated you make it, the more loopholes get exploited and the effects are counter-productive.

Fourthly the existence of any sort of compulsory registration system for people to spend money criticizing the Government, or other parties, can discourage citizens from political involvement. The Electoral Commission itself noted this, when they referred to the chilling effect on political participation from the former Electoral Finance Act.

Finally, any sort of limit could prevent groups with legitimate grievances from pursuing them against the Government, by campaigning against the governing party. Proponents of such regulations always cite the example of the Exclusive Brethren, and they are a group not many in society feel affinity for, so some may conclude they should not be allowed to spend their own money campaigning.

But take another scenario. What if the Crown confiscated land or property rights off an Iwi, as they have done in the past. That Iwi might want to campaign against the party in Government which stole their land or property rights. Do we believe it would be a good thing to prevent an Iwi from campaigning against a party that legislated away its rights?

This situation could fit the Foreshore & Seabed Act. What if an affected Iwi wanted to campaign against the parties that passed the Act? Bad enough, they have their rights legislated away from them, but even worse is they can’t spend their own money campaigning against the parties that did this.

The current debate over an Emissions Trading Scheme could see some Iwi lose hundreds of millions of dollars of value from their lands. I submit it would be wrong to stop an Iwi from campaigning against parties that it believed had destroyed so much of their value.

Advertising by parallel campaigners on radio and television

Currently parallel campaigners are not allowed to purchase advertising on broadcasters. The Government has put forward only two options – to retain the ban, or to allow parallel campaigners to advertise on broadcasters only if they are subject to registration and spending limits.

I do not support either of those options, and would like the Government to reconsider the option of allowing parallel campaigners (many also known as citizens) to be able to advertise on broadcast media, without any compulsory registration for parallel campaigners.

My next option would be for the Government to have a voluntary system of registration for parallel campaigners. It would have no threshold for registering, but would have an expenditure limit. As an incentive to voluntarily register, a parallel campaigner could then gain access to broadcast media advertising. This would be a strong incentive. It would allow campaigners who do not wish to register to still campaign in other media, but to agree to an expenditure limit if they do wish to advertise on broadcasters.

Other “carrots” for voluntary registration would be the ability to have the Electoral Commission pre-approve an advertisement.

Failing either of those two options, I would opt for the status quo rather than have compulsory registration for parallel campaigners over a certain threshold.

Electoral Administration

The new stand-alone electoral agency will be tasked with publishing guidance on electoral finance rules and providing advisory opinions to political parties, constituency candidates, and the general public on electoral finance law – including whether publications amount to an election advertisement.

I strongly support the creation of the new agency, and the ability to rule in advance whether or not a publication is an election advertisement.

The Government proposes to retain the offences and penalties regime and time limits currently in the Electoral Act 1993.

A major weakness of the Act is that only individuals can be held responsible. Time and time again we see parties escape prosecution by blaming things on lapses between individuals. I would advocate that the penalties regime should include provision for a party itself to be held liable for breaches. Without this, the law remains somewhat toothless.

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