A flaw in our electoral transparency regime

A key part of our electoral funding regime is a requirement for some transparency around donations, on the basis that if we can find out who has bought our politicians (typically after we have voted for them) then everything is alright. There are a lot of problems with that regime - it needs to be more transparent, with lower declaration thresholds and realtime disclosure so voters are fully informed - but last week we were reminded of another one: it simply does not apply to unregistered parties. And this has turned into a quarter of a million dollar problem:

More than $255,000 in donations have been made to a political party that never registered, a loophole in electoral laws that a political expert says is “unprecedented”.

The New Zealand Public Party has come under fire by former members and staffers who allege up to $100,000 in koha collected at events, and kept in a tin under leader Billy Te Kahika’s bed, is unaccounted for.

Complaints were laid to the Serious Fraud Office (SFO) and the Electoral Commission about missing donations however no investigations are resulting from the complaints.

The Electoral Commission said because NZPP never registered as a party it has no obligation to report donations.

The prevailing assumption has been that parties would register if they possibly could in order to contest the party vote, thus bringing them under the transparency regime, while those that did not register would be small. That held for 25 years, but quarter of a million dollars is a hell of a lot of money - more than some registered parties declare - and certainly enough that we want to know where it is coming from and what the people giving it want in exchange. And the fact that this is outside the disclosure regime also invites similar games in the future around unregistered component parties being used to launder donations and hide funding sources from the public.

As for how to fix it, separating registration for the party vote from registering for transparency seems to be an obvious solution. The requirement for 500 members works for the former, as it establishes a minimal level of credibility while not being too onerous. We could have a much lower requirement for the latter (with broadcasting funding being the encouragement), and a legal requirement for parties contesting more than, say, 10 electorates to register or submit donation and spending returns as if they were registered. This would avoid interfering with the normal unregistered parties (which typically run two or three candidates, and the "party" is really just a name to put next to them on the ballot paper), while ensuring we have transparency over groups potentially spending significant amounts of money.