Wednesday, April 04, 2007

A closer look: election funding

On Monday, the Campaign for Open Government announced that it was reforming to pursue tighter and more transparent election finance laws. It's a goal which is vitally necessary in the wake of the unprosecuted abuses of the 2005 election (abuse of public funds, a convenient "mistake" which saw national spend $112,000 more than it was entitled to on television advertising, and a dodgy negative campaign by the Exclusive Brethren church which violated the spirit (and in some cases, the letter) of the law). The COG's draft proposals can be found here; DPF and Jordan have already commented on them, so I thought I would too.

As a general framework, the purpose of election finance laws is twofold: to preserve democracy by preventing the rich from buying elections, and to prevent corruption and ensure proper accountability in our political system. The former is achieved by a variety of methods - supply- or demand-side controls on how money may be raised or spent, or public funding to ensure that parties are less dependent on a small pool of wealthy donors. The latter is primarily served by transparency. The Campaign for Open Government's proposals serve both these ends.

1. Banning anonymous and laundered donations, requiring disclosure of all donations over $200, and requiring disclosure before the election

This is pretty much a no-brainer. In order to ensure that our politicians are behaving properly, we need to know who else is trying to buy them. The current practice of anonymous and laundered donations subverts this, and results in our knowing very little about who is trying to buy themselves influence over a potential government. The ideal way of ending this practice is to require every donation above the level of pocket change to be declared, and impose criminal penalties for attempts to subvert it by fronting or laundering donations. Parts of the US do the former (and stick it all online so people can search through it by candidate, donor, or anything else which suits their fancy), while the UK does the latter. While there is a privacy concern here, IMHO it is outweighed by the need to preserve the democratic system; retaliation or persecution of donors by employers can be dealt with under s21 (j) of the Human Rights Act 1993, which prohibits discrimination on the basis of political opinion.

2. Limiting the size of large donations

This is aimed fairly and squarely at limiting the ability of the rich to buy themselves undue influence over parties, and I think it is a damn good idea. One of the themes in The Hollow Men is how the National Party was effectively bought out by a small clique of very rich donors, who used large amounts of laundered money to buy themselves unparalleled access and control over the party's agenda, at the expense of the wider membership (National isn't alone in this; the same group bought the Labour Party in 1987, with one of them infamously handing Roger Douglas a million dollar cheque for his services). Capping donations will prevent this, and force parties to rely on their broader membership rather than a handful of secretive wealthy backers. It may also limit the amount of money received by parties, helping to prevent the funding arms race which is clearly developing.

3. Controlling third party campaigning

This is the trickiest problem. Elections aren't just about the parties, but also about the people having their say; it is vital that individuals and groups are able to participate in the public debate, purchase advertising and campaign about issues important to them. At the same time, all the funding restrictions in the world mean nothing if the rich can simply sidestep them by setting up front groups and sockpuppets to work for the election of their chosen candidates. Current electoral law recognises this, by requiring disclosure and forbidding third parties from advocating for the election of any particular party (unless authorised by that party, in which case it counts as their expenditure) - but the 2005 election, with its campaign by the Brethren and the plans of the Talley brothers for a million-dollar parallel campaign to support Don Brash through an anonymous corporate front make it clear that something has to be done. Big money is getting desperate, and is increasingly willing to circumvent the law to buy itself political power and tax cuts.

There is a clear freedom of speech issue here, but the proposals - disclosure and a spending cap - are at least the beginnings of an answer. Its also one we already use - Part 3 of the Citizens Initiated Referenda Act 1993 establishes a basic regime for disclosure on advertising around a referendum, and caps spending by any person at $50,000, though the penalties are too low and there are obvious loopholes. Another possibility would be to mirror US laws which prohibit collusion between political parties and "independent" issue campaigns, which would rule out the sort of implicit management of the Brethren campaign we saw from National, or the obvious circumvention of establishing multiple, coordinated groups.

4. Effective enforcement

A complete no-brainer. The police's not taking electoral offences seriously in 2005 reduced the law to a joke. Either it needs to be made clear to them that preserving the democratic system is in the public interest, or the ability to investigate and prosecute such offences needs to be taken off them and handed to the Electoral Commission. Either way, the penalties need to be increased, and the current six month time limit on prosecution has to go.

I support the inclusion of polling and focus grouping around election time as an election expense. It's a political weapon, designed to help parties tailor their message and give them inside information on what the electorate is thinking. Including strategists and staff though may very well be unworkable.

5. Making public funding fair and transparent

If we want to remove the influence of money from politics and ensure that the electoral competition between parties is a fair one based on their merits (however defined by the voters) rather than their wealth, then we need to move towards greater public funding. Linking such funding to the level of popular support is an easy way of doing it, but runs the risk of entrenching existing incumbents and preventing new parties from effectively contesting the vote (particularly in light of MMP's unfair and undemocratic 5% threshold). I would rather see flat funding - a true "level playing field" - or funding according to the number of electorate candidates, but I can't really see the large parties agreeing to such a system.

My main point of disagreement with the COG is on the limit on broadcast funding. While I think the allocation method stinks (again, it protects incumbents and makes it very difficult for new parties to gain a foothold), the use of public funding and a cap on spending in this area is vital in preserving democracy and limiting the influence of wealth. Given the importance of broadcast advertising in deciding elections, repealing the limits would start an arms race between parties, pushing up election expenses and making them even more beholden to a narrow clique of rich backers. While the COG's other proposals will limit the amount of money parties can raise, given the decisiveness of TV advertising, I think a demand-side limit is more than justified.

For more thoughts on this issue I highly recommend Andrew Geddis' paper Rethinking the Funding of New Zealand's Election Campaigns [PDF] in the latest Policy Quarterly.


At the last election Labour was granted $1.1m of public money for broadcast advertising. The Alliance, who were competing for some of the same voters as Labour, received $20k.

This might be defensible. But it isn't the end - Labour were capped at $1.1m, the Alliance at their $20k.

National, who broke the broadcasting cap at the last election actually spent $83,000 *less* than Labour (who didn't break their broadcasting cap).

The Coalition for Open Government is certainly open to a separate broadcasting cap within an overall cap on election spending, but parties having different *caps* is indefensible.

And if parties don't want to spend their money on broadcast advertising, we don't see that they should be forced to.

For example (and only as an example) an overall cap might be $3.5m, with at most $1.1m to be spent on broadcast advertising (these are basically Labour's figures from the last election). These would be the limits for everyone, and those who got less public funding could make up the difference with their own money.

Having the Labour Party legally allowed to spend $340,000 more than the National Party, and $1.2m more than the Greens isn't right.

Posted by Graeme Edgeler : 4/04/2007 05:29:00 PM

The Coalition for Open Government is certainly open to a separate broadcasting cap within an overall cap on election spending, but parties having different *caps* is indefensible.

This bit I can wholeheartedly agree with. But an overall cap makes a lot of sense in terms of preventing an arms race and advantaging the richest parties.

Posted by Idiot/Savant : 4/04/2007 05:47:00 PM

Some potential complications

> Banning anonymous and laundered donations

laundered donations are laundered because you cant track it down. otherwise governments would just stop gangs and drugs by banning "laundered" money.

> Limiting the size of large donations

I take it that this would apply to unions. Otherwise how can one tell the difference between a union and a trust / business?

> I would rather see flat funding - a true "level playing field"

the danger that would seem to suggest is I might start a "99 MP" or a "WINZ" party and then spend lots of money advertising myself. If I got a million dollars to play with there would be a massive incentive for me to do that even if the general public (or any reasonable person) considered my position frivolous.


Posted by Anonymous : 4/04/2007 06:51:00 PM

I think we've been at cross purposes a little.

Under our proposals there will still be campaign expenditure caps - we're just not fans of the current system in which they are different for different parties.

We're open to arguments over whether there should be a separate broadcasr advertising limit within the overall limit, but there should certainly be an overall limit.

Posted by Graeme Edgeler : 4/04/2007 09:56:00 PM

I think the American ban on collusion between political parties and independent campaigns is an extremely sensible way to prevent independent campaigns become mere front groups for parties looking to breach their spending limits, while still protecting legitimate groups' free speech. Another move that could help is requiring independent political campaigns to disclose their sources of funding, *before* the election and ideally before any public advertising begins. The current rule that they can't explicitly advocate for a specific party seems a bit silly to me, however. All it seems to do is to prompt them to be slightly artful with their wording.

- Ranald

Posted by Anonymous : 4/04/2007 11:33:00 PM

As noted, the issue of third party activities is perhaps the most problematic aspect of this issue. Assuming we think there is sufficient reason to restrict them (in the name of equality of arms, as well as to preserve the overall integrity of any regulatory system imposed on candidates/parties), there are two ways to try and do so...

(1) Let individuals/groups spend freely on election-related messages, unless and until they "coordinate" with a party/candidate. The idea would be that genuinely "independent" speech is good, but "coordinated" speech risks subverting the other limits, as well as posing a potential corruption issue. However, a problem here is defining what counts as "coordination". Is it simply telling the party/candidate what you are doing? Or is some active planning/interchange of ideas required? What if a third party "independently" adopts a party's key message and spends money on promoting it at election time?. Additionally, there are obvious enforcement problems ... for example, how would we know if a union had met with Labour prior to putting out a leaflet praising Labour's industrial relations policy? Or if National's campaign team had helped the Brethren write their tax-cut pamphlets?

(2) Target all third party speech which is designed to influence the election, regardless of whether it is coordinated or independent, or whether it expressly mentions a party/candidate or is just "issue oriented". This, of course, inevitably restricts all non-political party/candidate involvement at election time - union and business included ('though they may still be permitted to communicate with their members ...). Further, there is the problem of how far from the election such regulation will stretch - at the minute, spending restrictions on parties/candidates cover a 3 month period. Should this timeframe be expanded (given the development of a "perpetual campaigning" mode of politics)? If so, will genuinely issue oriented messages (ie: the anti-Child Discipline Bill ads) end up getting caught in this web?

There are no simple answers here - but it is worth noting both Canada and the UK place controls on third party election spending, controls which cover issues related to an election. Canada has low spending limits, but applies them only once an election has been called. The UK has quite high limits (1 million pounds), but applies this for a full year prior to any election (plus, there are suggestions in the UK to drop the spending cap).

Anyway - I'm glad a conversation has begun on these issues ... if we're going to get them right, we're going to need to talk them over in quite some detail.

Posted by Anonymous : 4/05/2007 12:26:00 PM

Starting a "99 MP" type party isn't a trivial task now, and it could reasonably be made tougher. And you wouldn't get anything like a million dollars to spend unless you managed to get dozens of other people to agree to stand as candidates for your party. I don't think this is a serious problem.

Posted by Commie Mutant Traitor : 4/05/2007 01:38:00 PM

And why not just ban third party (an unfortunate term in this context) advertising expenditure during election campaigns? It's not free speech anyway if it has to be paid for. This wouldn't prevent people from expressing their opinions in blogs, letters columns, etc, it only stops people with lots of money from forcing their opinions on the public whether they want to know or not.

Posted by Commie Mutant Traitor : 4/05/2007 04:03:00 PM

One other thing to consider is the need to count negative thrid party campaigns. It's all well and good to prevent the Chinese from funding a pro-Labour campaign, but equally important to stop the US from funding a "Labour are communist lapdogs of the Maoist traitors" effort. Quite who you'd attribute that to I'm not sure - spread it across every party that benefitted? Perhaps better to simply open those campaigns up to legal action by any offended party.

Posted by Moz : 4/05/2007 04:33:00 PM


I guess you could make setting up a party more costly than the amount of money you get from it - but doesn't that defeat the purpose?

2) what about starting a spin off party? Let's say you have a national party and you want to get more money - so you start a "new national" (progressive national) party. You then effectively share resources or work in such a way as to facilitate the formation of a right wing government with twice the money.

> And why not just ban third party (an unfortunate term in this context) advertising expenditure during election campaigns?

If you pay someone to put your comments on a blog I guess that would be illegal - but what if you own the TV station and place your comment there (ie you don't have to pay).

> Perhaps better to simply open those campaigns up to legal action by any offended party.

I'd rather it if we did not run a charity for lawyers.


Posted by Anonymous : 4/05/2007 07:57:00 PM

How is it that someone who claims to be pro-democracy wants there to be legal limits to political involvement?

I think of it like this; imagine you're walking down the street and someone stops you. They tell you to stop because around the corner is an expensive billboard and you don't have the mental ability to critically analyse its message.

I don't think I'm assuming too much to think you'd disagree with this hypothetical person -- in fact, you'd probably be offended.

So, why is it then, that you would stop someone spending money on their message? Are you not mentally capable of deciding whether or not you agree with it? Maybe you think that you're smart enough but the rest of the country is too dumb?

It seems to me that you're all for a free democracy ... but not too free because people might be too stupid to vote the way you like.

Posted by Unknown : 4/05/2007 08:10:00 PM

I was thinking raising the number of members required to qualify for registration, rather than making the party pay.

The spinoff party thing is potentially an issue, but could easily backfire. Voter backlash against an obvious rip off of the taxpayer, each party getting less of a profile than the original, power struggles between the splinter parties, etc. Possibly parties seeking registration should be required to show significant differences in policy between themselves and all existing parties.

Biased mass media outlets are a problem under any system. Regulation to require fair and equal coverage by outlets that present themselves as neutral could help.

Why would I stop someone spending money on their message? Because some people have vastly more money than others to spend, which is profoundly undemocratic. If advertising didn't affect people's decisions, nobody would waste their money on it.

Posted by Commie Mutant Traitor : 4/05/2007 09:31:00 PM

Hugh, (certain types of) speech is a limited resource, there's only so much of it to go around. You can only fit so many 30 second ad spots into an hour of television, and as a result you have to pay for it.

So the question is, why should the wealthy get more speech than the poor?

Posted by Anonymous : 4/05/2007 11:46:00 PM

Those that want to regulate or equalise the amount spent on political advertising have a profoundly cynical view of the voting public. You think that a significant proportion are all too thick to make up their own minds so they need to be served an equal proportion of syrup from each party so that their vote is a fair coin-toss.

I don't know any people who would be swayed if any single party commandeered all the airtime on all TV channels for a full year. They might be amused, disgusted, or turned off - but not swayed.

Please credit us with some intelligence.

No matter how much money you have - you have only one vote. If you are concerned about vote-buying then how about including all of promised new government spending in election year as electioneering? That's where the votes are purchased.

Posted by Anonymous : 4/06/2007 02:36:00 AM