Monday, July 23, 2007

A closer look: the Electoral Finance Bill

In the wake of the 2005 election and its scandals over pledge cards, GST, and the circumvention of spending limits by the National Party in collusion with the Exclusive Brethren, the government promised a comprehensive reform of election finance law. Today, they finally introduced their Electoral Finance Bill into Parliament. So how does it measure up?

Badly. While the government promised reform, what it has delivered is, in most areas, an administrative tidy-up. And in some areas, the would actively make things worse. The biggest changes are to the rules covering third party campaigning, where - as promised - the government has introduced a tight regime, particularly with regard to donations and disclosure. But this simply highlights the failure to deliver in other areas.

Starting with the general provisions, the bill introduces the concept of a "financial agent" - a person appointed by a party, candidate or third party as being responsible for their election spending. The primary purpose here is to give the police someone they can prosecute for any breach, avoiding the embarrassing situation that prevailed with the National Party's convenient "mistake" over GST. It also requires parties - and in some circumstances, candidates and third parties - to appoint an auditor for their expenses, reducing the potential for fiddling the figures. But these are primarily administrative changes.

One significant change is that the "regulated period" in which expenses count as election expenses now covers the whole of an election year up until polling day, with a three-month minimum for rich parties to disrupt the normal election schedule, but I think the electoral backlash will discourage such behaviour.

For parties and candidates, the donation rules remain practically unchanged. The disclosure thresholds are the same - $10,000 for a party and $1,000 for a candidate - as are the spending caps. Anonymous donations are still permitted, as are donations laundered through trusts. About the only good point here is the definition of "donation" has been tightened to cover goods provided under, or purchased above, their market value (so, Bob the Builder's cheap paint job is partly a donation, as is a $500 T-shirt). On the negative side, the definition of "anonymous" has been significantly loosened. At present, a donation is "anonymous" if the identity of the donor is unknown to the candidate, or (for a party), to its candidates and administrators. The bill will change this so a donation is anonymous if the identity of the donor is unknown to the financial agent. While those involved in the administration of the affairs of a candidate, party, or third party have a duty to disclose if they know the identity of a donor, there's no such duty on candidates, and as written, the bill would allow donations to be legally anonymous while candidates know full well who the money has come from and to whom they are beholden. This is a recipe for political corruption, and it is difficult to see it as anything other than deliberate.

By contrast, third parties will be subject to a host of new restrictions. They will be required to register with the Chief Electoral Officer, and will face a spending cap of $2,000 for advertisements related to any candidate, and $60,000 in total. I support spending limits, but as noted here, there are some concerns that the total cap is too low, and the candidate cap may be as well. It would be interesting to compare it to, say, the cost of a full- or half-page advertisement in a major daily newspaper to see whether third parties are allowed to say anything at all about candidates. As expected, communications by bodies to their members are exempt - they are not "electoral advertisements" - so the bill does at least promote participation in politics through broad, membership-based organisations.

The most interesting part is that covering donations to third parties. This reads as a "what might have been" for the overall donation and disclosure regime. Third parties will be required to declare any donation over $500, and anonymous donations greater than this amount are barred (the money must be given to the Chief Electoral Officer to be passed on to the government). Laundering donations is also prohibited - those collecting money on behalf of multiple contributors must disclose the name and address of every one, and those "transmitting" money to third parties must disclose who they are fronting for. Failure to do either means the donation must be treated as anonymous - giving large contributors an incentive to abide by the rules or see their donations forfeited. Conspiring to circumvent the prohibition on anonymous donations is an offence, as is failing to identify a donor when transmitting funds. It's a tough regime, but one which achieves the purpose of imposing transparency, and it has to be asked why parties and candidates are not subject to a similar regime. If it's good enough for third parties, then its good enough for MPs.

The broadcasting regime continues mostly unchanged, and there seems to be no change to the spending caps. However, there is a welcome removal of political party representatives from the decision-making process around broadcasting allocations - something I would hope would lead to a fairer process rather than one which entrenched the status quo around the two main parties.

Finally, there is some small improvement around penalties, with a significant increase in fines for an illegal or corrupt practice from the current $3,000 or $4,000 to $10,000 or $15,000 respectively - or $40,000 for financial agents and party secretaries who should know the law (the one year jail term for a corrupt practice remains). This is better, but still lower than other, less serious offences. As the Coalition for Open Government has argued, you can get seven years imprisonment for stealing a TV - but only a year for stealing an election. I guess its just another case of politicians looking after themselves.

So overall its a disappointing bill. While I like the general thrust of the third party rules (though I'm concerned about the spending limits), the rules around candidates and parties are practically unchanged. There's no limits on donations, no ban on large anonymous donations, and no restrictions on laundering. There's also no pre-election disclosure, meaning that we still have to vote blind with no idea of who is trying to buy our politicians until long after the fact. The bill is a slight improvement, and worth supporting, but it is also hard not to feel that the government has failed to live up to its rhetoric and betrayed us again.