Greater transparency ensured for political party donations
- Amendment clarifies the definition of ‘party donation’ in the Electoral Act 1993
- Adds an offence for failing to comply with the existing obligation to transmit a political donation to the intended recipient
- Change will not apply to any ongoing court proceedings
The Government is introducing some amendments to the Electoral Amendment Bill to ensure greater transparency around political donations, in the wake of the New Zealand First Foundation High Court case.
The High Court recently determined a person receiving a donation must be involved in the “governance and management oversight of all the Party’s affairs” for it to be considered a “party donation”.
This paved the way for third parties not involved in the governance and management of a political party to receive donations for the benefit of the party without having to declare it.
“These amendments clear up any ambiguity about what a donation to a political party is intended to be,” Justice Minister Kiri Allan said.
“The amendment clarifies that a party donation is when a person donates to a political party or any other person with the intention that the donation is for the benefit of the party.
“The change backs up the Bill’s original purpose of improving the transparency and disclosure of political donations.
“Without this change, an opportunity could exist for political parties to structure their financial affairs in a way that allows them to legally avoid having to disclose their political donations.
“It’s important to fix this before the 2023 General Election. Donations are a legitimate form of political participation, but it’s also important that there is transparency and for the public to know who is making significant donations to political parties,” Kiri Allan said.
The amendments also add an offence to the Act. Currently, the Act requires every person to whom a candidate and party donation is sent to transmit it to the candidate or party secretary within 10 working days. However, if they fail to do so, there is no corresponding offence in the Act.
The maximum fine for which a person is liable under this new offence is $40,000. A complete defence is available for anyone charged if they can demonstrate they had a ‘reasonable excuse’ for non-compliance. It is in line with other offences in the Act for similar behaviour.
“These amendments provide a narrow and targeted solution to the loophole identified in the recent High Court ruling,” Kiri Allan said.
“There will be an opportunity for feedback and submissions to be made. I have asked for the Select Committee to consider reopening submissions on the bill, to ensure the changes do not have any unintended consequences. The Government is encouraging experts in the field of electoral law and political parties to engage with this process.”
The amendments have been introduced in a Supplementary Order Paper that the Justice Committee will assess as part of its consideration of the Bill.
The Committee is due to report back on the Bill to the House of Representatives by 5 December. The Bill is expected to be enacted in time for the 2023 General Election.