The impact of
the Electoral Finance Act on third parties in the 2008 New Zealand election
campaign
DRAFT VERSION
Introduction
Throughout the New Zealand Labour Government’s recent three terms in office (1999-2008), issues of political finance were particularly controversial, culminating with the Electoral Finance Act 2007 (EFA) being widely debated as either a cure or poison for fair elections. But just how much impact did the now-defunct EFA have on the actual 2008 general election campaign? In particularly, how did the new regime impact on the electoral participation of civil society via its various interest groups (now commonly referred to in political finance discussions as ‘third parties’)?[1]
Did the predictions made in 2007 that the EFA would put ‘democracy under threat’ come to pass?[2] Certainly during the campaign, many commentators noted that third party organisations were having less input into the campaign debate. Opponents of the EFA[3] complained that the new rules were stymieing freedom of expression and political debate. Some talked of a ‘litigious bomb waiting to go off’ (Otago Daily Times 2008), while other commentators declared that ‘The EFA’s dampening effect on the current election campaign is so serious, it is anti-democratic’ (Clark and Nicholls 2008). Furthermore, just nine weeks out from election day, the head of the Electoral Commission declared that the uncertainty resulting from the legislation was having a ‘chilling effect on the extent and type of participation in political and campaign activity’ (Electoral Commission 2008a). The commission also made a number of controversial decisions during the campaign that suggested the EFA was indeed affecting the campaign. There were minor controversies about the legality of everything from Tui beer billboard advertising to Act Party leader Rodney Hide’s yellow jacket, with a host of other legal rulings and court cases highlighting the legal uncertainty and complexity of the EFA. Yet it was possibly in the area of civil society’s organised interest groups such as trade unions, sector groups, and business associations that the impact was most strongly felt. This paper weighs up the evidence, pinpoints where the EFA had the most impact on civil society, and details some of the Electoral Commission’s more controversial and salient decisions.[4]
The EFA and its purpose
The New Zealand electoral system has historically been relatively laissez faire, with few state impediments to political activity. But since the 1990s New Zealand has been shifting towards an American-style system of more intense political regulation. This trend was particularly accelerated with the implementation of the highly-interventionist and complex EFA.
After having little place in New
Zealand political discourse, issues of political finance and electoral law
began to enter the debate after the
breakdown of political consensus in the 1980s and the subsequent violations of
political culture by Labour and National governments. This growth in anti-party
sentiment then led to calls for greater regulation, and the Electoral Act 1993
resulted at the same time as the electoral system was changed to proportional
representation. The new legislation introduced limits, for the first time, on
political party campaign expenditure as well as forcing a degree of political
donation disclosure by the parties.
However, confidence in the effectiveness of the Electoral Act substantially declined with the 2005 election scandals involving the Labour Party’s publicly funded pledge card and the Exclusive Brethren’s extensive parallel campaign that favoured the National Party by campaigning against Labour and the Greens. Issues of political finance then became the subject of bitter partisan debate, culminating in the Labour-led Government pushing through the EFA. This legislation was developed with only the minimum of consultation with the opposition parties and the public, and then passed into law on December 18, 2007 with 63 votes to 57, and in the face of considerable public opposition. The legislation’s regulated period took effect two weeks later, on 1 January 2008.[5]
In implementing the EFA, the Government’s stated intention was to strengthen electoral laws with the ultimate goal of preventing the undue influence of money on electoral outcomes, and providing greater transparency and accountability on party and candidate election activity.[6] According to electoral law expert Andrew Geddis, the new legislation built on the previous nature of electoral rules, but ‘extended the law’s reach substantially’ (Geddis 2009). It did so in four significant areas:
1) Third party regulation: The EFA attempted to more tightly regulate the publishing of ‘election advertisements’ by third party entities such as lobby groups, individuals or interest groups. Such entities that wished to publish election advertisements during election year were required to register with the Electoral Commission and comply with new rules.
The Government was attempting to regulate an area that was allegedly open to a loophole whereby third parties aligned to political parties could spend additional funds in an attempt to support those parties, thus undermining the caps placed on party expenditure. The Labour Party was particularly determined to prevent the Exclusive Brethren running another relatively covert campaign that indirectly favoured the National Party.
2) Extended regulated period: The EFA extended the regulated period
during which the state’s restrictions on political communications apply.
Previously the limits on party and candidate election spending applied for only
the three months up to polling day, but under the new regime these limits – as
well as the new requirements of the EFA – would take effect from the first day
in January of the election year. In 2008 it meant that the regulated period ran
from 1 January to 8 November – that is 318 days or 44 weeks.
3) Definition of an election advertisement: In regulating political speech, the EFA sought to differentiate between ‘issue advocacy’ whereby policy issues are publicised (which would not be regulated) and ‘election advertising’ whereby publicity is created for parties or candidates (which would be regulated). Defining ‘election advertising’ is a notoriously difficult task for legislators, and the EFA used a very wide, yet also ambiguous, definition, which – as dealt with later – had very significant ramifications. Rather than merely taking election advertising to be traditional paid advertising (such as newspaper ads, leaflets, handbills and billboards), the EFA extended the definition to include any form of words or graphic that could reasonably be regarded to be encouraging or persuading a person to vote for or against a party or candidate.[7] As will be seen later, depending on how the ambiguous definition was interpreted, this description could include websites, press releases, emails, chalked slogans on footpaths, and the spoken word.
Connected with the wide definition of an ‘election advertisement’ was the requirement that a ‘promoter statement’ be incorporated into any such advertisement. Regardless of who paid for the advertisement, the promoter statement needed to declare the ‘person on whose initiative an election advertisement is published’. It was this promoter statement requirement – and the lack of its inclusion in election advertisements – that caused the most EFA compliance problems.
4) Greater donation disclosure: The EFA sought to introduce greater transparency in political finance by forcing greater disclosure of political donations, including bolstering donor disclosure clauses. For example, anonymous donations to political parties could now not exceed $1000 without being handled by the Electoral Commission, and when intermediary legal trusts were used, they had to disclose the identity of people who donated to them (where such people gave more than $10,000).
The EFA had 148 sections, and the
consequences of breaching some of these were very serious. Depending on the
breach, offenders could be convicted of ‘corrupt practices’ (carrying a maximum
sentence of two years imprisonment or ‘illegal practices’ (carrying a maximum
fine of up to $40,000) or ‘summary offences’. And of course, election petitions
could result from infringing the new rules, which could lead to by-elections.
The alleged chilling effect of the EFA
In September, just two months out from the election, the Chief Executive of the Electoral Commission, Helena Catt, gave a speech about the EFA to a law conference in which she stated in carefully chosen words that ‘It is clear that having uncertainty remaining within the regulated period has had a chilling effect on the extent and type of participation in political and campaign activity’ (Electoral Commission 2008a). Soon after, in its annual report to Parliament the commission, which was jointly charged with overseeing the law, also said the EFA was a ‘difficult law’ and significant parts were ‘obscure’ and hard to interpret (Electoral Commission 2008a).
The view that the difficulties related to the EFA were having a ‘chilling effect’ appeared to be backed up by a number of controversial alleged breaches of the Act, which indicated the ‘dangers’ for political parties, individuals and organisations participating in political discourse during election year. For example, the commission had to consider whether EFA-breaches were caused by such items as red Labour Party balloons, Act leader Rodney Hide’s embroidered yellow jacket, Maori Party stick-on tattoos, old party T-shirts, Government media releases, Green Party candidate garden hedges displaying the party name, and so forth. In some of these cases, experienced MPs were referred to the Police for their breaches – for example, Hide for his jacket, and Jim Anderton for his emailed media releases.
Legal activity involving the EFA
The shift to a highly-regulated political process under the EFA meant that electoral battles of 2008 were supplemented by a substantial increase in legal battles. The 2008 campaign had a far greater legal aspect than any previous. Lawyers were employed in greater numbers than ever before – the Electoral Commission took on extra staff,[8] Crown Law was kept busy advising government departments, and many political parties and third parties hired lawyers to help them understand their compliance requirements.[9]
The Electoral Commission was often at the centre of this legal activity, and during 2008 it issued 54 decisions regarding alleged breaches of electoral law. Of these, 13 resulted in referrals to the Police for investigation and prosecution. Those referred to the Police for EFA-breaches mostly involved political parties and candidates, but also included the Employers and Manufacturers Association, Te Runaga O Aotearoa, a Cobb & Co restaurant, and The Radio Network.
At the present time it appears the Police have chosen not to prosecute any of these alleged third party breaches. A warning was given by the Police to both Te Runaga O Aotearoa and the Cobb & Co restaurant after they ran election advertisements supporting different political parties which failed to contain satisfactory promoter statements nor had the written authorization of the relevant political parties.
In the case of the Employers and Manufacturers Association, the Northern branch of the association was referred to the Police due to the commission’s belief that a newspaper advertisement purchased by the association fell under the category of an election advertisement and was thus a breach of the EFA because the association was not a registered third party and the cost of the advertising exceeded the $12,000 limit for non-registered third parties. The ad was run in July 2008 to oppose a law change to the KiwiSaver superannuation scheme that was being considered in Parliament. Despite having no overt relationship to the election scheduled for later in the year, the commission felt the advertisement crossed the line into election advertising because it featured a red ‘stop sign’ and the slogan ‘stop Mallard's attack on workers’. However, the Police eventually determined that no offence had been made.
At the time of writing, it appears that the Police are still investigating and considering whether to prosecute The Radio Network and MP Shane Jones for breaching the EFA when the then Cabinet minister hosted a radio show and signed off with the sentence: ‘vote Labour - see you in November’ without providing a promoter statement.
The Electoral Commission dismissed other complaints about third party activity during 2008. A brewery company was investigated in October for a billboard that sarcastically lampooned the leader of a political party who had been in trouble for a political finance scandal by using the words, ‘When Winston says no, he means no – Yeah right’. The Electoral Commission found that the billboards did not constitute an election advertisement, falling just short due to the belief that the ads would not have ‘an abiding impact on the thinking of members of the public’ (Electoral Commission 2008b: p.8).
The Hutt Chamber of Commerce was investigated for putting out a pamphlet that invited the public to a meeting with Winston Peters, and although it contained no promoter statement the commission deemed the pamphlet was not an election advertisement. The Post Primary Teachers Association (PPTA) was investigated for its billboards that focused on the issues of classroom student-to-teach ratios, but the commission advised that these were not election ads (with the proviso that its decision might be reversed if a particular party began campaigning on this policy later in 2008).
Some protests and rallies were the subject of complaints to the commission as well. For example, a Labour Party activist was deemed by the commission to have breached the EFA with the display outside of a National Party conference of an anti-National banner that had no promoter statement on it. However the commission did not refer the activist to the Police on the basis that the breach was not willful as the activist did not know the rules. In contrast, however, a website publisher was contacted by the Electoral Commission in the first week of January 2008, because his ‘Don’t Vote Labour’ website (at the address of www.dontvotelabour.co.nz) did not contain a promoter statement (i.e. details of his name and home address) on the site. The owner, 21-year-old Andrew Moore shut down the site after the commission informed Moore that he stood to be fined up to $10,000 if he continued to publish it without providing his personal details. The website was later converted into a blog, and was thus exempt from the EFA rules.
Third party
registration
By the time that registrations closed for third parties on 17 October – two weeks prior to the election – the Electoral Commission had 25 third parties on its books. Of these, 10 were trade unions, 3 were individuals, 2 were EFA objectors, and the rest were made up of lobby groups representing various political causes and sectors including, health, food industry, and general business.
Some third parties believed that their activities would not fall under the legislation’s coverage, but registered purely as an insurance policy in case their activities unintentionally crossed into EFA-defined electioneering. For example, the National Distribtution Union (NDU) said it registered ‘as a precaution after the commission raised a warning about some material on its website’ (Trevett 2008). Likewise, the Foundation for Economic Growth listed with the Electoral Commission on legal advice despite its belief that it was a non-partisan group pushing a non-partisan message.
Not all registrations with the Electoral Commission were accepted without controversy. The commission was taken before the courts by the National Party in an attempt to overturn its decision to allow the Engineering, Printing and Manufacturers’ Union (EPMU) to register as a third party. The National Party argued that the EFA’s provision for third party registration did not allow for the registration of any organisations closely related to a particularly political party, and because the EPMU was an active affiliate of the Labour Party, by allowing it to register the commission was effectively allowing parallel campaigning to occur. The High Court agreed, and the commission was forced to reconsider its decision, although eventually registration was granted to the union.
By registering as third parties, organisations and individuals were legally entitled to spend more than $1000 publishing ‘candidate advertisements’ in favour or against a particular candidate (but spend no more than $4000), or spend more than $12,000 on ‘party advertisements’ in favour or against political parties (but no more than $120,000). Such election advertising was defined as that which sought to persuade voters when either mentioning the name of a political party or referring to the policies held by specific parties. But to endorse or express support for a particular candidate or party first required the registered third parties to get the permission to do so from that party or candidate.
Third parties that did not register were still free to publish ‘issue advocacy’ – attempts to persuade the public on a certain political issue as long as those advertisements did not cross the line and become ‘election advertisements’ by referring to issues in a way that might be reasonably interpreted as supporting or opposing a particular political party or candidate.
Level of
activity and expenditure
How were the campaigns of third
parties, as well as their regular day-to-day activities, affected by the EFA?
Was it true that the EFA made it difficult for such groups to communicate with
voters at a time that the public wanted election information? Certainly there
were numerous anecdotal accounts that the third parties were publishing and
distributing less election material throughout the year – leaflets and
billboards, in particular, were less visible than usual. For example, according
to Robinson, with the constant questioning of the legality of various
campaigning ‘all this attention
may have had the effect of reducing the amount of campaign ephemera in
circulation prior to and during the campaign period’ (Robinson 2009).
One leading business lobbyist, Phil O'Reilly, claimed that groups which would normally be active – in particular, business and trade associations – did not want to get caught up in the EFA, and therefore did not participate in the debate about the economy. He was quoted as saying, ‘In newspapers, there is next to no interest-group advertisements and usually this is their one chance to get their say in. I think it's an enormously dangerous development’ (quoted in Trevett 2008).
One economic group appeared to disagree that the EFA was inhibiting. The Foundation for Economic Growth registered as a third party, and despite its strong reservations about the EFA and particularly its compliance costs, reported that ‘We did what we were going to do anyway and spent the same amount of money. So I guess that the EFA didn't affect our efforts (Scott 2009). The foundation declared election-related expenditure of $28,882 for 2008.
Only 12 of the 25 registered third parties actually participated in publishing election advertisements during 2008. Aggregated, they spent a total of $333,237. Of these, seven were trade unions, who together spent $163,847. Most of this - $104,110 was spent by the New Zealand Council of Trade Unions (CTU), making this organisation the only third party to come relatively close to the reaching the spending cap of $120,000 (suggesting that the $120,000 limit was not as prohibitively low, as some had warned).
The CTU spent about half of its budget on advertising that did not endorse a particular party (including about $7000 on 200,000 ‘What’s at stake’ leaflets, and about $35,000 on 300,000 ‘Your vote counts’ leaflets). The rest of the CTU budget was spent in a more partisan fashion – including about $20,000 spent on creating YouTube ads that attacked right-wing politicians such as Bill English, Roger Douglas and John Key. Because one leaflet effectively endorsed Labour, the Greens and the Progressives, this meant that the CTU had to secure written authorisation from these various left-aligned parties.
A number of individual trade
unions registered as third parties and spent money on election campaigns. The New Zealand Public Service
Association (PSA) – the country’s largest union – spent the most, with a budget
of $71,304,
mostly spent on print media advertisements entitled ‘Strong Public Services are Worth Voting
for’. The campaign also utilized the ‘circulation of leaflets, posters,
stickers, meetings in workplaces and a drive to ensure that PSA members and
their families were involved in the election’ (Pilott 2009).
The New Zealand Dairy Workers Union spent $16,740 (of which $8175 was spent in conjunction with the New Zealand Meat Workers and Related Trades Union Inc,
which also spent $8571). Part of
the declared expenses was for the publication of the union’s regular magazine The Dairyworker.
The Maritime Union of New Zealand Inc spent $3282. Most of this
was for an election advertisement in a Wellington newspaper, but part of this
expenditure disclosure to the Electoral Commission was to account for two
issues of its regular union magazine on the basis that it included party
political material and the subscription base included some non-members.
The EPMU only spent $5693, after a controversial battle to gain registration as a third party. Much of this was spent on a ‘Tax cut comparison’ chart used in a newspaper advertising and a leaflet, which amounting to $1,343. By contrast, in the 2005 election campaign the EPMU spent $45,000 on ‘Fair Share’ advertisements, and in 1999 the union spent about $300,000 on a campaign to ‘change the government’. This significantly-reduced expenditure in 2008 suggested that the EPMU may have been affected by the EFA.
In another example, the National Union of Public Employees spent $1285 on a postcard campaign relating to its campaign to have its fishery officer members issued with batons and pepper spray. Because the campaign listed the political parties that support their demand, the expenditure was deemed to be an election advertisements (Trevett 2008).
The Free Speech Trust declared
spending of $29,492
on the erection of seven billboards around the country that lampooned
government political parties over their support for the EFA and involvement in
other political finance controversies. The group involved blogger David Farrar,
and political advertising ‘mastermind’ John Ansell (who had previously been
responsible for National’s iconic and controversial 2005 red-blue election
billboards). Similarly, anti-EFA campaigner Henry Michael Horton spent $62,289 on print advertising.
The Vote for the Environment
umbrella group – a coalition of organisations such as Greenpeace and Forest and
Bird declared spending $1296 – mostly on leaflets that compared and ranked the environmental
policies of the parties. Similarly, the Christchurch-based Health Cuts Hurt group spent $293 on postcards
about the state of public health.
A provision of the EFA stated that third parties, whether registered or not, when issuing political communications to their members alone, were not affected by the EFA. Thus in 2008 some unions did not publish election advertisements, but instead communicated their election information and advice to their members. For example, although the NDU registered as a third party but declared spending no money, the union did in fact spend about $10,000 on election campaigning amongst its 20,000 members (Trevett 2008). Similarly, the EPMU reportedly kept most of its electioneering ‘in-house’ with a campaign that included a ‘checklist of workers' rights and analysis of policies’ amounting to an overt advocacy for Labour that was sent to all members (together with the instructions that it was not to be shared with non-members).[10] Interestingly, however, the vast bulk of its declared election expenditure was in the form of a $4350 cost for 29 editions of its regular magazine for members, EPMU News, which had to be included as an election advertising expense because some copies of this partisan publication went out to non-members.
Third parties, registered or not, were also unencumbered by the EFA in their publication of ‘issue advertising’ – defined as attempts to persuade the public on a certain political issue as long, as those advertisements did not cross the line and become an ‘election advertisement’ by referring to issues that might relate to a political party. The Electoral Commission stated that it faced a ‘significant challenge’ in deciding ‘In what circumstances a report by a third party on the policy stances of a range of parties may be considered to be an election advertisement’ (Electoral Commission 2008).
These more muted issue advertising campaigns were run by unregistered third parties such as Grey Power, the Sensible Sentencing Trust, Federated Farmers, and the Post-Primary Teachers' Association (PPTA). As covered earlier, the PPTA did not register with the commission, saying it was 'business as usual' and its political issue advertisements were not election advertising (Trevett 2008). Similarly, Federated Farmers – a representative group that has long been seen to be strongly but informally linked to the National Party – said it was not promoting a particularly political party in the election but publicised a checklist of policies, many of which corresponded to those of the National Party.
Other civil society groups managed to communicate political opinion without incurring EFA-related problems. For example, the Catholic Church ‘released a statement outlining principles and values of the church which Catholics might consider when voting’ (Trevett 2008). Also, one high profile opponent of the EFA, John Boscowan, even published a full-page newspaper advertisement opposing the legislation, leading EFA-proponents to point to it as an ironic example of how the EFA did not unreasonably curtail freedom of speech during the election campaign. However, it is not known to what extent Boscowen was forced to adjust his message to keep his campaign within the bounds of ‘issue advertising’, given the highly partisan nature of the issue.
An unregistered third party that represented recreational cyclists, the Cycling Advocates' Network, was surprised to find itself affected by the EFA after it ran a campaign through its website that encouraged the public to ‘make your vote a vote for cycling’. After being contacted by the Electoral Commission the organisation had to consider issues of including a promoter statement on its website, whether or not it needed to register with the Electoral Commission, and whether it needed to obtain written approval from the various political parties and candidates that it had effectively endorsed. The contentious element of the website was the inclusion of an evaluation of ‘how cycling-friendly parties and candidates were’ (Trevett 2008). According to Spokesman Stephen McKernon, ‘For a little advocacy group, it's a huge hammer for a tiny thing. We're just trying to help cyclists – we're not advocating for a particular party’ (Trevett 2008).
Uncertainty
and compliance costs
There were reports of a number of third parties choosing to avoid public discourse in 2008 due to either the compliance costs involved or the uncertainty. The uncertainty relating to the EFA was highlighted by the ‘Rule of Law Committee’ of the Law Society, which published a statement in August condemning the fact that the lack of clarity was harming the ability of citizens to participate:
The rule of law requires, as a minimum, certain, stable and predictable rules of laws that commend themselves to the sense of fairness of the people. However, the uncertainties that beleaguer the Act are seriously confounding the political process. No one is able to say with confidence whether some forms of political spending constitute election advertising and are subject to the Act’s prescriptive requirements. Given the uncertainties, the rule of law has descended into what an electoral official says is the law (does this or does this not constitute election advertising?). So much, then, for certain, stable and predicable rules of law (New Zealand Law Society 2008).
Peter Kiely, of the legal firm Kiely Thompson Caisley, gave details of his experience of third parties that he dealt with:
I had one client that wanted to support the Maori Party and came to me for expertise. The short point was that anything that might be argued as likely to advise or influence a vote had to be registered as a third party. The consequences of getting it wrong or breaching the Act were severe. Huge fines and possible imprisonment. People were really not prepared to take the risk either of the fine or of the police prosecution or the legal fees (Kiely, 2009).
Kiely elaborated on the financial risk, by saying that, ‘People just didn't want to get involved in litigation, either civil or quasi criminal. As a practising solicitor for 28 years I confirm that is a sensible decision in terms of cost. A legal opinion is at least $1,000 and a judicial review case $25,000’ (Kiely, 2009).
Trade unions, too, reported problems with EFA compliance. The
Finsec union reported a number of problems:
It placed limits in what we chose to do and how we chose to do it although in large part, these were limits decided upon primarily to avoid potential breaches of the Act – given the uncertainty around what would be legal and what would not. The major impacts for us were: Determining what was editorial and what was an advertisement; Placing artificial and unenforceable limitations on what information we sent to members could be used for; Being very cautious around the “double counting issue”. i.e. – did what we do have to be approved and / or accounted for by other parties (Casidy, 2009).
The PSA’s national secretary, Brenda Pilott detailed the administrative
burden imposed on her union by the EFA:
The administration of the EFA did create
difficulties for us The requirements of the EFA around accounting for
expenditure, and external audit, meant that we were forced to set-up internal
accounting and record systems that were both time consuming and costly. As an example of the additional
administrative burden imposed by the EFA, we had to devise a dual approach to
our communications during the campaign, as communication with members did not
fall within the ambit of the EFA, whereas communications with a general public
audience did. This was cumbersome
and at times difficult to manage and required us to print special runs of
materials, designating clearly who the intended audience was. This added costs to the campaign
(Pilott 2009).
The New Zealand Educational Institute reported mixed feelings about the
EFA, due to the fact that the union did not participate in election
advertising:
I think it would be fair to say that the EFA
had little impact in the end on NZEI's work during the election period. In the
event, we took a strategic decision not to undertake a large-scale public
campaign and focussed on communication with our members, which fell outside the
scope of the Act. However, if we
HAD wanted to run a much more public campaign, I think it could have had a more
serious impact - it certainly ate
up a lot of time in creating internal systems, communicating with members
(mainly reassuring them they COULD continue to run and promote candidate
meetings etc (Mills 2009).
EFA compliance costs prevented at least one trade union from participating in electioneering. The NDU’s national secretary Laila Harre was reported as saying that ‘the effort of obtaining political parties' approval put the union off campaigning’ in public (Trevett 2008).
In contrast to the negative experiences of a number of trade unions, the CTU’s president, Helen Kelly, commented on her organisation’s experience of the EFA, saying that ‘it worked fine – took some training, thinking and planning but generally allowed us to do what we wanted. We have always been transparent regarding our actions anyway so we were not worried about it’ (Kelly, 2009). However, the CTU did in fact run into complicated legal uncertainty about its campaign, with the Electoral Commission disagreeing with the union group’s interpretation of the EFA’s rules on proportioning part of its costs to the Labour Party.
One lobby group, Healthcare Providers New Zealand, registered as a third party and intended to publish election billboards and newspaper advertisements about health sector issues but decided not to proceed due to the uncertainty involved – particularly in terms of whether previous ‘billboards and advertisements earlier in the year could be considered election advertisements and put the group over its $120,000 spending limit. (Trevett 2008). Its chief executive Martin Taylor spoke out in October, complaining that the organisation had sought clarity about the law from the Electoral Commission so that the organization could be sure not to break the law, but such advice was not forthcoming and the group failed to find lawyers able to help.
There was also some uncertainty for third parties as to whether their election advertisements fell under the category of ‘candidate advertising’ (with its limit of $4000) or ‘party advertising’ (with its limit of $120,000). For example the Free Speech Coalition targeted one of its election advertisements at Winston Peters, with a billboard erected in Tauranga costing $4734. According to spokesperson David Farrar, the trust intended the billboard to be a ‘party advertisement’ but worried it might be interpreted as a ‘candidate advertisement: ‘If it was the latter then we would have breached the law. The Electoral Commission would not give us a ruling. We were definitely targeting Winston in his role as NZ First Leader, but we did place the billboard in Tauranga (more so he would see it) so [a ruling] could go either way’ (Farrar, 2009).
Much of the legal activity related to the uncertainty brought about by some of the more opaque features of the EFA. Commenting in September, Geddis observed that, 'People want to get their election campaigns going, but it is difficult to know where the lines fall and there is no way to know until courts rule on issues which arise from it' (Otago Bulletin 2008: p.4). Quite simply, many political parties and third parties were uncertain about what they could or could not legally do in election year. For example, the Finsec union said that, ‘The most pernicious thing about the Act was the uncertainty around what it required of third parties and an absolute inability to get clear and concise advice about this – even from the bodies charged with its enforcement’ (Casidy 2009).
In the end, there was therefore relatively little activity in terms of election advertisements or issue advocacy from registered and non-registered third parties. Lawyer Peter Kiely says that the general legal uncertainty created a reluctance by third parties in participate:
On a risk benefit analysis I think they decided it just was not worth the legal expense and/or risk of being referred to the police with such punitive fines and possible imprisonment. More realistically, most voters or organisations could not afford the legal fees to find out (Kiely 2009).
A large part of the problem was
that the authorities charged with interpreting the legislation were unable or
unwilling to provide adequate clarifications to electoral participants. Prior
to the passing of the EFA, the Electoral Commission warned that political
parties and third parties would no longer be able to rely on legal advice from the
agency, due to the complexity of the new rules. Once the law was in place, the
commission constantly informed those seeking advice that they needed to find
their own lawyers to advise them on what was legal.
Conclusion
It is beyond the scope of this paper to ascertain the EFA’s
effectiveness in achieving its stated objectives, but it is worth nothing that
part of the EFA’s stated purpose was to ‘ensure that the controls on the conduct of
election campaigns: (i) are effective; and (ii) are clear; and (iii) can be
efficiently administered, complied with, and enforced’ (EFA 2007, s 3). Yet the
experience of many participants showed that these goals were not achieved. A
second major stated purpose of the EFA was to encourage participation in
elections, but as this paper has shown, there is evidence to suggest that the
opposite occurred in terms of the participation of third parties.
It is notable that after its election loss, the Labour Party not only voted with National in Parliament to abolish the EFA, but also later made a submission to the Ministry of Justice on electoral law that advocated that third parties should be subjected to much looser regulation during elections. In an indication of how unpopular the regulation of third parties was in 2008, Labour revised its stance to advocate that there should be no limits on third party expenditure, and that the threshold for requiring registration should be considerably higher than in 2008, with a figure of $100,000 suggested.
There is no doubt that the EFA created a much
more comprehensively state-regulated campaigning environment, which
consequently reduced the freedom of some individuals and organisations to
participate in political discourse. Proponents of this increased regulation
argued that the provision of such civil freedoms and rights needs to be
balanced against other goals for the political system. The desirability of
promoting political equality for voters and for preventing political
corruption, for example, meant that the restrictions inherent in the EFA, such
as the reduction of political freedom, were warranted. But the experience of
many third parties would suggest otherwise.
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[1] Contemporary usage of the term ‘third party’ corresponds to the legal reference to an entity not directly involved in the contest for election – and thus the term is not to be confused with that of ‘minor party’, which in the past were sometimes described as ‘third parties’ because they were an alternative to the two major parties. This paper looks specifically at the impact of the political finance law on the political activities of non-political party organisations such as interest groups. In another related piece of research, I have focused on the impact of the EFA on political parties – see Edwards (2009).
[2] The New Zealand Herald, the country’s largest newspaper, ran a campaign against the Electoral Finance Bill under the banner ‘Democracy under threat’. The extensive six-week campaign began on 12 November with the entire front page utilized in opposition to the legislation.
[3] In the interests of
transparency, the author declares to having made a submission to the Justice and
Electoral select committee opposing the Electoral Finance Bill, and having
continued to be a public critic of the EFA in action. More prominent critics
included the organisations of the Human Rights
Commission, the Law Society, the New Zealand
Herald, the Sensible Sentencing Trust, and the National Party.
[4] I attempted to contact all registered third parties to invite their comments on the impact of the EFA in 2008, and the responses have helped inform this chapter.
[5] After the election of a National-led Government, the EFA was repealed on 1 March 2009, by section 15 of the Electoral Amendment Act 2009 (2009 No 1). The vote favouring the repeal was 112 to 9.
[6]
The legislation
included the following explanation: ‘The purpose of this
Act is to strengthen the law governing electoral financing and broadcasting, in
order to: (a) maintain public and political confidence in the administration of
elections; and (b) promote participation by the public in parliamentary
democracy; and (c) prevent the undue influence of wealth on electoral outcomes;
and (d) provide greater transparency and accountability on the part of
candidates, parties, and other persons engaged in election activities in order
to minimise the perception of corruption; and (e) ensure that the controls on
the conduct of election campaigns: (i) are effective; and (ii) are clear; and
(iii) can be efficiently administered, complied with, and enforced’ (EFA 2007,
s 3).
[7] The Electoral Finance Act 2007 definition of election advertisements covered: ‘any form of words or graphics, or both, that can reasonably be regarded as doing 1 or more of the following: (i) encouraging or persuading voters to vote, or not to vote, for 1 or more specified parties or for 1 or more candidates or for any combination of such parties and candidates (ii) encouraging or persuading voters to vote, or not to vote, for a type of party or for a type of candidate that is described or indicated by reference to views, positions, or policies that are or are not held, taken, or pursued (whether or not the name of a party or the name of a candidate is stated)’ (EFA 2007, s 5[1]).
[8] The Electoral Commission increased the employment of fulltime lawyers at the Commission from one half-time position to two fulltime positions. In her September speech to the law conference on the EFA, Catt also stated that ‘This situation has required – and will require – constant legal advice to assist with interpretation, imposing a burden beyond the resource demands which government helped us address with supplementary funding’ (Catt 2008).
[9] Unsurprisingly, a number of legal firms found themselves busy with considerably more electoral law case work than ever before. For example, legal firm Kiely Thompson Caisley had three senior staff working fulltime on electoral law issues for much of 2008, and when a legal case was being prepared they had another four lawyers involved (Kiely 2009).
[10] Another political group, the unregistered Campaign Against Foreign Control of Aotearoa, found that it was able to campaign amongst its members without problem with an emailed postcard campaign, but were informed that if those postcards were handed out in the street the law would be broken (NZPA, 03/07/2008).
