Significant and urgent reform of New Zealand's electoral laws is needed in order to restore and protect the health of our democracy, public trust in the political system, and citizen engagement with the political process.

Current electoral laws fail to uphold the fundamental democratic principle that every citizen has equal political power, with equal ability to contribute to and influence political outcomes. Addressing this should be of paramount importance for the Justice Committee.

The Opportunities Party submits that the Justice Committee should focus in particular on three key areas:

1. The significant and harmful role money plays in our electoral process must be addressed, as it allows for barriers to free and fair elections that undermine public trust in the electoral process, and discredit the legitimacy of the Government;
2. Disproportionate and unjustifiable advantages of incumbents must be mitigated by the Electoral Commission;
3. The excessively high and undemocratic MMP threshold, which fails to deliver a truly representative electoral system, must be amended.

The Opportunities Party asks that the Justice Committee give due consideration to the issues raised in these submissions, and the proposed solutions in order to protect and restore our democracy.

1. a) The improper and harmful role of money in the electoral process

Insufficient restrictions on the flow of money into political campaigns fail to protect political equality among citizens, and reinforce economic inequalities and wealth disparities among citizens. Under current electoral laws not all citizens have equal political power. This violates the cornerstone of what a democracy is meant to achieve.

Unlimited private funding to political candidates and parties provides significantly greater influence in the hands of wealthy donors who have a greater capacity to donate and determine who will govern the country than do ordinary citizens.

This inequality is impacting public perceptions and trust of our political institutions. Research by Stats NZ found that over a third of respondents (and 47% of Māori) considered the public has little to no public influence on government decisions, compared to 4% who considered the public has a very high influence on government decisions (Stats NZ, 2018).

Breakdowns in trust in government flows through to behaviour in workplaces and individual well-being, and threatens the very social fabric of our country, as some increasingly look for alternative and concerning avenues to vent their frustrations with political outcomes and societal issues (University of Auckland, 2022).

New Zealand's social stability, peace and security relies upon electoral reform to address these issues.

Reform needed:

• Lower donation limits in order to restore equal financial capacity among citizens to contribute to the political campaigns of their choice.
  • This would prevent parties and candidates becoming overly reliant to the undue influence of a small number of donors and lobbyists.
  • Canada already limits donations to citizens, with a cap of about $2,000 NZD per year. (Elections Canada, 2020)
  • Caps should be set at the level reasonably within reach for the ordinary citizen.

1. b) Electoral finance barriers to free and fair elections

Electoral laws fail to create an even playing field between political challengers and incumbents. There is currently a gross distortion in the system in favour of incumbents, which prevents all parties and candidates from the equal and fair ability to share their messages and ideas with the public.

The imbalance of wealth between political parties is stark. The declared donations to political parties for 2022 show that ACT declared over $2,000,000 in donations, National over $5,000,000 with some individuals donating over $100,000 in that 12-month period alone. One individual alone donated $500,000 to National in June 2023 (almost half of a parties' total allowed electoral spend in the regulated period from one person alone) (Electoral Commission, 2022). These are not amounts that ordinary citizens can compete with. Such inequality of support for political challengers creates a skewed competition.

The impression that wealthy donors can "buy" political outcomes needs urgent attention.

Limits on spending for the three months before an election are utterly inadequate to deal with these inequalities - particularly as they come with a number of exceptions that advantage parties with more money than the spending limits allow (i.e. surveys/opinion polling, travel and some labour). Clearly those with significant funds are able to functionally spend above the current limits, which reinforces their existing political and financial advantages.

Reform needed:

• Spending limits need to be extended beyond the three months prior to an election and should be in place at all times.
  • This would prevent excessive spending by some parties outside of regulated periods and start to address the unbalanced starting points among political competitors.
  • Better regulation and oversight over political spending is needed. Annual reporting and reporting of financial spending information ~three months after an election fails to pick up illegal spends, or spending over the limit.
  • Reporting must be required over the regulated period on a weekly or fortnightly basis.
    • Increased funding to the Electoral Commission will be needed to achieve better oversight.

2. Disproportionate and unjustifiable advantages of incumbents

There is no equal starting point between incumbents and challengers.

Parliamentary Services funding is frequently used for electoral advertising under a very thin veil to appear to meet the criteria for "parliamentary purposes," but is simply used to grow support on social media. Access to full time support staff, paid travel, research and electoral offices are privileges unavailable to challengers outside of Parliament.

Electoral Commission broadcasting criteria is outdated and reinforces improper incumbent advantages, being predominantly based upon past success, and they continue to enshrine those who have power to continue to maintain that power. The criteria must be reviewed to reduce the stark differential between parties. Providing some parties with $1,000,000 and others with $150,000 is a disproportionate advantage, and unjustifiable given the fundamental importance of free and fair competition.

Reform needed:

• Parliamentary Services funding needs to be restricted, and calculated towards both donations received by the party, and spending limits for costs incurred.
• Improve the criteria for the broadcasting allocation to achieve fairer more equal starting points.

3. Lower the MMP Threshold

It has been 12 years since the Electoral Commission recommended that the threshold be lowered. In 2023, the Independent Electoral Review again recommended that the threshold be lowered.

Right now, 5.57% of voters are unrepresented in Parliament because they voted for parties that did not make the threshold.

It is undemocratic to have any notion of a “wasted” vote, and reform is needed to increase the proportionate representation democracy requires, and the public expects and deserves. If a party receives enough votes sufficient to fill a seat in Parliament, that should be enough. There is nothing legitimate about excluding votes based upon an arbitrary and unjustifiably high threshold.

The threshold distorts voters’ choices by causing them to vote for parties, not because they are their first choice, but because the party they prefer has little chance of reaching that threshold (Electoral Commission, 2012).

It is a damning failure of the current MMP system and its prohibitive entry criteria that since the introduction of MMP, no new political party has made it into Parliament without having its origins in a pre-existing Parliamentary party.

The current threshold does not strike an appropriate balance between the need for proportionate representation and concerns about ensuring stable Government, and its continuance is unjustified. Small parties in Parliament have not had a destabilising effect. There are repeated examples of coalition Governments over the past 25+ years under MMP that have included parties with very few seats, including in the 2008 Government with 1 United Future seat; 2011 Government with 1 ACT seat and 1 United Future seat; and in 2014, 2 Te Pāti Māori with 2 seats, 1 ACT seat, and 1 United Future seat. There is therefore no basis to argue that by allowing small parties to enter Parliament there will be any destabilising effect.

Reform needed:

• The MMP threshold must be lowered to 3%, or removed entirely, to ensure a fairer and more representative electoral system.
  • Concerns around instability with a lower threshold are not supported by evidence.
  • The coat-tailing provisions need to be removed to restore the core principles of equity and fairness our electoral system is meant to be based on.

References

Stats NZ. (2018). Voting and political participation.
https://www.stats.govt.nz/reports/voting-and-political-participation

University of Auckland (2022). When trust in government slumps: lessons from pandemic survey
https://www.auckland.ac.nz/en/news/2022/03/04/trust-in-government.html

Electoral Commission. (2012). Report of the Electoral Commission on the Review of the MMP Voting System.
https://elections.nz/assets/2012-report-of-the-Electoral-Commission-on-the-review-of-mmp.pdf

Electoral Commission. (2022). Party donations and loans by year.
https://elections.nz/democracy-in-nz/political-parties-in-new-zealand/party-donations-and-loans-by-year/

Elections Canada. (2020). Limits on Contributions.
https://www.elections.ca/content.aspx?section=pol&document=index&dir=lim&lang=e

Further References

Boston, J., & Geddis, A. (2010). Editorial Note. Policy Quarterly, 6(3), 2.
https://ojs.victoria.ac.nz/pq/issue/view/516

Cameron. S., & Wynter. T. (2018). Campaign finance and perceptions of interest group
influence in Australia. Political Science, 70(2), 169-188.
https://doi-org.ezproxy.auckland.ac.nz/10.1080/00323187.2018.1562307

Electoral Commission. (2020). 2020 Broadcasting Allocation Variation.
https://elections.nz/assets/2020-general-election/Broadcasting-Allocation-Variation-9-September-2020.pdf

Feasby, C. (2010). Contemporary Issues in Canadian Political Finance Regulation. Policy
Quarterly, 6(3), 14-20.
https://ojs.victoria.ac.nz/pq/issue/view/516

IDEA International (2014). Funding of Political Parties and Election Campaigns A Handbook on Political Finance.

May, D. (2018). Chapter 7: Political party funding and the enigma of trust. In J. Mendilow &
E. Phélippeau (Eds.), Handbook of Political Party Funding (pp. 103-124).
https://doi-org.ezproxy.auckland.ac.nz/10.4337/9781785367977

Scarrow, S. (2018). Chapter 6: Political finance regulation and equality: comparing strategies and impact. In J. Mendilow & E. Phélippeau (Eds.), Handbook of Political Party Funding (pp. 103-124).
https://doi-org.ezproxy.auckland.ac.nz/10.4337/9781785367977

Vowles, J. (2015). Voter Turnout. In J. Hayward (Ed.), New Zealand Government and Politics (pp. 287-299). ProQuest EBook Central.
https://ebookcentral.proquest.com/lib/auckland/reader.action?docID=5836520&query=NEW+ZEALAND+GOVERNMENT+AND+POLITICS#