Brian Rudman: Electoral finance under the knife

Repealing the Electoral Finance Act is the easy part. Now the National Party and its governing allies have to reveal whether they're happy to return to the law of the jungle which allowed wacko sects like the Exclusive Brethren to run secret $1 million pro-National campaigns with impunity.

After the latest United States election spend-up, there must be those in National with business connections just drooling at the thought of the cash flow generated during that campaign. The figures are truly obscene.

The US Centre for Responsive Politics has added up the publicly declared funds collected during last year's elections. For the presidential campaign alone, candidates raised a total of $3.4 billion. Candidates for the House of Representatives raised an additional $1.86 billion and for the Senate, $778 million.

On top of that, the two major parties, the Democrats and the Republicans, managed to drum up an extra $2.96 billion apiece in campaign backing.

The biggest single funding sector was the finance/insurance/real estate industry which tossed in $820 million. Close behind were the single issue groups, which contributed $492 million and lawyers and lobbyists who gave $476 million.

The Centre for Responsive Politics suggests it's an investment that paid off richly for some. It calculated that the companies that benefited from the $1.327 trillion government bailout for finance and automotive industries paid out $216 million on lobbying and campaign contributions in the run-up to the election. A return on investment, centre researchers wryly note, of 258,449 per cent.

Members of the Senate committees who voted on these handout packages received a total of $9.86 million from recipient companies in the previous year.

At least in the United States, the donors have to declare their contributions. The repeal of the Electoral Finance Act means that Alan Timothy Gibbs of Kaukapakapa will no longer have to declare $200,000 in donations to Act last year, nor will new Act list MP John Boscawen have to reveal he stumped up $100,000. Ditto the rich horse industry brothers Peter and Philip Vela, who gave last-minute donations of $100,000 to Labour and New Zealand First. (Clarification: This requirement will remain until a new Act is drawn up.)

Of course if they hadn't wanted their generosity exposed, they could have laundered the money through one of the secret trusts that all parties use to hide their shy backers. In the year to last April, for example, National's Waitemata Trust supplied more than half the $704,100 in declared donations. Labour had anonymous donations, channelled through lawyers, totalling $230,000.

The question we have to address is do we want our parliamentarians beholden - either secretly or openly - to the rich and the powerful, as is the case so obviously in the US, or do we want to live in a democracy where an effort is made to decide issues on their merits?

More than 20 years ago, the 1986 Royal Commission on the Electoral System came down in favour of the latter.

Backing a system of state funding, the commissioners concluded "the extent to which ordinary party members and supporters can meet the sophisticated and costly requirements of parties in a modern democracy such as New Zealand is severely limited.

Our parties should be able to operate not just as electoral machines, but also as vehicles through which ideas may be discussed and sound policies developed". The commission said "political parties were too important to starve".

They also warned of the undesirability of parties being dependent on "donors of substantial wealth" and how we all stand to suffer if governments come to office with "poorly researched" programmes.

The commissioners added that "too great a reliance" on outside funders like trade unions and corporations would "be detrimental to our democracy and might ... lead to corruption of our political process".

After the last election, the Greens reflected the commission's sentiment, calling for a cap of $35,000 on any one donor and the disclosure of any donor giving more than $1000. They wanted a register of lobbyists and partial state funding as "insurance against ... parties becoming captured by wealthy vested interests".

Australia has long had state funding based on the number of votes cast. At the 2007 federal election, the payout was $2.70 a vote cast, which seems a cheap price to pay.

However, across the Tasman the politicians have taken a bob each way, retaining the ability to take donations as well.

Figures just released revealed that last year Australian parties pulled in $271 million in donations. Like New Zealand, the identity of donors giving more than $10,000 has to be revealed.

The latest figures show that Hong Kong businessmen, including a gaming tycoon seeking new casino rights, gave $1.39 million to the New South Wales Labor Party. Green leader Bob Brown queried a donation of more than $80,000 to the Liberal Party by a company seeking to build a $3 billion pulp mill in Tasmania.

In the US, Australia and New Zealand, it's the same story. Those with money will try to make it talk. The upcoming review of our electoral financing gives us the chance to protect our democracy from such manipulation. But I'm not holding my breath.