National floats ban on foreign donations

National Party MP Nick Smith has signaled reforms are needed to rules on foreign political donations. Photo / File

Calls to ban foreign donations to political parties received a shot in the arm yesterday after National Party MP Nick Smith signalled reforms were needed to ensure the integrity of the New Zealand electoral system.

In a related move, Parliament's justice select committee have issued a rare invitation to the country's intelligence agencies to give a - likely closed-doors and secret - briefing to MPs about "foreign interference" in local elections.

Nick Smith, a member of the committee and his party's spokesperson for electoral law reform, confirmed the committee as a whole late last year sent a letter to the New Zealand Security and Intelligence Service (NZSIS) and Government Communications and Security Bureau (GCSB) inviting them to give evidence.

Smith yesterday said he hoped the NZSIS and GCSB would be able to provide insight on the local risks posed by issues such as the hacking the public officials' communications, foreign donations, and anonymous and politicised social media campaigns.

"There is the issue of funding, and whether foreign governments are either directly, or indirectly through shelf companies, are using funds to inappropriately influence outcomes," he said.

Smith said the invitation to the NZSIS and GCSB offered evidence to be given in secret if required. He conceded this would be an unusual move for usually-open committee meetings, but was justified: "I think this is a really important issue," he said.

A spokesperson for the agencies said they were unable to comment on the parliamentary request.

While Smith was unwilling to be specific on who might be behind any possible foreign interference in New Zealand, he said he had read University of Canterbury professor Anne-Marie Brady's work on China's local influence "with interest" and was keeping a close eye on the developing Mueller investigation into Russian interference in United States elections.

And in a speech last night to Nelson Rotary, Smith doubled down and went public with his call for electoral finance reform, saying he wished to promote "a ban on foreign donations."

"The existing electoral law does put limits on foreign donors, but needs strengthening. Only kiwi citizens and residents should be able to donate to political parties or to campaigns that seek to influence an election outcome," Smith said.

The proposals floated by Smith - described as "ideas for discussion" and "not National policy - appear to markedly contrast with Prime Minister Jacinda Ardern's recent defence of New Zealand's political donation regime as "pretty good," and not in need of any reform.

Current electoral law prohibits non-citizens or residents from donating more than $1500 to political parties, but these can be avoided by donating through New Zealand-registered corporate entities - such as companies, incorporated societies and trusts - which are allowed to donate regardless of whether they are owned or controlled by New Zealanders.

The issue of foreign donations to, and interference in, democratic societies is a major issue internationally.

In the United States the ongoing Mueller investigation is probing Russian interference in the 2016 presidential election, Australia has recently cracked down on political donations and influence-peddling from China, and Britain is grappling with allegations the result of the Brexit referendum was subjected to foreign interference.

More locally, a high-profile research paper by professor Brady, and allegations about foreign donation laundering from disgraced former National Party MP Jami-Lee Ross, have put the spotlight on political donations linked to China.

Chris Finlayson, who served as the attorney-general and minister responsible for intelligence services until the 2017 election, in December made a similar call to Smith when giving his valedictory speech to Parliament.

Finlayson said: "I have become concerned about funding of political parties by non-nationals. That's why I think both major parties need to work together to review the rules related to funding."

"I have a personal view that it should be illegal for non-nationals to donate to our political parties. Our political system belongs to New Zealanders, and I don't like the idea of foreigners funding it."