One of the more substantial and contentious political issues to arise out of the Jami-Lee Ross mega-scandal concerns electoral finance rules, and with the increasingly promoted idea that taxpayers should fund the parties, so that they are less reliant on private funding.

The Government has now indicated that it is open to introducing extensive state funding of political parties, with a possible review of how such funding could be introduced – see: Justice Minister Andrew Little says there is 'scope for debate' around political funding rules.

Prime Minister Jacinda Ardern was reported as being open to following any public lead on state funding: "She said the Government was reviewing the 2017 general election, as it does with every election, and if there is public appetite for a change in political funding rules, she was open to listening to those concerns." She is quoted saying that "There are overseas examples where [Governments] have chosen to opt-out of that [private system of funding], and to have a different system. I'm not sure whether there is the public license for that".

Prime Minister Jacinda Ardern was reported as being open to following any public lead on state funding. Photo / Mark Mitchell
Prime Minister Jacinda Ardern was reported as being open to following any public lead on state funding. Photo / Mark Mitchell

However, the same article quotes New Zealand First leader Winston Peters' opposition to such a change: "If you haven't got market demand for a political party, why should the taxpayer be propping them up?". See also, Collette Devlin's Prime Minister Jacinda Ardern open to taxpayer funding for political parties.

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Former Massey University Vice Chancellor, Bryan Gould, who was also previously a senior British Labour MP, is an enthusiast for state funding, arguing that it's important for democracy to have parties well-funded, and it's the lack of state funding which has produced some of the current problems – see: Jami-Lee Ross saga underlines need for public funding of parties.

He also argues that political parties – once considered separate from the state – are now quasi-state institutions and therefore needed to be properly resourced. He says taxpayers should be ready to make a "valuable financial contribution to that essential purpose" of ensuring parties are strong enough to carry out their democratic role.

The best case for state funding is put today in the Dominion Post by Victoria University of Wellington's Michael Macaulay who highlights "concerns private donations simply lead to policy capture: that vested interests buy political influence to benefit their own agenda", and hence donations could be replaced by the "radical" idea of state subsidies – see: Line between political access and political influence is porous.

Macaulay points out that this doesn't have to cost a large amount, and would allow parties to focus on more important tasks: "Public funding need not be a huge burden: the total funds parties raise and declare amount to 0.0001 per cent of the government budget. It also builds on current arrangements that make public funding available for party electoral broadcasts, which at the moment stands at $4 million. Furthermore, public funding would enable party supporters to refocus their energies: not on fundraising but on developing public policy for the decades to come."

Business journalist David Hargreaves also likes this idea, saying "I increasingly think 'donations' should be banned. I think it should be illegal for anybody to contribute money to a political party" – see: We should urgently consider changes to the way our political parties are funded.

For him, the cost to the taxpayer would be worth it: "All right, another tax, I hear you grumble. But could we just direct maybe some of the tax take towards a realistic pool of funds that are allocated to political parties to allow them to operate? Of course, we've already got public funding for election campaigns. This would extend that concept out to the day-to-day operations of political parties. Even-handed. It would be quite even-handed and mean that no political party would enjoy a 'moneybags' advantage over its competitor."

In light of the current National Party scandal, various leftwing bloggers are also enthusiasts for such a reform – for example, Martyn Bradbury asks: Isn't it time to seriously consider making Political Parties taxpayer funded?, and No Right Turn puts forward, A reason to support public funding of political parties.

No system of political party funding is perfect, and yesterday I wrote an article for Newsroom, which argued that in addition to state funding not being a panacea for the problems of political finance, it could actually make things worse – see: State funding of parties is bad for democracy.

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In this, I point out that New Zealand actually already has a very generous system of state funding via Parliament, which is generally used for electioneering: "The latest annual report of the Parliamentary Service – just published – shows that the most recent "Party and Member Support" budgets for the parties totalled $122 million. Individual parliamentary budgets were as follows: National, $65.1m; Labour, $43.7m; New Zealand First, $6.2m; and the Greens, $5.8m. Amongst other things, these budgets pay for about 402 parliamentary staff working for the parties and their MPs."

I argue that such state funding has actually led to more problems, especially in regard to the parties becoming less connected to society, and also providing incumbents with a significant monopoly over fledgling new parties trying to enter into Parliament.

Today the NZ Herald has published an editorial making similar points: "The disadvantage of public funding is that these benefits are not available to parties outside Parliament. It becomes harder for new parties to form and compete with those that have gained a foothold in the system. If the law was to forbid private donations, an exemption or a provision would have to be made for parties not in Parliament and where would that line be drawn?" – see: Complete public funding of parties would be a big step.

Furthermore, the Herald points out that "Exclusive public funding of parties could make the incumbents more comfortable and deprive our politics of some for the challenges, changes and dynamism a democracy needs. It requires careful thought."

Finally, it's worth reflecting upon the irony that the whole Jami-Lee Ross mega-scandal was triggered with questions about Simon Bridges' alleged misuse of the state funding, with the leak of his travel expenditure details. As John Armstrong argued at the time, the parliamentary budgets of the parties are meant for "parliamentary business" but all the politicians have "licence to do just about anything", and in the case of the National Party leader, he was essentially using the budgets to electioneer – see: Simon Bridges' travel spending 'was state funding of a political party in drag'.