Smith Murray: Inquiry into the 2002 General Election — Consideration of Report of Justice and Electoral Committee 
Smith Murray: Inquiry into the 2002 General Election — Consideration of Report of Justice and Electoral Committee 
[Volume:617;Page:13123] 
MURRAY SMITH (United Future) 
: 
 I begin by expressing United Future’s congratulations to the Electoral Commission the Chief Electoral Office and the Electoral Enrolment Centre on the very good outcome of the 2002 election in terms of the way it was run. There was certainly a dramatic improvement in addressing the causes of concern from the previous election and those institutions did a fine job. 
The inquiry into the general election that always takes place afterwards is an opportunity to relook at our electoral system and to consider changes that could improve it. This year we considered two primary areas in particular. One was the area of donations to political parties and the other was the funding of political parties. In respect of donations to political parties issues such as the threshold for disclosure of donations limits on the amount that can be donated and the vexed problem of anonymous donations were all looked at at length. In the end the Justice and Electoral Committee decided not to take on the hard issues but simply recommended them for further inquiry. That was a little bit of a fizzer after we had begun what seemed to be quite a promising trek on a pretty meaty inquiry. 
The anonymous donation situation is really problematic. I note that in the last general election a large proportion of donations made to political parties—in fact 44.4 percent overall—were anonymous. In National’s case the sum of donations made anonymously was $200000 out of $529000 which is 38 percent. In Labour’s case it was $380000 out of $672000 which is 57 percent and ACT and United Future had similar figures at 56 percent and 53 percent respectively. Clearly all parties take advantage of the fact that donations can be made anonymously. 
Central to this issue is the question of what influence donations have on parties and on Governments’ policies and decisions. I must say that the evidence was very scant in terms of donations having much influence at all. Clearly parties have policies upfront that will attract certain funding—funding for Labour from unions because of its employee-centred policies and for National from members of the Business Roundtable because of its high-income-earner - supporting policies. But there is not a lot of evidence that donations from individuals in particular influence Government decisions. Perhaps the closest we got to a suggestion of that was the sale of New Zealand Rail to Fay Richwhite and Co. for what many regarded as a very conservative price. However if there is any influence then it is certainly not in the realm of $100 $1000 or even $10000 donations. 
That brings me to the second concern which is the difficulty of policing regulations about anonymous donations and donations generally and the difficulty of being able to find out who has made anonymous donations and how they have done that. The use of third parties such as trusts has become quite prevalent so that one can even have a donation that is overt but that has come from a trust that in turn has received it from third parties who remain anonymous. Direct deposits into a bank account often mean that the party does not even know whom the money has come from. 
United Future proposes we take a higher threshold of donations—and we suggested $50000 as a rough suggestion—a threshold that would be meaningful and below which clearly in terms of common sense there is unlikely to be much in the way of influence and propose we rigorously enforce that threshold. We suggest there should be a bar to intermediaries and there should be a declaration by donors of sums above $50000 as to the source of their funds. We would also ban anonymous donations above $1000 to prohibit the multithousand dollar donations getting above something like a $50000 threshold. That certainly is the way we think the direction should go—that is when it comes to donations we would keep the threshold high and rigorously enforce it. That is the only way we can effectively address that issue. 
Over the last few weeks I have had the privilege of travelling to Europe Scandinavia and the USA to observe some of the electoral systems operating there. I was keen to see the direction of the proportional systems in Europe and what that might mean for New Zealand. Some quite interesting factors emerged only one or two of which I can refer to tonight but in Europe clearly the proportional systems have proven that the proportional system is less stable than the Westminster democratic-type tradition. 
There are many Governments that do not last the full term and generally in Europe that term is a 4-year period. Norway for example with one of the oldest proportional systems has a system very similar to that of New Zealand but with multi-representative electorates and with some allocation still on a proportional basis. As Norway has developed its system it has seen a closing of percentages among political parties so that it now has two parties Conservative and Labour that get 20 to 25 percent of the vote; three parties the Christian Democratic party which is family centred the Progress party which is a populist party and the Socialist party which is a left party that get 10 to 15 percent of the vote—and the parallels can be seen—and then two smaller parties Centre and Liberal that get about 5 percent of the vote. That means Norway tends to have three to four parties in a Government coalition. Currently the conservative Christian Democratic - Liberal Government with a Christian Democrat as the Prime Minister has 62 of the 165 seats and relies on the Progress party’s—that is the centrist party’s—26 votes to make a majority. One can easily understand the instability of that system. After the last election the coalition of the time lasted only 2½ years. 
There are clear signals for New Zealand that as we move further away from a first-past-the-post two-party dominated system we may face the same sort of instability. But the message from Norway was that the instability was a price for a greater breadth of representation. Its people saw that most parties had a similarity in terms of central policies that meant there were not dramatic swings of policy and they saw that as a good price to pay in order to have that representation. I also spoke with ministry officials who admitted that it effectively caused a lot of uncertainty for them as projects were scrapped when there were changes of government and new emphases were brought in. So it was not all sweet in terms of the way that the Government ran. 
The instability was different in Estonia and Latvia. Since their independence from Russia in 1991 they have found profound and very positive change in their democratic structure. In their election in 2002 there was a groundswell against political corruption and currently in both countries two-thirds of the MPs standing in the last election have lost their seats. So they have a very inexperienced Parliament. In discussions we had with the President of Estonia he admitted having had a huge amount of experience in the constitutional reforms in that country that the inexperience of the Parliament was showing in some of the legislation it brought in. One of the parties in government there is the Latvia’s First Party a family centred centrist party that was formed in May 2002 and elected with nine MPs in October 2002. That party has close similarities to United Future and is evidence that there is a rise of family-focused parties in all the European countries. Even in Russia there is a party called the Party of Life—that is a family-centred centrist party that is part of the United Russia majority in the Duma which is the equivalent to our own House of Representatives. 
The is that in the rise of family-focused parties is happening quite rapidly. As I pointed out in Latvia there was a sudden rise of that party so I think that the rise of United Future in the last election was more than simply a factor of a worm or a single debate. The fact that in the last 2 weeks before the last election we went from 1 percent to 7 percent was indicative of a move we can see internationally towards centrist family-based parties. The increasingly rapid support for them in Europe is a key to the development of those countries. 
The other thing I noticed was that there was some envy in the larger countries for our unicameral system. In the United States and also in Russia it takes at least 6 months to get legislation through the system because there are the executive the Senate and the House of Representatives to contest with. That means that legislation is well considered whereas in this House the rapid changes in legislation we are able to make are not always positive. We should not be concerned therefore about taking time over legislation in order to get it right. 
The select committee process is central to that and is a vital part of our electoral system. We have a very good system. There are areas such as the donation area that can be addressed but we still have an evolving system. We have only had three elections under MMP. I think there is much we can be grateful for in our system when we compare it with systems overseas.