Bryce Edwards: Political Roundup - Is Government policy for sale in New Zealand?

Does money buy policy in New Zealand politics and government? Based on the ongoing political finance scandal involving New Zealand First, which comes hot on the heels of the Serious Fraud Office charging four people in relation to donations to the National Party, New Zealanders have every reason to doubt the integrity of the electoral process. It’s no wonder there are growing calls for reform of a broken political finance system.

The ongoing leaks about the donations received by NZ First, and what look like attempts to at least circumvent political finance laws, saw the Electoral Commission refer the matter to the Police, who have now passed the scandal onto the Serious Fraud Office for investigation. At question is the role of the NZ First Foundation, which Winston Peters argues is separate from the party, but which appears to have been used to collect the donations in a highly questionable way.

This has the potential to damage to the reputation of not just NZ First , but the Government as a whole, and could have a significant influence on the election year.

Serious questions are now being asked about the influence that hitherto secret donations have had on various Government policies and decisions. The latest details about the donations were published yesterday by RNZ’s Guyon Espiner and Kate Newton – see: NZ First Foundation received tens of thousands of dollars from donors in horse racing industry.

This article details some of the many donations made by those in the racing industry that were given to the party in a way that meant they weren’t made publicly available. And although the article stresses that the law may not have been broken by these donations, it links them to policy decisions by this government.

Here’s the key part: “In this government's first Budget in May 2018, Peters announced $4.8 million would be spent over four years for tax deductions to be claimed for the costs of acquiring ‘high quality’ breeding horses. Then in the 2019 Budget the government repealed the betting levy. That meant that a 4 percent levy on betting profits - which previously netted the Crown about $14 million a year – would not be paid to the government, but would be redirected to the racing and sports sectors. Peters signed off on the move despite the opposition of Treasury”.

Of course, this doesn’t necessarily mean that racing industry donors bought these policy decisions. But the lack of transparency, and the apparent attempts made to hide the donations, are enough to raise suspicions about the democratic process. The article quotes Otago University’s Andrew Geddis about the importance of the public knowing who funds parties: “Unless we're able to see who was putting money into the system, and then see who's getting benefits out of the system – you simply aren't able to draw those connections and ask, you know, is there a problem?”

Geddis is also quoted in another article by RNZ’s Espiner and Newton, saying information about donations is “very important for the public to know” in a democracy “where we're entrusting political parties and their representatives with a great deal of public power” – see: Wealthy and powerful NZ First Foundation donors revealed.

This article also provides further details of how the mysterious NZ First Foundation raised more than $300,000 in the 2017-19 period in the form of donations of around $15,000 or just under. The $15,000 figure is the threshold for when donations have to be made public. Espiner and Newton point out that “in some cases, multiple such donations were made by related entities or individuals during a year”. The possibility exists that larger donations might have been broken into smaller donations to evade the law.

Winston Peters hit back, doing a Facebook Live Q+A on Wednesday night in which he argued that “donors to the New Zealand First Foundation are entitled to keep identities secret” if the sums involved are under the threshold – see Derek Cheng’s Winston Peters says donors are entitled to anonymity. Peters added that such donations are necessary “if we don't have such a system of public fundraising, taxpayers would have to pay and we're diametrically opposed to that”.

In terms of the Government’s racing industry reforms, Peters said: “no one is buying any policy here” because as Minister of Racing he had simply implemented an independent racing policy. And he’s been backed up by Prime Minister Jacinda Ardern, who says accusations on this are “not fair”. She has said: “Racing policy, decisions, bills, as with any decision we make, as a Government, goes through considerable scrutiny – no one policy is ever decided by one party, they go through all of us.”

National’s finance spokesperson Paul Goldsmith has called for some reassurance that money isn’t buying policy: “We have New Zealand First ministers making large decisions about large spending and all New Zealanders want to be assured about the integrity of the decision-making” – see Jo Moir’s Winston Peters on Foundation donations: ‘I did not receive any money’.

In this article, Shane Jones is reported as arguing that the controversy is just a witch hunt against the party, and denies racing or fisheries policy is for sale: “No, I think that's really petty to talk to like that… I've been a recipient of Sealord's and the Dalmatian leadership in terms of fisheries, and I resent any suggestion that decisions or statements I make about fisheries are driven because of donations.”

Some defence of the arrangements are also found in Barry Soper’s column yesterday – see: Winston Peters' Trumpian moment. He relays Peters’ point about why he’s helping the racing industry: “he's fought for the survival of the industry for the last 30 years, he told us. Significant changes to it last year came from a review of it by an overseas, independent advisor who said it needed urgent reform and would be irreparably damaged if it wasn't carried out.”

Soper points out that other political parties also take donations from sectors that expect policy wins – for example, “the significant support of the trade union movement for Labour. And they don't do that for nothing, neither does the racing industry for Winston Peters or big business for the National Party which gets the lion's share of donations.” He concludes that party donations “should be seen for what they really are, paying for the sympathetic ear of a lawmaker.”

Jacinda Ardern has also defended NZ First’s connection to the racing industry on the basis that is “no secret to anyone in New Zealand that Winston Peters has a strong knowledge, understanding and long-standing connection to the racing industry”.

In response to this, National-aligned blogger David Farrar says: “Yes she is defending NZ First having massive secret donations from the racing industry and in return delivering huge financial windfalls to the racing industry with taxpayer money” – see: Has Jacinda read her own coalition agreement?

Farrar also makes the point that NZ First cared so strongly about their racing policies that they demanded them be installed as part of the coalition agreement: “Jacinda needs to read the Labour and NZ First Coalition agreement. It requires Labour to ‘Support New Zealand First’s Racing policy’. There is no other portfolio which has the agreement requiring the Government to support one party’s entire policy. This shows how massively important it was that NZ First could guarantee to its funders their policies would be implemented.”

Newsroom editor Bernard Hickey says the public should take these racing industry financial connections seriously: “Winston Peters is Racing Minister and has pushed through reforms to the NZ Racing Board and the industry that are expected to see the TAB sold off to Australian betting companies in a way that breeders and trainers want. He has also cut levies paid by the industry” – see: Winston Peters should stand down as Racing Minister.

He argues therefore that “Winston Peters should stand down as Racing Minister, at the very least, while those donations are being investigated by the Serious Fraud Office.” Furthermore, “the Government should put its Racing Industry Bill, which is in the select committee stage after its first reading in Parliament last month, on hold.”

Hickey is also interviewed on the whole connection between money and politics in another article, in which he says the lack of transparency that appears to exist in the current arrangements in political finance law means that “the scrum is screwed, if you like, by people who are wealthier than the rest of us and can ask for special favours, and have influence over a project larger than they would have if they were just another citizen who was voting in an election. One of the ways to protect yourself is to make sure everyone knows who's donated what to whom” – see Alexia Russell’s New Zealand First in party donations furore.

Finally, for the best dissection of the NZ First leader’s eight-minute appearance on Facebook in which he promised to tell the “truth about the NZ First Foundation”, see Ben Thomas’ So many questions as Winston Peters goes live on Facebook. 

Dr Bryce Edwards is a politics lecturer at Victoria University and director of Critical Politics, a project focused on researching New Zealand politics and society.