NEW ZEALAND'S CONTROVERSIAL CAMPAIGN FINANCE BILL

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SIPDIS

SIPDIS
SENSITIVE

STATE FOR STATE FOR EAP/ANP
PACOM FOR J01E/J2/J233/J5/SJFHQ

E.O. 12958: N/A
TAGS: PGOV PHUM KDEM NZ
SUBJECT: NEW ZEALAND'S CONTROVERSIAL CAMPAIGN FINANCE BILL



1. (SBU) Summary. The Electoral Finance Bill, a
highly-controversial Government bill to reform New Zealand's
campaign finance rules, aims to place restrictions and spending
limits on non-party political advertising. The legislation has
survived two readings and is likely to pass before the parliamentary
recess in December. Despite some modifications, a broad spectrum of
opponents in and outside government still claim that it is affront
to New Zealand's democratic principles and will limit free speech
and participation. Despite the strong criticism, Labour remains
defiant and argues that the legislation is needed to prevent wealthy
special interests (i.e., potential National Party supporters) from
buying elections. End Summary.

Campaign Finance Bill Continues Towards Passage
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2. (SBU) On July 23, a highly contentious Government-backed bill
that seeks to enforce restrictions and spending limits on non-party
political advertising was introduced to Parliament. Despite its
controversy, the Electoral Finance Bill received enough support from
the minor parties to ensure its passage to the Electoral Select
Committee on July 26 where its members - a mix of Government and
opposition MPs - scrutinized the bill and made some changes. (Note:
A bill becomes law after its third reading in Parliament, when it
receives its Royal Ascent from the Governor-General, the
representative of Queen Elizabeth II, New Zealand's official Head of
State. In between readings, the bill is sent to Select Committee for
further scrutinizing and recommended changes, if any. End Note).

3. (SBU) On November 19, the Justice and Electoral Select Committee
reported back on the Electoral Finance bill. Cognizant of the weight
of popular opposition to the bill that has been building since its
introduction, the Committee recommended several changes to its
original draft. The Committee increased the limit on how much lobby
groups can spend (NZD 120,000 or USD 91,000); relaxed the definition
of election advertising; limited anonymous donations to NZD 240,000
(USD 182,000),and limited the amount that can be given anonymously
by an individual to NZD 10,000 (USD 7,600). Additionally, the
Committee expanded the bill's restriction on political advertising
to cover government departments, initially exempt from the scope of
the bill. Labour has been criticized for using government-funded
public awareness campaigns as thinly veiled election advertisements
for Labour Ministers.

4. (SBU) The Committee, however, upheld one of the bill's most
controversial provisions: the expansion of the official election
period from three months before voting day to January 1 of an
election year. This expansion of the regulated election period
places limits on spending by political parties and advocacy groups
for up to 11 months rather than the current three months.
Bill Draws Strong Criticism
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5. (SBU) On introduction, the bill drew intense and broad
opposition throughout New Zealand society, which has continued to
build. Political opposition to the bill is being led by the
National Party who, if it becomes the next government, pledges to
repeal it if the draft legislation becomes law. The influential
Human Rights Commission, a statutory body that monitors and promotes
human rights in New Zealand, believes the bill will suppress free
speech and grassroots political participation.

6. (SBU) The New Zealand Law Society (akin to the American Bar
Association) wants the bill to be discarded entirely rather than
amended, despite some relaxing of its more restrictive measures.
The daily New Zealand Herald newspaper launched a campaign to
persuade the Government to shelve the bill. The paper has written
scathing editorials slamming the legislation as transparently
partisan and anti-democratic, with several op-eds and articles
supporting the paper's position. Following a large street protest
against the bill in Auckland, similar protests were held in New
Zealand's other major city centers, Wellington and Christchurch.

7. (SBU) Opponents of the bill uniformly claim that because New
Zealand lacks a written constitution, any legislation that affects
the country's democratic system of government has, in the past,
received bipartisan support and broad civil society support. The
Election Finance Bill, if passed, would break with that tradition.

Government Defends Finance Bill
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8. (SBU) Prime Minister Helen Clark has flatly rejected calls for
the Government to abandon the bill. Despite acknowledging that the
bill was imperfect on introduction, Clark believes that the
necessary amendments to the bill worked out in the Justice and
Electoral Select Committee will satisfy critics. She noted that New
Zealand has looser electoral laws and asserted that the bill is an
attempt to provide greater clarity around private funding for
elections.

9. (SBU) Justice Minister Annette King, who is charged with
shepherding the bill through Parliament, says the latest draft

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addresses key concerns and will be effective in stopping
well-financed special interests from being able to buy votes for
their party through advertising. Fending off criticisms from
National's deputy leader, Bill English, that the amended bill
remains legally vague and will dampen needed democratic debate, King
noted that where there is uncertainty the "law of common sense" will
prevail.
Labour Wants to Pass Bill Before December Recess
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10. (SBU) The bill's changes are supported by Labour and its
support parties, the Progressives, the Greens, NZ First and United
Future. The Green Party said the NZD 120,000 restriction on
third-party spending would prevent those with deep wallets "drowning
out Kiwi groups and people with legitimate election issues." United
Future leader Peter Dunne said his main concerns - relating to
third-party activities and the definition of election advertising -
had been addressed. But he said he would not support any moves to
rush the bills into law before Parliament rises for the summer
break. The Government hopes that the bill will become law before
the end of the year. If the legislation passes before the
Parliament recesses, it will be applied almost immediately to the
upcoming 2008 election.

Another Campaign Bill
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11. (SBU) At the same time Parliament considers the Electoral
Finance Bill, another bill aimed at regulating campaigning funding
is also before Parliament. The Appropriation (Continuation of
Interim Meaning of Funding for Parliamentary Purposes) Bill allows
MPs to use public funds to publish anything that does not explicitly
solicit votes or money. Under the bill, sitting MPs will have the
potential to access more funds than those challenging their
Parliamentary seat. National claims that this bill coupled with the
Electoral Finance Bill, results in an "anti-democratic double
whammy" from Labour. National opposes the bill, but the Government
is confident that it has enough support from the minor parties to
ensure passage.

Labour Worries of 2005 Election Repeat
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12. (SBU) Labour's resolve to pass the Electoral Finance Bill
originates from concerns surrounding the entry into the 2005
election of the Exclusive Brethren Church (EBC). The Brethren
informed election officials that they intended to spend NZD 1.2
million (USD 910,000) to campaign against the Labour government but
without giving the money to the National Party. The election
finance law at the time allowed for such activity but the group had
to be careful to avoid public affiliation with the National Party.
Labour characterized the EBC negative campaign attacks as an attempt
to buy the election. Labour's accusation that National was secretly
working in collusion with the Exclusive Brethren hurt National's
credibility during the election, which it subsequently lost. Given
that National Party supporters tend to come from the business
community and have deeper pockets to support candidates than do NGOs
and unions, Labour worries that money could play a deciding factor
in New Zealand elections - particularly a close election in 2008,
and Labour cannot compete with National in that regard.

13. (SBU) Comment: The Labour Party has yet to fully recover from
having to reimburse parliamentary funds for unlawful election
advertising in 2005. National also faced a financial penalty from
2005 but for a considerably smaller amount than Labour.
Consequently, Labour faces the next election campaign with a
financial shortfall and needs this bill to level the campaign
funding playing field. By standing defiantly behind a bill that has
seen unflagging popular criticism, Labour appears to be ready to
weather any political fallout from its passage in the hopes of
keeping National from taking the money and winning in 2008.
McCormick