Government Bill. Explanatory note. General policy statement. process, prevent the undue influence of wealth, and promote participation

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1 Electoral Finance Bill Government Bill Explanatory note General policy statement This Bill creates a stand-alone Act (the Electoral Finance Act) to provide more transparency and accountability in the democratic process, prevent the undue influence of wealth, and promote participation in parliamentary democracy. The Bill draws together the provisions relating to electoral finance into one comprehensive scheme. The Bill is designed to address problems identified by the courts and others in order to maintain public and political confidence in the administration of parliamentary elections, and the continued functioning of our democracy. The Bill is an omnibus Bill as it significantly amends the Electoral Act 1993 and also amends the Broadcasting Act It is intended that the provisions of the Bill amending these 2 Acts will be divided into 2 separate Acts at the committee of the whole House stage. Background In 1986 the Royal Commission on the Electoral System made several recommendations for amendments to electoral legislation to strengthen the electoral finance regime in anticipation of Mixed Member Proportional representation (MMP). Recommendations included proposals on election spending by political parties, candidates, and third parties. Some of the Royal Commission's recommendations were adopted when the Electoral Act 1993 was enacted. After 4 MMP elections further issues, including some of the Royal Commission' s unimplemented recommendations, have been identified as requiring legislative attention

2 2 Electoral Finance Explanatory note Successive Justice and Electoral Committees, including the Committee that reported on 8 September 2006, have also recommended a review of the electoral finance regime. The 2005 General Election brought concerns about the rules governing electoral finance into sharper focus. Allegations were reported to the police about breaches of electoral finance rules, including breaches of third party advertising rules and overspending on election broadcasts, but prosecutions did not proceed. The Peters v Clarkson election petition, although not upheld in court, raised questions about the interpretation of current law, for example, the treatment of dual-purpose advertisements. For these reasons Cabinet agreed, in April 2006, to a targeted review of the electoral finance regime, focusing on the electoral expense, advertising, and broadcasting rules, including- a review of what an 'election expense" is, what the limits should be, and how expenses can be apportioned between parties and constituency candidates: whether third parties should be subject to election expense limits and the requirement to furnish returns: political donations: whether there is an alternative approach to the current regime, including the campaign funding of parties and constituency candidates, which would be simpler for parties, candidates, and administrators. The policy objectives of the Bill are to- maintain public and political confidence in the administration of elections: promote participation in parliamentary democracy: prevent the undue influence of wealth: provide transparency and accountability to minimise the perception of corruption: contain rules that are effective and clear, and can be administered, complied with, and enforced efficiently: reflect our unique political culture and environment: promote participation in the electoral process by lessening the advantage held by those with access to large financial resources. To advance these objectives, the Bill amends the electoral finance regime in the following areas- political donations:

3 Explanatory note Electoral Finance 3 election expenses: third party advertising: compliance and enforcement. The Bill also amends the broadcasting regime for election programmes. Political donations The Bill requires all registered parties, candidates, and third parties to appoint a financial agent to be responsible for accepting and reporting on donations, and for incurring, paying, and reporting on election expenses. This amendment will ensure that there is a clear line of accountability for receiving donations and incurring expenses. The Bill extends the definition of donation to include the provision of over-valued goods and services by a party, candidate, or third party, and money lent to a party, candidate, or third party otherwise than on commercial terms. Additional disclosure is required to the Electoral Commission if a party receives a single donation over $20,000 or a donation that, when aggregated with all previous donations known by the financial agent to have been made by the same donor in the last 12 months, exceeds a multiple of $20,000. These amendments will improve the transparency and the accountability of the current disclosure regime, in order to provide voters with information about the sources of private financial support for political parties and candidates. Election expenses The Bill specifically defines election expenses for candidates, parties, and third parties. The Bill provides for the apportionment of dual-purpose election activities between constituency candidates and parties based on coverage. This amendment will allow for the fair apportionment of expenses for dual purpose activities. The definition of election activity is updated by the Bill to cover new technologies and media and will ensure that the definition covers electoral advertising and promotion activities, regardless of the medium through which they are delivered. " References to appearing to encourage or persuade" in the current definition have raised questions about the types of activities that are

4 4 Electoral Finance Explanatory note captured. The amendment to specifically provide that an advertisement may constitute an election activity even though it does not expressly mention of the name of a party or candidate will afford additional clarity. The Bill defines commercial value in relation to materials and advertising space to ensure that parties or candidates with existing trade relationships cannot obtain unfair advantage. The meaning of materials is also amended by the Bill to provide greater clarity. The disclosure regime for election expenditure is strengthened by the Bill. These amendments will encourage compliance with the expenditure limits. Third parties The Bill creates a regime for additional regulation of third parties in New Zealand. Third parties are defined as persons and entities other than candidates, parties, and financial agents of candidates or parties. The Bill requires third parties to- notify the Chief Electoral Officer of their involvement in election activity if they are going to incur election expenses over a threshold: file a return disclosing election expenditure relating to the third party activities: file a return disclosing all donations received over $500 in sum or value (inclusive of goods and services tax): pay to the Chief Electoral Officer any anonymous donation received that exceeds $500 in sum or value (inclusive of goods and services tax): be subject to election expenditure limits. The Bill defines, in relation to third parties, third party activity and election expense. These definitions are necessary to set the parameters within which the third party regime applies. Third party election advertisements that are authorised by a candidate or a party are included in both the third party expenditure limit and the candidate's or party's expenditure limit. This will result in greater transparency about total election expenditure and is the most effective way of ensuring that candidates, parties, and third parties cannot avoid their expenditure limits by acting in concert. The additional regulation of third parties will- provide more transparency:

5 Explanatory note Electoral Finance 5 limit the potential for unlimited parallel election campaigns that undermine the objectives of expenditure limits for parties and candidates: ensure that election advertising by third parties cannot overwhelm the speech of political parties and candidates: reduce the ability of third parties to attack a party that cannot respond because it has reached its spending limit. Compliance and enforcement The Bill strengthens the penalties for corrupt and illegal practices, includes a new penalty providing for payment to the Crown of the value of any financial benefit derived from offending, and extends the time limits for prosecution in respect of a number of offences. These amendments will encourage compliance, that will in turn enhance public confidence in the electoral system. Broadcasting The Bill removes the requirement for political representatives to be appointed to the Electoral Commission for the purpose of its jurisdiction under the Broadcasting Act The Bill provides for a common start date (from writ day) for candidates and parties for the broadcast of election programmes and simplifies the process for making complaints about election broadcasting. The common start date will eliminate the confusion that was associated with candidates and parties having different start dates for when election programmes may be broadcast. Clause by clause analysis Clause 1 relates to the Title of the Bill. Clause 2 provides that the Bill comes into force on the day after the date on which it receives the Royal assent. Part 1 Preliminary provisions Clause 3 sets out the purpose of the Bill. Clause 4 is the interpretation clause. Key terms that are introduced into electoral law are candidate advertisement, election advertisement, financial agent, party advertisement, promoter, regulated period, and third party.

6 6 Electoral Finance Explanatory note Clause 5 sets out the meaning of election advertisement. Appointments Clause 6 requires a candidate to appoint a financial agent to be responsible for administering the candidate's financial transactions in relation to donations and his or her election expenses. A candidate may appoint himself or herself as his or her own financial agent. Clause 7 requires the secretary of a registered political party to appoint a financial agent for the party to be responsible for administering the party's financial transactions in relation to donations and its election expenses. A party secretary may appoint himself or herself as the party's fi nancial agent. Clause 8 requires a third party to appoint a financial agent to be responsible for administering the third party's financial transactions for its promotion of election advertisements. If the third party is an individual, the third party may appoint himself or herself as the third party's financial agent. Clause 9 provides that a person is eligible to be appointed as a financial agent under clause 6. 7, or 8 only if the person is a registered elector resident in New Zealand, and has not been convicted of an offence of dishonesty or a corrupt practice. Clause 10 requires a candidate to appoint an auditor if the candidate is required by clause 73 to obtain an auditor's report on his or her return of election expenses. Clause 11 requires a registered party to appoint an auditor. Clause 12 requires a third party to appoint an auditor if the third party is required by clause 112 to obtain an auditor's report on his or her or its return of election expenses. Clause /3 sets out a list of persons who cannot be appointed as an auditor for a candidate, a registered party, or a third party. A person cannot be appointed as an auditor if that person is a constituency or list candidate, an employee or partner of a candidate, an officer or employee of a registered party or third party, a body corporate, a person disqualified from acting as an auditor under section 199 of the Companies Act 1993, a financial agent, or a Returning Officer. Listing of third parties Clause 14 lists persons eligible to be a third party. A registered elector, a body corporate that is not an overseas person (within the

7 Explanatory note Electoral Finance 7 meaning of the Overseas Investment Act 2005), and an unincorporated body all of whose members are registered electors may be a third party. A constituency or list candidate, a party, and the financial agent of a candidate or party are ineligible to be a third party. Clause 1 5 requires the Chief Electoral Officer to establish, maintain, and publish a list of third parties. Clause 16 provides that applications to be listed as a third party must be made by a promoter to the Chief Electoral Officer and details the requirements of applications. Clause / 7 sets out the times when listing as a third party is prohibited. Clause 18 sets out the grounds on which an application to be listed as a third party must be refused. Clause 19 sets out the responsibilities of the Chief Electoral Officer in relation to the listing of, or refusal to list, a third party. Clause 20 requires changes of third party particulars to be notified to the Chief Electoral Officer. Clause 2 J sets out when the Chief Electoral Officer must cancel the listing of a third party. Part 2 Election campaigns Subpart 1-General provisions relating to donations Clause 22 defines terms used in subparts 1 to 4 of Part 2. These include anonymous, candidate donation, party donation, third party donation, and specified amount. Clause 23 provides that all candidate donations, party donations, and third party donations given or sent to any person must be transmitted to the financial agent of the candidate, party, or third party, as the case rnay be. Clause 24 provides that where a person who is involved in the administration of the affairs of a candidate, party, or third party knows the name and address of the donor of an anonymous donation, that person must disclose the donor' s name and address to the financial agent of the candidate, party, or third party, as the case may be. Clause 25 creates an offence relating to contravention of clause 24.

8 8 Electoral Finance Explanatory note Clause 26 requires every financial agent to keep proper records of all donations that he or she receives. It is an offence to contravene this requirement without reasonable excuse. Clause 27 provides that if the Chief Electoral Officer believes any person has committed an offence against subpart 2 or 4, he or she must report the facts upon which that belief is based to the New Zealand Police. Clause 28 provides that if the Electoral Commission believes any person has committed an offence against subpart 3, it must report the facts upon which that belief is based to the New Zealand Police. Subpart 2-Disclosure of candidate donations Clause 29 imposes an obligation on a financial agent for a candidate to file with the Chief Electoral Officer, at the same time as filing a return of election expenses, a return of donations. The return must set out details of all candidate donations received from the same donor that, taken either singularly or when aggregated, exceed $1,000 in sum or value (inclusive of goods and services tax), and details of all anonymous candidate donations received that exceed $1,000 in sum or value (inclusive of goods and services tax). Clause 30 requires the provision of a nil return if the financial agent considers there is no relevant information to disclose under clause 29. Clause 3 1 requires a financial agent to retain all records, documents, and accounts that are necessary to enable a return of candidate donations to be verified. It is an offence to contravene this requirement without reasonable excuse. Clause 32 creates offences for the contravention of clause 29 relating to the return of candidate donations. Clause 33 requires the Chief Electoral Officer to send a copy of every return of donations filed by a candidate' s financial agent to the Electoral Commission. The Chief Electoral Officer must make copies of the return available for public inspection and may publish every return in any manner that he or she considers appropriate. Clause 34 prescribes the period for which the Chief Electoral Officer and the Electoral Commission must keep a return of candidate donations. On the expiry of the prescribed period the Chief Electoral Officer and the Electoral Commission must destroy the return.

9 Explanatory note Electoral Finance 9 Subpart 3-Disclosure of party donations Clause 35 imposes an obligation on a financial agent for a party to file with the Electoral Commission, by 30 April in each year, a return of party donations for the year ending with the immediately preceding December. The return must set out details of every party donation received that, either on its own or when aggregated with all other donations made by the same donor during the year, exceeds $10,000 in sum or value (inclusive of goods and services tax), and details of every anonymous party donation received that exceeds $10,000 in sum or value (inclusive of goods and services tax). Clause 36 requires a financial agent, before making the return required by clause 35, to obtain an auditor' s report on the return. Clause 37 requires the provision of a nil return if the financial agent considers there is no relevant information to disclose under clause 35. Clause 38 requires a financial agent to file with the Electoral Commission a return in respect of every party donation received from the same donor that exceeds $20,000 or, when aggregated with all other donations received from the donor in the previous 12 months, exceeds a multiple of $20,000. Clause 39 requires a financial agent to retain all records, documents, and accounts that are necessary to enable returns of party donations to be verified. It is an offence to contravene this requirement without reasonable excuse. Clause 40 creates offences for the contravention of clause 35 or 38 relating to returns of party donations. Clause 41 requires the Electoral Commission to make available for public inspection every annual return of party donations and accompanying auditor's report filed under clause 35, and every return filed under clause 38. The Electoral Commission may publish every return and report in any manner that it thinks appropriate. Subpart 4-Disclosure of third party donations Clause 42 provides that an anonymous third party donation may not exceed $500 in sum or value (inclusive of goods and services tax). An anonymous donation in excess of this amount must be paid to the Chief Electoral Officer (who must in turn pay the amount into a Crown Bank Account).

10 10 Electoral Finance Explanatory note Clause 43 creates offences relating to anonymous third party donations. Clause 44 provides that where a donor makes a third party donation that includes funds contributed by other persons who expect or require those funds to be applied as a donation, this must be disclosed at the time the donation is made. Where a donor does not disclose, or is unable to disclose, in respect of each contributor whose contribution exceeds $500 the name and address of the contributor and the amount of the contribution, then the donation must be treated as an anonymous third party donation. Clause 45 provides that where a third party donation is given or sent to a person (a transmitter) for forwarding to a financial agent, this must be disclosed when the transmitter forwards the donation together with the name and address of the donor and any contributors. Where the transmitter does not disclose, or is unable to disclose, the identity of the donor or any contributor, then the donation must be treated as an anonymous third party donation. Clause 46 creates an offence relating to contravention of clause 45. Clause 47 imposes an obligation on a financial agent for a third party to file with the Chief Electoral Officer, at the same time as filing a return of election expenses, a return setting out details of every third party donation received that, either on its own or when aggregated with all other donations made by the same donor during the regulated period, exceeds $500 in sum or value (inclusive of goods and services tax). Clause 48 requires the provision of a nil return if the financial agent considers there is no relevant information to disclose under clause 47. Clause 49 requires a financial agent to retain all records, documents, and accounts that are necessary to enable a return of third party donations to be verified. It is an offence to contravene this requirement without reasonable excuse. Clause 50 creates offences for the contravention of clause 47 relating to returns of third party donations. Clause 5 j requires the Chief Electoral Officer to send a copy of every return of donations filed by a third party's financial agent to the Electoral Commission. The Chief Electoral Officer must make copies of the return available for public inspection and may publish every return in any manner that he or she considers appropriate.

11 Explanatory note Electoral Finance 11 Clause 52 prescribes the period for which the Chief Electoral Officer and the Electoral Commission must keep a return of a third party's donations. On the expiry of the period the Chief Electoral Officer and the Electoral Commission must destroy the return. Subpart 5-General rules governing election advertisements Clause 53 provides that election advertisements may not be published in a regulated period unless certain conditions are met. Clause 54 provides that it is an offence to avoid the financial limits set out in clause 53. Clause 55 provides that an election advertisement that encourages or persuades, or appears to encourage or persuade, voters to vote for a party or candidate must be authorised in writing by the financial agent of the party or the candidate, as the case may be. An election advertisement that encourages or persuades, or appears to encourage or persuade, voters to vote for 2 or more candidates must be authorised in writing by the financial agent of each of the candidates or by the financial agent of the party to which the candidates belong. The election advertisement must state the name and address of the promoter who has promoted the advertisement. Clause 56 prohibits the making of payments for the exhibition of election advertisements. (This provision is based on section 219 of the Electoral Act 1993.) Clause 57 exempts advertisements of a specified kind from prohibitions or restrictions imposed by bylaws or enactments. (This provision is based on section 221 B of the Electoral Act 1993.) Subpart 6-Candidates' election expenses Clause 58 defines terms used in subpart 6 of Part 2. An important term is candidate activity. This is defined as an activity, undertaken during a regulated period by, or with the authority of, the candidate or the candidate's financial agent, that comprises the publication of a candidate advertisement in any form (for example, in the form of a radio or television broadcast, notice, poster, pamphlet, billboard, or electronic message). Clause 59 defines the term election expense for the purposes of subpart 6. This includes, among other items, the preparation, design, composition, printing, distribution, postage, and publication of a

12 I2 Electoral Finance Explanatory note candidate advertisement. Specified matters, such as the cost of travel and the labour of any person that is provided free of charge, are excluded. Clause 60 provides that an election expense in relation to a candidate may be incurred only by that candidate's financial agent. Clause 6 1 creates offences relating to the contravention of clause 60, and to agreements, arrangements, or understandings undertaken to avoid the requirements of that clause. Clause 62 prescribes the maximum amount of a candidate's election expenses in respect of any regulated period. These amounts are the same as currently set out in the Electoral Act Clause 63 provides for the apportionment of the election expense of an election activity undertaken both before and within the regulated period. Clause 64 provides for the apportionment of the election expense of an election activity that comprises 2 or more candidate activities. Clause 65 provides for the apportionment of the election expense of an election activity that comprises both a candidate activity and a party activity. Clause 66 provides that in certain circumstances the cost of a party advertisement is deemed to be an election expense of a candidate. Clause 67 provides that ifa candidate's election expenses exceed the prescribed limit, the candidate's financial agent, i f the contravention is known, is guilty of a corrupt practice, and is otherwise guilty of an illegal practice unless the agent provides that he or she took all reasonable steps to ensure that the prescribed limit was not exceeded. Clauses 68 to 71 re-enact the substance of sections 206 to 209 of the Electoral Act Clause 68 prescribes periods for claiming and paying an election expense of a candidate. Clause 69 prescribes the procedure to be followed where a claim is disputed. Clause 70 gives the District Court power to grant leave to a financial agent to pay a disputed claim or a claim submitted after the permitted time for making claims has expired. Clause 71 provides that an election expense over $50 must be invoiced before it can be paid.

13 Explanatory note Electoral Finance I 3 Clause 72 requires a candidate's financial agent to file with the Chief Electoral Officer a return of election expenses. A return must be in the form supplied by the Chief Electoral Officer, be filed within 70 working days after polling day, and be accompanied by an auditor' s report if required by clause 73. Clause 73 requires a financial agent to obtain an auditor' s report before filing the return required by clause 72 if the candidate' s total election expenses exceed 75% of either of the maximum amounts prescribed in clause 62. Clause 74 requires the provision of a nil return if the financial agent considers there is no relevant information to disclose under clause 72. Clause 75 creates offences for the contravention of clause 72 relating to a candidate' s return of election expenses. Clause 76 requires a financial agent to retain all records, documents, and accounts that are necessary to enable a return of a candidate's election expenses to be verified. It is an offence to contravene this requirement without reasonable excuse. Clause 77 provides that if the Chief Electoral Officer believes any person has committed an offence against subpart 6, he or she must report the facts upon which that belief is based to the New Zealand Police. Clause 78 requires the Chief Electoral Officer to send a copy of every return of a candidate's election expenses and any accompanying auditor' s report to the Electoral Commission. The Chief Electoral Officer must make copies of the return and report available for public inspection and may publish every return and report in any manner that he or she considers appropriate. Clause 79 prescribes the period that the Chief Electoral Officer and the Electoral Commission must keep a return of a candidate' s election expenses and any accompanying auditor's report. On the expiry of the prescribed period the Chief Electoral Officer and the Electoral Commission must destroy the return and report. Subpart 7-Parties' election expenses Clause 80 defines terms used in subpart 7 Of Part 2. An important term is party activity. This is defined as an activity, undertaken during a regulated period by, or with the authority of, a party or the party's financial agent, that comprises the publication of a candidate

14 14 Electoral Finance Explanatory note advertisement in any form (for example, in the form of a radio or television broadcast, notice, poster, pamphlet, billboard, or electronic message). Clause 81 defines the term election expense for the purposes of subpart 7. This includes, among other items, the preparation, design, composition, printing, distribution, postage, and publication of a party advertisement. Specified matters, such as the cost of travel and the labour of any person that is provided free of charge, are excluded. Clause 82 provides that an election expense in relation to a party may be incurred only by that party's financial agent. Clause 83 creates offences relating to the contravention of clause 82, and to agreements, arrangements, or understandings undertaken to avoid the requirements of that clause. Clause 84 prescribes the maximum amount of a party's election expenses in respect of any regulated period. These amounts are the same as currently set out in the Electoral Act Clause 85 provides for the apportionment of party activities that are undertaken both before and during a regulated peirod. Clause 86 provides that if a party's total election expenses exceed the prescribed limit, the party's financial agent, if the contravention is known, is guilty of a corrupt practice, and is otherwise guilty of an illegal practice unless the agent provides that he or she took all reasonable steps to ensure that the prescribed limit was not exceeded. Clauses 87 to 90 re-enact sections 214BA to 214BD of the Electoral Act Clause 87 prescribes periods for claiming and paying an election expense of a party. Clause 88 prescribes the procedure to be followed where a claim is disputed. Clause 89 gives a District Court power to grant leave to a party' s financial agent to pay a disputed claim or a claim submitted after the permitted time for making claims has expired. Clause 90 provides that an election expense over $50 must be invoiced before it can be paid. Clause 91 requires a party's financial agent to file with the Electoral Commission a return of election expenses. A return must be in the

15 Explanatory note Electoral Finance 15 form supplied by the Electoral Commission, be filed within 50 working days after the declaration made under section 193(5) of the Electoral Act 1993, and be accompanied by an auditor' s report obtained under section 92. Clause 92 requires a party' s financial agent to obtain an auditor' s report before filing the return required by clause 91. Clause 93 requires the provision of a nil return if the financial agent considers there is no relevant information to disclose under clause 91. Clause 94 creates offences for the contravention of clause 91 relating to a party' s return of election expenses. Clause 95 requires a financial agent to retain all records, documents, and accounts that are necessary to enable a return of a party' s election expenses to be verified. It is an offence to contravene the requirement without reasonable excuse. Clause 96 provides that if the Electoral Commission believes any person has committed an offence against subpart 7, it must report the facts upon which that belief is based to the New Zealand Police. Clause 97 requires the Electoral Commission to make every return of party election expenses and accompanying auditor' s report available for public inspection. The Electoral Commission may publish every return and report in any manner that it considers appropriate. Clause 98 prescribes the period that the Electoral Commission must keep a return of a party's election expenses and accompanying auditor's report. On the expiry of the prescribed period, the Electoral Commission must destroy the return and report. Subpart 8-Third parties' election expenses Clause 99 defines terms used in subpart 8 of Part 2. An important term is third party activity. This is defined as an activity, undertaken during a regulated period by, or with the authority of, a third party or the third party's financial agent, that comprises the publication of an election advertisement in any form (for example, in the form of a radio or television broadcast, notice, poster, pamphlet, billboard, or electronic message). Clause 100 defines the term election expense for the purposes of subpart 8. This includes, among other items, the preparation, design, composition, printing, distribution, postage, and publication of an election advertisement. Specified matters, such as the cost of travel

16 I 6 Electoral Finance Explanatory note and the labour of any person that is provided free of charge, are excluded. Clause JOI provides that an election expense in relation to a third party may be incurred only by that third party' s financial agent. Clause 102 creates offences relating to the contravention of clause /01, and to agreements, arrangements, or understandings undertaken to avoid the requirements of that clause. Clause 103 sets out the limits on the total advertising expenses of a third party. The expenses in respect of any regulated period must not exceed $2,000 (including goods and services tax) for advertisements that relate to a candidate in the candidate's capacity as a candidate for an electoral district and must not, in any case, exceed $60,000 (including goods and services tax). Clause 104 provides that if a third party's advertising expenses exceed the prescribed limit, the third party's financial agent, if the contravention is known, is guilty of a corrupt practice, and is otherwise guilty of an illegal practice unless the agent provides that he or she took all reasonable steps to ensure that the prescribed limit was not exceeded. Clause 105 provides for the apportionment of election expenses for the publication of an election advertisement both before and within the regulated period. Clause 1 06 requires certain advertising expenses to be attributed to both a third party and a party or candidate. Clause 1 07 prescribes periods for claiming and paying an election expense of a third party. Clause 108 prescribes the procedure to be followed where a claim is disputed. Clause 109 gives a District Court power to grant leave to a financial agent to pay a disputed claim or a claim submitted after the permitted time for making claims has expired. Clause 110 provides that an election expense over $50 must be invoiced before it can be paid. Clause 111 requires a third party's financial agent to file with the Chief Electoral Officer a return of election expenses. A return must be in the form supplied by the Chief Electoral Officer, be filed within 70 working days after polling day, and be accompanied by an auditor' s report if required by clause 1 12.

17 Explanatory note Electoral Finance 17 Clause 112 requires a financial agent to obtain an auditor's report before filing the return required by clause Ill if the third party' s total election expenses exceed 25% of the maximum amount prescribed by clause 103(J)(b). Clause 113 requires the provision of a nil return if the financial agent considers there is no relevant information to disclose under clause Ill. Clause 1 14 creates offences for the contravention of clause Ill relating to a third party' s return of election expenses. Clause 115 requires a financial agent to retain all records, documents, and accounts that are necessary to enable a return of a third party's election expenses to be verified. It is an offence to contravene this requirement without reasonable excuse. Clause 116 provides that if the Chief Electoral Officer believes any person has committed an offence against subpart 8, he or she must report the facts upon which that belief is based to the New Zealand Police. Clause 117 requires the Chief Electoral Officer to send a copy of every return of a third party' s election expenses and any accompanying auditor's report to the Electoral Commission. The Chief Electoral Officer must make copies of the return and any accompanying report available for public inspection and may publish every return and report in any manner that he or she considers appropriate. Clause 118 prescribes the period for which the Chief Electoral Officer and Electoral Commission must keep a return and any accompanying auditor' s report filed by a third party's financial agent. On the expiry of this period the Chief Electoral Officer and the Electoral Commission must destroy the return and report. Part 3 Miscellaneous Subpart 1 -General provisions and penalties Clause 119 provides that where the financial agent of a candidate, party, or third party commits an offence, the candidate, party, or third party is also liable in respect of the same offence if the candidate, party, or third party authorised the commission of the offence, or knew or could reasonably have known it was to be or was being committed and failed to take reasonable steps to stop or prevent it.

18 I 8 Electoral Finance Explanatory note Clause 120 provides that it is an offence to knowingly provide money for an illegal purpose or for election expenses incurred in excess of the maximum amounts prescribed in clauses 62, 84, and 103. Clause 121 enables a search warrant to be issued under section 198 of the Summary Proceedings Act 1957, even though an illegal practice is not punishable by imprisonment. Clause 1 22 sets out the time frames within which prosecutions under the various offence provisions must be commenced. Clause 123 provides that a person charged with a corrupt practice may be found guilty of an illegal practice. Clause 124 provides that the penalty that may be imposed on conviction for a corrupt practice is a term of imprisonment not exceeding 1 year, or a fine, or both. In the case of a financial agent or secretary, a fine may not exceed $40,000, and in the case of any other person a fine may not exceed $15,000. Clause 125 provides that the penalty that may be imposed on conviction for an illegal practice is, in the case of a financial agent or secretary, a fine not exceeding $40,000 and, in the case of any other person, a fine not exceeding $10,000. Clause 126 enables a court to order that any person convicted of an offence under this Act who has directly or indirectly benefited from the commission of the offence to pay to the Crown an amount equal to the value of the benefit. Subpart 2-Regulations and transitional provisions Clauses 127 and 1 28 relate to regulation-making powers dealing with advertisements of a specified kind. Clause 129 provides a general regulation-making power. Clause 130 sets out transitional provisions dealing with the situation where an election is underway before 1 March This Act does not apply and the provisions of the Electoral Act 1993 continue in force. Subpart 3-Consequential amendments Clause 131 provides for the consequential amendment of the Citizens Initiated Referenda Act 1993.

19 Explanatory note Electoral Finance 19 Subpart 4-Amendments to Broadcasting Act 1989 The amendments to the Broadcasting Act 1989 in clauses 1 32 to 137 provide for 2 things. First, both candidates and parties are allowed to start broadcasting election programmes from writ day. Currently, a candidate may broadcast an election programme within the 3 months before polling day and a party may broadcast an election programme from writ day. Secondly, complaints about election broadcasting no longer need to be made to broadcasters in the first instance. Instead, they may be made directly to the Broadcasting Standards Authority. Subpart 5-Amendments to Electoral Act 1993 The amendments to the Electoral Act 1993 (clauses 138 to 158) increase the penalties for corrupt practices and illegal practices, insert a new power to obtain a search warrant in relation to suspected illegal practices, and make related changes consequential to enactment of this Bill. The Electoral Act 1993 is also amended to remove the requirement for 2 political representatives to be members of the Electoral Commission for the purposes of its jurisdiction under Part 6 of the Broadcasting Act 1989.

20 Hon Mark Burton Electoral Finance Bill Government Bill Contents 1 0 Title Commencement Page I Part 1 Preliminary provisions Purpose Interpretation Meaning of election advertisement Appointments Appointment of financial agent for candidate Appointment of financial agent for party Appointment of financial agent for third party Persons eligible to be appointed as financial agent Appointment of auditor for candidate Appointment of auditor for party Appointment of auditor for third party Persons eligible to he appointed as auditor Listing of third parties Persons eligible to be third party Chief Electoral Officer to establish, maintain, and publish list of third parties Application to be listed as third party Times when listing prohibited Grounds on which listing must be refused Listing of, or refusal to list, third party Changes to be notified to Chief Electoral Officer Cancellation of listing l Part 2 Election campaigns Subpart 1-General provisions relating to donations 22 Interpretation

21 Electoral Finance Donations to be transmitted to financial agent Disclosure of identity of donor Offence relating to contravention of section 24 Records of donations Duty of Chief Electoral Officer Duty of Electoral Commission Subpart 2-Disclosure of candidate donations Return of candidate donations Nil return Obligation to retain records necessary to verify return of candidate donations Offences relating to return of candidate donations Return of candidate donations to he available for public inspection Return of candidate donations to be kept for certain period Subpart 3-Disclosure of party donations Annual return of party donations Auditor's report on annual return of party donations Nil return Return of pamy donation received from same donor exceeding $20,000 Obligation to retain records necessary to verify returns of party donations Offences relating to returns of party donations Return of party donations to be available for public inspection Subpart 4-Disclosure of third party donations Anonymous third party donation Offence in relation to anonymous third party donation Contributors to be identified, if known Identity of donor to be disclosed by transmitter, if known Offence relating to contravention of section 45 Return of third party donations Nil return Obligation to retain records necessary to verify return of third party donations Offences relating to return of third party donations Return of third party donations to be available for public inspection Return of third party donations to be kept for certain period I

22 Electoral Finance Subpart 5-General rules governing election advertisements Election advertisements not to be published in regulated period unless certain conditions met Offence to avoid limits set out in section 53 Requirements for election advertisements that promote parties or candidates Payments for exhibition of election advertisements Display of advertisement of a specified kind Subpart 6-Candidates' election expenses Interpretation Meaning of election expense Election expense to be incurred by candidate' s financial agent Offence to incur unauthorised election expense Maximum amount of candidate's total election expenses Apportionment of election expense for candidate activity undertaken both before and within regulated period Apportionment of election expense of election activity between candidates Apportionment of election expense of election activity between candidate and party Cost of party activity deemed to be election expense of candidate in particular case Off'ences in relation to candidate's total election expenses Periods for claiming and paying candidate's election expenses Procedure where claim disputed Leave to pay claim after time limitation Election expense to be invoiced Return of candidate's election expenses Auditor's report on return of candidate's election expenses exceeding 75% of maximum amount Nil return Offences relating to return of candidate's election expenses Obligation to retain records necessary to verify return of candidate's election expenses Duty of Chief Electoral Officer Return of candidate's election expenses to be available for public inspection Return of candidate's election expenses to be kept for certain period

23 Electoral Finance 80 8l Subpart 7-Parties' election expenses Interpretation Meaning of election expense Election expense to be incurred by party's financial agent Offence to incur unauthorised election expense Maximum amount of party' s total election expenses Apportionment of election expense for party activity undertaken both before and within regulated period Offences in relation to party's total election expenses Periods for claiming and paying party's election expenses Procedure where claim disputed Leave to pay claim after time limitation Election expense to be invoiced Return of party's election expenses Auditor' s report on return of party's election expenses Nil return Offences relating to return of party's election expenses Obligation to retain records necessary to verify return of party's election expenses Duty of Electoral Commission Return of party's election expenses to be available for public inspection Return of party's election expenses to be kept for certain period Subpart 8-Third parties' election expenses Interpretation Meaning of election expense Election expense to bc incurred by third party' s financial agent Offence to incur unauthorised election expense Maximum amount of third party's total election expenses Offences in relation to third party's total election expenses Apportionment of election expense for third party activity undertaken both before and within regulated period Election expenses attributed in respect of advertisements authorised by candidate or party Periods for claiming and paying third party's election expenses Procedure if claim disputed Leave to pay claim after time limitation Election expense to be invoiced I 51 5I 5I

24 Electoral Finance Return of third party's election expenses Auditor's report on return of third party's election expenses Nil return Offences relating to return of third party's election expenses Obligation to retain records necessary to verify return of third party's election expenses Duty of Chief Electoral Officer Return of third party's election expenses to be available for public inspection Return of third party's election expenses to be kept for certain period Part 3 Miscellaneous Subpart 1-General provisions and penalties Liability of candidates, party secretaries, and third parties Providing money for illegal purposes Power to issue search warrants in respect of illegal practice Time limit for prosecution Persons charged with corrupt practice may be found guilty of illegal practice Punishment for corrupt practice Punishment for illegal practice Additional penalty Subpart 2-Regulations and transitional provisions Regulations relating to advertisement of a specified kind Requirements before Minister can recommend that regulations he made General regulations Transitional provisions Subpart 3-Consequential amendments Consequential amendments Subpart 4-Amendments to Broadcasting Act 1989 Principal Act amended Interpretation Right of complainant to refer formal complaint to Authority New section 9 substituted 9 Time limits Functions of Authority

25 Cl 1 Electoral Finance () Prohibition on paid election programmes Subpart 5-Amendments to Electoral Act 1993 Principal Act amended Interpretation Electoral Commission Functions Membership Term of office Vacation of office of additional members who hold office for purposes of jurisdiction under Part 6 of Broadcasting Act 1989 Appointment of deputies Chief Electoral Officer Application for registration Registration Deposi t by party secretary Deposit by candidate Deposit payable in respect of bulk nomination schedule Interfering with or influencing voters Repeals Electoral advertisements Providing money for illegal purposes Punishment for corrupt or illegal practice New section 226A inserted 226A Power to issue search warrants in respect of illegal practice Schedule 1 amended Schedule Consequential amendments 73 The Parliament of New Zealand enacts as follows: 1 Title This Act is the Electoral Finance Act Commencement This Act comes into force on the day after the date on which it receives the Royal assent. 5 6

26 Electoral Finance Part 1 el 4 Part 1 Preliminary provisions 3 Purpose The purpose of this Act is to strengthen the law governing electoral financing and broadcasting, in order to- 5 (a) maintain public and political confidence in the administration of elections; and (b) promote participation by the public in parliamentary democracy; and (c) prevent the undue influence of wealth on electoral out- 10 comes; and (d) provide greater transparency and accountability on the part of candidates, parties, and other persons engaged in election activities in order to minimise the perception of corruption; and 15 (e) ensure that the controls on the conduct of electoral campaigns- (i) are effective; and (ii) are clear; and (iii) can be efficiently administered, complied with, 20 and enforced. 4 Interpretation In this Act, unless the context otherwise requires,- address means,- (a) in relation to an individual, the full address of the place 25 where that person usually lives: (b) in relation to a body corporate or unincorporated, the full address of its principal place of business or head office candidate means a constituency candidate, and a person who 30 becomes a candidate is deemed to be a candidate on and from the beginning of the regulated period candidate advertisement means any form of words or graphics that can reasonably be regarded as encouraging or persuading voters to do either or both of the following: 35 (a) to vote for a candidate in the candidate' s capacity as a candidate for an electoral district (whether or not the name of the candidate is stated): (b) not to vote for another candidate (whether or not the name of the candidate is stated) 40 7

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