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The SST does not understand electoral law

Written By: - Date published: 7:30 am, August 21st, 2017 - 32 comments
Categories: journalism, Media, newspapers, the praiseworthy and the pitiful, you couldn't make this shit up - Tags:

The Sunday Star Times had a story in yesterday morning’s paper suggesting that Labour was playing fast with electoral laws relating to donations. The heading of the article “Artworks used to funnel secret donors’ contributions to the Labour Party” says it all. The article contains this hyperbolic passage:

The Labour Party is hiding tens of thousands of dollars in donations behind over-inflated art auctions – and naming the artists as donors instead of the secret individuals handing over the big bucks.

The artists had no idea the party was naming them as the donors – they never saw a cent of the money. They say their works are auctioned off at well above market value to wealthy benefactors who want to keep their support for the party secret.

Labour says the practice complies with electoral rules. But one party operative described the practice as “whitewashing” – a way to keep big donations private at a time when corporate contributions to political parties were falling because of public scrutiny.

I have been to a few of these auctions. They are not secret. Anyone who wants to pay the entry price is welcome to attend. And successful bidders are hardly anonymous.

From the article the process the Labour Party has chosen is to assign a value to a painting and treat that as a donation with the artist listed as a donor. If someone pays more than $15,000 over that value then the difference is also treated as a donation.

This is exactly what the current laws require. Section 207 of the Electoral Act 1993 defines a party donation as “a donation (whether of money or of the equivalent of money or of goods or services or of a combination of those things) that is made to a party”.

So an artist giving the party a painting worth $30,000 is clearly making a donation of goods in that amount and it is correct that this is reported.

And what of the person buying the painting at value? Well they are getting the item for what it is worth. They are not making a donation which involves giving something and getting nothing back.

But what about the generous soul who knowing that the auction is for the Labour Party and they will get all the money and who makes an outlandish bid? Well they are caught. Section 207 includes within the definition of “party donation” “where goods … are provided by a party under a contract or arrangement at a value that is more than their reasonable market value, the amount of the difference between that value and the reasonable market value of those goods or services”. So if someone bids over $15,000 more than its value for a painting then the difference will be treated as a donation which needs to be declared.

So there is nothing underhand in this arrangement. It is precisely the way the donation reporting system is designed to work.

And I am surprised that the paper should concentrate on Labour’s fundraising which compared to National’s is very modest.  If you want proof of this have a look at Labour’s latest return and National’s latest return.

A related article highlights issues relating to anonymous donations although the maths does not appear to be correct.

At least four out of every five dollars donated to the two big parties is given secretly, as transparency around their political funding dwindles.

More than $31 million has been donated to registered political parties in the past six years, most of that to National.

Smaller parties like the Greens publicly disclose who provided most of their funding, but the big parties are secretive. 83 per cent ($8.7m over six years) of the money donated to National is from anonymous donors, and 80 per cent ($2.8m) of that donated to Labour.

I can’t see how the other parties excluding National and Labour received $17 million over the past six years.  I presume the figures also add in electorate donations but if this is so National would be even further ahead.  Possibly the broadcasting allowance is also included.

Of course the best solution is to establish state funding of political parties.  Just think no need for donations, no unfair advantage to one side, no donations regime …

32 comments on “The SST does not understand electoral law”

  1. Sanctuary 1

    A clumsy attempted “hit” that fell flat on it’s face. Probably fed to Fairfax via Farrar and the dirty politics engine.

    Nice to know the Tory press is in full panic mode, though.

  2. Is it gaming the system?

    ‘They do it too’ seems a better response than ‘we are following the letter of the law’ imo

    • red-blooded 2.1

      Of course it’s not gaming the system. If the donation(s) are declared and assigned to the artist (donations of goods), or a combination of the artist and the buyer (for anything over market value) and they’re declared; where’s the “gaming”?

      I’ve bought a (small, cheap) artwork at an auction. I paid over market value – it was declared. End of story.

      • marty mars 2.1.1

        It was a question – thank you for your vigourous reply.

        • greywarshark

          The whole point of the post is to show how it is NOT gaming the system, and the lkegal situation is explained. Why then question what has been explained satisfactorily?

          • marty mars

            Bloody hell sorry for not being up to your standard of comprehension. I’ll fuck off into the dim corner. And gaming the system is staying within the rules/law as far as I understand it yay I did undastunned only bit

      • The gaming is in that you can dodge the $15,000 threshold quite effectively by claiming a high market value for the artwork, which is purely subjective, and then declaring the donation as the gifting of the artwork, rather than the buyer, when in reality the market value of the work might be below the disclosure threshold, and the real donor was actually the purchaser of the painting. Even the creator of the artwork doesn’t know its real value until they try to sell the thing, it’s all guesses, even from serious appraisers.

        I think for this kind of in-kind auction, the law should probably be changed to require disclosure of the final purchase price and the names of both the creator who donated the piece and the purchaser, to ensure that subjectively priced goods can’t be used to artificially inflate the anonymity threshold. I agree that if the situation is as described, what Labour is doing is arguably legal, however it is also at least mildly unethical, too. (not to the extent that news outfits like stuff were beating their chests about, of course, but still to a notable extent) The other thing you could do is require artworks and other items of similarly subjective value to be commercially appraised before auction, so that the party can’t shop around for a particular price on an artwork, but that is also vulnerable to parties having an “understanding” (ie. a corrupt practice) with appraisers.

        We should also be discussing drastically lowering the disclosure threshold. Shaw thinks $1,000 is a good starting point, I would probably have said that’s too cautious and we could place $500 as the point of non-anonymity.

        That said, I agree this practice is comparatively benign as looking for loopholes around disclosures goes, but it is troubling because the instinct of political parties should be to encourage donors to be public, rather than anonymous, as public disclosure is really the only protection we have against undue influence in politics, and parties should want to talk about who their supporters are so that they can get even more.

        • greywarshark

          Thanks MW good explanation. We definitely should do what you suggest to take this perception or real loophole away. State funding wold be wise but the farmers and bizfibs would object till doomsday.

        • Paul Campbell

          I think the threshold should be $1, no exceptions – the bulk of transactions are handled electronically these days so there’s not really a record keeping burden

          (and frankly if someone’s coming in the back door with wheelbarrows full of cash we probably particularly want to know)

          If you’re embarrassed to giver money to a political party, don’t do it. If you are worried about repercussions from your boss finding out then we need better laws to protect people who are discriminated against for participating in the electoral process

          • Matthew Whitehead

            Hey Paul,

            While in theory I agree that being maximally transparent with private donations to political parties is a good thing if we’re going to have a system that allows private donations, there are considerations beyond the practicality of bookkeeping that make it worth actually having an anonymity/disclosure threshold, and I say that as someone who would be perfectly happy to end private political donations altogether, or at least sharply limit them, in favour of taxpayer funding.

            You’re not understanding the full implications of being a publicly listed supporter (and not just a supporter, but also a donor) of a political party. Many of the people on public lists like this get harassed in anonymous ways that are hard to track, (seriously, if you ever talk to someone who authorizes electoral ads, it gets pretty harassy) let alone the stupid ways like through cellphones or email which can be traced down and put to an end through complaints to service carriers. Writing tougher laws won’t help end that anonymous harassment, so there is a genuine balance to be had in setting anonymity thresholds that allow small donors to avoid the possibility of harassment because of their political views against the legitimate public interest of disclosure. I have no embarassment whatsoever or fear of illegal discrimination on the basis of my political views, but I would probably not want to give an over-threshold donation myself, for instance.

            One way we could tilt that balance towards disclosure without eliminating the privacy side of the equation is require parties to ask people if they want their donation kept anonymous even if they fall under the threshold. There are several who would probably say they’re willing to be declared.

    • Craig H 2.2

      All political parties rely heavily on donations, whether that’s cash, goods, services or time.

  3. Peter 3

    A gigantic beat-up of fake news proportions!

  4. Ross 4

    A cheap shot. At least we all know that the SST has given up pretending to be unbiased.

  5. DH 5

    Mickey I’d question the wisdom of posts such as this with the election so close. This site is well haunted by media lurkers and IMO it just feeds the vultures future columns with this kind of commentary. You can bet they’ll be poring over every reply in this thread looking for angles. Calling them out may not be the wisest action, it just pisses them off and there’s no need for that at present.

    • Anne 5.1

      Uggh DH?

      Call them out! Call them out at very available opportunity. Too damm bad if they don’t like it. Hiding the truth under a bushel for fear of reprisal is exactly what is wrong with this big bad world of ours. It encourages the culprits – be they individuals or corporate giants – to keep on doing it.

  6. I did enjoy the way they mention twice that the artists never received any of the money for these artworks. Er, no – because that’s the whole fucking point of a donation, shit-for-brains. Do SST reporters not understand what a donation is, or what?

  7. DH 7

    Ride the wave while the surf’s up Anne. Last election they needed to be held to account (and were not) . This election they don’t…. not yet anyway.

  8. Bearded Git 8

    “83 per cent ($8.7m over six years) of the money donated to National is from anonymous donors, and 80 per cent ($2.8m) of that donated to Labour.”

    The law on donations needs to be changed-urgently. It needs to be much more transparent where the donations are coming from.

    • If you had 100,000 people all donate $10 you’d have $1 million and yet no single donor would have got anywhere close to the threshold.

      Now, I happen to think that every single donor needs to be listed, no matter the amount, just to ensure that large donors aren’t hidden in the mess of small donations.

  9. jennifer 9

    Now the Nacts are just playing “dirty Politics”. What about the secret “donations” they got from the Exclusive Bretheren??? At the last election. Nothing has been said about that!

  10. greywarshark 10

    Tryingto raise a shadow of a disagreement about Helen signing the back of a picture which someone bought as hers, presumably without looking at it. Caveat emptor should have applied, but no excuse for the fatuous arguments that RW excel in to prevent any deep reasoning to occur in their brains.

    The SST is hoping for something similar that it can stir up in its little cooking pot that presents floor sweepings and entrails as amazing dishes.

  11. Finn 11

    Clarifying question: do the party assign a value to the artwork (the value that will be declared as the value of the artist’s donation) before or after the auction?

  12. McFlock 12

    The valuations are assigned beforehand, according to the article.

    What surprises me is the artist who reckoned that $36k was “a few thousand more” than market price was still surprised to be listed as a donor, when they quite clearly gave the party a painting worth tens of thousands of dollars.

    • One Anonymous Bloke 12.1

      They probably would have preferred anonymity. Who wants to attract the attention of National Party thugs?

  13. I seem to recall a restaurant that held expensive dinners at some ridiculous price. That restaurant then donated the proceeds to National with the people who bought the meals thus remaining anonymous despite the fact that each had paid well above the limit to remain anonymous.

    I believe that restaurateur also got a ‘Sir’ added to his name under the Key government.

    I believe that we can say that both sides are doing it and that we need them to stop.

    Of course the best solution is to establish state funding of political parties. Just think no need for donations, no unfair advantage to one side, no donations regime …

    And no paying for access via Cabinet Clubs.

    • Alwyn 13.1

      I fear your memory is leading you astray and into the realms of fantasy.
      Tony Astle, the resteranteur concerned became an Officer of the New Zealand Order of Merit. That is a very minor award. It is the sort of thing people get for being a Counciller in a place like Whakatane for 10 years.
      Try looking up the last lot of recipients. I’ll wager you haven’t heard of 90% of them.

      The people who went to the diners paid out about $5,000 each I believe. The limit was $15,000 at the time so no reporting at all was required.
      I find it rather funny that people who see nothing wrong when Labour do it were totally oposed to the National Party dinners.

      And vice versa of course.

      • I fear your memory is leading you astray

        you could be right there.

        Tony Astle, the resteranteur concerned became an Officer of the New Zealand Order of Merit. That is a very minor award.

        I’m concerned that he got an award for, apparently, being nice to National. I read the reviews and his restaurant is shit so getting an award for something like, IIRC, services to restaurants was bollocks.

        And nobody should get such an award for merely doing their job anyway.

        • alwyn

          ” I read the reviews “.
          In other words you never ate there?
          I did, once, and I thought it was overpriced. The food was fine but not worth the money charged. On the other hand it was one of the early, and longest lasting fine-dining places in Auckland. He deserved the award as far as I can see. Cuisine Magazine certainly rated it highly for many years and I’m sure their reviewers knew a great deal more about the subject than you do. What did you do? Look up Trip Adviser?

          “And nobody should get such an award for merely doing their job anyway”.
          Wow! How can you justify “Sir” Michael Cullen getting his gong? He didn’t even do his job properly did he?

          • Draco T Bastard

            How can you justify “Sir” Michael Cullen getting his gong?

            I don’t.

            He didn’t even do his job properly did he?

            He’s probably about the best we’ve had at that job for some time.

      • One Anonymous Bloke 13.1.2

        Yes, because selling access to Ministers is exactly the same as selling donated paintings.

      • reason 13.1.3

        It used to be $25,000 for a secret dinner date with Johnny made-off … our ex-pm.

        And you got your money back …. if the secret got out http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11619417

        “But isn’t it just so very, very curious that the donation most likely to cause the National Party the most amount of embarrassment in the lead up to the 2014 election got treated in a way so radically different to every other donation received by that Party and its candidates, thus allowing it to remain hidden from public sight until after the election is over? So very, very, very curious.” https://www.pundit.co.nz/content/curiouser-and-curiouser

        I’m sure the SST was part of the dirty politics last election …. reporting and spreading lies about Labour and Cunliffe ….. and not reporting on the very real $25,000 donation …. made when John key* was present …. and on the piss with the dodgy donor.

        *Johnny was a Key before he became a made-off

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    The Government will provide $500,000 to the Hawke’s Bay Mayoral Drought Relief Fund to help farmers facing one of the worst droughts in living memory, says Agriculture Minister Damien O’Connor. “Yesterday afternoon I received a letter from Hawke's Bay's five local Government leaders asking me to contribute to the Fund. ...
    BeehiveBy beehive.govt.nz
    2 weeks ago