Part 4: Extent of compliance with the appropriations

4.1
In this Part, I present:

• my findings about the Service’s compliance with the Party and Member Support appropriations; and
• my observations about the various types of advertising expenditure that I reviewed.

Compliance with the appropriations

4.2
Figures 2 and 3 show:

• the advertising expenditure incurred under each Party and Member Support appropriation during the period from 16 June to 16 September 2005; and
• the expenditure I found that was incurred for purposes outside the scope of the appropriations.

4.3
The amounts for 2004-05 include Goods and Services Tax (GST). The amounts for 2005-06 exclude GST because, under the Public Finance Act (as amended in 2004), appropriations are now compiled excluding GST.

Figure 2
Advertising expenditure incurred under each Party and Member Support appropriation, 16 June to 30 June 2005 (including Goods and Services Tax)

Figure 3
Advertising expenditure incurred under each Party and Member Support appropriation, 1 July to 16 September 2005 (excluding Goods and Services Tax)

4.4
The GST component of the unlawful expenditure incurred in 2005-06 is not included in Figure 3 because it was authorised not under the Party and Member Support appropriations but under permanent legislative authority under the Public Finance Act. The total GST payable on the unlawful expenditure in 2005-06 was $81,126. Because the advertising expenditure to which this amount relates was unlawful, so was the payment of GST.

4.5
When the GST on the 2005-06 expenditure is added, the total expenditure on advertising that I found to be outside the scope of the appropriation was $730,136.

4.6
In the course of my inquiry, two parliamentary parties repaid the Service the amounts for which their parties were in breach of the appropriations. In addition, a former MP also repaid the costs of advertising that I considered to have been inappropriately incurred. I include these amounts in my findings because the expenditure, when incurred, was in breach of the appropriations, regardless of any remedial action taken later.

General observations

4.7
The legal advice I received was clear. If an electioneering purpose could be ascertained from looking at the advertisement as a whole, having regard to its timing, the amount printed, the extent of its distribution, and the other factors discussed in Part 3, then the advertisement as a whole was outside the scope of the appropriation – even if a parliamentary purpose could also be ascertained.

4.8
I was particularly aware of the Solicitor-General’s statement that each case is “highly context-specific”. I had to carefully consider whether any advertising or publicity within the three-month pre-election period had an electioneering purpose – even if, at first glance, the material looked like a routine parliamentary advertisement and would be accepted as such at any other time. The closer the advertising was to the Election, the closer it resembled the party’s own electioneering material (for example, by having prominent party logos and election slogans), and the more widely it was distributed, the more likely it was that the true purpose of the advertising was to influence voters to vote for the MP or party.

4.9
I took a common-sense approach based on what I considered a reasonable member of the public would think from looking at the advertisement as a whole, in its full context.

4.10
I am concerned that I found a substantial amount of material that was contrary to the Speaker’s Directions. A number of advertisements and newsletters expressly solicited votes. However, even where no express soliciting of votes occurred, a large number of advertisements contained material that could only be described as election platforms and promises.

4.11
That impression was often heightened by context – for example, advertisements for a series of public meetings throughout the country during the period of the election campaign that could only be described as part of an election campaign strategy, or newsletters distributed by MPs containing common policy statements of an aspirational, forward-looking nature. In my view, any reasonable person would conclude that such material was part of the party’s election campaign.

4.12
The House continued to sit until 11 August 2005, and a number of the advertisements that we reviewed related to matters that were, at the time of their distribution, before the House. I allowed for this, but also had to consider the reality that, in the pre-election period, even matters that are legitimate parliamentary business may also have been important to an MP’s or party’s re-election prospects.

4.13
I also recognised that MPs remained MPs once the House had been dissolved, and that it was important that their availability and their services to the public continued to be advertised. However, I found it difficult to accept that the extensive advertising by some MPs and parties during the six weeks before the Election had a legitimate parliamentary purpose. It is well understood that politicians are focused keenly on the Election during this time. Advertising in the final weeks before the Election almost certainly had an element of electioneering unless it was of the most mundane type.

4.14
I was particularly disappointed to find that the Service paid for significant amounts of newspaper advertising by some parties in the last week before the Election. That advertising was incontrovertibly of an electioneering nature, and I could not discern a legitimate parliamentary purpose for it.

4.15
I make the following observations about the various categories of advertising that I reviewed:

• constituency clinic advertisements;
• public meeting advertisements;
• promotional items;
• policy documents;
• “retrospective” messages to constituents; and
• newsletters.

Constituency clinic advertisements

4.16
Routine constituency advertising by an MP had no electioneering purpose if it advertised the MP’s contact details and electorate clinics. Such advertisements may or may not have included:

• a photo;
• a slogan (such as “working hard for you”) that had no direct bearing on the Election; or
• a party logo as well as the parliamentary crest.

4.17
In some cases, I was able to discern a change in the pattern of the “routine” advertisements as the Election approached – for example, an electioneering slogan may have been included to introduce the advertisement. In such circumstances, I considered the purpose of the advertisement to have become election-focused as well as of a legitimate parliamentary purpose. This took it outside the scope of the appropriation.

Public meeting advertisements

4.18
Advertisements for public meetings in the pre-election period formed one of the largest categories of expenditure identified for individual MPs.

4.19
The most obvious indicator of the purpose of such advertising would be what was discussed at the meetings. Clearly, gathering such evidence was impractical. Accordingly, I had to discern the purpose from the face of the advertisement, its timing, and other factors, such as whether it formed part of a programme of meetings.

4.20
In one case, a parliamentary party undertook more than 70 public meetings in the 93 days to which this inquiry relates. The frequency of the meetings increased as the Election date drew nearer. While 4 meetings occurred in the last two weeks of June 2005, 19 occurred in July, 35 in August, and 15 in the first two weeks of September 2005.

4.21
Several advertisements for public meetings involved party leaders or candidates who were not sitting MPs. The motives for organising such meetings, close to the Election and involving the party leader or other candidates (whether sitting or otherwise), had to be presumed to have included a wish to influence voters to attend the meeting and be persuaded to vote for the particular party or candidate.

4.22
I understand that meetings held to inform the public of an MP’s views on matters of the day can be held at any time, and in general are a part of normal parliamentary business. However, context must be taken into account. A public meeting during the pre-election period is a time when members of the public are encouraged, by a particular party or its MPs, to gather and hear that party’s or MP’s views on matters of the day. The election-related benefits, both for the party or MP and for the public who attend, are tangible and political. The benefit in parliamentary terms is demonstrably less so, especially (but not exclusively) after the House has been dissolved.

4.23
For these advertisements, the factors I considered included:

• whether the subjects proposed to be discussed at the meetings were under active consideration by the House at the time;
• whether the meetings appeared to be part of an overall campaign of public meetings, from which could be deduced an election strategy;
• whether party election platforms were identifiable as subjects for discussion at the meetings;
• the meetings’ proximity to the Election; and
• any printed speeches that were delivered at the meetings, and the nature of the topics raised.

Promotional items

4.24
Several promotional items were charged to the Party and Member Support appropriations, including:

• flags;
• a protest banner;
• pens;
• signage;
• photographs; and
• carry bags.

4.25
In one case, a parliamentary party commissioned 10,000 pens at a cost of $30,870. The pens featured the parliamentary crest, but also featured an election slogan and a party website address. In another case, 2000 plastic carry bags were produced at a cost of $990. The bags featured the parliamentary crest and a party logo.

4.26
It is unclear what parliamentary purpose some of these items could have, regardless of any electioneering purpose. Promotion is an inherent aspect of political activity, which in turn is inherent to much parliamentary business. However, in my view, some of the examples in this category did not have a clear parliamentary purpose, and so were not within the scope of the appropriations.

Policy documents

4.27
Several parliamentary parties used Party and Member Support funding to meet the cost of printing brochures and mail-merge letters containing their election policies and commitments. Only a few referred overtly to the Election. There was a mix of existing policies and policies that could only be described as election platforms (using phrases such as “We will …”). The common feature was that they had a focus on what the parliamentary party intended to do if elected. While some of these documents had what might be considered a parliamentary purpose, it was also possible to discern, to varying degrees, an intention to influence the voting decisions of the public in the days leading up to the Election.

4.28
Two parliamentary parties produced more than 1 million such documents each. In one case, the documents took the form of a pledge card. Others took the form of pamphlets.

4.29
In applying the method based on the Solicitor-General’s advice, I first considered whether there was an electioneering purpose. The presence or absence of overt references to the Election was not the determining factor in this regard. Instead, I considered whether the content of the documents, their format, the amount printed, and the timing of their publication and distribution were such that one could discern an intention to persuade the public to vote for the parliamentary party or MP concerned. If that was so, then an unlawful purpose had been established, regardless of whether the publications also served a parliamentary purpose.

“Retrospective” messages to constituents

4.30
Several MPs took an opportunity to publish “report card” messages to their constituents just before the Election, reporting on their achievements as an MP during the previous 3-year term. There may well have been a legitimate parliamentary purpose to such messages. However, the question arose as to whether there may also have been an electioneering purpose – even though some of the messages contained no reference to the Election, the MP’s (or party’s) election policies, or whether the MP was standing again.

4.31
These “retrospectives” took different forms. In some cases, they involved newspaper advertisements published shortly before the Election.

4.32
As in the case of policy documents, the presence or absence of an overt reference to the Election did not, on its own, determine whether there was an electioneering purpose. Instead, I considered whether the content of the retrospective messages, their format, the amount printed, and the timing of their publication were such that one could discern an intention to persuade the public to vote for the MP.

4.33
In general, if an MP could be seen to have been campaigning on their record as an MP close to the Election, any claim that a retrospective message was purely for a parliamentary purpose had to be approached with scepticism. References to the Election and election policies reinforced that scepticism.

Newsletters

4.34
A large number of newsletters were distributed by MPs or parties in the pre-election period. They appeared to have different purposes:

• Some addressed constituents in general (that is, the public), with an overt focus of reporting on the MP’s or party’s recent official activities, and stated views on issues (national or local) of the day. There was a legitimate parliamentary purpose to such advertising.
• Others addressed party supporters and had a focus on campaign organisation. This was not a legitimate parliamentary purpose.

4.35
Many of the newsletters had both these purposes.

4.36
Several members of one parliamentary party produced similar newsletters and distributed them to the public. The newsletters had an individualised front page, but included a common second page – a standard message that included electioneering material.

4.37
In all cases with the newsletters, the question arose as to whether there may also have been an electioneering purpose – even though some of the newsletters contained no reference to the Election, the MP’s (or party’s) election policies, or whether the MP was standing again.

4.38
Once again, the presence or absence of an overt reference to the Election did not, on its own, determine whether there was an electioneering purpose. I considered whether the content of the newsletters, their format, the amount printed, and the timing of their publication were such that one could discern an intention to persuade the public to vote for the MP.

4.39
In general, if an MP could be seen to have been campaigning on their record as an MP close to the Election, any claim that a newsletter was purely for a parliamentary purpose had to be approached with scepticism. References in those newsletters to election policies or promises reinforced that scepticism.

Comments from parliamentary parties and the Parliamentary Service

4.40
I received three main comments from parliamentary parties and the Service about my findings on the extent of compliance with the Party and Member Support appropriations:

• The findings would basically mean that most other expenditure on services provided to MPs and parliamentary parties would be inappropriate.
• The findings were not equally applied to list and electorate MPs.
• The findings meant that no parliamentary party or MP could communicate policy to their communities of interest.
• Other expenditure may now be inappropriate

4.41
A view held by three parliamentary parties and the Service was that my findings about advertising would essentially render inappropriate expenditure on a range of other services provided to parliamentary parties.

4.42
The inquiry I undertook specifically examined advertising expenditure that occurred within a three-month period (16 June to 16 September 2005) when political sensitivities were high nationwide. The focus of the inquiry was whether that expenditure was incurred within the scope of the appropriation set by the relevant Appropriation Act, the Parliamentary Service Act 2000, and the Speaker’s Directions issued in November 2003.

4.43
Clause 46(3)(d) of the Speaker’s Directions specifically prohibits electioneering advertising. It is clear that this prohibition does not apply to other activities undertaken by MPs. In relation to advertising, it states that operational resources may not be used –

… for producing or distributing promotional or electioneering material by mail or other means of communication for the purpose of supporting the election of any person or the casting of a party vote for any political party.

4.44
The legal advice I received only addressed what might constitute electioneering in the context of advertising.

4.45
However, in a broad sense, the inquiry does pose questions about the appropriateness of other expenditure incurred by the Service.

4.46
One former MP said −

Everything I did, every speech, every public appearance and the image I tried to portray was designed to achieve public acceptance of myself and to enhance my parties [sic] credibility which hopefully translated into votes at some stage.

4.47
This was also reflected in comments from two parliamentary parties −

It seems to me that most of what we MPs do now falls outside the new funding interpretation. We are politicians! We are always trying to win support for our policies and ourselves.

The [Service’s] practice properly accommodated the Parliamentary reality that there is at least some voter-influencing purpose to almost everything said and done publicly by MPs, inside and outside Parliament.

4.48
Although my inquiry has examined only advertising expenditure, I would expect the Service to establish a process for reviewing all other expenditure on support services for MPs. Such a process may include seeking appropriate legal advice on the scope of the appropriations, and advice from my Office, to enable the Service to establish the nature of activities than can be funded within the scope of the appropriations it administers.

Consideration of list and electorate MPs

4.49
Two of the responses I received questioned whether I had been fair in my consideration of advertising by list MPs – particularly in relation to public meeting expenditure that I had provisionally found to have been inappropriately incurred.

4.50
One parliamentary party considered the provisional findings to be “biased toward electorate MPs and a recognised electorate constituency”. It maintained that, in an MMP Parliament, constituencies are not just geographically based but are sectoral and are found throughout the country. A former list MP considered his constituency to have been rural New Zealand.

4.51
These views are appropriate, and reflect the realities of an MMP Parliament. However, the difficulty arises in relation to context.

4.52
I considered each advertising example on its merits. If, on balance, I considered an advertisement to have an electioneering purpose, then the associated expenditure was inappropriate. In relation to public meetings undertaken by list MPs, the form of the meeting advertised was not the factor that decided appropriateness. It was whether the advertised meeting, based on the facts I had to consider, appeared to have an electioneering purpose. The example in paragraph 4.20 clearly demonstrates such a situation.

4.53
I have previously considered the issue of how the administration of parliamentary advertising addresses the challenge posed by advertising in an MMP environment. As I noted in my 2005 Report, any new rules for parliamentary advertising should specifically address this challenge.

The findings make it impossible to communicate policy

4.54
Several parliamentary parties expressed concern that my findings would effectively prohibit them from communicating policy to their communities of interest.

4.55
I am fully aware that the communication of policy is expressly permitted in the Speaker’s Directions, and that such communication is central to parliamentary democracy.

4.56
However, communicating policy to large numbers of the local and national voting populace in close proximity to an election must be considered differently from communications that take place at other times of the electoral cycle. The election-related benefits from communicating such information in a pre-election period are much higher than they are at other times.

4.57
This element of time sensitivity, coupled with the form and content of the communications themselves, does mean that a policy publication that may be benign at any other time of the electoral cycle takes on an electioneering purpose when considered in its full context in a pre-election period. The Service cannot lawfully meet the costs of such communications under the Party and Member Support appropriations.