Politics

New ‘election hack’ offence recommended in electoral process proposals

A long-awaited report into New Zealand’s election processes has finally landed - and it proposes some significant changes to how we handle the threat of foreign interference.

A review of New Zealand's election processes has recommended some significant changes - including new powers for the Electoral Commission and greater efforts to combat potential interference in our elections by foreign entities.

The inquiry into the 2016 local elections and 2017 general election was launched by Parliament’s justice committee in July 2018, but labelled “a shambles” by some committee members with six different chairs overseeing the work and multiple delays in the process.  

The committee’s work has largely been overtaken due to Justice Minister Andrew Little pushing through electoral law changes under urgency to address the issue of foreign interference - a decision which National MPs objected to, claiming Little had compromised the inquiry’s integrity by introducing legislation before it had finished its work.

“The process became a sham as neither the officials nor Labour members could reasonably come to any other conclusion than that predetermined by Cabinet.”

But while there is some overlap, the committee has made a number of recommendations that go well beyond the narrow scope of Little’s changes - including a suggestion that the Electoral Commission be given powers to investigate electoral offences, obtain documents and other evidence, and impose fines or other sanctions for minor law breaches (with major breaches remaining in the hands of police). 

The report said a number of other countries had independent agencies to monitor compliance with electoral law, and it would be useful to give the Electoral Commission the power to investigate and sanction “straightforward” offences rather than requiring police to act.

It also suggested giving the commission responsibility for running all aspects of local elections, and as part of that centralisation encourage or require the use of the same voting system in all local races.

Foreign interference to the fore

A significant proportion of the report relates to the issue of foreign interference in New Zealand elections, after Little asked the committee to examine the topic in November last year.

“The fact that this occurred in Australia reinforces for us the need for vigilance and preparedness against the possibility of a similar intrusion occurring in New Zealand.”

While any responses to the risk of foreign interference had to be proportionate, the committee said there was room for improvement - including on the issue of a potential election hack.

The report noted that shortly before Australia’s 2019 election, a “foreign entity” had hacked into the computer systems of the country’s Parliament and three political parties, gaining access to policy papers and emails.

“The fact that this occurred in Australia reinforces for us the need for vigilance and preparedness against the possibility of a similar intrusion occurring in New Zealand.”

While the Crimes Act already had a number of hacking-related offences, the “very serious consequences” of doing so to interfere with an election meant it would be wise to create a specific crime.

The committee’s proposal would make it a crime to hack the computer system of a political party, candidate or election administrator “in order to affect the results of a general or local election”, with a maximum penalty greater than the current two years’ imprisonment on offer for hacking offences.

The Government should also develop a contingency system to kick in if a security breach compromised the integrity of a local or general election, the report said.

Hacking fears are also behind a recommendation that online or electronic voting be avoided in favour of manual voting “for the foreseeable future”, with the committee saying security agencies had made clear their concerns about a pilot or introduction of online voting for local body elections.

The committee said New Zealand needed “strong, robust and well-enforced” anti-avoidance rules to ensure foreign entities could not circumvent a ban by using “shell companies” to donate money.

The issue of foreign donations also features in the committee’s report, including a loophole that currently allows foreign-owned but New Zealand-based companies to make unlimited donations to political parties or candidates, and did not appear to be solved by Little’s changes.

The committee said New Zealand needed “strong, robust and well-enforced” anti-avoidance rules to ensure foreign entities could not circumvent a ban by using “shell companies” to donate money.

While the report did not make a recommendation on how to do that, it sets out three options for further exploration and policy work:

* using the Overseas Investment Act definition of an “overseas person”, which includes a 25-percent foreign ownership test;

* adopting the concept of “carrying on business”, which focuses on whether the entity in question carries on a business or engages in economic, philanthropic or social activities in New Zealand; or

* only allowing natural persons to donate, which would prevent any businesses, trusts or associations - whether foreign- or New Zealand-owned - from making political contributions.

The committee said it had discussed the merits of political parties asking intelligence agencies to vet candidates for local and national elections, and agreed the agencies should continue their usual role of “following leads in relation to foreign interference or terrorism”.

“We think it is important that the agencies are able to provide a confidential service to political parties, separate from government, about individual candidates where there may be concerns about political foreign interference.

“We encourage the intelligence agencies to proactively approach the political party if they have significant concerns about a candidate or prospective candidate.”

Rancor on both sides

The report also recommended that the Government investigate whether it could adopt some form of Australia’s foreign influence transparency scheme, which forces lobbyists for foreign governments and political parties to identify themselves on a public register.

Specific mention is made of foreign-language media outlets, with the committee concerned “by the likelihood that significant media organisations that serve a diaspora in New Zealand have inappropriate links to foreign governments in other countries, and, as a consequence, their editorial independence is compromised”. 

The report recommended the Government consider requiring all media organisations to have a majority of board members living in New Zealand, and prohibit foreign governments or state entities from owning or investing in media organisations here.

In a sign of the rancour which has characterised the inquiry process, both sides traded claims of inappropriate behaviour in relation to election donations - National regarding the lack of transparency regarding New Zealand First’s eponymous foundation and over $340,000 in anonymous donations received by the party in 2017, and Labour over the $150,000 donation received by National from the foreign-owned but New Zealand-registered Inner Mongolia Rider Horse Industry.

While the relevant sections are 41 pages apart, both Labour and National use identical phrasing about the differing cases: that “New Zealand cannot pretend its electoral laws provide for a high standard of transparency” given the circumstances.

That shows the bitterness between the Government and the Opposition regarding this topic - but it perhaps also demonstrates the scale of change that is required to truly fix our electoral laws.

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