Public choice of the Electoral Finance Bill

Eric Crampton gave an excellent speech to the Christchurch anti Electoral Finance Bill rally yesterday. He took a look at the bill from the perspective of public choice. He found the bill wanting on a number of issues. Text of his speech is below:

It takes a lot to drag an academic economist out of his office to a political rally downtown. If this were simply a protest over bad legislation, I'd have stayed in Ilam: bad legislation, unfortunately, isn't all that uncommon.

And, this is very bad legislation - so bad that, even after amendment,the New Zealand Law Society wants it scrapped. This is amazing. When law is badly drafted, it's the lawyers that profit by the resulting court battles. Lawyers from Chapman Tripp warn that the courts may well decide the next election - they expect court action. Legislation has to be shockingly bad before we'd expect lawyers to say it should be scrapped entirely, but that's what they've done. Even the Electoral Commission, who has to give advice on compliance with the legislation, is reported to have thrown up its hands: it can't make heads or tails of the legislation either, and so can't provide advice.

Even worse, the legislation seems pointless.

The best social science evidence shows that donations to political parties don't buy the donor a whole lot in terms of changes in policy. And, when sitting politicians spend money on election campaigns, the spending doesn't have a very big effect on vote share. Spending can matter a lot for challengers, who have to work very hard to get their names known. But, spending doesn't matter much for incumbent politicians.

Further tightening up of campaign spending rules, and especially changes like the ones now proposed that allow political parties to use Parliamentary budgets for electioneering, protect sitting MPs against challenges by newcomers. It's an incumbent protection racket plain and simple. New parties and new ideas will be frozen out, and the same old hacks are guaranteed job security.

As bad as all of that is, it's not the main reason I'm here.

This isn't just bad law. It's a bad law that affects how we make laws, and threatens the legitimacy of government itself. Constitutional rules stand apart from other bits of legislation. They affect fundamental rights and freedoms, and they set out how all the other rules will be written. The Electoral Finance Bill directly affects our freedom of speech. Once it's passed, we'll only have freedom of speech 2 years in 3. And, it sets out the rules for how an election is conducted - how legislation for the subsequent three years will be formed. These have constitutional implications.

Constitutional rules aren't like other rules. They really require broad agreement across society. I studied under James Buchanan, who won the Nobel Prize in economics for his work in this area. He likened it to setting out the rules for a poker game: you get everybody to agree to the rules before you deal the cards. If everybody's agreed to the rules before the cards are dealt, the outcome of the game is fair and legitimate. What Labour and its support parties here have done is dealt the cards, taken a peek at their hands, and then declared deuces wild. This violates constitutional justice and threatens the legitimacy of any government that is elected under the new rules.

Electoral rules - constitutional rules - require broad agreement if the government that's formed under them is to have legitimacy. We're here today to say that we don't give that assent. If Labour rams this bill through Parliament, shuts up anyone who opposes it during the 2008 election, then squeeks through a tight coalition win after a lot of litigation, will that government have any legitimacy?

That's why this Bill must be stopped and that's why I'm here. The Bill violates the spirit of our constitutional foundations. It throws freedom of speech out the window. And it rigs the election to protect the politicians who pass it. Helen Clark, Annette King, throw out this Bill!