The head of the New Zealand Security Intelligence Service (NZSIS) doubts banning foreign donations to political parties would lead to greater transparency.
"Transparency is not just about banning foreign donations," Rebecca Kitteridge said at the Justice Select Committee on Tuesday in Parliament.
Her comments follow calls from Green Party Electoral spokesperson Golriz Ghahraman to ban overseas donations to political parties to facilitate greater transparency.
- GCSB, SIS bosses fear Christchurch terror attack copycats, retaliation
- GCSB boss Andrew Hampton warns against local election online voting
- GCSB, NZSIS concerned about foreign interference in New Zealand election
"From the intelligence we have, we know that a foreign donation ban would not on its own be an effective way of mitigating the risks New Zealand candidates and MPs face," Kitteridge said.
"You can see how a foreign actor could easily use a proxy to work around such a ban. We know that foreign states are adept at understanding and working around regulatory regimes."
Kitteridge appeared at the select committee alongside Andrew Hampton, director-general of the Government Communications Security Bureau (GCSB).
It was the second time they appeared before the committee over potential foreign interference in the 2017 general election. In April, the pair confirmed foreign interference in 2017 was "plausible".
"We've seen relationship building and donation activity by state actors and their proxies that concern us. This activity spans the political spectrum and occurs at a central and local government level," Kitteridge said.
"This is an extremely sensitive issue and we are unable to provide specific examples of interference at an unclassified level.
"We have briefed this committee at a restricted level and provided classified briefings to successive administrations and leaders of the opposition."
In their last briefing, Hampton confirmed that the GCSB did not pick up on any candidates or political parties being targeted by cyber operations in the 2017 election.
"We don't monitor political parties and we don't monitor MPs," Kitteridge told the committee.
She said if the agencies - which work together closely - identified a foreign state that was interfering, they would investigate further.
"We do have the ability to brief political party leaders and MPs about national security issues on a need-to-know in addition to our regular briefings to [NZSIS and GCSB Minister Andrew Little] and leader of the opposition [Simon Bridges]."
National MP Mark Mitchell raised concerns around local body politicians who don't have high levels of protection the way MPs do.
"I couldn't agree with you more - there needs to be increased effort," Kitteridge responded.
"It is quite a big resource issue... There are opportunities to be engaging with councils... We are speaking to Local Government NZ about how we can increase security."
Hampton said because those institutions are smaller, "we should be in no hurry to move to electronic voting".
It's an issue he highlighted last time, telling the committee he GCSB has had ongoing concerns about the security implications of proposals to pilot or introduce online voting for local body elections.
'Outside the spirit of the law'
The spy bosses' appearance followed NZME's revelation on Tuesday that National received a $150,000 in 2016 donation through a New Zealand-registered, but Chinese-owned company.
The Chinese-owned company, Inner Mongolia Rider Horse Industry NZ, is owned by billionaire racing mogul Lang Lin, who according to NZME, met with then-Foreign Minister Todd McClay in 2016.
Prime Minister Jacinda Ardern described the donation as "outside the spirit of the law".
But National leader Simon Bridges said it was a New Zealand company and that it was disclosed, "So in a sense, it's old news".
Political party donations of more than $15,000 are currently required to be declared under the Electoral Act. The threshold for anonymous donations to candidates is lower at $1500.
Ghahraman is calling for a cap on individual donations to $35,000. She also wants to ban overseas donations, and reduce the anonymity threshold to $1000.
Last year, Jami-Lee Ross accused his then-leader, Simon Bridges, of trying to disguise a $100,000 donation from Chinese businessman Zhang Yikun, by splitting it up into smaller amounts, to be hidden from the Electoral Commission.