Jacinda Ardern admits political party 'foreign donation ban' won't close loopholes

In an attempt to stop foreign governments influencing or disrupting New Zealand's democracy ahead of the 2020 election, the Government has banned foreign donations over $50.

But Prime Minister Jacinda Ardern has admitted it won't stop an apparent loophole: big foreign donations of over $100,000 being funnelled through New Zealand trusts, businesses or foundations.

In August, the Prime Minister accused the National Party of operating"outside the spirit of the law", for accepting a $150,000 donation from a Chinese billionaire channelled through a New Zealand business.

Electoral law expert Andrew Geddis explained to Newshub: "It doesn't matter if that company is owned by an overseas person - the law allowed it and will continue to allow it." 

There is already a ban on big foreign donations in New Zealand. As it currently stands, foreigners aren't allowed to donate more than $1500.

The change that's been announced by the Government drops that to just $50, and anything above that, parties will have to do due diligence to ensure it's not from a foreigner.

Justice Minister Andrew Little believes that changes he announced will tighten the loophole in the current law that allowed National to receive the donation through a New Zealand-registered, but Chinese-owned company.

"It does go a very long way to dealing with exactly that issue through the due diligence requirement," he said on Tuesday. 

Political party secretaries would be responsible for making sure donations are from locals, for example. They would also have to reside in New Zealand.

But the Prime Minister appeared to have a different view. She said she "absolutely acknowledges" that the law change wouldn't completely close loopholes in the law. 

In fact, she said the law change wouldn't catch donations like the one she once described as "outside the spirit of the law" at all.

"It does not cover the substantive issues that some have raised around how the National Party have used donations," she told Parliament.

National leader Simon Bridges described the law change as "very minor".

He suggested the legislation would have more meaning if it had "something to say about trusts and foundations like the New Zealand First Foundation".

The Electoral Commission is currently looking into allegations New Zealand First has been hiding donations through the New Zealand First Foundation.

New Zealand First leader Winston Peters wouldn't say if the law change would prevent foreign donations to foundations like the New Zealand First Foundation.

"I told you I'm going to leave that to the Electoral Commission and I'm not going to have amateur hour with you guys," he told reporters.

The Justice Minister said foreign influence in New Zealand's elections is "a real risk for us, we have to act, and we are acting".

The Prime Minister said the legislation has been introduced now "because we need to get in place before the election".