Justice Minister Kris Faafoi has ordered a review of electoral laws to consider donations, the MMP voting system, the length of Parliament term, and voting age.
The review will not look at online voting, a return to 'first past the post' or alternatives to MMP, the future of Māori electorates, local electoral law, or big constitutional changes such as New Zealand becoming a republic.
"While we have a world-class electoral system, times are changing and the Electoral Act needs to continue to move with them," Faafoi said on Tuesday, as he announced the independent review which will report back in 2023.
"The Electoral Act has had mostly piecemeal tweaks over the years. We now have an opportunity to take a proper look at how we run our elections," Faafoi said.
"We will work with parties across Parliament on broad, non-partisan support for any changes and I have written to other party leaders expressing that intention.
"I will be consulting with all parliamentary party leaders and Parliament's Justice Committee on the Terms of Reference for the review before they are finalised.
"I am also writing to these and other groups, such as Māori organisations, youth organisations, universities and the New Zealand Law Society to seek nominations for potential panel members."
The review panel will report back with recommendations in late 2023, with the reforms aimed to be passed before the 2026 election, but any changes will likely wait until the Electoral Commission, political parties and the public have had time to prepare.
MMP under review
Under consideration is whether it's time to lower the threshold for parties to enter Parliament under the mixed-member proportional representation (MMP) voting system, which in 1993 replaced the traditional 'first past the post'.
Each person gets a vote for a candidate and a vote for a party under MMP. If a party does not win an electorate seat, then it must get 5 percent of the party vote to enter Parliament.
Lowering the threshold was recommended by an Electoral Commission review of the MMP system conducted in 2012. Judith Collins was Justice Minister when the MMP review was released and did not act on the recommendations.
Collins said last year there was no consensus at the time.
"When it was last reviewed there was no consensus in Parliament and I always took the view that we should have a consensus in Parliament on major constitutional issues."
Green MP Golriz Ghahraman has advocated to lower the threshold to 4 percent. Prime Minister Jacinda Ardern promised ahead of the 2020 election that any changes would not happen until after.
Also under consideration is what's known as 'coat-tailing'. It allows parties to bring in extra MPs without having to cross the 5 percent threshold, if they win an electorate. The number of additional list MPs is based on the percentage of the party's vote.
The Māori Party was able to bring in an additional MP thanks to this rule. Rawiri Waititi won the Waiariki electorate from Labour and he was able to bring in co-leader Debbie Ngarewa-Packer based on the party winning 1.2 percent of the vote.
Labour and the Greens don't think the rule is fair. They think it would make more sense to scrap the coat-tail rule and instead lower the threshold from 5 percent to 4 percent for parties to get into Parliament.
The 2012 review recommendations included "abolishing the one electorate seat threshold for allocating list seats" - in other words, scrap the coat-tail rule.
ACT, although it's now polling well above the 5 percent threshold, has benefited from the coat-tail rule in the past, and leader David Seymour is not a fan of getting rid of it.
"Jacinda Ardern needs to explain why she is so determined that Māori Party voters shouldn't get their full representation and Debbie Ngarewa-Packer should not take her seat in Parliament," Seymour said last year.
"Election rules should be changed rarely, and only for good reason. Labour has no good reason to change the election rules other than its own political advantage."
Another significant consideration is whether to extend the term of Parliament beyond the current three years to allow governing parties to get through their agendas with more time.
Documents obtained by Newshub showed the Justice Minister had received advice about four-year terms, and had even met with the Electoral Commission about the idea.
A Research New Zealand survey of 1000 people, found 61 percent were in favour. New Zealand already had two failed attempts at extending the term, one in 1967, the other in 1990.
Any changes would not likely come into play until 2029.
Prime Minister Jacinda Ardern already signalled electoral law changes with multiple political parties under investigation by the Serious Fraud Office (SFO).
The SFO announced in May it had charged six people in relation to a donation made to the Labour Party in 2017. It confirmed none of the defendants are sitting MPs or are current or former officials of the Labour Party.
Labour joined a list of parties being investigated by the SFO over donations. The law enforcement agency is also investigating donations made to the National Party, Māori Party and the NZ First Foundation.
"That sends a message to us in the political system that we should be looking at the way our regime works. Clearly, it's not currently, so let's do something about that," Ardern told reporters.
In August 2019, Ardern accused National of operating "outside the spirit of the law", for accepting a $150,000 donation from a Chinese billionaire channelled through a New Zealand business.
In an attempt to stop foreign governments influencing or disrupting New Zealand's democracy ahead of the 2020 election, the Government banned foreign donations over $50 down from $1500.
But Ardern admitted it wouldn't stop an apparent loophole: big foreign donations of over $100,000 being funnelled through New Zealand trusts, businesses or foundations.
The review will consider whether political parties should get state funding.
Should the voting age be lowered?
The electoral review will also consider whether the voting age should be lowered from 18.
In October last year, the High Court ruled discrimination against 16- and 17-year-olds was "justified". The Make it 16 campaign is putting its case forward to the Court of Appeal.
"Voting is a human right, and we believe there's insufficient justification for blocking 16- and 17-year-olds from voting," co-director Cate Tipler told The AM Show in August. "At its core, and why we're at court, is it's a human rights issue."
Faafoi said any changes to the voting age would require a majority in a referendum or a 75 percent majority in Parliament.
Another issue under consideration is allowing Māori to move to the Māori electorate roll quicker. Māori, at this time, do not have enough time to switch to the Māori electorate before the 2023 election.
Māori Party co-leader Rawiri Waititi has described the current electoral system as "inherently racist" because it "intentionally blocks our right to equitable representation" as New Zealanders have to wait six years before they can switch from the general roll to the Māori roll.