The consequences of the John Banks donation scandal

This blog post was originally published at Liberation

Is it all a damp squib? Or will the Kim Dotcom allegations about John Banks lead to messy by-elections, the death of the Act Party, a boost for the Conservative Party, and other party mergers? The guest blog post below from Act-watcher Geoffrey Miller, delves into the various ramifications, and outlines five possible consequences of the scandal.

Five possible consequences of the John Banks donation allegations:

1. Nothing – or nothing much

Sometimes things that seem like enormous scandals turn into damp squibs. In September 2006, a former policeman and then private detective, Wayne Idour, went on Campbell Live and in an extended interview made what seemed like stunning allegations about the then Labour-led government:

There was information concerning Mr Benson-Pope, there was information concerning David Parker, there was information concerning Michael Cullen. A lot of this information is not yet public. I don’t want to go into it, but we do know a lot. It relates to the prime minister and some of the information relates to her husband…I would like to believe we could trust our politicians… I’m just disgusted at what I’ve been uncovering. A lot of information I’ve been uncovering about the Government is very dishonest. And if the public knew, and they have a right to know, my view is… there would be a by-election (sic) tomorrow.

The detective later turned out to have little credibility, little evidence and was in the pay of the Exclusive Brethren. No-one resigned, the government survived and the story was soon forgotten.

Fast-forward to 2012, and it’s important to remember that the allegations about donations made to John Banks’ 2010 mayoral campaign are still exactly that. We only have the word of Kim Dotcom, himself the subject of a massive police investigation, to go on. At this stage, we only have Dotcom’s statements – carried by the news media – that Banks personally accepted cheques from him, and that Banks telephoned Dotcom to thank him for his donation afterwards.

The video footage screened on the TV3 Campbell Live report did not provide evidence of wrongdoing. It only showed that Banks and Dotcom were friends.

Moreover, a likely motivation for Dotcom now turning on Banks appears to be revenge for not helping him after his arrest earlier this year. This motivation appears to be corroborated by information from former Act MP David Garrett:

I have it on good authority that the Dotcom donation(s) have emerged because Banks didn’t want to know the fat man in his hour of need in Mt Eden…Apparently Mr Dotcom was being badly treated in some way and asked who the MP for the Mt Eden Prison area was….but said MP was most ungracious to his beneficient donor, and didn’t want a bar of him

This motivation does not necessarily mean the allegations are untrue, but would it really be beyond the realms of possibility to think that Dotcom is exaggerating the allegations just to get back at Banks?

2. The police investigate – slowly

It is well known that the police take their time investigating breaches of electoral law, if they investigate at all. Cameron Slater has pointed out that several MPs are the subject of long-running investigations which still have no outcome.

The allegations are perhaps more serious in the case of Banks, but unless he resigns of his own accord or his pushed into quitting, the process could easily take years. If the allegations are substantiated and Banks is charged, he will almost certainly resign, at least as minister and probably as an MP. But if and when that happens, it may already be past the 2014 election or within the 6 month timeframe in which a by-election does not need to be held.

Unless a smoking gun appears in the interim, and as long as John Key continues to support him, Banks is probably politically safe.  John Banks certainly did not seem to be in a mood for resigning when he appeared on TVNZ’s Q&A programme on Sunday:

I can tell you that when I signed my declaration for the mayoralty I signed it in good faith in the knowledge as a Justice of the Peace as true and correct. I have nothing to fear and nothing to hide and I welcome the inquiry and everything will come out in the wash, Mr Holmes.

It is also notable, however, that Banks was somewhat evasive in his Q&A interview and refused to answer directly questions about the receipt of the donation.

Essentially John Banks is laying down the gauntlet: prove it.

3. A messy by-election in Epsom

This outcome assumes John Banks resigns, either because he is charged or his position becomes untenable politically.

The assumption seems to be that Catherine Isaacs will stand as the Act candidate. This seems plausible, and under normal circumstances a woman candidate might go some way to changing Act’s image (we are not under normal circumstances).

The unknown is what National would do. The problem this time for National and Act is that any deal-making will border on the absurd, no matter how it happens.

Here are three variants:-

a) A re-run of 2011: National’s Paul Goldsmith stands in Epsom but tries his best not to win the seat. National voters are encouraged – implicitly or explicitly – to vote for Catherine Isaacs to keep Act alive. Cup of tea, anyone?

b) National tries to genuinely win the seat. Knowing that voters have had enough of deals, the National candidate – whether Goldsmith or perhaps someone else – genuinely campaigns for the seat. So does Act. National voters are given the message that Act’s time is up.

In the best case, National wins in a clean campaign.

In a less optimal situation, National and Act battle it out in a nasty fight, with ultimate victory going to National and Act being obliterated.

In the worst case, National and Act battle it out in a nasty fight, split the vote and leave the road open for a third candidate (see below).

c) National stands no candidate in Epsom. This option avoids any direct deal making. Voters are encouraged implicitly or explicitly to vote for Catherine Isaacs instead. A direct endorsement by John Key is unlikely.

The problem with options A and C is that they still look like manipulation of the electorate. The problem with option B is that it could lead to a hostile campaign, split the vote and let in a third candidate.

4. The election of a third candidate in Epsom – Colin Craig or Winston Peters?

Epsom voters showed in 2011 that they were willing to overlook the teapot fiasco and do as they were told. Having seen the results, they may not be so willing to do so again. The “two for one” argument – that voters could get more MPs for their money by voting for the Act candidate – does not apply in a by-election, and convincing voters that Act will make a comeback in 2014 seems equally unlikely.

By-elections have often provided a launching pad for candidates not from one of the two main parties. Social Credit picked up two seats in by-elections in 1978 and 1980 and Winston Peters won his Tauranga seat as an independent candidate after resigning from National in 1993. Act itself almost managed to win the Taranaki-King Country seat in 1998, with the rural voters almost, but not quite, electing Owen Jennings as their representative.

As an isolated contest, a by-election draws disproportionate national media attention compared with races in general elections. Colin Craig, the leader of the new Conservative party, could be presented with a unique opportunity. He could offer conservative Epsom voters the choice of backing a new conservative force which would “keep National honest”. Moreover, he could take advantage of and stoke voter disgruntlement at the National-Act cartel in Epsom.

The Conservatives differ from Act in that they are not encumbered with the neoliberal ideology of the past and are more pragmatic about issues such as the sale of state assets. In one respect, the Conservative Party displays parallels with Act in its own early days: no shortage of money. The Conservatives spent $1.8m on their 2011 campaign (see: Electoral Commission records), most of which was funded by Craig himself.

As Colin Craig’s experience in 2011 showed, money does not automatically buy elections, but he has now the benefit of experience of running his electorate campaign in Rodney. If the Conservatives can mount a well-organised and credible campaign in Epsom, Craig might have a reasonable chance of taking advantage of voter dissatisfaction and winning the seat.

The other potential third-party candidate is Winston Peters. Peters deftly played the victim in the teapot saga, and is a masterful campaigner. He is now based in Auckland and a safe seat would secure NZ First’s future for the next election cycle. The disadvantages for Peters are that he lacks the financial resources of the other three competitors (National, Act and the Conservatives) and he is a polarising figure who currently sides with the Opposition. His election as the member for Epsom is not inconceivable, but it would require a leap of faith and a very high level of disgruntlement with National from Epsom’s “blue-rinse” constituents to be realised.

In all cases, the success or failure of a third party candidate could be greatly influenced by the actions of the other parties, notably Labour and the Greens. If they did not stand candidates, they could help pave the way for their candidate of choice to take the seat. The problem with this is threefold: a Labour-Greens-Conservative alliance seems extremely unlikely; a Labour-Greens-NZ First alliance only a little bit less unlikely; and finally, it could be interpreted by Epsom voters as yet more cynical manipulation of the electorate.

5. A National-Act merger

If Act’s brand was toxic before, it must be bordering on the sheer radioactive now. Few in Act must have much hope that the party will ever be able to re-emerge as a significant force in New Zealand politics in its current form.

Many remaining members and supporters of Act – most likely a dwindling number – will be aghast at the allegations against Banks and the potential consequences for Act. Since the 2011 election, Act has essentially been on a good behaviour bond.  The party was kept alive only because John Key and National wanted it to be.

After the implosion of 2008-2011, the party’s only hope was to keep its head down and regain some credibility as National’s right-wing flank. Had that happened, a modest comeback – perhaps 2-3% support and a similar number of MPs – could have been achievable in 2014. Even then, it would have been a tall order. Should the donation allegations drag on, any comeback seems like an impossibility.

Even before the donation allegations, core Act supporters had been lukewarm with their support for John Banks, because of his more social-conservative and National-linked background. Act has long faced the tension that its neoliberal ideology does not convince many voters, yet a shift to becoming a purely conservative party does not sit well with much of its membership. Just a week ago, blogger Cactus Kate, for instance, was cutting in her criticism of John Banks’ support for raising the drinking age:

In the meantime on behalf of the students all of whom are afraid/shy/spun in your web of silliness to tell you that you don’t belong in ACT, let me remind you of the principles of the ACT Party, that Nikki Kaye and for heaven’s sake Trevor Mallard and Gareth Hughes seem more capable of understanding… I encourage the remaining members of ACT on Campus to tell John where to stick his righteous, patronising conservatism as it is only going to get worse

If there is a post-Banks future, one option for Act would be to reform and rebrand the party. This debate is almost as old as Act itself. Most recently, the current President of Act on Campus, Hayden Fitzgerald, said in response to a question in an online interview by Frank Mackasy:

There’s no doubt that the ACT brand is damaged but I think the support base can be rebuilt if the Party sticks to its core values. A complete rebranding of the Party could be something worth considering but the cost of doing so may not outweigh the cost of repairing the current brand. Which direction you think ACT should take here will differ depending on who you talk to!

Realistically, reforming or rebranding the current party holds little real prospect of success. Old wine in new bottles is still old wine. Act has had several chances to reform and reinvent itself – the 2004 leadership transition from Richard Prebble to Rodney Hide, accepting the responsibility of government in 2008 and the Don Brash coup of 2011 – and yet each time support has suffered, rather than increased.

Another option would be to concede that Act is a spent force. David Farrar suggested the following after the 2011 election:

I still think the best way forward is for… ACT to rename itself and look at some sort of co-operation with the Conservative Party, and those who are economic and social liberals to form a new party without the baggage of the past.

Under the current circumstances, it would seem that the Conservatives would be advised to keep well away from the Act brand. But would a merger of Act with another party make sense?

In 2004, Richard Prebble’s suggestion that Act merge with National helped to contribute to him being rolled as leader. In 2012, it may be the only real option left.

The template could be the de facto merger of Labour with the Progressive Party. The one-man band of Jim Anderton moved closer and closer to Labour to the point that it made no sense to carry on. The party had reached the end of its useful life. Accordingly, the party wound up in its final term: in 2011 Jim Anderton campaigned for and told his supporters to vote for Labour. Labour’s Megan Woods took over Anderton’s old seat of Wigram.

What does National gain from a merger with Act? It ends the life of a terminally ill rival party that has only embarrassed it since 2008. The remaining Act supporters could be assured that their party’s ideas would live on under National. Catherine Isaacs could stand for National in Epsom, and could assure voters that she would continue her charter schools programme, perhaps as Associate Minister of Education.

And the “unfortunate experiment” with John Banks would be over.

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