Present legislation on campaign finance transparency (NL0039)

What is the public problem that the commitment will address? The Political Parties Act (Wet op de politieke partijen, Wpp, in dutch) will further increase transparency about the financing of political parties and political campaigns.

What is the commitment? The proposal for the Wpp will be presented to the House of Representatives.

How will the commitment contribute to solving the public problem? If the parliament adopts the proposal for the Wpp, transparency about the funding of national parties will be increased. Binding rules on (digital) political campaigns and the funding of decentralized political parties will be introduced.

Why is this commitment relevant to OGP values? With this commitment, the functioning of political parties is being made more transparent for citizens. This contributes to increasing accountability of the politicalparties and to increasing confidence in the government and strengthens democracy.

Additional information - Milestone Activity with a verifiable deliverable Start Date: End Date: The bill for the Wpp will be presented to the House of Representatives. 01-01-2021 31-12-2021

Action Plan Review

Commitment 1: Transparency in the Political Parties Act

Commitment #1: Transparency in the Political Parties Act (Ministry of the Interior and Kingdom Relations)

For a complete description of the commitment, see Commitment 1 on page 7 of the Netherlands 2020 – 2022 action plan here.

Context and objectives:

Regulations around political party financing in the Netherlands have room for improvement. The Group of States against Corruption (GRECO) [1] and the Office for Democratic Institutions and Human Rights (ODIHR) have found that recommendations on campaign finance oversight remain unaddressed. [2] Since 2013, donations to political parties above EUR 4,500 need to be disclosed and are published via the Ministry of Interior and Kingdom Relations. However, anonymous donations up to EUR 1,000 and foreign donations are currently allowed, making it relatively easy to circumvent the regulation by splitting donations up into smaller tranches, or channeling them via third parties, such as associations. This loophole, and the topic of party financing generally, surfaced during the parliamentary elections in 2021, [3] when several political parties disclosed that they received significant contributions for their electoral campaigns. [4]

The Ministry of Interior and Kingdom Relations will develop new political party legislation in this commitment. As a first step towards a new Political Parties Act (Wet op de politieke partijen - Wpp), the government will amend the Political Finance Act (Wet financiering politieke partijen – Wfpp). [5] This bill will enhance the regulations around political party financing and increase transparency in several ways. It will prohibit donations from outside the EU/EEA to Dutch political parties and their subsidiary institutions (except for Dutch voters residing in these jurisdictions). Political parties will be required to publish all donations, including the smallest ones, that they receive from other EU member states. The draft law will also require the natural persons behind legal entities that donate to a political party to be made public. The threshold of EUR 4,500 per donor per year will continue to apply to the disclosure of donations from the Netherlands. [6] This commitment builds on the previous OGP action plan, where the Ministry of the Interior and Kingdom Relations developed a tool to promote the transparency of local political parties’ financing. [7]

In addition, the State Commission on the Parliamentary System has recently recommended amending the current Political Finance Act to oblige political parties to be more open about the digital instruments they use. In particular, the Commission considers micro-targeting a possible threat to democracy and the rule of law. [8] In 2018, researchers from the Delft University of Technology warned that customized, targeted political advertisements can erode public trust in democracy by limiting public contestation of ideas and feeding voters with potentially inaccurate information. This facilitation of disinformation and voter manipulation from micro-targeting can potentially be exploited by foreign and malign operators to influence domestic political discourses. [9]

Thus, beyond improving the framework on party financing, this commitment also aims to develop binding rules around campaigning in the digital space. In light of this broader legislative ambition, the Minister of Interior and Kingdom Relations and the International Institute for Democracy and Electoral Assistance initiated a voluntary code of conduct on transparency of online political advertisements ahead of elections in March 2021. [10] The code of conduct was signed by the majority of parties in Parliament as well as Facebook, Google, YouTube, Snapchat and TikTok. ^[11] However, there are currently no legal regulations around the transparency of digital campaigning in the Netherlands and political parties are generally allowed to spend their resources however they like. [12] This in turn leads to opaqueness around the origins of targeted political advertisements and the groups that they are seeking to influence.

Potential for results: Substantial

If passed in the House of Representatives, the new Political Parties Act could enhance regulations around the transparency of income for political parties in the Netherlands. The amended Political Finance Act will require political parties to disclose the identities of donors that previously were able to remain anonymous. [13] This will include the identities of natural persons behind legal entities that donate to political parties, who previously could remain anonymous. Journalists, civil society, and interested citizens will have access to more complete information on the sizes of financial donations to political parties in the Netherlands as well as the identities of the donors. The insights gained from this information could better inform the electorate about who is donating to political parties and in turn improve public trust in democratic principles. In addition, the prohibitions on foreign donations and the mandatory disclosure of donations from EU countries could strengthen the integrity of Dutch elections (and the political system more broadly) by reducing foreign influence.

Given that virtual spaces are increasingly shaping the global political arena, the ambition to adopt binding regulations around digital campaigning and micro-targeting in the new Political Parties Act is a highly commendable, novel, and timely proposal. The binding regulations from this commitment could significantly limit the ability of actors (both foreign and domestic) to secretly influence public discourse in the Netherlands through targeted political advertisements and online campaigns. [14] While greater transparency alone is unlikely to completely address the phenomenon around disinformation, the regulations from this commitment could shed new light on who is behind the spread of disinformation, how such campaigns operate, and which groups are possibly being influenced. Access to this information could in turn result in greater resilience within the Dutch political system and public against cases of disinformation in political micro-targeting.

It should be noted, however, that the specific regulations and possible changes in transparency around micro-targeting and digital campaigning are not explicitly described in the commitment. Therefore, the actual changes from this commitment will depend on what binding regulations are ultimately adopted. Nonetheless, even if no binding rules are adopted, the discussions around micro-targeting will be valuable for decision-makers, both domestically and globally, in diagnosing specific challenges and informing future policymaking on the role of digitalization and its impact on democracy. These insights can also help sharpen European legislation that is relevant and currently under way, such as the EU’s Digital Services Act.

Opportunities, challenges, and recommendations during implementation

This commitment’s success will depend on majorities in both parliament and senate, as well as the level of ambition of the proposal that the government submits to parliament. In the past, the government has considered it difficult to make OGP work more politically salient, owing to policy constraints (such as the Oekaze kok [15]). Nonetheless, the IRM recommends stakeholders continue looking for opportunities to use political momentum and, where possible and appropriate, connect the action plan to ongoing discussions in parliament and the senate. This peer pressure among parties could move the needle and create new norms around online campaigning. It is likely that this will prove challenging, as the theme of micro-targeting can be divisive. Although most (but not all) parties signed the voluntary code of conduct on transparency of online political advertisements during the 2021 electoral campaign, the text on micro-targeting left considerable room for interpretation. [16] The IRM thus recommends actively involving external organizations and experts in this process, including civil society and researchers, in order to prevent the commitment from becoming isolated discussions among political parties.

The newly elected parliament comprises more than 17 parties and regulation of political parties is increasingly impacting representation and trust in government. Broad societal support for the need to regulate political parties is therefore important. Igniting broader debate and inviting external stakeholders, such as the Council of Europe, International IDEA, and others to take part in these deliberations can help shape consensus and streamline the process of adopting possible binding rules. To that end, the IRM recommends that the Ministry of Interior and Kingdom Relations consider organizing a series of events, such as roundtables, to mainstream this topic into other relevant discussions like state support to political parties (including but not limited to subsidies, airtime on public broadcasting channels for political parties, etc.). Earlier IRM recommendations on supporting decentralized parties and party expenditures also still hold. [17]

Finally, the IRM recommends seeking stronger links to European discussions and legislation around this topic, as several other countries are undertaking such efforts. This can help the Netherlands to take on this issue with resolution and determination and ensure the country positions itself as a pioneer in cutting-edge open government policy.

Results Report

Commitment 1. Transparency in the Political Parties Act (Wpp)

● Verifiable: Yes

● Does it have an open government lens? Yes

● Potential for results: Substantial

● Completion: Substantial

● Did it open government? Major

Commitment 1: Transparency in the Political Parties Act (Ministry of the Interior and Kingdom Relations)

Context and Objectives:

This commitment sought to improve the transparency of political party financing and political campaigns and reducing the risk of undue (foreign) influence on the democratic process. The commitment was highly relevant against the backdrop of recent parliamentary elections, where many parties (including from the ruling coalition) received sizable donations and criticism from GRECO and ODIHR on the lack of transparency in party financing and reporting requirements during election campaigns. Its main objective was to amend the Political Parties Financing Act (Wet financiering politieke partijen - Wfpp) as a first step to more comprehensive legislation, the Political Parties Act (Wet op de Politieke Partijen - Wpp). The proposed legislative changes would significantly improve regulations and transparency around donations to political parties and the functioning and financing of (digital) political campaigns. ^[1]

In the Action Plan Review, the IRM identified possible political sensitivities around these topics and recommended that, where possible, a broad array of stakeholders could be involved to help ensure support for the envisioned new rules. It also highlighted the need for an ambitious proposal by the government to Parliament and the Senate to make the desired impact and effectively address current shortcomings.

Did It Open Government? Major

On 12 April 2022, Parliament approved the bill to amend the Wfpp and set new binding rules that will increase the transparency around the financing of political parties and their ancillary institutions. ^[2] On 18 October 2022, the Senate approved the bill. ^[3] From 1 January 2023, there is a ban on donations from abroad to political parties and donors will be allowed to make donations of a cumulative maximum of €100,000 per year. The amendments lowered the threshold for disclosing donations from €4,500 per donor per year to €1,000, and parties must disclose donations of €10,000 or more per donor per year within three days of receipt. Parties will report this information to the Ministry of Interior and Kingdom Relations, who will then publish the data on its website. In addition, the bill obliges political parties to report on the ultimate beneficial owner in case of donations from legal entities. These obligations are a major improvement in government transparency compared to the situation before the action plan.

At the same time, the bill does not address the topic of digital campaigning, as this will be addressed during the drafting of the Wpp. Moreover, some of the amendments have not closed well-known loopholes. Notably, Parliament rejected an amendment that stipulated that only natural persons will be allowed to make donations to political parties. As a result, foreign individuals could in theory make donations to a foundation in the Netherlands, and the foundation could subsequently make a legal donation to a political party. It also remains unclear if there will be any control on the origins of donations from Dutch citizens abroad that want to support a political party. During the deliberations in the Senate, some parties expressed concern that these restrictions could affect the enforceability of the law and could create excessive amounts of administrative work when all donations need to be registered in accordance with the law.

Looking Ahead:

The Wfpp will eventually merge into the new and more comprehensive Wpp. During this process, stakeholders could include relevant provisions around digital campaigning, as originally envisaged in the commitment. Stakeholders could also address issues the IRM mentioned in earlier reports such as local party subsidies and closing current loopholes (such as donating via a local foundation). For that, political support will be required. Stakeholders could use the next OGP action plan to convene relevant political actors to discuss the current law and its implications for the open government agenda.