Experts debate “side effects” of Hungary’s new election system

June 4, 2015

Various Hungarian experts attending Wednesday’s “Campaign finance, campaign expenses, and sham parties—lessons and possible solutions” roundtable discussion agreed that the new electoral system introduced in 2013 caused the state to squander billions of forints unnecessarily.  The roundtable was organized by anti-corruption NGOs Transparency International and K-Monitor, investigative journalism website átlátszó.hu and Political Capital.

In rewriting the election system in 2013 the state squandered HUF 4 billion (USD 15 million) on the funding of sham political parties, that is, parties established or fielding candidates merely or primarily for the sake of qualifying for public campaign funds.  Of this, a sizable amount should have already been repaid by numerous candidate and parties failing to account for the public campaign funds they received.   In the general election alone, out of HUF 1.87 billion (USD 7 million) worth of public campaign funds and penalties owed the government, the tax authority has only managed to collect HUF 22 million (USD 8,000) according to Ilona Pálffy, head of the National Election Office (pictured, far left).  She thinks it unlikely that certain parties and candidates will ever return the public campaign funds and pay the penalties they owe.

Transparency International, which proclaimed the 2014 general election lawful but not fair, has been critical of the new election law since its adoption in 2013.  Campaign finance is but one aspect of the law with which the anti-corruption NGO finds fault.

Sham political parties

The new election law significantly lowered the threshold for participating in elections.  In the hope of receiving large amounts of public campaign funds, a number of parties fielded sufficient candidates to be able to run country lists, often without having any popular support.  Many of these organizations did not campaign at all, and either failed to account for the funds received or accounted for them using fictive invoices. In the case of the former, an amount equal to twice the unaccounted for funds was to be repaid but this has not happened.

Transparency International also noted the disparity between support for individual candidates and parties.

  • Whereas individual candidates received HUF 1 million (USD 3,700) apiece in public campaign funds and were only allowed to draw on the funds upon presenting an invoice, parties running country lists received support in the form of cash.
  • Whereas individual candidates failing to obtain at least 2 percent of the popular vote in the electoral district had to repay the HUF 1 million, parties were not required to repay anything providing they accounted for the use of the funds, even if they failed to receive a single vote.

Most of the outstanding HUF 1.87 billion is owed by parties failing to account for the funds who, by law, are required to repay twice the amount.  The balance consists of the amount owed by individual candidates failing to obtain 2 percent of the vote and/or failing to return signature pages issued to them by the national campaign office, thereby incurring a fine of HUF 50,000 (USD 185) per missing page.

Transparency International recommended that the election law be modified in such a way that there also be a success threshold in the case of campaign funds received by parties, and that those failing to obtain at least one percent of the vote countrywide be required to return all public campaign funds received.  At the same time, in the case of individual candidates it would lower the success threshold from the current 2 percent to 1 percent.

Unlevel playing field

These concerns were raised by Transparency International before the election.  However, upon seeing the concrete results of the faulty campaign finance system, other organizations would now like the system of campaign finance to be reconsidered.

Political analyst Ágoston Mráz, whose employer, Nézőpont Intézet (Point of view institute), is close to the government, expressed his satisfaction with the new election system, although he too would modify the rules with regard to accounting for expenditures.  He considered problems surrounding the fake political parties an “unpleasant side effect” of the system, but he considers the current campaign finance system to be far superior to the previous one.  He cited the fact that in 2010 neither Jobbik nor LMP received any campaign support as proof that the former rules did not promote equal opportunity.  (They did receive money but only retroactively based on the election results once both parties had cleared the 5 percent hurdle necessary to enter parliament-ed.)

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Mráz acknowledged that the amount of public money spent on the campaign could have been reduced by shortening the campaign period from 70 to 50 days.  He believes that instead of providing public campaign funds up front, they should be provided retroactively.  “In this way the state would not have to run after the parties to collect what is due, but rather the parties would have to run after the state.”

Fraud

Pálffy said that in her opinion there was a connection between the generous campaign finance law and election fraud.   She said that violations regarding the collection of signatures indicate that, of the various kinds of cheating that took place, falsifying the signatures necessary for a candidate’s name to be put on the ballot was the most common form of fraud.  She said that parties enjoying no social support whatsoever collected signatures and fielded candidates merely for the purpose of receiving generous public campaign funds in 2014 ranging from HUF 149 million to HUF 597 million (USD 550,000 to USD 2.2 million).

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Pálffy also said that the tax authority had better success at collecting finds in October’s municipal election where the penalty for not returning an original signature form was HUF 10,000 (USD 37) instead of HUF 50,000 (USD 185) per page.  She questions whether individual candidates should be required to repay the HUF 1 million support they receive.  Pálffy knows of one example where the candidate must pay penalties exceeding HUF 20 million (USD 74,000) even though his monthly income does not reach minimum wage.  At the same time, she thinks it is necessary to be much stricter with those parties that currently owe the government money.  She said that 20 organizations fielding candidates in last year’s general election have arrears of this kind ranging from HUF 10.15 million (USD 36,000) to HUF 650 million (USD 2.4 million). “I would not allow these parties to contest elections, and if they do then in no way should they receive money,“ added the head of the national election office.

Republican institute strategic director Csaba Tóth (below left) said there was little point to proclaiming the principle of equality of opportunity when in reality the governing party enjoys an enormous advantange when it comes to resources.  He mentioned the proliferation of government advertising as well as that of state-owned companies advertising their successes in last year’s general election.  He said such things are difficult to measure, but nevertheless were important to consider from the point of view of equal opportunity.

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László Róbert of Political Capital (right) argued that “the support of fake parties was not a side effect but rather the political objective” of the new election system.   The election expert said the government intentionally created this election system for 2014 in order to atomize the political opposition and create a plethora of opposition parties for disaffected opposition party supporters to vote for.  László supports the idea of a 1 percent threshold, saying “it is not possible to give public campaign funds away for free”.  He cites the fact that the fake parties hardly placed any political advertisements and many did not even have a normal website.  He emphasized that it was not possible to determine objectively whether somebody had campaigned or not for lack of appropriate criteria.  “At least the one percent rule ensures there is some social support behind the party in question,” said the elections expert.