By Lisa Marriott & Max Rashbrooke*
Less than three months out from New Zealand’s 2023 election, large political donations have been making headlines. Donations to both the ACT Party and the National Party have significantly outpaced large-scale contributions to other political groups.
Last year, National got $5,116,000 in political donations, an all-time record, and ACT $2,081,000, for a total of $7,197,000. Labour ($419,000) and the Greens ($413,000) raised a combined $832,000. The right raised $8.50 for every $1 the left raised. https://t.co/LIdPbwOZ6G
— Max Rashbrooke (@MaxRashbrooke) May 8, 2023
Should this be a cause for concern? Studies from overseas indicate those who raise the most money tend to win. And, based on our recent “Doughnation” research, donors know that too. Wealthy New Zealanders admitted to gaining access to the levers of power through political donations.
So do our current campaign finance rules do enough to protect a basic principle of democracy – that we should all be equal in the ballot box?
Not according to an interim report from the Independent Electoral Review, which warns New Zealand’s current electoral laws are still “not as fair as they could be”.
Its final report will be delivered to the government in November – too late to have an impact on the 2023 election.
But if we want future elections to be fairer, here’s what the report found needs to change.
How can we make future elections fairer?
The Independent Electoral Review’s interim recommendations include
-
replacing the current broadcasting allocation with a “fairer and more effective form of state funding” for registered parties
-
per-vote and base funding for registered political parties
-
tax credits for donations up to NZ$1,000
-
introducing an expanded Election Access Fund and a new fund to facilitate engagement with Māori communities.
Those changes are additional to several changes to political party finance implemented at the beginning of 2023, ahead of this year’s election.
What changed ahead of this election?
Changes included lowering the reporting threshold for large donations from $30,000 to $20,000 and new requirements around reporting donations above $1,500.
In the first six months of 2023, the main political parties have already received more than $4 million in donations over $20,000.
The National Party benefited the most from political donations, receiving $1,255,587 in large political donations, closely followed by ACT, which received $1,255,000. New Zealand First received $567,304, the Green Party received $496,260 and the Labour Party received $428,844.
These figures reflect the large donations that have to be disclosed within 10 days of receipt. We won’t know the sum total of small donations until well after the election.
How much do large donations sway elections?
Research suggests donations can help political parties win more votes, but that typically this only applies to the more established parties. And, while money matters in New Zealand, it’s not necessarily a straightforward relationship.
Recent data from the United States showed better-than-average fundraising is a strong predictor of better-than-average electoral success, concluding that “money still matters”.
Australia’s Grattan Institute found that over the past five federal elections there, the party with the biggest war chest tended to form government. And an analysis of general elections in France and the United Kingdom between 1993 and 2017 showed increased spending per voter improved candidates’ share of votes.
New Zealand’s 2017 election also illustrated a strong relationship between money and votes. National received 44.45% of the votes after a $4,579,086 fundraising haul. Labour received 36.9% of the votes and received $1,611,073 in political donations.
But the 2020 election result suggests there are limitations to the relationship between funding and votes, particularly for the two main parties. In 2020, other factors clearly contributed to the electoral outcome. For example, Labour’s handling of the COVID-19 pandemic appears to have outweighed National’s fundraising advantage.
Some voters’ voices are louder than others
Even if political donations don’t always decide elections, it is fairly well established that money buys access. Work from the Grattan Institute shows that highly regulated industries – such as mining, transport, energy and property construction – provided the highest level of donations to Australian political parties, made the greatest number of commercial lobbying contacts, and had the most meetings with senior ministers.
Access is not the same as influence, of course. It is typically difficult to make a causal connection between donations and influence, except when political scandals occur.
However, research out of the US by Martin Gilens showed that politicians’ decisions do not represent the preferences of poorer or middle-class citizens. Rather, these decisions fall in line with the interests of the wealthiest – a situation that Gilens attributed at least in part to the influence of wealthy donors.
In New Zealand, the Independent Electoral Review’s interim report acknowledged the
risks to public confidence in the electoral system if some people have more access to, or can unduly influence, parties and candidates through political financing.
In a recent opinion piece, former ACT board member Robin Grieve defended political donors as not always being motivated by self-interest, giving an example of a donor wanting to help children in the care of Oranga Tamariki.
While there may have been altruistic intent, the issue is still that the donation was made by a wealthy person to a political party with the stated objective of influencing legislation.
Is that fair? In our research exploring the motivations of wealthy donors, some agreed that it was unfair that they could donate while others could not, with one noting a
real problem with people who accumulate a lot of money supporting the systems that have allowed them to accumulate a lot of money.
Another commented that they did not think
that it is right that rich people can distort democracy.
Not everyone was concerned about this situation, with one donor telling us
the fact that some can promote their position more than others doesn’t worry me.
Govt to close donations 'loophole' used by NZ First Foundation https://t.co/AVh2WejgA7 pic.twitter.com/XPu9YhbJzo
— nzherald (@nzherald) August 1, 2022
If acted on, the Independent Electoral Review’s recommendations for tighter donations controls and fairer funding for registered parties would help create significantly more transparency in New Zealand’s political donations system.
We believe a move away from a reliance on large individual donors would help increase public trust in the way political parties are funded. It also is likely to help level the playing field of access and potential influence in New Zealand politics.
*Lisa Marriott, Professor of Taxation, Te Herenga Waka — Victoria University of Wellington and Max Rashbrooke, Research Associate, Institute for Governance and Policy Studies, Te Herenga Waka — Victoria University of Wellington. This article is republished from The Conversation under a Creative Commons license. Read the original article.
16 Comments
The article is in my opinion informative, balanced and well reasoned. This is a very important issue. Why are there no comments?
'per-vote and base funding for registered political parties' could help give better political representation by smaller parties that have important messages and ideas for change to present to the general public.
My take on the main political parties is that they are not providing leadership and actions to protect NZ citizens, land and flora and fauna from the extremely damaging long term consequences of climate change.
Quite a few times I have commented here that we need to have taxpayer funding of political parties, and strict auditing of current and past ministers financial affairs. I get maybe 2 upvotes.
The price our country has paid in blood for our democracy is high, but the price of a NZ politician in your pocket is shockingly low.
Here's a true story: The major donor of a party in government assaulted the party leader in their beehive office. Now tell me donors don't demand a return on their investment.
Simple. If I want to join a political party and donate, I'll do that.
There are parties in parliament and out of parliament who I find highly objectionable and I would consider it to be a breach of my human rights and an act of compulsion to fund them to campaign.
I am ok to fund what will be a very small amount of money per person for every candidate to have their say no matter how much I detest them.
Compare that to the sacrifice made by my grandparents generation who marched off to war to protect democracy.
I am not ok with the current arrangement where the big end of town effectively runs the country for their own benefit. Think immigration without a population policy, asset sales despite a referendum voting against this, lowering or abolishing taxes that only really affect the wealthy.
The Independent Electoral Review's recommendation for 'fairer' funding of political parties recommends:
*replacing the current broadcasting allocation with a “fairer and more effective form of state funding” for registered parties
*per-vote and base funding for registered political parties
*tax credits for donations up to NZ$1,000
*introducing an expanded Election Access Fund and a new fund to facilitate engagement with Māori communities.
All but the last of these recommendations seem to suggest showering taxpayer money on political parties in proportion to how they have fared in past elections. This doesn't make elections 'fairer'. What it does is to use state money to preserve mediocrity: the status quo of Overton Window centrism. That doesn't offer good government; it simply uses state money to improve the chances of existing centrist MPs keeping their seats.
The last recommendation, 'a new fund to facilitate engagement with Māori communities', is, of course, simply racist.
When I arrived in NZ 20 years ago I was astonished to discover two MPs who were clearly agents for a foreign country and nobody was disturbed by it. They were never interviewed, never released statements and both of them were successful at raising donations for their political parties. Eventually when it became too obvious they were quietly dumped. Clearly NZ has a serious problem with funding political parties.
Political debate is needed in a democracy. It is essential for a free society. And it costs money. There has to be a way of financing political parties that is fair.
I can only speak for myself. I belong to a minnow party which struggles to get its message out to the public. But I would object if the taxpayer came to the party with public funding.
I do get miffed when I see the level of donations to the major parties, either from wealthy interests or from unions, but there are many ways to offset the ability of the major parties to swing elections. Firstly by changing to STV rather than MMP with it's own set of prejudices. (But I am not holding my breath on Nat/Lab supporting a change to the electoral system which might work against their party machines)
Secondly, much tougher donation law with more visibility for anything more than a token few dollars and certainly follow up policing to examine influence pedalling.
Thirdly every election hopeful should get reasonable access to publicly funded media. All to often our media simply fail to even mention minor parties in any comment of election issues.
But at the end of the day an election is a contest of ideas, with passion being a major motivator. "Fairness" is a slippery concept which can be taken too far.
Politicians are there to represent the interests of the Voters and only the voters. Any external influence beyond the voters pretty much adds up to corruption of their duties and responsibilities. Accordingly I believe that political party funding should only be allowed from the voters and the fairest and most transparent way to do this is directly from government funding via some sort of allocation model. The well funded and ever active vested interests will find a way around anything less than this.
The same sort of thinking needs to be applied to lobbying or any communication between politicians and voters
you only need to look at policies brought in that clearly show donor influence
i.e policies to enrich those buying and selling houses, look at the money spent by some of the REA that in my mind caused national to fight tooth and nail to stop banning overseas investment in existing housing
letting larger trucks onto our roads which in turn is causing us a whole of money in road repairs
and on the other side changing to industry bargaining,
it is not just the money spent before elections but the plum jobs many ministers get after retirement that makes one go Hmm
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.