Monday, April 4, 2022

Bryce Edwards: Wouldn’t it be great if political parties opened their books

An unusual thing happened on Friday, when the National Party proactively released public information about financial donations it had just received. The party declared that its former deputy leader Paula Bennett had just raised $1.8 million dollars in donations from a handful of wealthy supporters. And she had raised the money in just three weeks. One donation of $250,000 was from New Zealand’s wealthiest man, Graeme Hart.

The unusual part was that the party was releasing the details of the large donations publicly and early, instead of just leaving it to be silently added to the register at a later date on the Electoral Commission website, which would be picked up by the media later down the track.

Normally parties are keen to downplay large donations from the rich. With public suspicions that political parties are beholden to and even corrupted by large donations, there is a reluctance to allow this information to be publicised.

National going on the front foot and publicising their windfall involved a large element of bragging and gamesmanship. National got to reiterate to the public that they are competitive again, after years of waning confidence in the party. Here was a concrete sign that they were being endorsed and would be in a strong state to fight next year’s election.

Of course, the information was going to be made public anyhow. The Electoral Act 1993 states that any donations of $30,000 or over have to be declared to the Electoral Commission within ten working days of their receipt. (And although Bennett had been promised the donations, National hadn’t actually received the donations until recently.)

So National made a virtue of declaring something that they had to make public anyhow. Party President Peter Goodfellow explained that donors were being “open and transparent” and National wanted “to be upfront about this too, which is why we’re proactively releasing this information.” Reporting on this, journalist Thomas Coughlan pondered whether the party was being “mindful of donations scandals that cast a pall over much of the last parliamentary term”.

Political parties should open their books

Nonetheless, the proactive declaration by National raises the question of whether all political parties should be much more transparent and go the whole hog and just open their books for the public to see how they get their money. At the moment, we only get glimpses of how parties are funded, and there are ongoing suspicions that much party fundraising is structured in ways that circumvents disclosure.

After all, we currently have three of the largest political parties – National, Labour and New Zealand First – all involved in court prosecutions over donations they have received. And Te Pāti Māori is currently being investigated by police over $320,000 in undeclared donations. Controversies over allegedly hidden donations have cast a shadow on the integrity of all political parties.

If parties were to open their books to the public this could be done on a voluntary basis, or could even be a requirement of registration with the Electoral Commission, which allows a party to compete for the party vote in elections. Such a move of radical transparency would allow the public to have much more confidence in the integrity of the political process.

Of course, the Minister of Justice is currently undertaking a review of political finance law, with the stated desire to make donations more transparent. But it’s hard to have much confidence in this leading to any significant improvements. When it was announced last year, the reaction from experts was sceptical, with the view that the status quo and vested interests would be protected by the review. And the policy options being explored didn’t seem very impressive. There is certainly nothing on the table as radical as having the parties open their books to the public.

There is a public interest in political parties being much more upfront about their monies. There’s a perception that all is not well in this area, and that large donations are having an untoward impact on politicians. As always, those donating are likely to support policies and parties that retain and enhance their privileged position.

On Friday rightwing political commentator Matthew Hooton made a call for more transparency of donations in his weekly Herald column. He suggested that foreign interests could be influencing our parties, as happens elsewhere in the world. He points out, for example, that the usually anti-free-trade New Zealand First party was unusually pro-Trade when it got into Government in 2017: “It has never been adequately explained why NZ First was so keen on a free-trade agreement with Russia and Belarus — at odds with its usual mercantilist stance — that it demanded Labour write it into the 2017 coalition agreement.”

Hooton calls for much more openness from our parties: “it’s not unreasonable to demand that all parties provide transparency over their campaign donations, policy-writing processes and candidate selections”.

The influence of wealth on policies

The Labour Party has reacted to National’s windfall by using it as leverage in their own donations drive with party members and supporters. Labour’s general secretary Rob Salmond emailed those on the party database to say the latest $1.8 million to National was “worrying”, and urged supporters to donate to help match National.

Labour will inevitably also be carrying out more fundraising events to try to bring in some big money. Last year the party was utilising “cash for access” meetings in which “interactive sessions” with the top ministers and the prime minister were sold for over $2000 a ticket.

More recently the party has continued to sell such access to Cabinet Ministers, but at a lower price, and tailored for the Covid age – Zoom meetings with policymakers, with ticket prices of only $25. But we can expect Labour to up its game in the race for greater business funding to match National.

Meanwhile, Act has also been highly successful in raising significant amounts in donations from the rich. In March it declared that it had raised $850,000 from a number of donors, with some giving as much as $100,000, including Rod Drury of Xero.

Immediately there was speculation about what the large donations were due to. Māori Party co-leader Rawiri Waititi pointed the finger at Act’s policies on co-governance, and suggested the party’s major donors were complicit in a racist agenda. He called for a boycott of Xero.

Many of Act’s donors have also given money to National. For example, Graeme Hart gave $100,000 to Act this year, alongside the $250,000 to National. And other donors to National, such as Craig Heatley and Trevor Farmer, have previously been high profile financial supporters of Act.

Some commentators have suggested that the increased amounts of money going to National are due to leader Christopher Luxon coming out recently with policies such as tax cuts that will aid the wealthy. Others argue that it’s more likely that the donors reflect National’s rise in the opinion polls – as money often follows success, as donors like to back parties that have a good chance of making it into power.

Another reason for the high levels of donations given to the parties of the right has been put forward today by National-aligned political commentator David Farrar. He says that the “most important” factor “is a deep discomfort over the direction of the Ardern Government” felt in the business community. Farrar argues “those large donations are coming in, because the donors are extremely worried about what would happen to New Zealand if there is a third term of the current Government”.

Farrar also points out that the levels being given to parties of the right is unprecedented this far out from an election. Pointing to earlier records of donations in the year before an election, the $3m just given to National and Act is about 10 or 20 times as much as usual.

Whatever the reason for the big donations to political parties, it’s also worth reflecting on another area of funding that might be even more consequential for political party policy – the increased financial value of MPs’ assets. On Friday research came out showing that the houses of Auckland MPs of all parties have risen in value by $14 million over just three years. They are collectively benefitting from what curiously seems to be a cross-party housing policy consensus. So, perhaps the personal enrichment of house-owning politicians is having the biggest impact on how parties operate.

So, although we desperately need more transparency about the political donations which are undoubtedly having an impact on which policies get implemented, we also need to focus on how the individual politicians are also often being personally enriched by those same policies.

Dr Bryce Edwards is a politics lecturer at Victoria University and director of Critical Politics, a project focused on researching New Zealand politics and society.


Ross said...

"The unusual part was that the party was releasing the details of the large donations publicly and early,..."

ACT announced the results of it's latest funding campaign a few weeks ago and it included large donations from wealthy business people.
So National had to show it had not lost support from wealthy donors --Hart donated to both parties. It could not be seen to have been left flat footed.

Therefore I see nothing unusual about this. Similarly it was to be expected the left would go into panic mode over it.

Denis McCarthy said...

Well that takes care of the rich donors at this stage and I believe that there is more to come from them.
It would be interesting to know to what extent non rich mainstream voters are making political donations. I suggest that many of them are also deeply disturbed at the agenda of the current government and therefore (possibly for the first time in their lives) are making donations to a party they want to represent them.
Consider that even making a small donation to a party confirms your positive attitude towards it and the strong likelihood that you will vote for it on Election Day.