Funding from the many, for the few

Last updated 11:34 24/07/2007

The Government's new Electoral Finance Bill is an excellent example of political expediency. Unable to get the law it actually wanted through Parliament, Labour has kicked all the hard stuff into touch and run with something that will maximise the amount of money political parties can continue to receive while silencing those who want to criticise them.

David Farrar's Kiwiblog has an excellent deconstruction of the new legislation this morning.  Farrar is particularly concerned at the changing of the definition of the election period from three months to the entire year in which an election is held and capping third-party campaigning at $60,000 for that year.

Farrar argues, with some justification, that these changes favour the incumbent, since it allows the government of the day to launch huge, costly taxpayer-paid promos for its policies under the guise of informing the public of legislative changes such as Working for Families or KiwiSaver while the Opposition is unable to follow suit.

Both Farrar and others, such as the Kyoto Forestry Association, and the Campaign for Open Government, are pointing out that $60,000 is absolutely nothing when spread over a year - that would basically entitle a lobby group to publish five or six newspaper advertisements in a national newspaper if they were lucky.

What equally concerns me, however, is that Labour has cracked down hard on the third-party donations but left much of what it originally complained about - large donations from shadowy corporates, channelled through secret trusts - untouched.

So having been unable to force through state funding of political parties, which was Labour's ultimate aim, because of a lack of support in Parliament, it has left the funding tap on for large donors to parties directly.

This protects the likes of the $300,000 donation to Labour's campaign by expatriate Sydney businessman Owen Glenn, and the large cash donations given to Labour by the unions. It also allows National to continue funnelling money through secret trusts - ironically, one of the reasons Labour gave for wanting to change the law in the first place.

Despite all the bluster from Justice Minister Mark Burton, who claims the new bill will "restore confidence in a fair and transparent electoral process'', nothing could be further from the truth.

Labour has kept the $10,000 cap on secret donations, meaning parties can accept as many $9,999 gifts as they like without declaring them. Under the bill, those over $10,000 still only need to be declared - with no attribution - as long as the party genuinely does not know where the money came from.

The same will apply to the so-called secret trusts. They will have to declare who they are and the amount of their donation, but most already do. We still won't know who were the corporate or wealthy individuals who paid money into the trust in the first place.

So in a nutshell, the changes mean anyone wanting to participate in the electoral process to any meaningful degree (given that election campaigns are expensive things) has little choice but to give their money to a political party. That's what Labour wants.

It's difficult to see this bill as much more than petty revenge over the Exclusive Brethren's attempts to influence the election result by spending a reported $1 million helping National. In future, the Brethren would be limited to $60,000 unless it donated directly to National's campaign - which National doesn't need, given it can still only spend $2.1 million on its campaign in total.

Meanwhile, all the hard stuff - like the rules around parliamentary expenditure by political parties (that's the pledge card and stuff), funding for election broadcasting, and state funding of elections - is safely tucked up in a review that won't report back until after the next election.  

11 comments
sam dixon   #1   01:29 pm Jul 24 2007

The premise that departmental advertising gives the incumbent government an unfair advantage needs examining:

Isn't such advertising needed so people know the services they have a right to access exist? Yes

Is this advertising really poltically biased? No. (Look at the Kiwisaver ads, they don't exactly trumpet Kiwisaver as the greatest thing since sliced bread and say we should thank Labour for it.)

Is there another mechanism to prevent departmental advertising being used for political purposes? Yes, the Auditor-General for starters.

Given these answers, it doesn't seem departmental advertising unjustly advantages the incumbent. _________________________

Also, the unions do not give huge amounts to Labour, and they openly declare it when they do (unlike a number of rich businessmen who back other parties). Seven unions representing over 100,000 workers gave the Labour Party $144,000 in 2005, less than 4% of Labour's election expenses. Toll, Westpac, and SkyCity gave both the major parties $115,000 in total - check out http://www.elections.org.nz/parties/donations_summary.html#gen1 _________________________

It is a shame though that nothing has been done to crack down on large secret donations - Owen Glenn puts his name to his money, so any direct benefit he receives from a Labour government would be open to criticism as cash-for-policy, but who put that $1.75 million into the National Party's coffers via trusts, and what do they expect to get in return?

Linda Wright   #2   04:48 pm Jul 24 2007

I truly don't care who gives to a political party. I will judge parties on their policies and how well they deliver on them.

What I do object to is parties using my tax dollars to promote themselves and restricting the ability of other people to spend their money as they see fit.

I would rather see NO tax dollars spent on the election campaign, but remove all limits on spending so political parties and third parties can spend as much as they want to - on TV or via any other medium.

The funding for parties would then reflect the amount they could raise. This is a reasonable indication of their popularity or otherwise.

And Sam, the advertising we have seen recently from the government was a lurid red and featured the Labour logo far more strongly than the government department or ministry. You could not honestly say it was not designed to link Labour strongly to the supposed benefits being advertised. This was far more than merely providing information.

Bryce Edwards   #3   04:50 pm Jul 24 2007

Colin's analysis is pretty accurate. The Electoral Reform Bill has definitely ended up as a highly partisan approach, when one might hope for - but not expect - a less self-serving one. There's nothing really in Labour's bill about fairness - so Colin is entirely correct that it will do the opposite of its intention of restoring faith in the electoral process.

And, yes, the use of governmental advertising is a huge problem for fairness. Labour and National governments have again and again misused their publicity resources for partisan advantage. For examples, check out Part 4b of my blog post entitled 'Myth 11: Parliamentary resources are not routinely used for party political purposes': http://liberation.typepad.com/liberation/2007/04/myth_11_parliam.html

Basically this 'expedient' bill illustrates how fraught and difficult party finance reform is. Whenever a government attempts to clamp down and tighten regulations on political activity it almost inevitably leads to more problems and unfairness than it was supposed to fix.

Cheers

Bryce

Jonathan Fraser   #4   05:59 pm Jul 24 2007

The comments made by Linda Wright are very seductive, and highlight exactly why we should have state election funding.

It has to be acknowledged that some policies will benefit specific lobby groups. Therefore, therein lies opportunity for interests to use the money they donated to Party A, to push Party A to enact reforms that are sympathetic to their interests.

Obviously, in small amounts, relative to other fundraising and total allowable spending, this is not so much of a problem. But with porous donation declaration clauses, and no limits on third party advertising, the electorate would be swamped by a campaign funded by those people who want reforms to benefit them. Elections are supposed to be fair.

Only state funding achieves this. The bill referred to above is pathetic, and should ban all funding except what was given by the state as election advertising, so that state funding becomes a fact, and then parties must agree to raise thresholds in order to better portray their platforms.

Sally R   #5   06:12 pm Jul 24 2007

There are some errors in your post. The Cabinet Manual and Cabinet Office Circulars make clear that government departments curb their policy advertising in the run-up to an election, meaning that the incumbency advantage to which you refer does not accrue during election campaigns. Also, you suggest the government doesn’t intend to deal with the issue of Parliamentary Service funding and spending until after the next election. That is incorrect – their public statements yesterday show that they will deal with that issue later this year, before the interim arrangements expire.

More broadly, it would be good if responses to the Government’s proposals in this area will take the form of constructive counter-proposals rather than simply criticism. I'm sure the Bill will be debated and amended and (hopefully) improved at the Select Committee stage, but this can only happen when there are suggested improvements to consider.

Bryce Edwards   #6   10:07 am Jul 25 2007

Linda Wright makes some excellent points. To put it other way, ultimately the best way to deal with parties adopting unattractive political policies due to donations is simply not to vote for them. If, for example, Labour is encouraged by big business donations to outlaw the right to strike (sounds fanciful? well actually, Labour's ERA has outlawed many of the previously legal abilities to strike), then you don't vote Labour - regardless of why they adopted that policy. The Act party can get as much business funding as it wants to push its discredited New Right policies, but it doesn't seem to be helping it much, does it?

And what's so wrong with having parties being influenced by business, unions, or other groups? I think this is a positive thing. It'd be great if we had a left-wing party bankrolled by workers that was clearly left-wing and a right-wing party bankrolled by business. That would give a proper electoral choice that we don't have at the moment.

Jonathan Fraser wants us to have a sterile party system with professional politicians that are entirely independent of societal forces and don't need party members or any real connection with society apart from getting their votes every 3 years. In this scenario (which is actually almost a reality) we have parties that are really just part of the state. Is this really that attractive?

Bryce www.liberation.org.nz

Colin Espiner   #7   12:23 pm Jul 25 2007

Sally, thanks for your remarks. I accept your point that the Government has said it will consider the parliamentary funding aspects of advertising before the next election. With regards to the Cabinet Office circulars advising departments about curbs on advertising in the run-up to an election, all I can say is they must be widely ignored because both this government and the last one have indulged in massive spend-ups during election year - the most recent being $20 million spent advertising Working for Families in 2005.

Cheers

Colin

anon   #8   02:47 pm Jul 25 2007

In the 2005 General Election, only 47 of the top 120 spending electorate candidates won their seat.

burt   #9   04:56 pm Jul 25 2007

Colin

So we need to control election campaign spending in the interests of democracy. How can this be? The evil vast right wing conspiracy complained bitterly about Labour’s extra $800,000 of election spending in 2005 yet Labour said that such spending didn’t have any effect on the outcome of the election.

Labour can’t have it both ways – either the 2005 election was undemocratic because of uncontrolled spending or there is no need to restrict funding for future elections.

Oh well, I guess it's in the best interest of the Labour Party so we should just move on.

Jude   #10   04:33 pm Jul 26 2007

Why let any of them advertise to get votes? Let's have a "no advertising" election campaign. We can listen to speeches, interviews and action in Parliament and make decisions from there - that is if you haven't made your decision already!


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