Despite rhetoric and out-dated tales to the contrary, the Labour Party obtains only very limited funding from the few trade unions still affiliated to it. Therefore when the then general secretary of the Labour Party, Rob Allen, was asked in 1999, about the degree of dependence the party has on union funding, he replied that the party was ‘Virtually not dependent at all. The income from unions is a very tiny, tiny proportion of funds – almost insignificant’ (Allen, 1999). The bigger picture is that there has been a reduction in the traditional class pattern of donor-party relations: the Labour Party is no longer reliant on trade unions and party members for its financial resources, just as the National Party no longer has a near-monopoly on business funding. Obviously there has been an increasing homogeneity of party finance that few commentators acknowledge. [Read more below]
Early Labour Party reliance on union money
The Labour Party started life in 1916 as the political wing of the union movement, with an affiliate membership. After the party came to government and introduced compulsory unionism in the 1930s, Labour had 185,000 union members – a membership level that they managed to retain until the 1990s (Gustafson, 1992b: p.274).
At a time when the Labour Party derived little in the way of donations from business interests, the union’s financing was the lifeblood of the party. In the 1940s, for example, union contributions were ‘the largest, the most regular, and the most dependable item in the party revenues’ (Lipson, 1948: p.248). During the late 1950s the union affiliate fees raised an average of ₤13,500 a year for the party (Mitchell, 1962b: p.78). Even as late as 1972, R M S Hamilton reported that the party was ‘dependent for resources on the affiliated trade unions, which provide most of its annual budget’ (Hamilton, 1972: p.205). As a result of their financial contributions ‘as well as through their numerical majority’ Lipson observed, ‘the unions inevitably preponderate in all decisions on Labor strategy and policies’ (ibid). This influence did not last, however, and by the 1980s the party derived only a tiny proportion of its election campaign fund from the unions. By the 1990s donations from wealthy individuals and businesses heavily outweighed any union contributions.
The peak of union affiliation occurred about 1979, when there were ‘fourteen national trade unions and sixty-nine provincial (district) trade unions’ affiliated with the Labour Party, providing the party with 200,000 affiliated members (Levine, 1979: p.72). In 1982 45 unions were affiliated to the party (Vowles, 2002b: p.419).
Decline of the the union link
By the early-1990s the numbers of affiliated unions and unionists had declined substantially, and in 1994 only 51,000 unionists and seven unions remained affiliated (Munro, 1994b: p.2). Since then the number of affiliated unions has dropped to only four and no current figures are available on the affiliated numbers of workers, although they have almost certainly declined even further. The only affiliated unions of any real strength are the Engineers and the Service Workers Unions. Furthermore there is no central trade union body that is affiliated to the Labour Party. The Council of Trade Unions, which represents 83% of union members and 36% of wage and salary earners, has no party affiliations (Vowles, 1992a: p.346).
The affiliation fees from the trade union movement have become increasingly insignificant compared to the money donated from business or the millions of dollars of backdoor parliamentary state funding. In the mid-1980s the Labour Party received about $190,000 a year from its affiliated union membership, but by 2000 its funding was only a fraction of this amount. As early as 1990 the trade union contribution had dropped to $141,172, then to $125,712 in 1991, and then down significantly to $51,025 in 1993 (Edwards, 1994). Even the Engineers Union – the largest union affiliated to Labour – now only contributes $20,000 per year, except in election years when it contributes about $80,000.
Despite the rhetoric about the close connection between workers’ organisations and the Labour Party, the simple reality is that Labour’s structured ties with working people have been largely severed. Although there are still some formal and official links between the Labour Party and the union movement these are essentially elite links rather than anything more organic. Even the informal links of personnel that also exist are often exaggerated in the media and by Labour’s opponents. Organisationally, the link between the two no longer exists in any substantive form.
The only modern financial support of any importance that unions give is when they operate ‘third party’ election campaigns in favour of Labour. For instance, in 1999 the Engineers’ Union spent $300,000 on a campaign ‘to change the government’. A future blog post will look at so-called ‘third party’ campaigning in more detail.
Allen, Rob (1999) Interview by author. Tape recording. Wellington, 24 May 1999.
Edwards, Brent (1994) ‘Labour Party Records Financial Surplus After Difficult Year’, Evening Post, 26 November 1994.
Gustafson, Barry (1992b) ‘The Labour Party’, in New Zealand Politics in Perspectives, third edition, Gold (ed), 263-288, Auckland: Longman Paul.
Hamilton, RMS (1972) ‘New Zealand’, in Pacific Politics, IF Nicolson and Colin A Hughes (eds), Carlton: Pitman Pacific Books.
Levine, Stephen (1979) The New Zealand Political System: Politics in a Small Society, Sydney: George Allen & Unwin.
Lipson, Leslie (1948) The Politics of Equality: New Zealand’s Adventures in Democracy, Chicago: University of Chicago Press.
Mitchell, Austin (1962b) ‘Party Organization and the Election’, in New Zealand Politics in Action: The 1960 General Election, Chapman, Jackson and Mitchell (eds), 77-89, Wellington: Oxford University Press.
Munro, Mike (1994b) ‘A Warning Amid the Wallowing in Warm Fuzzy Unity’, Dominion, 2, 28 November 1994.
Vowles, Jack (1992a) ‘Business, Unions and the State: Organising Economic Interests in New Zealand’, in New Zealand Politics in Perspective, Hyam Gold (ed), Auckland: Longman Paul.
Vowles, Jack (2002b) ‘Parties and Society in New Zealand’, in Political Parties in Advanced Industrial Democracies, ed. Webb et al., Oxford: Oxford University Press.