The latest Listener magazine business column by David W Young deals with the issue of the ‘influence of big business on politics’ and the question of to what extent business donations influence parties and governments - see Money doesn't talk. Young argues (along very similar lines to previous posts on this blog) that business influence on politics occurs through a number of mechanisms, but that political finance is not a significant cause of this influence. Young is also kind enough to refer to me in his column! [Read more below]
In a similar way to which I’ve argued elsewhere, Young also says that business strongly influences politics in New Zealand, but that this doesn’t occur in the simplistic and conspiratorial way that liberal political finance reformers suggest:
Businesses do have sway, but it doesn’t come through their wallets. They participate in business confidence surveys to which pundits and the government are sensitively attuned. Business leaders serve on public boards. Chief executives are regularly consulted by the main political parties.
He also says that globalisation means that the ease of capital flight is a huge constraint on what parties and governments can propose: ‘Simply put, big businesses don’t need to spend time in smoky back rooms plotting to overthrow hostile governments – they can move offshore more easily than ever before’.
As I’ve suggested elsewhere, the trend is actually for business to donate less and less to politics. Young says that ‘Few listed companies make political donations these days. Telecom gave it up in 2006’. Likewise, he refers to the situation in Australia: ‘the Institute of Public Affairs has pointed out that Australia businesses are putting less money into politics than they used to, because the reforms of the 1980s and 1990s effectively gave companies the playing field they wanted’.
Therefore Young describes the fear of political finance reformers that ‘there is a real risk that corporate New Zealand could use its deep pockets to hijack the political process’ as ‘curious’ and ‘odd’. Young also points out that business donations are both inefficient as a mechanism to seek political influence, as well as being too problematic:
For most companies, it makes little sense to get out the chequebooks for politicians. In New Zealand, chief executives don’t have to pay money or lay on gifts to get face-to-face time with a political leader. It is a very inefficient way to get the policies you want, compared with employing lobbyists or public relations professionals, or calling the politicians yourself. It’s an easy way to upset shareholders and staff: no matter how the cash is divvied up between the parties, someone is going to be unhappy.
Furthermore, the business donations are overshadowed by the already existing state funding of parties:
Last election, there were $3.2 million of declared donations over $10,000. As political scientist Bryce Edwards points out, this is a fraction of the money the parties get from the taxpayer through parliamentary funding.
Young also throws in a few more arguments that I’ve made before about political finance – about the poor showing of the capital-rich Act party, and about the studies that Freakonomics author Steven Levitt has made that show the relative impotency of political finance.