The Labour Party was the biggest spender in last year’s general election. In fact, controversially, Labour went 20% over the spending limit by using taxpayers’ money to print and distribute campaign propaganda. While most people think of National as being the party with all the wealth, for most recent elections Labour has had more money and has been the recipient of significant funding from business and the state. In the three-month campaign period leading up to last year’s election, Labour spent, according to the Electoral Commission, $3.9m on advertising, compared to National’s $3.0m. Labour is the most well-resourced party in New Zealand, and it has been for some time now.
The Labour Party was the biggest spender in last year’s general election. In fact, controversially, Labour went 20% over the spending limit by using taxpayers’ money to print and distribute campaign propaganda.
While most people think of National as being the party with all the wealth, for most recent elections Labour has had more money and has been the recipient of significant funding from business and the state. In the three-month campaign period leading up to last year’s election, Labour spent, according to the Electoral Commission, $3.9m on advertising, compared to National’s $3.0m.
Labour is the most well-resourced party in New Zealand, and it has been for some time now. For instance, it also outspent National in the previous 2002 election.
Details of the donations to Labour in 2005 are only sketchy, but there were a number of large contributions from businesspeople. For example, wealthy expat Owen Glenn gave Labour $300,000 (building on a $200,000 donation in 2004). He said he liked the way Helen Clark governed the country, felt she stacked up well on the international scene and "I particularly like her stance on seeking free-trade agreements with China and the United States." Labour also received money from banks, a large number of so-called "anonymous" sources and from some unions.
In New Zealand there has been a definite breakdown in the classic donation patterns, and the class-bias in favour of the National Party has become much less pronounced, if not reversed. In recent years, Labour seems to have become the main recipient of business donations. Since 1996 when the Electoral Commission started keeping records, Labour has disclosed greater donations than National in six out of ten years. More significantly, the broader trend is for businesses to donate to several parties across the party system rather than just to the parties of the right.
Business interests recognise the old models of politics have broken down. In this situation they opportunistically vary their contributions according to electoral circumstances, giving more to National and Act when these parties have a high probability of winning power, and to Labour and the “left” parties when National’s chances are low. Business donations also vary with the ability of the major parties to come up with policies to benefit them. For instance, by the late 1990s National had simply run out of steam and lacked any ideas for reinvigorating the economy after the restructuring of the previous ten years or so. In that situation, business swung more behind Labour and have been gifted bumper profits since 1999 and a massive growth in the wealth of the several hundred people on the National Business Review Rich List.
The affiliation fees Labour receives from the trade union movement have become increasingly insignificant compared to the money donated from business. In the mid-1980s the Labour Party received about $190,000 a year from its affiliated union membership, and this was essential for its day-to-day functioning, but by 2000 the party’s funding from unions was only a fraction of this amount. As early as 1993 the trade union contribution had dropped to $51,025. Even the Engineers Union – the largest union affiliated to Labour – now only contributes $40,000 in an election year. When the 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”. In 2005, Labour had $160,000 in union donations disclosed, a very small percentage of its total income.
An added element to the election expenditure issue in 2005 was the fact that the Electoral Commission has referred nearly all the parties in Parliament to the police to investigate alleged breaches of the Electoral Act – mostly for failing to disclose much of their campaign spending that came from their parliamentary funding. Labour, National, Greens, New Zealand First and Act were all referred to the police for alleged breaches of the Electoral law. They were accused of using taxpayer funds meant for parliamentary activity in the election, and the failure to declare the spending in their disclosures to the Electoral Commission.
It has become common knowledge that billboards for most parliamentary parties were paid for with parliamentary taxpayer funds. But this is merely the tip of the iceberg. Supposedly in order to carry out their parliamentary functions, the parties and their MPs are provided with funding and services that cost in excess of $40 million per year. For most parties, state resources are now their principal source of material support. Most other financial resources are relatively insignificant.
In all, the extra-parliamentary Labour Party organisation appears to operate on a budget of about $2.5 million per year. Compared to this, the Parliamentary Service provides the parliamentary wing of Labour with $5 million in Party and Member Support alone. The Labour parliamentarians also receive about $12 million worth of Services to MPs, and Labour ministers currently receive nearly all of Ministerial Services’ staffing budget of over $15 million. These lucrative resources greatly overshadow the party organisation’s finances. In addition to this, Labour in government has used vast amounts of taxpayers’ money on PR – for example in 2005 Labour used $15 million on advertising its Working for Families budget package.
Compared to these many millions, the $160,000 that unions gave Labour last year is a pittance to the politicians. It buys the union leaders very little influence in the party. Many union members feel even a dollar donated to the Labour Party is a dollar too much and that the money donated by unions would be better spent on campaigning for workers’ rights.
While the figures supplied by the Electoral Commission about expenditure and donations tell some interesting stories, the expenditure figures and the donation disclosure laws are filled with loopholes which cover up a lot of donations, especially from business figures. Sometimes political parties attempt to evade the regulations by getting their donors to break their large contributions into smaller donations and attaching different names to the amounts.
There are many other parts of the regulation regime that are less than robust. The limitations on election spending, for example, are more relaxed and open to manipulation than might be expected. Although the parties need to disclose their election spending, this actually only applies to general advertising expenditure. Party spending on many other types of election campaigning are excluded from both the disclosure requirements and the limits on expenditure.
That these loopholes are very effective is suggested by the large discrepancy between what parties declare in their returns of donations, and what they spend in the three months before polling day. For instance, in the 2005 general election Labour spent $3.9m (including broadcast advertising) but for that year declared to the Electoral Commission donations amounting to only $930,000. Likewise, Act spent $966,000 but only declared donated income of $32,000 in the same year. It appears likely that parties are accepting many large donations in such a way that does not require disclosure.
Overall, however, we can see important trends. Parties are less attached than ever to any kind of mass membership and to any real, mass constituency. Business donations are more important than funds generated from the almost non-existent rank-and-file of most of the parliamentary parties. And state funding is even more important for most of them than business donations. Indeed, despite all the talk about “rolling back the state”, the state provides a cash lifeline which keeps all these bankrupt parties in business.
