It is not commonly realised that the most important source of resources for political parties is now the state. The vast bulk of the resources provided to political parties come via the backdoor of parliamentary funding. MPs receive resources intended to permit them to carry out their legislative duties and serve their constituents – activities such as research, paying for office expenses, consultation with the public and so forth – but much of this is used for partisan political purposes, electioneering, and organising their parties. This blog post details the considerable resources that the parliamentary parties receive from the state (not including direct state funding in the form of Electoral Commission money, which will be discussed in . Additional posts will show that these resources are not simply used for parliamentary functions, but are in fact strongly utilized for party political activity. [Read much more below]
The Cost of NZ's MPs
It has been calculated that each ordinary MP costs the state about $750,000 a year while ministers cost about $2 million each (Bain, 1998a: p.9). Much of this constitutes a considerable source of indirect public funding of the parties. This is a major shift from the past, when the bulk of party resources came from their membership base or from organisations aligned with the party, such as trade unions and businesses. Other blog posts show that less party funding now comes from these sources, as the parties have only minuscule memberships and their traditionally-aligned organisations contribute relatively little. As a result, New Zealand political parties have shifted from a reliance on membership, business and union contributions to a more autonomous existence in which parties behave more as ‘virtual government departments’.
'Indirect' funding
Most of the taxpayer-funded resources provided to parties in New Zealand come under the category of indirect state funding because these resources are not given directly to the party organisations but instead to the parliamentary wing of the parties under the guise of helping the MPs carry out their parliamentary or ministerial activities. Officially, such financial support is not known as state funding for parties, but as ‘parliamentary funding’. 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.
Parliamentary funding is distributed to the parties by the Parliamentary Service and Ministerial Services. The Parliamentary Service is the more significant of these two bodies, administering Parliament, its MPs and their offices. In 2000/01 the Parliamentary Service had a budget of $85.6 million (Small, 2001a). Ministerial Services is a separate body that provides resources to MPs in the Executive. In 2001, Ministerial Services provided the governing parties with $15.5 million to employ ministerial staff (Alliance, 2000). It also funds the Prime Minister’s Department, which in 1995 cost $5.7 million (Boyd, 1995b). Both organisations come under the organisational umbrella of the Parliamentary Services Commission, which is controlled by the parties. The Commission is made up of the Speaker of the House, the leader and shadow leader of the House, and a representative from each party in Parliament (or two representatives in the case of parties with over 30 MPs).
Parliamentary resources are distributed through the following four main categories. These categories all differ in the degree that they are converted into political resources for the parties, which is explored in the following section.
(1) Party and Member Support:
The Parliamentary Service provides each party in Parliament with an annual funding for ‘Party and Member Support’. In the 2001/02 parliamentary year, each party was given the following amount: Labour: $4.9 million; National: $4.8 million; Act: $1 million; Green Party: $0.8 million; Alliance: $0.8 million; New Zealand First: $0.6 million; and United New Zealand: $0.1 million (Parliamentary Service, 2002). [The allocation of this category of funding is partly based on the number of MPs outside of the Executive (i.e. not ministers). Labour and the Alliance received proportionally less money in this category because these parties had MPs receiving their resources from Ministerial Services. Together, the category of Party and Member Support adds up to $111,176 for each list MP who is not a member of the Executive, and $132,176 for each constituency MP who is not a member of the Executive.] In total, Party and Member Support amounted to $13 million. This funding is made up of the following three categories:
(1a) Leaders’ Funding: Each party leader is allocated $57,176 per year for each MP who is not a member of the Executive. This funding pays for the costs of the party leaders’ office staff in Parliament. The total paid to the parties in 2001/02 was $5.4 million.
(1b) Party Group Funding: Every party is allocated $20,000 per MP, to cover the costs of research on portfolio issues, as well as parliamentary party management (the whips’ office staff and operating costs). In 2001/02, a total of $2.4 million was paid to the parties.
(1c) Members’ Support Funding: The parties are allocated $34,200 per list MP and $55,000 per constituency MP. This is to cover the cost of operating out-of-Parliament electorate offices, printing, postage from Parliament, advertising, and technology purchases. In 2001/02, the parties were paid a total of $2.2 million for this category.
Table 8.2: Party & Members Support (2001-2002)
Labour Party $4,950,000
National Party $4,801,000
Act New Zealand $1,002,000
Alliance $809,000
Greens $800,000
New Zealand First $557,000
United New Zealand $130,000
Total $13,049,000
Source: Parliamentary Service (2002).
(2) Services to MPs:
In Parliament, the parties receive additional services provided by the Parliamentary Service, which in 2000/01 cost $28.2 million. ‘Services to MPs’ is made up of the following categories.
(2a) Secretarial Support: The largest single resource that the state confers on political parties is the provision of secretarial staff in Parliament and in MPs’ electorate offices. MPs are entitled to at least two full-time staff: an executive secretary in Parliament and one further electorate secretary for list MPs and two electorate secretaries for constituency MPs. The budget for this in 2000/01 was $13 million.
(2b) Members’ Communications: MPs and their parliamentary staff have unlimited access to free telephone services and stationery. MPs are also provided with a mobile phone. This funding is entitlement-driven (i.e. the expenditure is uncapped), which means that MPs have unlimited access to means of communication. On top of parliamentary postage privileges, MPs are also provided with a monthly stamp warrant of $85. The 2000/01 budget for ‘Members’ Communications’ was $3.3 million.
(2c) Members’ Travel: All MPs and their spouses are able to travel by air, taxi and rail within New Zealand for free. In the 2000/01 financial year, MPs spent a total of $7.7 million on travel. These resources are entitlement-driven. A full breakdown of the travel budget is no longer released, but in 1997, funding from the state allowed MPs to spend ‘an average of $85,681 on self-drive and VIP cars, $25,963 on domestic air travel, $7390 on international travel and $6901 on taxis’ (Guyon Espiner, 1998a: p.1).
(2d) Information Services: A number of useful information resources are provided within Parliament. These include the Parliamentary Library and its research services, and access to many computer communications systems and information accessories such as the internet. The budget allocation for this in 2000/01 was $4.2 million.
The Parliamentary Service also spends a further $15 million on maintaining and operating the parliamentary complex, as well as providing catering.
Table 8.3: Services to MPs (2000-2001)
Secretarial Support $13,081,600
Members Communication $3,296,036
Members’ Travel $7,710,401
Information Services $4,200,594
Building & Operations Management $14,007,359
Catering Services $755,359
Personnel & Accounting Services $572,237
Policy Advice $194,618
Total $43,818,204
Source: Parliamentary Service (2001).
(3) MP Salaries and Allowances:
Each year the Parliamentary Service spends about $14 million on MP salaries and allowances (Parliamentary Service, 2002). Backbench MPs receive about $83,000, ministers receive about $145,000, and the prime minister earns $216,300. The allowances are widely considered generous by private sector comparison, and once factored into the total remuneration, the whole MP salary package is considerably bigger than it appears. For example, in 1999 journalist Helen Bain applied private sector calculation and rules to the salaries and produced an alternative estimation of the total salary packages: ‘The poor underpaid backbencher, listed as earning $83,000, actually earns a salary package of $201,000. Cabinet ministers, with an official salary determined by the Higher Salaries Commission of $145,000, receive a package worth $330,000. The prime minister, listed as earning $216,300, has a salary package of $445,000’ (Bain, 1999e: p.17).
(4) Resourcing of the Governing Parties:
The resources available to a party in government are especially considerable. There are four discernable categories of resources that are of potential party-political use.
(4a) Staffing and offices: Staffing entitlements are much greater for the governing parties because Ministerial Services provides MPs in the Executive with extra staff to deal with their ministerial portfolios. In 2001, Ministerial Services provided funding of $15.5 million, of which Labour Party ministers received about $12 million and Alliance ministers $3.5 million (Ministerial Services, 2001).
(4b) Publicity resources: Governments are able to undertake significant advertising campaigns. For example in a six-month period during 2000, the government allegedly spent about $6 million on pollsters and advertising agencies (NZPA, 2000a: p.2).
(4c) Government expenditure: Through government expenditure parties can reward and reinforce their support. This ranges from the ‘pork-barrel’ politics of spending money on developments in order to find favour from a certain constituency through to the awarding of government contracts to specific supporters.
(4d) Government appointments: Parties can reward their supporters by appointing them to positions on state agencies and enterprises. The government of the day has the ability to appoint supporters to more than 3000 positions on about 400 boards and agencies (Colin Espiner, 2003a).
The Principle Source of Income
For most parties, state resources are now their principal source of material support. Most other financial resources are relatively insignificant. As detailed in other blog posts, the income that the New Zealand parties derive from civil society is very small – the two major party organisations have annual incomes of about $2 million, while the smaller parliamentary parties have incomes of less than a third of this figure. In election years, income from civil society increases somewhat to fund the election campaigns but, even then, remains relatively low.
It is worth comparing the level of state funding and private funding for the individual political parties under MMP. The funding arrangements differ for every party, but the Labour Party and the Alliance provide examples of both a major, well-established party and a minor, younger party. In terms of resources from civil society, the Labour Party has more recently been the most well-funded party. 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.
The Alliance case has been even more pronounced. As shown in Table 8.4, the Alliance listed its total income (for both wings of the party) in 2000 as $3,870,500. This paid for the salaries of 66 staff and operated 24 Alliance offices both inside and outside of Parliament (including ministerial offices). About 94 percent of this income ($3,620,500) was listed as coming from either the Parliamentary Service or Ministerial Services and only $250,000 was listed as coming from the extra-parliamentary organisation. Significantly, these figures also excluded ‘Non budget Parliamentary and Ministerial services provided (e.g. rent, power, computer support, research and library services), MP travel and allowances, Parliamentary Services provided phone lines and cellphones’ (Alliance, 2000). Much of this $3,870,500 income obviously has to be spent on parliamentary and ministerial activities, but as shown in a future blog post, a lot of the funding is also used for party-political purposes, and in many cases party organisational work.
Table 8.4: Alliance Party Resources (2000)
Resource; Budget; Offices; Staff
Leaders’ Funding $229,000; 2; 3
Party Group Funding $200,000; 1; 3
Members’ funding $741,500; 10; 15
Secretarial funding $150,000; 4; 4
Ministerial funding $2,200,000; 6; 38
Sub-Total $3,620,500; 23; 63
Party Organisation $250,000; 1; 3
Totals $3,870,500; 24; 66
Source: Alliance (2000).
Although it varies considerably between individual parties, it is clear that the state in New Zealand provides the parties with the vast majority of their income. [This compares very highly against other state-funded party systems. The following figures are the percentages that the state subsidies make up of total party income for various countries in 1989: Sweden, 47 percent; Germany, 74 percent; Norway, 45 percent; Italy, 39 percent; Austria, 25 percent; and Finland, 84 percent (Pierre et al., 2000: p.14). However some caution needs to be applied in making direct comparisons with these figures as they deal with direct funding regimes, unlike New Zealand’s indirect scheme.]
In terms of the numbers of staff employed by the parties the parliamentary units have consistently outstripped that of the national offices. As will be discussed in a further blog post, the size of the extra-parliamentary party offices have dwindled. While it is difficult to ascertain the exact number of staff employed by the party organisations, it appears that Labour employ about 9 staff; National, 7; Act, 2; and the Green Party, 2. In strong contrast to European party systems, the overwhelming majority of party staff in New Zealand are now paid for by the state. In Europe, Mair reports that despite the great increases in state subsidies it is ‘still only in a minority of countries… that the overall numbers employed in the parties’ parliamentary offices now exceed those employed in the central [head] offices’ (Mair, 1994: p.9). This difference between New Zealand and Europe shows that even in its undeveloped and ‘indirect’ form, the state-funding arrangements for New Zealand parties is particularly advanced.
