Whenever business donations to political parties are discussed in the current debate about party finance reform, it is assumed that these donations generally only go to parties such as National and Act. It seems that few people are aware that Labour obtains a very large proportion of business donations. In fact in recent years, the Labour Party has been the most well resourced party in New Zealand. [Read much more below]
The modern Labour Party extra-parliamentary organisation typically has an annual operational budget of about $2.5 million, and in the last two general elections the party has spent at least a further $2 million on the campaign. It has generally been the most well-resourced party in New Zealand in recent years.
Professionalisation and business-orientation
Since the 1970s the party has made considerable efforts to obtain the favour and donations of business. In the late 1970s and early 1980s the party organisation cultivated closer ties with business as part of its professionalisation under the presidency of Jim Anderton. Mike Williams, then the party’s chief fundraiser, set up the first ‘scheme to arrange meetings between potential big business donors and senior party figures’ (Murphy, 1990b). Williams told the media that ‘donors would be put in touch with ministers and then "touched" for donations’ (ibid). According to Williams, ‘I do not think there is anything wrong with touching a company which has seen a minister. Most of them do not even end up giving anything’ (quoted in Murphy, 1990b). Williams also says that his practice is to ask business donors about any problems they have, and then report ‘general concerns of the business community to Labour’s caucus’ (Vaughan, 2003: p.6)
By the time Anderton left the presidency in 1984 the party’s financial position had improved substantially. The solid financial structures were now in place, and financial pledging by members ensured the party had an annual income of about $1 million. Out of this, a building programme was launched, which involved the construction of Fraser House in Willis St, Wellington, to house the party’s head office. Part of this spending involved employing 17 full-time staff – 12 working in the head office and five organising in the provincial centres (Ovenden, 1986: p.30).
Labour becomes the biggest spending party
The 1984 general election cost the head office ‘between $600,000 and $700,000’ (RCES, 1986: p.213). Then, in 1987, Labour’s expenditure rose dramatically to between three and four million dollars. This was over four times what the party spent in 1984, and appears to be the highest recorded campaign expenditure in New Zealand history. During this period the business community began funding the Labour Party on a highly significant basis. At the 1984 election much of the business sector was disillusioned with Muldoonism and many transferred their loyalty from National to Labour. Then at the 1987 election, business interests contributed over $3 million to the campaign, greatly overshadowing the much lesser contributions of unions (about $300,000) and party members (about $150,000) (Frontline, 1989). Evidence of substantial corporate funding is provided by ex-businessman Allan Hawkins, who donated $250,000. He stated that this ‘was probably a fairly common sort of level at that time….. I knew of others that were talking about amounts like that’ (Frontline, 1989; see also Palmer, 1992: p.138). Roger Douglas and other cabinet ministers admitted receiving donations directly, and this was later confirmed by party president Ruth Dyson. Allan Hawkins, for example, said he gave his Equiticorp donation of $250,000 directly to Douglas (Frontline, 1989).
Decline and recovery of business donations
In the late 1980s and early 1990s Labour's business donations temporarily dried up. But an income lift was achieved through business donations, which in the 1993 election year climbed back up near the one million dollar mark ($964,000) (MacLennan, 1996: p.C4). In 1996 the party organisation, under the leadership of Michael Hirschfeld, raised $911,000 from the business community (Small, 2000b). In the 1996 election Labour spent $1,279,880 (including $436,400 of state funding for broadcast advertising). The following year, $413,000 was donated by business (ibid).
According to Allen, the party organisation has run surpluses since 1995, and by 1999 the party had ‘no financial difficulty in an on-going sense at all’ (Allen, 1999). In 1999, Labour’s income was $2.5 million, and the party’s surplus was $182,000 (ibid). In the election of that year, the party spent $1,644,183 (including $605,677 of state funding for broadcast advertising). In the late 1990s the party organisation continued to employ a person under the title of ‘Corporate Fund-Raising and Sponsorship Management’. Also, Bob Harvey became party president in 1999, largely due to his fundraising skills, and he reportedly expected to raise about $700,000 from the corporates in 1999 but ended up attracting $1,240,000 (Speden, 1999d: p.16; Small, 2000b). Harvey also came to complain about being regarded merely as an ATM for the Labour MPs. His replacement, Mike Williams, has played an even stronger corporate fundraising role. Whereas the president normally visited about 60 or 70 businesses, Williams visited nearly 400 in 2001 and then over 500 in the election year, with about 10 to 20 percent of them promising a donation. According to Williams, typical corporate donations averaged between $4000 and $6000 (O’Sullivan and Small, 2002a).
After being elected to government in 1999 and building up a budget surplus, the year 2000 was a very poor financial year for the party, mostly because its corporate donors went on strike after the Labour-Alliance Government initially pursued a number of ‘leftist’ policies. It was revealed that while the party had set a fundraising target of $350,000 for the 2000 year, it had only achieved a mere $50,000 (O’Sullivan, 2000). This low figure is consistent with that provided to the Electoral Commission in 2000 which declared that the Labour Party only received $35,000 in head office donations, including $15,000 from Westpac Trust and an anonymous donation of $20,000.
The most well resourced party in NZ
But in 2001 the party recovered, and the corporate fundraising target was exceeded four months early (Watkins, 2001; Guyon Espiner, 2001b: p.6). In the 2002 general election Labour spent $2,089,187 (including $614,722 of taxpayer television funding), which meant that it was the biggest election spender. This was the first time that Labour had been the biggest spender since 1987 – when the party had last sought a second term in government, again largely with the support of business. The Labour Party has in more recent years possibly been the most well-funded party. In the seven-year period (1 April 1996 – 31 December 2002) since it became mandatory to disclose national donations over $10,000, the Labour Party has declared donations totalling $2,568,421. By comparison, in the same period, Act declared $1,284,339, and National $2,114,859. In apparently receiving greater business donations than any other party, Labour are undoubtedly aided by the fact that their most recent three party presidents/fundraisers have all been millionaires with very solid business connections.
Bibliography
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