The misuse of parliamentary funds by political parties is the biggest political finance problem in New Zealand. Yet the Government has just increased this funding by $1.7m and has decided to relax the rules on how the parties can misuse the money. It’s a shame therefore that most of the current debate on political finance focuses simply on the (draconian) Electoral Finance Bill, while this more serious issue of 'backdoor state funding of parties' is totally marginalized from the debate. [Read more below]
The illegal misuse of taxpayer funds by parliamentary parties to pay for their 2005 election campaigns was the biggest scandal to come out of that election. The Auditor-General Kevin Brady made a ruling – based on Crown Law advice – that $1.2m of taxpayer money had been illegally spent by most parties (and in particular the Labour Party). Despite promises to fix this problem to prevent it happening again, the Government has just announced a backroom deal has been reached that will actually make the matter worse by allowing the parliamentary parties even more scope to misuse the funding. (See also: Argy-bargy over election funding).
The Labour Government has cobbled together the support of a number of minor parties to push through new parliamentary spending rules that will ensure that the millions of dollars of taxpayer funds can more easily be used for party political purposes without the Auditor General being able to prevent or complain about their use. Speaker Margaret Wilson has gazetted the rules in the Appropriation (Continuation of Interim Meaning of Funding for Parliamentary Purposes) Bill which lays down the rules for the next year about how parties can use their parliamentary funds to electioneer. It takes the previous vague and flexible rules that existed before the Auditor-General intervened, and explicitly endorses those rules so that the Auditor-General is not able to complain. More than this, the Bill also inserts a ‘get out of jail card’ in the rules by stating that even if such spending is found to be illegal the parties will be explicitly exempt from paying the money back.
As National MP Gerry Brownlee has correctly pointed out, ‘Officially, we don't have state-funded political parties in New Zealand, but this is a very serious step down that road’. So instead of tightening the rules – as most voters would expect – the obscure appropriation bill means that NZ’s backdoor state funding of parties will be further entrenched. Parties such as Labour will be able to get away with the blatant use of parliamentary funding to purchase more pledge cards, billboards and media advertising. This state funding has a myriad of negative effects on democratic competition – one being that it protects incumbent MPs and parties. It is also informative that Wilson has been reported as refusing ‘to say whether the pledge card would be legal under the new spending rules’.
Added to this spending flexibility, last month the Government decided to increase the funding of the parties in Parliament by 12% - taking their ‘Members Support’ budgets to $15.8m per annum. As pointed out in other posts, this money is essentially a form of 'backdoor state funding' of the parties, and is the parliamentary parties most significant form of revenue. The Members Support budgets are not the only parliamentary resources that are misused for political advantage by the parties – for example, Ministers get their own separate political funding – but they are one of the most important ones. They pay for political staff, research and advertising by the parties, as well as the party political offices in the electorates. According to The Press, the parties now receive the following annual amounts for these purposes: National: $7 million; Labour: $5.4 million; Act NZ: $377,832; Progressive Party: $186,000; etc.
The 12% increase has not received much publicity because it’s in the self interest of all the parliamentary parties to improve the revenue from the state – much in the same way that companies involved in a cartel all work together to ensure their self-interest is maintained – and so the parties have attempted to keep this issue off the political agenda. In fact, the Cabinet did not even publicly announce their decision. And note also that the original recommendation for the increase came from the Parliament’s ‘Appropriations review committee’, which I understand includes representatives from virtually all the parliamentary parties. Clearly a classic cartel is in operation.
The upshot of all of this – in the context of the current attempts to 'reform' political finance in NZ – is that it seems that the Labour Party and its supporting parties are combining three strategies to ensure their own advantage: [1] increasing their state funding; [2] ensuring the rules for the use of the funding still facilitate its party political use; and [3] using the Electoral Finance Bill to clamp down on any other groups spending their own money on politics. Combined together, these strategies are a formidable attempt to tilt the playing field in a certain direction whereby the Labour Party win and many others lose.
