Supporting political party funding law reform
Professor Lisa Marriott and Max Rashbrooke are undertaking research that supports political party funding law reform.
Money for something
Democracy relies on equality between citizens. When some people have greater influence on key decisions, or greater access to people who have influence, democracy is undermined. However, in New Zealand, over several decades, political parties’ memberships have waned dramatically, and income and wealth have become more concentrated at the top. Meanwhile the cost of campaigning has risen. All this has made parties ever-more dependent on wealthy donors, leaving the door open for those donors to win favours in return. Mr Rashbrooke and Professor Marriott's research highlights an accelerating pace of scandals caused by the movement of money between wealthy donors and decision-makers.
The problem
New Zealand is increasingly an outlier among developed countries, owing to its weak regulation of political donations. Compared to other nations, New Zealand has relatively little transparency about the sources of parties’ funding: most developed countries require donors to disclose their identity once they give over NZ$5,000 or even $1,500, but here the threshold is $15,000. Two-thirds of developed countries place limits on the very large amounts that can be donated to parties: New Zealand has none. Many countries allow donations only from citizens, not companies or unions: New Zealand imposes no such restrictions. In short, a wide range of tools that can enhance transparency and curb undue influence are largely unused in New Zealand.
This situation clearly causes public disquiet. Nearly three-quarters of New Zealanders distrust the current system of funding political parties. Polling presented in this report shows that, of the New Zealanders with definite views, between half and two-thirds want donations capped at $10,000-15,000. They also seek greater transparency.
However, for all the issues raised by big money in politics, it is not the case that parties should be starved of funds. As New Zealanders, we have a shared interest in political parties being well-funded, so they can develop thoughtful policies and communicate them to the electorate, in a vibrant political contest.
If, however, one party, or one side of politics, raises larger sums of money from big donors, it may be better able to get its message out to voters. Our research demonstrates significant funding imbalances between New Zealand political parties. And the international evidence suggests that more money, all other things being equal, means more votes. This allows wealthy donors an outsized influence over which political messages are most successful.
Possible solutions
Based on evidence collected for this research, we argue that regulations should be designed so that, when political parties are seeking funds, they are encouraged to reconnect with the wider voting public. Party funding should be egalitarian, voter-centric, and generated where possible from a large number of small donations from ordinary New Zealanders, rather than a small number of large donations from the wealthy.
We argue that large donations should be more tightly regulated, to remove opportunities for undue influence, while preserving individuals’ freedom to support the party of their choice. We also argue that New Zealand should join its developed-country counterparts and provide greater state funding for parties. This can be done in a way that, as above, fosters a more engaged political democracy and enhances equality of political influence.
Find out more
This report addresses growing concerns about political party funding, spurred by evidence of disproportionate donor access and multiple court cases. The research findings will inform the planned review of the Electoral Act.
Max has also recently written about Rich List donors.
"Proposed changes to New Zealand’s political donation rules have put the spotlight on donors who give thousands and the motivations they have for their generosity. Our current research into New Zealand’s political donations system aims to shed light on this often obscure process", wrote Marriott and Rashbrooke for The Conversation in July 2022
Undisclosed money threatens next election, by Max Rashbrooke, Stuff, July 30, 2022
National and ACT build $5m election war chest, Labour and Greens trail in fundraising, by Max Rashbrooke, Stuff, October 23, 2022
Contact
If you're interested in knowing more about this report or the proposed review of the Electoral Act, contact:
Professor of Taxation
School of Accounting and Commercial Law
Senior associate, Institute for Governance and Policy Studies
2020 J.D. Stout Fellow, Stout Research Centre