Bryce Edwards: Opinion - The money follows Labour again

The Labour Party is far from poor. In fact, the latest political funding and spending news suggests it’s actually flush with cash. Dr Bryce Edwards of Victoria University looks at how modern political finance trends mean that “money follows power” rather than just going to the parties of the right.

There tends to be an assumption that the National Party receives significantly more political funding than the Labour Party. Helped along somewhat by the Labour Party itself, the story goes that the traditional party of the left and of trade unions is bereft of resources, and has trouble competing with the wealthy right.

It’s true that for much of the twentieth century Labour did not have access to donations from the wealthy, and was more reliant on its mass membership and trade union affiliates for getting things done. National, on the other hand, was the party of business and the rich.

This all changed in the 1970s and 1980s, when Labour modernised and professionalised. It consciously became a party more favourable to business and the middle class. By the time of the 1987 general election it was New Zealand’s wealthiest party – spending an estimated $4m on its campaign of that year (made up of over $3m in business donations, and only about $300,000 from unions, and $150,000 from party members). This record expenditure in 1987 has never been beaten by another party.

In the MMP era, the levels of funding declared by the two main parties appears to be relatively similar. The most important proviso is that the party in power tends to be better resourced than the one in opposition. Put simply, money flows towards power. Hence, during the Helen Clark Labour-led Government, Labour was continually better off than National. And while John Key was prime minister, National attracted much more money.

With Labour now back in government, we can expect to see a lot more money flowing to the party. One sign of this shifting pattern of private money came in last week’s publication by the Electoral Commission of the spending declarations of the political parties in last year’s general election. The figures showed Labour was, in fact, the biggest spending party (unless you include the Electoral Commission’s “Broadcasting Allocation” funding into the spending figures). Labour declared spending $2.58m while National spent slightly less – $2.55m.

We don’t yet have the annual declarations of donations received by the parties – this will be published in about two weeks – but it’s likely we will see a similar pattern of very competitive levels of donations received by Labour and National. Labour might even have the edge.

Certainly, after Jacinda Ardern took over the leadership of the party last year, Labour reported that the cash was rolling in, like they had never seen before. In the first 24 hours, they claimed $270,000 had been donated, and that figure reportedly hit $500,000 the following week.

As others have pointed out, this is a huge change from recent elections, in which Labour struggled to compete with the money raised by National. In 2014, for example, Labour spent only $1.27m, which was about half of National’s spending.

Of course, National may have found itself in opposition, but it’s still the biggest party in parliament. Hence it will be seen by business interests as a contender for power at the next election, and that means money will continue to flow its way. It’s also worth noting that the money spent by National’s candidates in last year’s election amounted to $1.1m, which was nearly twice that declared by Labour’s candidates.

Why the wealthy donate to politicians

This idea that “power attracts money” can be seen very clearly in some examples of candidate donation declarations made public last month. The MP receiving the most money was the fast-rising Simon Bridges, who declared accepting $120,000 last year – twice as much as any other MP.

But it was the one of his donors, rich-lister Paul Adams, who provided the most candid and revealing statements about his gifts to Bridges. He was quoted on Stuff, saying that “As the Minister of Transport we wanted to make sure he was doing his bit for our region”. Adams then admitted that the change of government would see his money going in a different direction: “We've got another government now so we've got to start working on other people.”

In other candidate declarations, the Talley’s food company was recorded as giving money to candidates from National, Labour and New Zealand First. Amy Adams was one recipient, and she explained to Stuff that Talley’s “have some facilities in my area.” Similarly, Kaikoura MP Stuart Smith was reported as believing “Talley's motivation for the donation was due to having businesses in his electorate.”

Clearly, donations are made to MPs who have power in the areas where the donors want influence, and this is often a bigger factor than which party the MP belongs to.

State funded resources

The latest political finance figures released are about ministerial and parliamentary spending – with a lot of details released this week about the use of travel and accommodation entitlements. For some this is a bad look – with the suggestion that some politicians are overusing their entitlement. The real story, perhaps, is that much of this related to electioneering last year.

Spending on MP travel during the election period went up, according to the previously released spending figures. But these latest figures – although ostensibly for the post-election period of October-December 2017, also include a lot of receipts that had not been filed for the previous declarations. Hence, some of the most recent travel expenses were for electioneering.

The Herald’s Claire Trevett also noted in her report on this taxpayer-funded spending, that “The expenses include some costs from the previous quarter which had not been invoiced until more recently – that included $289,150 worth of expenses for the former National ministers prior to the election.”

What is often forgotten in the debate about political finance and electioneering is that the parties and politicians are much more reliant on their parliamentary and ministerial budgets for running their parties and campaigns than they are on private donations.

It’s Labour that now has its hands on the resources of Ministerial Services. It also has access to funding from Parliamentary Service, which provides budgets for the leader of the party, based on how many non-ministers the party has in Parliament. The most recent Parliamentary Service annual report lists funding to the Labour Party being nearly $13m for 2017. Of course, the other parties benefit from the same deal.

This money can be spent by the parties in a variety of ways to help them campaign and try to increase their public support. It’s a form of backdoor political party state funding, and the biggest dirty secret in Parliament. So, all up, when you hear the Labour Party being described rather quaintly as the party of the poor – it’s actually pretty rich.