Max Rashbrooke: New Zealanders have had enough with ‘dark money’ in politics


Political party funding has often been seen like a pie straight out of the oven: too hot to handle. Not anymore.

New data show most Kiwis want tough curbs on the sums that wealthy people can give to political parties – and a significant minority wants those sums cut to the bone.

Donations to political parties have been the subject of a rising number of scandals, most of which involve the suspicion that the money buys the donors access to politicians – and even influence over them – that the rest of us cannot hope to enjoy.

While there is some merit in the argument that people should be able to financially assist parties they support, there is an even stronger case that we should all have equal influence in the democratic process.

Political donations are in the spotlight now for two reasons. First, most of New Zealand’s major political parties – National, Labour, New Zealand First and Te Paati Māori – are under investigation for hiding or failing to properly declare donations.

In the New Zealand First case, currently working its way through the courts, the allegation is that the party’s foundation was used to channel hundreds of thousands of dollars to MPs without the public’s knowing anything about it.

In National’s case, wealthy individuals are alleged to have broken up large donations into smaller amounts so that they come in under the threshold at which the donor’s identity would have to be revealed.

This is why donations are referred to as political “dark money”: it is sometimes difficult even to know who is giving what, and therefore what influence might be obtained. New Zealand’s regulation of donations is much weaker than in other comparable countries, such as Canada and Ireland.

There is no maximum amount that can be donated, and the donor can conceal their identity if they give under $15,000 in a particular year.

The second spotlight on political donations comes from the Government’s decision to review party funding. It has just begun consultation on a reform package that proposes to reduce the anonymity threshold to $1500 but makes no mention of capping donations.

Ministers’ hands will be strengthened, moreover, by new data showing surprisingly strong levels of support for a clampdown on donations.

In a poll conducted earlier this year for the Institute for Governance and Policy Studies, about two-thirds of New Zealanders backed a regime in which the maximum amount that could be donated was $10,000 and the donor’s identity would have to be declared if they gave over $1000 (69.3 per cent and 64.4 per cent support, respectively).

And a substantial minority – about four in 10 – supported a still tougher system in which the maximum amount was $1000 and donor identity was declared once they gave more than $100 (43.7 per cent and 39.5 per cent support, respectively).

In the poll, which surveyed a random selection of 1000 New Zealanders, just 17.6 per cent of respondents supported the current system of having no limit on donations – and no wonder, given the continuing drip of scandals.

For some time now, roughly seven in 10 New Zealanders have expressed little or not much trust in the political donations system. Kiwis also want to see much more transparency from their political parties: 85 per cent think parties should make an annual disclosure of their finances.

This poll can be seen in the light of the findings in my recently published book, Too Much Money: How Wealth Disparities Are Unbalancing Aotearoa New Zealand. This country’s 1 per cent are increasingly influential, controlling one-quarter of all wealth and 70 per cent of all shares.

Wealth is also now a dynastic phenomenon: over one-third of fortunes on the Rich List have either been inherited from the previous generation or are being handed on to the next generation to run.

These wealthy people pay relatively little tax: Inland Revenue research shows that four in 10 of them pay a lower rate than those on the minimum wage, owing to the many strategies they can use to avoid their tax obligations.

Donations to political parties are just one of many ways in which these wealthy individuals can influence politics and sway decisions in their favour.

It is unsurprising that the New Zealand public now wants tough action that could close off at least one avenue through which wealth is turned into power.

• Max Rashbrooke is the author of Too Much Money: How Wealth Disparities Are Unbalancing Aotearoa New Zealand, available online and at bookstores.

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