Political party funding in New Zealand

Tim Barnett

Guest Author

At a time when party funding has become a media hot topic, with both New Zealand First's and National's party funding under investigation by the SFO, and prosecutions related to National Party funding, it is timely to take a broader view of the whole issue of political party funding in New Zealand.

The funding of political parties is a complex area requiring the alignment of law and practice to achieve multiple outcomes. In my view it should specifically be organised in a way which delivers the following six outcomes (the fact that there are six indicates the complexity!):

  1. minimises the potential for corruption
  2. creates as balanced a playing field as possible between political parties
  3. allows flexibility for the entry of new parties over time
  4. is sustainable (implying support from the significant parties, and also resulting in party-building above Parliamentarian-building),
  5. can be effectively monitored, and,
  6. enriches the democratic experience for those entitled to register to vote.

New Zealand currently provides partial funding of political parties – arrangements cover election broadcasting and social media and, through the Parliamentary funding of party leaders, some research and coordination activity. This has developed in an unplanned way. The expenditure on the current system does not seem to be a particular matter of controversy, although the gaps in the current system present multiple risks.

In short, we have ended up with the worst of both worlds – a system full of holes and inconsistencies where the risk of corruption is real, and a skewing towards resourcing the Parliamentary side of organised politics. This upsets the desirable balance between party and Parliamentary wings. This is only partly offset by the vital limit on spending per voter.

Noting the above, the current system in New Zealand can be measured as follows against those six criteria:

ItemRatingReason1CorruptionFailMore can be done2BalanceFailThe parties with strong links with wealth, accrue more of it3New EntryModest passThe broadcasting/social media allowance factors in parties which have appeared since the last election and are polling well4SustainabilityFailIt is the subject of disagreement between parties and skewed to the Parliamentary side of things5MonitoringPartial failPartial fail, because Criteria 1 (above) is weak6DemocracyModest passsome of the funding does go to communication with voters, and the funding per voter limits the allowable costs of the whole election.

It is clear that something needs to be done. The obvious move – filling the gap by Government (taxpayer) funding of political party administration between elections, plus tightening up on current weaknesses – is apparently strenuously opposed by two of the four major political parties.

There is a need for fresh thinking coming from outside the parties.

There are aspects of two overseas approaches which provide some potential clues for New Zealand going forward.


The first is Canada. There were two foci of their party funding law reforms between 2004 and 2015.

  • The first was to exclude institutional funders of political parties – companies, NGOs, unions – and to increase state funding to make up some of the difference.
  • The second element was to encourage small amounts of political donations from as many individuals as possible, similar to the funding flow to some US Presidential election candidates over the years (e.g. Elizabeth Warren in 2019/20).

Canadian citizens can give a total of $1550 annually to a party, plus the same to a party’s electorate committee, and to a leadership candidate. If their total donation is more than $200 their name is made public. Total anonymity is only allowed if the donation is less than $20 per annum. Conversely, a generous tax credit for donations is offered.

City of Seattle

Developing this approach, the second example is the City of Seattle.

In 2019, Seattle introduced the concept of a Democracy Voucher for their city elections. The city’s Ethics and Elections Commission issued each of their 461,000 registered voters with four Democracy Vouchers, with a face value of $25 each. Vouchers were only redeemable by the campaign organisations of the candidates standing for City Council in 2019.

Each Voucher is uniquely tracked and, when used, their name or the registered voter and the name of the candidate they “donated” the Voucher to, were put on public record.

Campaign limits also applied, so that when a candidate reached that limit their campaign couldn’t accept more vouchers. By the time of the vote in 2019, 98,179 of the vouchers had been used, around 5% of those issued. That cost voters US$2.4 million.

More information is available on http://www.seattle.gov/democracyvoucher/program-data.

I think there is a dearth of fresh thinking in this area. Here’s hoping that we can break the mould!

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