Reforming Political Party Donations

Max Rashbrooke
Senior Associate, Institute for Governance and Policy Studies, VUW

In a democracy, we should all have an equal chance of being heard by our elected representatives. But can we still say this is the case when our system allows donations to political parties of unlimited size, many of which are not even disclosed to the public?

This is the question that Professor Lisa Marriott and I are investigating this year in a research project funded by Victoria University and the Gama Foundation.

Our research is prompted in part by the growing number of fraud investigations that involve the finances of major political parties. This year alone, people connected with the New Zealand First Foundation and the National Party will be on trial for allegedly concealing donations. Donation-related charges were also filed last year against several people connected to the Labour Party, an investigation into Auckland Council donations is ongoing, and last year the Māori Party was referred to the Serious Fraud Office for the late disclosure of hundreds of thousands of dollars’ worth of donations.

The sheer volume of cases suggests the regulation of political party donations needs reform. And there have long been concerns about this particular intersection of money and politics.

Political parties are an essential element of our democratic system, and must be funded to carry out tasks such as developing policies and presenting them to the public. This helps ensure a proper contest of ideas and a well-informed voting public.

However, seeking donations from members of the public can create tensions, especially if parties become reliant on large donations from a small number of people. Unless donors are completely altruistic, they are likely to want something in return. This could include greater access to, and a more sympathetic hearing from, ministers and members of Parliament. This would then violate the principle that all citizens should have equal influence in a democracy.

New Zealand takes a relatively relaxed approach to such concerns: unlimited donations are allowed, and the identity of a donor must be disclosed only if they give over $15,000. Even that limit can be circumvented if donors split up larger sums into sub-$15,000 tranches and get associates to give them in their own names. Some other countries, however, take a much stricter line: Canada, for instance, does not allow any donations over C$1,675.

In light of domestic concerns, our government is now taking action on two fronts. It has recently consulted on seven small adjustments to donations rules, including lowering the threshold at which donor identities must be disclosed. Separately, it is asking an independent panel to review the entire Electoral Act, which governs political donations, among other things.

Our project aims to support donations reform by examining the issue in detail, through desktop research, examining international practices, and interviewing players within the system. As part of that work, we will also look at alternatives to donations, such as taxpayer funding of political parties. Anyone who is interested in our project can find out more at the link below.

Blog Post written by:
No items found.