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ImperatorFish: How Should We Fund Our Political Parties?

Written By: - Date published: 12:43 pm, July 10th, 2012 - 22 comments
Categories: political parties - Tags:

Scott at Imperator Fish has kindly given us permission to syndicate posts from his blog – the original of this post is here.

One of the weaknesses of our democratic system is that it gives people the opportunity to buy political influence.

I don’t mean to suggest that some people are “buying” politicians, in the sense of writing cheques in return for express promises from politicians. We don’t usually know the motivations behind large political donations. But it’s reasonable to assume that companies existing solely to make profit aren’t giving cash out of feelings of altruism. We should not be naive enough to think that donors don’t want something in return for their money, even if what they want is never expressed openly.

It’s obvious that parties promoting certain types of policies will be supported by those organisations and individuals who stand to benefit by those policies. So unions give money to Labour, rich cranks donate to ACT, and corporates and wealthy individuals are more likely to give to National.

But despite all of these things being obvious, we still retain the capacity to be surprised whenever a story emerges showing that a party or politician is acting in a way that might potentially benefit a donor.

The Clayton Cosgrove donation scandal (one is tempted to use the term “beat-up” rather than “scandal”) illustrates this point. There is no evidence that the donor, Independent Fisheries Limited, pressured Cosgrove into pursuing any sort of property development legislative change, and yet it’s likely that IFL donated to Cosgrove because it saw some benefit in doing so. Perhaps the company’s owners thought Cosgrove was sensitive generally to the concerns of land-owners in the Christchurch area, and paid the money in the hope he would be re-elected. This is really no different to a company giving National cash because the Nats are “business-friendly”.

In the perfect world politicians would not accept cash from anyone, because the risk of undue influence is always present where parties are funded by donations. But what choice does a party have under our current system? Cake stalls and sausage sizzles will only take a political party so far.

But this post is not intended to be a defence of Clayton Cosgrove. Unless more details emerge about the IFL donation the story seems doomed to disappear in a few days. That a politician pursued policies that appeared to favour someone who donated to his party is hardly a scoop.

There is an obvious solution to the donation problem. Full state-funding of political parties would cost only a few million dollars per year, but it would do away with much of the suspicion that surrounds politicians, and would go some way towards restoring the public’s trust in our political system. We would of course need to have a robust debate over the make-up of any funding system, to ensure it was fair and didn’t entrench the power of the main parties, and we would need to accept that any system we implemented would be imperfect and would need ongoing refinement.

Those groups who currently have influence would probably object to such a system, but that’s precisely why we should be looking at this seriously.

Such a system would be difficult to sell to the public, but it would be worth the effort if it helped to clean up our political system.

[Bunji: And if you agree with State Funding – how do you think it should work?  Based on Membership numbers?  Vouchers?  Or?]


22 comments on “ImperatorFish: How Should We Fund Our Political Parties?”

  1. tracey 1

    I agree with state fundinig campaigns. If the cheque is big enough I am sure it enables more one-on-one access to a minister or MP. We’re all human and we’re all influenced byt he human beings we have contact with.

    Lobby groups, with daily access tot he halls of power maybe positive on one level but on another it is grimey and elitist.

    When was the last time the Chair of Fletcher’s had to queue at his local MP office on a Saturday to have a chat about something bothering him, fletcher related or not.

    • Gosman 1.1

      Equally , when was the last time the Head of a Trade Union had to queue at his/her local MP office on a Saturday to have a chat about something bothering him/her, Union related or not?

      • Draco T Bastard 1.1.1

        Yes, exactly.

        I’d say that Gosman was getting it but he was just being sarcastic without realising the truth.

    • McFlock 1.2

      Tracey, we all know how it is – CEOs don’t need to go to electorate offices. They’re at the charity dinners and in the corporate boxes, having quiet chats over complimentary beer. It can be very hard work, so they say before their media meltdowns.
      And the union reps are outside, protesting with their unions. 

  2. Pete 2

    Personally I’m opposed to state funding of political parties as I believe that a) there are alternate methods to “fixing” the current system, b) it results in political parties being less responsive to their members and c) means those people end up being forced to support parties and individuals who they may be completely ideologically against.

    However if it was to be introduced I believe that the best way would be:
    1) The status quo remains in place until the next election,
    2) Between now and then an amount of funding per voter is determined. This should look at things like typical votes:donation ratio’s, What amounts the public are happy paying etc.
    3) As of the next election the policy is introduced with parties provided a lump sum for the next 3 years for them to manage based on the number of voters that they receive.
    4) Prior to the following election the funding amount would be reviewed and adjusted up/down based on so the amount was known before voters voted.

    • Pascal's bookie 2.1

      What would you think about a voucher system?

      ie, the pool of money to be given to parties is divided by the number of people on the electoral roll. Each person on the roll then allocates their share of the pie to their party of choice. If they don’t want to give it to any of them, the money goes back to the consolidated fund.

      In essence it would be a 100% tax rebate on political donations. 🙂

      It also eliminates the problem of tactical voting. If you support the libetarianz, and would like them to get some funding, you could give it to them, yet you might have *voted* for National on the grounds that anything else was a wasted vote.

      • Pete 2.1.1

        I think vouchers are fine however the downside I saw with them was that they would create another level of administration which would add another additional cost. I think that ideally that the mechanism for any state funding plan should correspond with the voting process (either via the enrolment or voting stages).

        One downside to the above approach came to mind last night how do new parties gain funding?

    • Bunji 2.2

      I’d be inclined to have a funding model based on membership (rather than per voter – which also risks entrenching current political parties) to partly address those concerns. If parties have to have a thriving membership, they’d be inclined to listen to it somewhat more…

      • Pete 2.2.1

        Then presumably membership would have to be free otherwise party’s gain an additional form of funding which can still be manipulated eg Bronze membership ($10) gets you full voting rights etc while Diamond membership ($1,000,000) gets you full membership and the party leaders cell phone number?

        Also do you then have to make it compulsory to belong to a political party otherwise party’s suffer from voters being willing to support their idea’s and policy at the ballot box but not wanting any direct involvement/contact with the party itself?

  3. DH 3

    I think full state funding would be the best investment we could ever make.

  4. Gosman 4

    This is just another ploy from leftist leaning people who desire to ‘Even’ the political landscape in their favour. As such it has no show of being implemented as it won’t get cross party support and will be vigorously opposed. EFA part Deux.

    • felix 4.1

      “leftist leaning people who desire to ‘Even’ the political landscape in their favour”

      Define “even”, then define “in their favour”, then try writing your comment again with this new well knowledge to draw on.

    • Deano 4.2

      I like the scare quotes around ‘even’. When one party represents and is funded by the wealthy clique who control most of the country’s wealth and the others don’t, the playing field isn’t even if party funding is based on private donations.

  5. higherstandard 5

    They should get not one more cent of taxpayer money.

    However, they should be provided with a “free” slot on state TV and radio to promote their policies and generally bullshit the public.

    …….. apart from that they can all get fucked.

  6. Tom Gould 6

    In relation to the Cosgrove beat up, Scott has missed the most important element, that both the donor and the recipient have said there were no preconditions, offered or sought. Anyhow, maybe taxpayer funding of parties is a good idea, maybe not, but it does not go to the issue raised, how does an electorate candidate under MMP raise the money to fund the local electorate campaign? Even if the central office doles out $20k or whatever the limit is to each of their electorate candidates, this will only catch the big party candidates. What of a new party? The Conservatives, for example? Will they get the full $20k to pass on to each and every local candidate? And if so, will that not jusy encourage hopeless unelectable candidates to spend the full amount, meaning enormouse waste? Why not just let the candidates raise their own money, and declare the donor source and amount, like Cosgrove did? The rules work. We are only discussing the matter because they do.

    • Bunji 6.1

      It would mean tighter party control on electorate candidates I suppose. The party would get its allocation and then it’d be up to them how much they farmed out to candidates to spend… But that wouldn’t work for independent candidates.

      I guess you could have a hybrid system where parties central campaigns are funded, but candidates can only spend what they raise, have a $500 donation limit, and keep the cap on advertising spend. It could probably even be lowered, to ensure candidate spend is only on candidate vote and an even playing field.

      The Nats might not like it though – the likes of Sam Lotu Iiga got >$50k from their head office last time for their campaigns…

  7. Cannot think of something clever 7

    What both sides of the divide have missed is that political spend has a much lesser effect on voting than one might intuitively believe. The extreme examples include the NZ Conservatives and ACT. Both spent a very large amount per electoral seat (in the Conservatives case no seat) compared to the likes of the major parties.

    We can also point at some campaigns where Labour either on its own or combined with Unions outspent National. The spend by Labour and National is typically not dissimilar. As, by all accounts, Labour are skint this time around we might see something substantially different in spend.

    This is also seen outside NZ where presidential candidates in the US often spend enormous amounts with no success.

    Based on that I really don’t want you and me funding their ambitions.

    I’m more with TG – if potential conflicts of interests were super transparent that would really address the type of furore we see with Cosgrove.

  8. Jimmie 8

    The one good thing about the current system is if you have a party that is stagnating, is not renewing itself or its candidates and is generally seen as out of touch then this leads to reducing membership and/or donations.

    This sends positive internal messages to the leadership stating, pull your act together or else you’re history.

    This means the party is not only in competition externally for votes from other parties it is also driven internally to modernize and to find suitable leadership and candidates to become more relevant.

    Surely this is better than a situation where the parties basicly become beneficiaries to to the state and surely will advantage existing parties over newcomers.

    There will be no incentive to listen to members as they aren’t part of the funding equation.

    Look at National circa 2001-05 as a case in point – under English they hit a pretty bad low – they reformed, got their act together, and came back and won in 2008.

    Labour are in a similar place currently. By advocating for state funding this is running away from the problems that Labour has to get to grips with uninspiring leadership and irrelevant policies.

    Look at how well the Greens have done since they turfed out their odd balls, moderated some of their policies, and put on a professional image of themselves – Labour should learn from this.

    • Pascal's bookie 8.1

      Vouchers would deal with that. the funding would be directed by voters.

  9. jaymam 9

    It’s simple, full state-funding of political parties should be done by a dollar amount for each party vote obtained in the NEXT election, and parties can only spend that amount in the year before the election.
    The parties will have to estimate the votes they will get. If they overspend, their allocation will be reduced for the following election.
    Every other method is subject to rorting or is unfair to new parties.
    The cost of state funding is negligible compared with the other costs of government.

    • RedLogix 9.1


      Actually just to really get the point across; how about for every vote they over-estimate they get twice the dollar amount taken off the following election.

      • jaymam 9.1.1

        OK there could be some fine-tuning. Other countries do it this way already. I’d like to say that they can only spend the money they get at ANY time. There needs to be some way to stop lobbyists like the Exclusive Brethren spending millions.

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