NZ elections are being Americanised with “dark money” flowing into campaign groups

Elections in the United States are dominated by big money. But what isn’t commonly understood is that most of it is raised and spent, not by the political parties and candidates for office, but by special interest groups who run their own election campaigns to influence the outcome. Billions of dollars are channelled into campaign groups to run what are normally attack ads against politicians. The reason for this is because the political donations rules are designed to encourage this – with big clampdowns on people funding the politicians, but allowing them to more easily give to advocacy and lobbying groups instead.

This is a trend that is finally starting to occur in New Zealand. As the rules tighten on money going to candidates and political parties, this is pushing the big money towards less regulated and less transparent special interests. Critics call this “dark money” or “soft money” because it’s outside of the party system and therefore more difficult for officials and the public to scrutinise.

As with the US, such groups are incentivised to run negative attack campaigns, because if they run positive campaigns in support of a party or candidate, then that spending has to be allocated against the expenditure limits of the politicians, who also need to sign off their agreement with the campaigns (which they never want to do).

Dark money spent in the 2023 general election

Some of the money spent by campaign lobby groups must be declared. The Electoral Commission has just published the declarations of those organisations that spent more than $100,000 on advertising at the last election. However, there are many ways that “dark money” spending can stay below the threshold, and so most lobby group campaigning isn’t captured by the Electoral Commission.

The amount spent by these so-called “Third-Party promoters” has escalated quickly in recent elections. At the 2020 election, only $147,000 was spent. This increased by 13 times in 2023, with nearly $2m being declared. You can view all the declarations here: Registered promoter expenses for the 2023 General Election

The top spender lobby groups were the following, in order of money spent:

1. Vote for Better Limited: $386,515

2. New Zealand Taxpayers' Union: $371,565

3. New Zealand Council of Trade Unions - Te Kauae Kaimahi: $299,344

4. Hobson's Pledge: $283,899

5. Family First New Zealand: $204,771

6. The Better NZ Trust: $266,069.39

7. Groundswell NZ: $283,899

Lobby group spending dominated by the political right

This big spending list is dominated by rightwing campaigners – with only the CTU and Better NZ Trust being aligned with the leftwing parties. The latter carried out a campaign promoting policies to enable greater electric vehicle uptake. It’s unclear who funded the group, but previously they had listed one of their supporters as being Energy Efficiency & Conservation Authority (EECA) – a government agency – which led to allegations that they were a “sock puppet” group. And the CTU ran an attack campaign against Christopher Luxon, with advertisements saying he couldn’t be trusted.

On the right, there was a real mix of socially and fiscally conservative lobby groups. The biggest spender was the mysterious Vote for Better group, run by businessman Tim Barry, whose main interests are in the horse racing industry.

The next biggest spender was the Taxpayers' Union, run by director Jordan Williams, which ran anti-Government campaigns, mostly focusing on extravagant spending. Some of the TU’s declared advertising expenses were paid to The Campaign Company, which is also owned by director Jordan Williams. The Campaign Company was also contracted to several other lobby groups – such as Groundswell and Hobson’s Pledge. The company was also employed by electorate candidates, such as NZ First’s Casey Costello.

Some of this is covered today by Farah Hancock’s very good RNZ report, $2m surge in election campaign spending by third-party groups. In this she raises whether some groups such as Hobson’s Pledge have been involved in “astro-turfing”, in which elite well-funded campaigns are passed off as grassroots movements. She also draws attention to the increasing amounts being spent by the conservative groups – Hobson's Pledge increased their spend from $254,115 in 2017 to $283,899 last year, and Family First went from $141,224 in 2020 to $204,771 in 2023.

There were 31 “third party promoters” that were registered with the Electoral Commission because they were planning to spend significant amounts of election advertising, but 26 of these didn’t make a declaration, presumably because they say they didn’t spend above the $100,000 threshold that necessitates one.

RNZ’s Farah Hancock has also investigated some of these groups. One appears to have been politically successful in its objectives: “The Natural Health Alliance encouraged voters to choose NZ First to get the Therapeutic Products Act repealed. It ran several full-page advertisements in the New Zealand Herald. Chairperson Paddy Fahy indicated these cost close to $10,000 each. Repealing the Act formed part of National's coalition agreements with NZ First and ACT and is included in the government's 100-day plan.”

While we know some of what these campaign groups have spent money on, it’s difficult to discover where they raised their money from. Although New Zealand’s political donations rules keep tightening up – and some scholars think they should be tightened significantly more – this has merely pushed the big money into these more mysterious groups, who don’t need to disclose their funding. This trend is only likely to worsen. And because such groups are incentivized to run campaigns against political parties (because the rules discourage them from campaigning in favour of parties or candidates), New Zealand is likely to go further down the route of elections dominated by Americanised attack advertising funded by dark money.

Fights between left and right activists about such dark money are likely to escalate. The Labour Party’s Greg Presland, who is also a part owner in corporate lobbying-PR-consulting firm Polis Consulting Group, has been drawing attention to the funding of groups on the right, asking questions about the rightwing Vote for Better Limited, which was the biggest campaigner last year – see: About the promoters electoral returns

Here’s his key point about this campaign run by businessman Tim Barry: “There is nothing to suggest that he is a well healed individual who is deeply upset with the direction of the last Government and the thought struck me what if he was paid by someone to do all of this? What if he was instructed by a Fisheries Company or an Oil Company or a fundamentalist American Christian Church or the Atlas Network for that purpose to do his best to undermine confidence in the left during the election campaign? The problem with the promoter rules is there is no obligation for them to say who they were paid by. And it can be an overseas person or corporation.”

Other political donations scrutinised

Newsroom’s Jonathan Milne has also drawn attention to a big mining company that appears to have successfully influenced an election race on West Coast last year. He has been investigating the spending of $32,600 by Bathurst Resources to bankroll the campaign of an Independent candidate at last year’s election, which is said to have been a decisive factor in leading to Labour’s Damien O’Connor losing to National’s Maureen Pugh – see: Big coal company bought West Coast election campaign

The mining company was opposed to the Government’s mining policies, and so funded the contest of independent candidate Patrick Phelps who was campaigning for more mining on the West Coast. Phelps is the manager of Minerals West Coast Trust, which last year was given $220,000 by various mining companies.

The donation from Bathurst Resources meant Phelps was the biggest spending candidate, and according to various sources was able to pull enough votes off O’Connor to let National win the seat – something that the Bathurst Resources company also boasts about.

The experience has made Labour’s O’Connor even more critical of the role of the wealthy in the political process: “There are many international companies and organisations wanting to influence New Zealand elections for their own purposes – the smoking industry, the investment and real estate industry as we’re starting to see. And there’ll be many more… I think what people have to do is follow the money, ask the question: why such investments would be made? And for the most part, no business makes an investment without some realistic expectation of a return.”

The big fundraising and spending electoral candidates

The Electoral Commission released the donations and expenditure declarations of all electorate candidates last week, which means the public has a better understanding of the money being used by politicians at the local level. Below are some of the top figures from these declarations, detailing whether they were successful in their campaigns.

The top ten donation recipients:

1. Siva Kilari, National, Manurewa – unsuccessful: $110,483

2. Mahesh Muralidhar, National, Auckland Central – unsuccessful: $109,496

3. Shane Jones, National, Northland – unsuccessful: $95,524

4. Chlöe Swarbrick, Greens, Auckland Central – successful: $95,023

5. Chris Bishop, National, Hutt South – successful: $98,549

6. Cameron Brewer, National, Upper Harbour – successful: $86,659

7. Tim Costley, National, Ōtaki – successful: $79,679

8. Hamish Campbell, National, Ilam – successful: $70,677

9. Scott Sheeran, National, Wellington Central – unsuccessful: $64,260

10. Catherine Wedd, National, Tuktuki – successful: $61,920

The top ten election advertising spenders:

1. Scotty Bright, Democracy NZ, Port Waikato – unsuccessful: $41,905

2. Rachel Boyack, Labour, Nelson – successful: $32,560

3. Julie Anne Genter, Greens, Rongotai – successful: $32,554

4. Raf Manji, TOP, Ilam – unsuccessful: $32,502

5. Tim Costley, National, Ōtaki – successful: $32,089

6. Chlöe Swarbrick, Greens, Auckland Central – successful: $31,643

7. Dana Kirkpatrick, National, East Coast – successful: $31,565

8. Cameron Brewer, National, Upper Harbour – successful: $31,243

9. Katie Nimon, National, Napier – successful: $31,191

10. Carlos Cheung, National, Mt Roskill – successful: $31,072

Some of this information is also available today in Glenn McConnell’s very good Stuff article, The politicians who were flush with cash and broke the bank campaigning

Dr Bryce Edwards

Political Analyst in Residence, Director of the Democracy Project, School of Government, Victoria University of Wellington

This article can be republished for free under a Creative Commons copyright-free license. Attributions should include a link to the Democracy Project (https://democracyproject.nz)

Cartoons today

Body - NZ Herald 27 February 2024

Yeo - ODT 27 February 2024

Cook - The Post 27 February 2024

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