An analysis of declared donations and expenses

The NZ First funding scandal got me interested in the overall picture of declared donations and expenses for our major political parties. More specifically I was interested in the linkages between declared donations and declared election expenses.

I had no expectation that there would be 100% correlation. Because a party generates much income that isn’t declared – only donations over $10,000 tend to be. And likewise only campaign expenses are declared, not the total costs of running the party.

But do most of the parties have some consistent ratio of declared donations to declared campaign expenses? Did any party have a very low ratio which might suggest a deliberate strategy to (legally) conceal large donations by breaking them into bits or having them never put through the party’s accounts?

Now it is important to stress that it is not bad per se to have income from non declared sources. National for example brings in up to $1 million a year just from membership subscriptions and donations. That is a good thing.

Now to the data, which is taken from the Electoral Commission website. Records only started in 1996. I have excluded 1996 as we don’t have donation returns for the full 1994 – 1996 period (law was only changed in 1995). So I have covered the periods 1997 – 99, 2000- 02, 2003 – 05 and 2006 – 2008. We don’t yet have expense returns for 2008 but I have included 2008 as we now have continous disclosure for amounts of over $20,000. This means everyone’s ratio is higher than would normally be the case, but as I am looking at the differences between them, it isn’t a huge factor. I wanted it to be as up to date as possible.

The Maori Party have only had expense returns for one election, so they are artifically high. If you exclude post 2005 their ratio is 52%.

National and Labour are very close to each other. If you exclude post 2005 elections National are at 80% and Labour 67%.

The Alliance is the only non current party in there. I included them as they are probably the closest to NZ First as a larger third party. Over the last three elections they have both spent similar amounts – $884K for the Alliance and $827K for NZ First. And during that time the Alliance has declared $711K of donations (including donations to Democrats when they were part of Alliance).

Then in order we have the Greens, United, Progressive and ACT at 54%, 47%, 42% and 35% respectively. A reasonable degree of difference, but all within that one third to one half range.

Finally we have NZ First. Since 1997 they have declared $827K of expenses but declared only $45,000 of large donations – a ratio of 5% – just 1/7th of the next lowest party ACT at 35%.

So what conclusions can one draw from this? Well remember the data is not complete. But there would seem to be two main conclusions one can draw – but competing conclusions. They are:

1. That NZ First is the only party that has never ever attracted large donors. That they are entirely funded by small donors and have had only one quarter as many large donations as the miniscule Progressive Party and one sixteeneth as many large donations as the Alliance.

   OR

2. That since 1997 NZ First has had a deliberate strategy of concealing large donations by means such as having had them broken up into smaller parcels, or channelling them through associated trusts who do not pass them onto the party but spend them at the discretion of the unknown trustees.

I will leave it to readers to decide which conclusion they think is most likely.