The Political Power of Wealth?: An International Perspective on Campaign Financing

By: Hannah Thompson

In June 2013, the New Zealand Parliament passed the Local Electoral Amendment Act 2013 with the primary intention of tightening rules on campaign financing in local elections. The Act determined that donations exceeding NZD $1,500 (roughly USD $995) – whether in cash, or in goods and services – made to candidates in relation to an election campaign could not be done so anonymously. Any person involved in the administration of the affairs of a candidate, relating to his or her election campaign, can now be liable for failing to disclose a donor’s identity (where it is known) for a fine not exceeding NZD $5,000 (USD $3,380). The relative modesty of the donation amount to be disclosed is intended to ensure that the identities of all moderate financial contributors to local electoral campaigns are publicly accessible information. In addition, the Electoral Act 1993 determines that candidates must file a return with the New Zealand Electoral Commission in respect of all donations from a single donor exceeding a total of NZD $30,000 (USD $19,900).

The changes to the Local Electoral Act 2001 brought by the 2013 Act were primarily motivated by the political controversy surrounding donations made to the 2010 campaign of Auckland mayoral incumbent, John Banks. In addition to failing to disclose the source of several large donations, Banks was accused of filing a false electoral form under the 1993 Act when it became apparent that he was aware that Finnish/German multimillionaire Kim Dotcom had donated NZD $50,000 (USD $33,200) to his campaign, but had failed to disclose this on the form.

The scandal effectively ended Banks’ political career – not least because, in addition to supposedly forgetting that he asked Dotcom for a donation, Banks also “forgot” that he had ever met Dotcom, and that he had flown in a helicopter to the millionaire’s Auckland mansion. Beyond this, it highlighted public concerns about the potential influence of wealthy donors in local and national politics. Even under the amendment, a central remaining concern is that candidates can effectively circumvent the disclosure requirements where they do not technically know the identity of the donor. Ultimately, there is no obligation to investigate, and candidates are not required to disclose the identity of persons they think have donated to their campaigns. The potential for heavy-handed influence of anonymous wealthy donors to the success of their political candidates of choice still remains an issue in New Zealand politics.

America’s political history reveals a similar – if not exponentially more significant – fear of political influence by the wealthy. As in New Zealand, most states have regulated campaign financing in some measure for several decades. The move to regulation began with the Federal Election Campaign Act Amendments of 1974 (FECA), which, though only applicable to congressional and presidential elections, was accompanied by comparable laws in most states.

Virginia is an example of a state that has fairly straightforward regulations on campaign contributions, particularly when compared with the federal scheme. Currently, Virginia’s Code requires, by way of the Campaign Finance Disclosure Act of 2006, that any individual campaigning for political office must file a campaign finance report, which includes not only the name of donors who have contributed over USD $100 cash or in-kind donations to the campaign, but also their address, an aggregate amount of contributions made by the contributor to date, and a number of other criteria (§ 24.2-947.4). The state effectively has a “full disclosure” policy with respect to campaign contributions. It has been suggested that this policy of full disclosure has worked effectively to curb corruption in Virginia elections, and the unduly heavy hand of the influence of wealth on the political process.

Interestingly, despite the hurdle of constitutional limitations on political regulation, Virginia’s threshold for requiring disclosure is significantly lower than that in New Zealand (USD $100 vs. USD $995 respectively), which has no such constitutional check on the regulation of elections. One could suggest that the threat of an effectual plutocracy is more of a concern in the United States than in New Zealand, given the expansively deep pockets of potential contributors to American political campaigns. Yet, the Banks scandal reveals that the influence of wealth poses a real threat to the integrity of political processes not only in large countries or states like Virginia, but equally so in small nations like New Zealand.

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