Business
Money doesn’t talk
by David W Young
Big business has no reason to cross the government’s palm with silver.
A curious feature of the never-ending debate about the Electoral Finance Act is the depth of concern some people have about the influence of big business on politics. The act’s defenders apparently believe there is a real risk that corporate New Zealand could use its deep pockets to hijack the political process. This fear is odd. It certainly over-estimates the influence that businesses have on politics, and probably exaggerates their interest in changing an election outcome.
For most companies, it makes little sense to get out the chequebooks for politicians. In New Zealand, chief executives don’t have to pay money or lay on gifts to get face-to-face time with a political leader. It is a very inefficient way to get the policies you want, compared with employing lobbyists or public relations professionals, or calling the politicians yourself. It’s also an easy way to upset shareholders and staff: no matter how the cash is divvied up between the parties, someone is going to be unhappy.
The only real reason for a company to give money to politicians is a fairly boring one: the earnest desire to be a good corporate citizen. Buying carbon credits and building Habitats for Humanity have become much more popular and effective ways of feeling good.
Few listed companies make political donations these days. Telecom gave it up in 2006, shortly after government intervention in the sector saw its share value plummet. Then-chief executive Theresa Gattung had warned the government off regulation by invoking the potential loss of money to “mum and dad” shareholders, not by threatening to cut the rather meagre $50k donation and corporate box time.
Across the Tasman, free market think-tank the Institute of Public Affairs has pointed out that Australian businesses are putting less money into politics than they used to, because the reforms of the 1980s and 1990s effectively gave companies the playing field they wanted.
Simply put, big businesses don’t need to spend time in smoky back rooms plotting to overthrow hostile governments – they can move offshore more easily than ever before.
Last election, there were $3.2 million of declared donations over $10,000. As political scientist Bryce Edwards points out, this is a fraction of the money the parties get from the taxpayer through parliamentary funding. Still, it’s a fair whack. We’ll never know how much came from businesses, unions and wealthy individuals – but having spent a few years working for a political party that was big on fundraising, I’d say most came from the latter.
Advocates of the Electoral Finance Act point to these millions – and those spent by members of the Exclusive Brethren supporting National – as evidence that a law change was needed.
It would be hard to find a less competent bunch of political interferers than the Brethren. But even if they had got their act together, there’s little evidence that big money can sway an election result in any serious way.
In the United States, presidential candidates need tens of millions of dollars just to be taken seriously. Even there, however, economist Steven Levitt finds that money doesn’t buy victory. Levitt has discovered that a winning candidate can cut campaign spending by half and his or her vote will drop by only one percent. Similarly, a loser can double it and his or her vote will climb by only one percent.
In New Zealand, the Act Party has historically been the richest party after Labour and National, but hardly the most successful. Some of the big business lobby groups themselves have plenty of cash but low public esteem.
Businesses do have sway, but it doesn’t come through their wallets. They participate in business confidence surveys to which pundits and the government are sensitively attuned. Business leaders serve on public boards. Chief executives are regularly consulted by the main political parties. Lobby groups participate behind the scenes on policy formation.
Despite efforts by several parties, small business owners have never voted as a bloc. There are enough of them to ensure that if any party could come up with the right policy prescription to woo them in 2008, business really could have an impressive amount of influence on politics.
