Labour's finances in the red

Labour Party leader Andrew Little. Photo / Mark Mitchell

Exclusive: Report reveals failings in fundraising

The Labour Party has run at a deficit for at least two years, forcing it to dip into its cash reserves and highlighting one of the problems the party faced in last year's election.

A copy of the party's financial report obtained by the Herald shows it recorded a $71,373 deficit in 2014 and an even larger $104,915 deficit the year before, a shortfall president Professor Nigel Haworth put down to the costs of byelections and its leadership contests.

That resulted in a $117,410 drop in its cash reserves ($612,378) and the value of its net assets dropped from $270,000 to $199,000. Those assets include about $500,000 in property.

After last year's election, a review of Labour's performance raised fundraising as a priority, saying the party risked ongoing "electoral failure" if it could not raise more money.

Yesterday, leader Andrew Little denied it was embarrassing that Labour was in deficit despite criticising the Government for its deficits.

"The Government is accountable to all the people, all the time and should conduct themselves appropriately.

Political parties are accountable to their members and should conduct themselves prudently, but over the long term."

However, he said, it "absolutely" highlighted the need to focus on fundraising.

"There is no question about that. A singularly poor point of our organisation's performance is fundraising."

The report shows the party spent $2.1 million on last year's election - $125,000 more than it raised. It listed election revenue of $1.99 million - of which $940,000 was subsequently declared as donations - less than half of its spending.

Professor Haworth said the party expected to be able to record a "small surplus" this year. The deficits predated his tenure as president.

He said one of the reasons for the shortfall was the cost of the leadership contests in 2013 and 2014. The report shows they cost the party about $60,000 each, although it recouped about $30,000 in donations each time.

In 2013, it spent $104,000 on the Christchurch East and Ikaroa-Rawhiti byelections - a similar amount as the deficit for that year.

The report also shows the costs of running the party are just over $1 million a year, of which about $500,000 was in staff remuneration. A significant chunk of its revenue came from levies on the affiliated unions, MPs and local electorate branches which totalled $636,000 last year.

The figures show the party is still paying off loans from some of its electorate branches, which Dr Haworth said dated back to before 2008. The interest on the loans is costing $30,400 a year and it still has more than $700,000 owing. The practice of taking loans from local electorates to fund the campaigns was halted in 2009 by Mr Little who was then president.

Last year, Labour raised $940,000 in donations, a quarter of National's $4 million. It spent $1.3 million on election advertising - half of National's $2.6 million.