The cost of democracy

Election campaigns require serious money. FRAN O'SULLIVAN and VERNON SMALL examine how the parties get the cash.

They are the bagmen: veteran political arm-twisters, many powerful in their own right, who use charm, reason, and sometimes, if all else fails, rhetorical brass knuckles to get what they want - cash.

They want bags of it, enough to finance four weeks of campaigning, tortuous radio jingles, screaming billboards, heroic newspaper advertisements and endless television opportunities so that our politicians can woo you.

Labour's "ATM machine", as former president Bob Harvey used to call himself, is Auckland-based party president Mike Williams. His aggressive fundraising campaign has left the other parties relatively flat-footed. National and Act were both caught short by Clark's decision to call a "snap election", and Labour's stratospheric poll ratings and National's bad press have made Williams' job easier. Donors are more sympathetic to a winner than a loser.

The canny Williams started early. He approached nearly 400 businesses last year. He has visited up to 500 separate firms so far - well above the 60 to 70 normally fingered for Labour's campaign. Labour expects to spend $1.6 million to get re-elected, although Williams notes acerbically that a campaign costs "whatever you can get".

By now his seduction line is well practised: businesses should donate to re-elect the Government. The need to support the democratic process, and to acknowledge the "Clark-led" Labour Government has created a stable and healthy business environment, provide the mantra-like warmup lines.

Then the president gets to his bottom line: Labour deserves to become Government in its own right with "no dependence on small parties".

The line may be smooth, but the response can be rough."You've got to kiss a lot of frogs before you find a prince, I'll tell you that," he says. "It's a numbers game. The more you visit the more money you get."

Williams' sales pitch is rubbished by former National Treasurer Bill Birch. "Why would you support a socialist Government when you are in business? One that puts up taxes, tightens the labour market, nationalises businesses. It's just a philosophical thing."

In 1999, Canadian fundraiser Rita Albano - whose early concerns sparked an audit inquiry into several Fay Richwhite donations which are now the subject of a Serious Fraud Office probe - co-ordinated the corporate drive. But this time Birch heads a 16-20 strong corporate fundraising team.

"They are professional, our amateurs, and they are good because they are people of good standing," he says. "I find business quite supportive. They recognise there is no political funding and democracy needs a bit of assistance and they like to support the private enterprise party, so that makes my job a bit easier."

For the 1996 election, National raised $3 million. It will be lucky to get half that this year, unless it can scare business people into believing that Labour has a hidden agenda for its second term that will hurt them.

Long-time fixer Sir Selwyn Cushing, a former chairman of National's corporate taskforce, has stroked a few connections.

FR Partners' Bill Birnie - closely connected to Sir Michael Fay and David Richwhite - is also at work.

Birch is persuasive and knows how to close a deal. "Birch would come in and look you in the eye and see whether he could squeeze you for a decent amount or not. If not, he would make sure he would take ten grand off you," an Auckland investment banker chuckles.

"Sometimes people will give money just to keep in with the influential person. He now has influence in Auckland where people are trying to secure mandates - a lot wouldn't ignore that in their considerations."

Act's fundraising boss, John Boscawen, must share Birch's contact list - he's criss-crossing the same network. A wealthy property developer, Boscawen cut his teeth in Epsom, where he drove his own financing strategy to bankroll a tilt at the blue-ribbon seat.

Boscawen has asked all of Act's nine MPs to back their election chances with their own money.

"I make the pitch that I am doing this because this is what I believe in personally. The MPs are prepared to back it with their own money and Act has been very successful," he says. "It has been a party of influence and I point to policies where Act has benefited or had an effect."

Act also promotes to business its catalyst role, pushing the National Party to adopt more aggressive positions on policies such as tax reductions.

"Just take our Waitangi Treaty policy. Derek Quigley twice put up a private member's bill. The National Party twice voted it down. Last week they announced it as their own policy.

"I point out to donors ... and they see it that the National Party wouldn't be doing that unless we had pulled them into it."

Boscawen deals with the "smaller fry" while Act's top-drawer backers are the provenance of president Catherine Judd, who courts wealthy backers such as former brewing magnate Douglas Myers, Alan Gibbs and Craig Heatley - all now living overseas - property specialist Michael Friedlander and Trevor Farmer.

Their donations - several million secretly routed through a trust one year - have been the equivalent of a smart bomb precisely targeted to support a party prepared to promote strong private enterprise principles.

With wealthy backers or not, Act's poll ratings are still under the 5 per cent threshold that would secure it parliamentary seats. Boscawen is peeved the party's ability to raise its profile has been hamstrung by the Electoral Commission's decision to award it $166,300 worth of free television time compared with the $615,000 Labour and National have been awarded. Act is prevented from law by paying for extra time from its own campaign funds.

The irony was not lost on Cushing when Jim Anderton called him seeking a donation for his Progressive Coalition. Skellerup - formerly part of Cushing's Viking Pacific stable - has contributed to Anderton's Wigram fundraising. But Anderton is also one of the politicians who drove the renationalisation of Air New Zealand .

The party's Marty Braithwaite says businesses donate because they approve of Anderton's regional development work.

New Zealand First and the Alliance each expect to pull in at least $250,000 and the Greens are expecting $500,000. Green fundraiser Danna Glendining says the party is picky over which corporate donations it accepts.

But why should business put money into politics at all? Both National and Labour pay lip service to the bland formula that donors are simply bankrolling democracy. Corporates that sign the cheques have a different take.

"Most of us who are affected by policy don't want to not be there at all, because we know how vindictive politicians can be," said one influential player. "One day we're going to be sitting in the minister's office pitching for a privatisation and not wanting them to say, 'I remember those pricks, they turned Mike Williams, or whoever it is, away five times'."

Labour's business donations average between $4000 and $6000, although many have donated $10,000 because they know it will not be disclosed. It's a similar pattern with National and Act.

Deloitte Touche Tohmatsu chairman John Hagen says his accounting firm typically gives about $5000 each to the main parties. A few partners individually give to Act. The ANZ had traditionally given less than $10,000 to several parties anonymously.

Away from the boardrooms, Labour has another funding stream. The party's main union donor, the Engineering, Printing and Manufacturing Union, is expected to hand over $80,000, the same amount as at the last election. Of that, $70,000 will go to Labour Party headquarters and $10,000 to help EPMU organiser Lynne Pillay in Waitakere, where she is up against Alliance leader Laila Harre.

In 1999 the EPMU gave $20,000 to the Alliance, but it will get nothing this time because the union believes its low poll rating does not justify the expense. The union will also give $1500 to Labour's Gill Boddy-Greer, who is trying to unseat United's Peter Dunne in Ohariu-Belmont, and is contemplating a smaller donation to Jim Anderton in Wigram.

But the EPMU will be limiting its advertising spend to informing its members and encouraging enrolment. In 1999 it spent about $300,000 on advertising for a change of Government.

Labour raised more than $1 million from businesses last election, and Williams said he hoped to do a little better this time.

"Not because we've picked up any big donors but because we are going to many, many more businesses than we ever did before."

He estimates that between 10 and 20 per cent of those approached would promise a donation, but he could not be sure how many would pay or how much would come in until after the election. Former Police Minister Ann Hercus gets the chase-up job.

Williams says donors never talk about gaining access or policy concessions in exchange for their cash. "No they don't. My line for that is: 'I can't offer you anything except that there will be a healthy centre-left party called Labour, and that this is the least corrupt country on Earth except Norway and they kill whales'."

He says he does not suggest their cash will ease access to top Government figures. "There's no point in saying, 'I can assist you to go and see a minister' and I never say that, because why would you bother? Up to and including Helen they are extremely accessible."

But Cushing says access is very much part of the play. Big donors frequently expect contributions will get them a foot in the door to present a case, even if fundraisers do make clear there should be no expectations of favours. Access to senior politicians during a campaign soon closes down as their timetables become bogged down by the parliamentary agenda.

Williams says donors are genuinely supporting democracy."If they think they're giving money to influence the Government, they're not. Our MPs simply don't know where the money is coming from, except what they read at the Electoral Commission."

Ernst Young chairman Rob McLeod debunks the nostrum. "There are more justifiable causes for a charitable dollar than politicians.

"I've never internalised favours and for the kind of money we give I think we are out of the league. I think there are people out there who give tens of thousands, if not into the hundreds of thousands, who possibly have more influence as a result of that.

"They possibly target a favoured regime by giving that money."

Neither National nor Labour disclose the sources of individual contributions to MPs - though they give total figures.

Says Williams: "I don't ever report to anybody, except the general secretary, where the individual money's come from."

He did not even tell Prime Minister Helen Clark. "She doesn't ask. I never volunteer. Hard as though it is to believe, that is how it works."

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