Sunday, November 26, 2006



Why we need transparency

News from The Hollow Men continues to trickle out, with the Dominion-Post have a good series on some of the key allegations yesterday, and the Herald publishing a short summary today (Public Address also has a guest column, from Danyl Mclauchlan, who occasionally comments here, assessing the book). Meanwhile, I'd like to focus on one of the more interesting aspects: the role of money in politics.

Chapters 14 and 15 take a long hard look at the way National's 2005 election campaign was funded, uncovering the donors behind National's money laundering trusts, and demonstrating that both Don Brash and party president Judy Kirk lied to the public repeatedly with their claims that they "have no idea where the money comes from". Some parts of this, notably National's skirting of election funding laws and the offer of the Talley brothers to provide $1 million through an anonymous front company to support Brash's election - arrangements that "stink", according to electoral law expert Andrew Geddis - have already received solid coverage. But one aspect has been all but ignored by the media: the practice of people and companies "investing" in a political party so as to profit directly from its policies.

For example, Hager notes that pharmaceutical company Pfizer sponsored a table at a fundraising dinner held by National in June 2005 - in the process giving about $5000 to the party. While this is below the $10,000 declaration limit, and so did not need to be declared to the public, Pfizer was very visible and made damn sure that the senior National Party people at the dinner - including Don Brash, John Key, and Judy Kirk - knew exactly who they were and where the money was coming from. Coincidentally, National had promised a bottom-up review of Pharmac - from which Pfizer stood to profit significantly if it weakened or ended Pharmac's single-buyer power (used to squeeze better deals out of the pharmaceutical industry for the benefit of sick New Zealanders). Equally coincidentally, it has also subsequently opposed measures to limit direct-to-consumer pharmaceutical advertising. Another table was sponsored by Diane Foreman, on behalf of the Private Hospitals Association, an organisation with the goal of "grow[ing] the private [health] sector to relieve the public sector" - in other words, shuffling patients into private hospitals rather than public ones. Coincidentally again, this is National Party policy, and equally coincidentally, Foreman and her associates would make hundreds of millions of dollars from such a shift.

The most egregious example however is that of the Insurance Council, who reportedly promised National a million dollars because it would privatise ACC - resulting again in hundreds of millions of dollars in revenue to its members. They then colluded with the party to ensure that the "details" (such as the core idea) of the policy were kept from the public - a textbook example of Brash's "moral obligation to lie" in action. When the policy was leaked, they then worked hand-in-glove with National on the media response.

All of this was of course kept secret from the New Zealand public - and you can see why. It looks pretty suspicious, doesn't it? In fact, if it happened in a poor third-world country, we wouldn't hesitate to call it by its true name: corruption. One hand is clearly washing the other.

As Hager notes,

When National MPs oppose measures to control smoking or gambling, or to allow greater subsidies for or advertising of pharmaceuticals, the public has every right to know whether those interests have been giving the party money.

Unfortunately, thanks to National's laundering of its donations, the public doesn't know, and so cannot judge whether such arrangements are acceptable. Which is precisely the point - National knows that what it is doing is dodgy, and so they hide it.

This is why we need electoral transparency and an end to money laundering and anonymous donations: so the voters can decide for themselves, and hold parties to account at the ballot box. And that fear of accountability is precisely why National opposes such moves.

16 comments:

"...the Insurance Council, who reportedly promised National a million dollars because it would privatise ACC"

So, the order was policy, then funding? Wouldn't it only be a problem if it were funding, then policy?

Not that details like causation matter. It is true that having money influence political power is a problem.

I think the solution of regulating/removing money from politics (which you seem to champion) is stupid and unworkable.

The real solution is to remove the unnecessary power that the government has. But no-one likes that idea because then they wouldn't be able to protect the poor/brown/environment/women/etc, which works so well at the moment.

Posted by Hugh : 11/26/2006 02:54:00 PM

Thanks for this I/S, and for your continuing coverage of the Hager book's revelations - I've been away from keys since Thursday morning and your posts are perfectly formed little puddles of the latest juicy leakings, which I can gleefully jump up and down in in my metaphorical red gumboots :-)

Posted by Span : 11/26/2006 03:23:00 PM

Hugh: Hager is clear that the policy existed before the money was offered: "the money was not being given to influence the policy, which National already intended, but to help ensure the election of the party". But even that is troublesome enough when combined with the secrecy - the Insurance Council was treating our democracy like a business decision, and attempting to covertly influence elections so as to maximise the profits of its members. Again, if National was open about the sources of its funding, the public would be able to judge for themselves whether it was acceptable. But that's precisely why National are secretive - because they know such cosy arrangements are not acceptable to the New Zealand electorate.

The real solution is to remove the unnecessary power that the government has.

That just moves it somewhere else - into the hands of the private sector. The power exists, and will not go away. The problem then is to ensure that it is democratically controlled and used for the public benefit, rather than controlled by an unaccountable and unelected elite who use it to entrench their position and lord it over everyone else.

Posted by Idiot/Savant : 11/26/2006 04:08:00 PM

I/S; Your links show a remarkably accurate assessment of the National party, long before the leaked emails. This is to your credit.

Posted by james cairney : 11/26/2006 04:11:00 PM

For months I blogged, defending the left on various blogs, speculating from my own deductions, and reaching some very similar conclusions to Hagar...but without the evidence that he has now bought to the light of day.

The truth turns out to be even more sordid and dangerous than I had guessed. I find myself taking less pleasure in the vindication, and more apprehension mixed with sorrow at how narrowly NZ dodged a very large bullet in 2005.

Posted by Logix : 11/26/2006 05:36:00 PM

I don't think the ordering of whether the policy or the funding comes first is greatly important - at that stage it is only a policy. That said, the public deserve to know if party policy is being written by outside and undeclared influences

Once a govt is in power one of the first things to decide is to decide on which policies it might implement first, and what might be put in the too hard basket. Large financial donations to political parties could also influence these sorts of decisions.

If they were not trying to buy democracy off with a large checkbook why bother with the hideously overpriced tables in the first place?

Posted by Joe Hendren : 11/26/2006 09:00:00 PM

"The most egregious example however is that of the Insurance Council, who reportedly promised National a million dollars because it would privatise ACC - resulting again in hundreds of millions of dollars in revenue to its members."

Or unions who campaigned strongly for the Labour party who promised to raise the minimum wage and oppose optional probationary periods.

National have long supported the privatisation of ACC, they even privatised ACC once; those who support National's policies choose to support them financially, just like those who like pro-union policies support Labour financially.

There are a number of serious allegations in The Hollow Men, I/S, this isn't one of them.

Posted by Graeme Edgeler : 11/26/2006 09:21:00 PM

I/S, you wrote: 'That just moves it somewhere else - into the hands of the private sector. The power exists, and will not go away. The problem then is to ensure that it is democratically controlled and used for the public benefit, rather than controlled by an unaccountable and unelected elite who use it to entrench their position and lord it over everyone else.'

~~~~~~~

And this is precisely THE problem in the United States-- sad to say, the elected officials in Washington do NOT represent the people-- they represent lobbyists.

Yes, like it or not, the power is there (either in the hands of the government or the hands of corporate power). A government can be held accountable by the pwople, whereas several corporations cannot. But that requires two things (a) transparancy of government & (b) vigilance on the part of the people (a worthy responsibility).

As long as there is no transparency in government (in ALL parties), then there is no democracy except in name.

I'm just thankful that NZ is nowhere near as far gone as the US in that regard & I hope it never does.

~ Josh

Posted by Josh : 11/27/2006 01:45:00 AM

Graeme: Its hardly a secret that the unions support the Labour Party though, is it? It is, after all, the Labour Party. Labour are quite open about their supporting worker's rights, were against the Employment Contracts Act (or whatever it was called), and wanted to strengthen unions when they were elected in '99. I don't remember National being quite so open about privatising ACC during the last election. In fact, I remember Brash saying that they had no plans to privatise anything, until someone found out that there were some state farms that were on the block -- which caused a big kerfuffle.

This was the weird thing about National's last campaign -- it was tax cuts and nothing else. Even the 'let's ban the Maoris' thing fell by the wayside. If their campaign was being funded by the Insurance Council, and they were going to privatise ACC, and they didn't want anyone to know, then yes, that is a problem. The comparison with Labour and the unions is completely disingenuous in this case. A long and open tradition of a supportive relationship between the worker's unions and (what was once) the worker's party bears no comparison with secretive deals between corporate businesses and the party of *cough cough* "mainstream New Zealand".

If their policies were so good, why didn't they want to tell us about them so we could make an informed decision with our vote? It's not like the public aren't well versed in the merits of these kinds of reforms.

Posted by Mausie : 11/27/2006 06:27:00 AM

National is the party of mainstream business. yu'd have to be blind to not know that they would try to make NZ a better environment for business.

But rather than fihts over who is to blame we should start discussing solutions
1) give money to parties from tax so they dont need to ask for so much of it.
2) more agresive enforcement, for one thing allow procecutions for electoral offences many years after the event.
3) more agresive oversight - things like manditory use of parlimentary email for party business and making that email available to a review body or the public (except where it is a state secret)- a very british coup...

Anything else?

I dont think the beat up is that helpful.

Posted by Genius : 11/27/2006 06:57:00 AM

National is the party of mainstream business. yu'd have to be blind to not know that they would try to make NZ a better environment for business.

Well, actually no. They would make it better for big corporates with monopolistic tendencies but as far as the SME kiwi battler businesses, I don't think they or their five supporters give a dam.

In today's DomPost I see Roger Kerr stating that NZ has never operated in a freer market and yet defending the right for corporates to operate without regulation. All this does in increase the cost of doing business in NZ, which is where most SME's *do* their business.

Finally, if Insolent Prick shows up today, perhaps he could explain to us again how National raised so much of its money from cakestalls and sausage sizzles around the country. Seemed to be a major theme of his earlier this year.

Posted by noddy : 11/27/2006 08:50:00 AM

Graeme, you state that the Union movement supported Labour financially as labour made minimum wage promises, etc.

The difference is just that, Labour promised, and indeed campaigned, on changes to the minimum wage, it was all above board.

National kept the ACC policy largely quiet, although not a serious allegation in the light of the book, it is still unsavoury politics. A more accurate analogy would be if Labour had the quiet intention of, say, compulsory unionism (or some other electorally unpopular pro-union policy).

Posted by james cairney : 11/27/2006 11:33:00 AM

The ACC policy wasn't a big plank for National, but I wouldn't say they kept it quiet. It will have been catalogued in lists of things National wouyld do to lower costs for business etc. Anyone knowing a fair amount about NZ politics when asked about National's plans for ACC would have thought they intended to open it up to competition - not least because they did last time they in power, and strenuously opposed when Labour Nationalised it.

Labour didn't have billboard advertisements promising state-funding of political parties, but as Jordan Carter has pointed out, that's in their manifesto somewhere...

Posted by Graeme Edgeler : 11/27/2006 11:51:00 AM

I have to agree with Graeme and suggest this is a total beat-up.

National at the last election had *no* policy, beyond...tax cuts...

Posted by Pablo : 11/27/2006 01:18:00 PM

Fair enough Graeme.

Posted by james cairney : 11/27/2006 09:22:00 PM

the difference with unions pushing a rise in minimum wages is that unions would not personally benefit from such a rise. they might get higher membership, but again, that would not be a personal benefit.

the thing with the insurance industry is that they personally stood to gain a lot from privatisation - money that went straight into the pockets of their shareholders, many of whom presumably live outside nz.

Posted by Anonymous : 12/01/2006 01:38:00 PM