Thomas Anderson and Simon Chapple Grease or Sand in the Wheels of Democracy? The market for lobbying in New Zealand Abstract What is the nature of the New Zealand market for political lobbying? hat is the nature of the market Is lobbying grease in the wheels of a well-functioning democracy for political lobbying in New WZealand? Is our lobbying – adding to overall societal efficiency – as its supporters suggest? grease in the wheels of a well-functioning Or is lobbying sand, wasting resources in buying redistribution to democracy – adding to overall societal the powerful and damaging the social fabric essential for a well- efficiency – as its supporters suggest? Or is lobbying sand in the wheels, by wasting functioning democratic mixed economy, as opponents of lobbying resources in buying redistribution from believe? And, should we regulate lobbying in New Zealand, and one social group to another and damaging the social fabric essential for a well- why? This article concludes that the question is not whether lobbying functioning democratic mixed economy, should be made more transparent via regulation, but rather how this as opponents of lobbying believe? And, can best be achieved. should we regulate lobbying in New Zealand, and why? Keywords lobbying, vested interests, transparency, OECD, nature of Broadly, lobbying is any effort by lobbying, regulation, parliamentary access individuals or collectives to directly influence decisions of legislators and public officials outside elections. So defined, Thomas Anderson is a student at Victoria University of Wellington and a research assistant at lobbying is an important element of the Institute for Governance and Policy Studies. Simon Chapple is the Director of the Institute for Governance and Policy Studies at Victoria University of Wellington. He has previously worked in the political participation outside the voting OECD in Paris, the Reserve Bank of New Zealand and various government departments in Wellington. booth. This article focuses more narrowly Page 10 – Policy Quarterly – Volume 14, Issue 2 – May 2018 on the local market for lobbying. Market 2011; Walters, 2017; Edwards, 2017, 2018a, lobbying. The first theory is that vested lobbying occurs via the purchase of the 2018b; Barton Deakin, 2016; Secombe, interests directly lobby policymakers with services of a profit-making lobbying 2015). There are commentaries by money to generate political change which intermediary lobbying for a third party. politicians (e.g. Mallard, 2003). There are rewards their bottom lines (Olson, 1965; Market lobbying also arises where a body, several pieces of postgraduate student or Tollison, 2014). Such ‘rent seeking’ lobbying such as a corporation, a trade federation academic research (Williams, 2014; Tyler, is entirely social sand: it wastes society’s or peak business organisation, a trade 2015; Strong and Tyler, 2017), as well as a resources. A second theory suggests that union federation or a non-governmental useful broader consideration of vested vested interests lobby policymakers with a organisation (NGO), hires a person and interests, including lobbying, by Ellie mix of private information and money (De allocates their time to lobbying activity. Argyle and political commentator Colin Figueiredo and Richter, 2014). Money When analysing a market, the usual first James (Argyle and James, 2014). There are either signals the credibility of their port of call for developing an understanding several investigative works alleging information or buys access to policymakers. is industry statistics. However, such data egregious behaviour by lobbyists (Hager This form of lobbying may be a mixture of does not exist for lobbying. Statistics New and Burton, 1999; Hager, 2002, 2012). grease and sand, if the private information Zealand industry data does not contain an There is one policy article by a professional is of social value. A third theory suggests exclusive industry category for political lobbyist (Unsworth, 2014). Information on that vested interests with similar objectives lobbying intermediaries; the industry is too some lobbyists is available from a list of to policymakers support policymakers to small. Most intermediary lobbyists are access cards to Parliament issued by the allow them to fulfil more of their shared probably included as management advice speaker of the House. There is online objectives (Groll and McKinley, 2015). and related consulting services. The market is also too diffuse. For those corporates that directly lobby government, their lobbying Empirical researchers have had limited activity will be included as measured output in their disparate industries. success in identifying whether lobbyists Additionally, data on NGO, trade union are successful because of what they and business organisation lobbying activity is not available as such. know – their knowledge base – or who In many countries, the regulation of lobbyists provides considerable informa- they know – their connections. tion with which to examine the lobbying market. While this has not resulted in a definitive overseas answer to the grease information provided by lobbying Again, this form of lobbying may be a mix versus sand question, it provides companies to promote themselves to of grease and sand. information pertinent to addressing the potential clients. Finally, there is a body of While the empirical work arising out of issue to the public, and, via a more trans- theory and empirical evidence on lobbying the rational choice paradigm has been parent system, automatically reduces the markets from overseas. It is to this unable to determine the extent to which amount of sand in the system. By contrast, international literature to which we first lobbying generates social value, or has lobbying is unregulated in New Zealand. A turn. chosen not to address these questions Lobbying Disclosure Bill was introduced (Grossman and Helpman, 2001, p.4), it has in Parliament in 2012 by the Green Party, International literature on lobbying established a number of important but it was unsuccessful, with the general There is a vast international literature on empirical regularities about lobbying. view being that it was an ill-considered and lobbying from a wide variety of disciplinary While many of these stylised facts are poorly crafted legislative response perspectives. The surface of this literature unsurprising, it is valuable to have them (Edwards, 2018b). The downstream can be scratched here only, and our focus confirmed by systematic study. These consequence of an absence of regulation is is on the economic literature, which is empirical regularities, for the United States, an ongoing lack of public information on based on a rational choice paradigm which, are as follows (all from De Figueiredo and the local market. while delivering insights (e.g. Grossman Richter, 2014). First, lobbying spending is However, various sources of and Helpman, 2001), may not be the most significantly more sizeable – five times information can be utilised to cast light on appropriate lens through which to consider larger – than private funding of political the local lobbying market, allowing a lobbying. As overseas information comes parties. Second, businesses account for the structured discussion of whether it from different political and economic vast majority – 84-86% – of lobbying provides grease for or is sand in the wheels environments, their conclusions must be spending. In contrast, issue–ideology of New Zealand democracy, if not anything applied with care to New Zealand. Yet that groups, such as environmental groups, approaching a definitive conclusion. There information is far from irrelevant. comprise a small share: between 2% and are a number of media articles on aspects There are several core theories in the 7% of spending. Corporate lobbying is not of the lobbying industry (e.g. Dudding, international literature on the market for cancelled out by the countervailing power Policy Quarterly – Volume 14, Issue 2 – May 2018 – Page 11 Grease or Sand in the Wheels of Democracy? The market for lobbying in New Zealand Figure 1: Number and distribution of lobbyists and non-lobbyists with swipe card of acquisition of cards, is unclear. In 2003 access to Parliament, 2012 - 2017 MP Trevor Mallard claimed that ‘[i]n the 100 many years I have spent in Parliament, I have noticed a growth in lobbying. This 90 growth is likely to continue. Lobbying as 80 a practice and a discipline is going to get more sophisticated and more common’, 70 and he repeated this view in 2015 (Tyler, 60 2015, p.18). In 2015 another long- serving MP, Peter Dunne, reported that 50 lobbying activity had shrunk, but agreed Number of people 40 with Mallard that it had become more sophisticated in its methods (ibid., p.19). 30 After the 2017 election, the new speaker 20 of the House reduced numbers with card access. Lobbyists currently make up fewer 10 than half of those with cards; 22 of those 0 with cards appear to act as lobbyists. In 2012 2013 2014 2015 2016 2017 Post-election 2017 terms of the organisations they represent, Non-lobbyists Lobbyists Year their current number and distribution are as follows: Table 1: Market shares of lobbying · seven holders (32%) represent New Zealand (estimated guess) European Union corporations; Corporates 26% 13% · seven (32%) are intermediary lobbyists; Business Associations and Unions 20% 10% · two (9%) represent industry bodies Consultants (intermediaries) 18% 15% (businesses); NGOs 18% 13% · five (23%) represent trade unions