Richlister behind Les Mills gym empire reveals why he donates to political parties

Thursday, 21 March 2024

New Zealand politics runs on private money, but never before has the political right amassed so much from wealthy donors. In this two-part series, Stuff political reporter Bridie Witton asks what rich-listers are getting in exchange for their cash, and, what a surge in private donations means for the public trust. You can read the first part here.

Businessman and philanthropist Phillip Mills wants to go on the record, despite facing backlash for his political views.

He was labelled “hypocrite of the week” by the Taxpayers’ Union last May because he was one of 100 wealthy New Zealanders who told the Government they want to pay more tax.

Mills, of fitness empire Les Mills, hadn’t paid back the Covid-19 wage subsidy which supported the 12 gyms dotted between Auckland and Dunedin. Mills said the gyms - shut down during lockdowns - had yet to make a profit. Its international branch, its fitness brand selling clothing and fitness classes, has paid back the subsidy.

But when asked if he will answer questions about the opaque world of political donations, he wanted to speak out. He sees the comments from the Taxpayers’ Union as an attempt at stopping him speaking in support of progressive values.

“I am not afraid and wont be scared off,” he said. “A lot of my wealthy friends are scared [from speaking out about politics] because of that, it actually scares them off from saying anything. I think that is a terrible shame for our society.”

As well as speaking up in support of tax reform and the green transition, Mills financially backs the Labour Party and the Greens - and gave both parties six-figure sums over the 2020-2023 electoral cycle.

All political parties rely on wealthy donors, but nearly 70% of Labour’s political donations in the last electoral cycle - between the 2020 and 2023 elections - came from wealthy donors, meaning support from people like Mills is imperative to its success.

National raised huge sums from wealthy donors this electoral cycle, but it made up slightly less of its overall haul, at 57%. For the Greens, 58% of their published intake was from donations above $20,000. (Full electoral returns for 2023 are due in May which includes donations below $20,000. These tend to favour National and once added to the total are expected to widen the imbalance between the political left and right, however the Greens are also expecting a significant boost from one-off, smaller donations).

Labour suffered a staggering election loss in October, losing stronghold seats to National and a significant chunk of the party vote. The Green Party had a solid result, pulling 11.6% of of the party vote while its Wellington Central candidate Tamatha Paul won the high-profile Wellington Central seat, beating Labour’s Ibrahim Omer.

Some voters could see big money as having a pernicious influence on politics, but Mills said his donations are not transactional - he is simply backing a world view he believes in (richlisters backing the political right made the same argument in the first part of this series, which you can read here).

“It is about our belief around economic justice,” he said. “I think that people who are donating purely selfishly are misguided, we all suffer if we don’t deal with climate change, we all suffer with terrible inequality.”

But he finds it hard to believe some of the richlisters backing National and ACT aren’t motivated by their own gain.

Landlords are slated to benefit from National-led government policies to restore interest deductibility to their mortagages. Many of its donors are associated with the property sector - such as the Bayly Corporation, and property management company Stonewood Group.

The policy change brings landlords in line with business owners, who are able to deduct the interest paid on their loans from their taxable income. However, National says it will also benefit renters.

Mills doesn’t agree. “It does look like there is cronyism going on here.”

Without proof, it is only a suspicion - and one which richlisters Stuff spoke with denied. But the current system may breed mistrust - many on the political left around Wellington believe those donations have influenced policy on the right.

The independent electoral review panel, which was asked to consider how to make New Zealand's electoral system clearer, fairer and more accessible, reported in March that most of the people who made submissions wanted more disclosure of party funding, suggesting the public is also wary of the influence of big money donors in politics.

Academics Max Rashbrooke and Lisa Marriott, from Victoria University, have researched the issue and interviewed big money donors. They found the close proximity between wealthy donors - who tend to be from the world of business - and decision makers means laws tend to favour them.

They say it is not surprising when political parties sell access to their politicians. National in 2022 put on a ‘President’s dinner’ at Auckland’s Hilton hotel with leader Christopher Luxon for $1500 a head. Labour also let people pay $1500 for a lunch with then-Prime Minister Jacinda Ardern in 2019, and in 2021 sold tickets for a business conference with Ardern at more than $2000 a head.

But one former Labour government Cabinet minister said it would take more than cash to influence policy. “People of influence, whether donors or not, have access to politicians,” he said. “Money doesn’t necessarily buy you influence.”

For them, the person needed to be adding valuable ideas and perspectives to have their views taken into account.

The most blatant recent example of the close proximity between wealthy donors and law makers was the emails between Labour’s Stuart Nash and two business leaders, which got Nash sacked from Cabinet.

In 2020, while the Government was negotiating a commercial rent relief package, Nash - then minister for small business - sent an email outlining Cabinet discussions and noting his disagreement with colleagues on the issue.

The emails, which came to light last March, were in breach of the Cabinet manual which states ministers should not disclose or record the nature of discussions or the views of ministers or officials. Nash was promptly sacked from Cabinet and left politics at the election.

The Greens managed to outpace Labour in political donations, raising more than $1.49m to Labour’s $1.38m in the 2020-2023 electoral cycle. Of those, $875,657.09 came from wealthy donors, who only gave slightly more - $931,304 - to Labour.

Consultants working in the Wellington beltway have a number of theories as to why Labour did not pull so much in donations from the business community this electoral cycle.

One, widely held, theory is Labour lost much of its support from the business community because of the pace at which it wound back pandemic restrictions. Chris Hipkins’ first meetings as Prime Minister at the start of last year were with business leaders to claw back support.

They also believed Labour supporters may not want to be seen as so well-off they can spare a large political donation (donations $1500 and higher have to be declared), because of the party’s genesis as one which represents the working classes.

Labour’s fundraising strategy for the 2023 election was to ask for small, one-off donations, to support items such as hoardings.

It speaks to the declining rate of party membership - an issue across political parties - which is also part of the broader decline in civic participation in modern life. As a result, parties are not banking as much in membership fees, and are more reliant on donations.

One top Labour Party official hoped for reform, and a cap on political donations. The Green Party have also campaigned on capping political donations at $35,000. Co-leaders Marama Davidson and Chlöe Swarbrick did not see a tension between calling for political donations to be capped, while relying on big-money donors.

“We think that everyone has to play by the rules and that there has to be transparency,” Davidson said. “We think that everyone should have to be more transparent, and not allow for big money and power and wealth to dictate election outcomes.”

This story has been amended to clarify donations below $20,000 for 2023 have yet to be published. 9.38am.