Is democracy damaged by corporate donations to political parties?
Democracy - in the famous phrase, it's supposed to be government "of the people, by the people, for the people."
But what if some people are more equal than others? That is, what if, by virtue of their wealth, they get to wield more influence than others?
Indeed what if some of the biggest influencers are not really people at all, but corporations and other large organisations such as trade unions?
This is the concern about donations to political parties. Those making the donations typically say they get no direct benefit; they are not buying influence, just trying to promote their principles. Yet others say it would be naive to think there isn't some kind of payoff when the big decisions get made.
The facts, figures, laws and history of this topic can get fairly complicated; see the links below for some good starting points.
But at the heart of it all is this: is Australian democracy damaged when powerful organisations provide a major part of the funding for the political parties? Or is this an essential part of a robust democractic process?
Presenting the arguments on this issue we have two of the leading proponents of these opposing views.
Greens Senator and democracy spokesperson
Democracy IS damaged because...
Program Director, The Grattan Institute
Democracy is NOT damaged because...
Political donations to political parties distort the political process.
Nothing makes this clearer than a British example, where earlier this year an aide to British Prime Minister David Cameron was caught on camera offering access to the leader in return for donations. The party’s co-treasurer, Peter Cruddas, boasted he could arrange private meetings with the PM for those willing to hand over £250,000 (A$380,000) a year, with a promise that their views would be "fed in" to the leader's policy unit.
Politicians are constantly making decisions that affect corporations that make massive political donations to their campaigns. These include planning laws that favour property developers and gambling laws which maintain gaming machines in clubs and hotels and boost their profits.
Donors can access government but the door is closed to others.
Democracy is damaged when individuals and companies who make donations have access to politicians while the average punter or community group does not.
MPs sit with donors at fundraising dinners and meet with them at Parliament House.
John Thorpe, a former NSW president of the Australian Hotels Association famously told ABC TV’s Stateline program in 2004 that ''democracy isn't cheap”.'
''Look, what helps is this - you attend as an observer, as I did at the ALP national conference. Yes, it costs money. But we did get interviews with ministers, we did get interviews with staffers, and that does help us in our policies and our regulations.''
The Greens www.democracy4sale.org research project shows money follows the party in power. For example the resource and pharmaceutical industries gave far more to the federal Coalition than Labor during the Howard years and developers favoured Labor when they were in power in NSW.
Sometimes donations fly under the radar robbing the public of a clear picture of who’s getting what.
Current electoral funding laws not only allow large donations but make it difficult for most people to identify who is donating to whom.
High disclosure thresholds and loopholes allow many tens of thousands of dollars to be donated to a political party from a single company without public disclosure. Lengthy disclosure periods mean that donations made before an election are kept secret until well after the election is held.
The public think donations stink and that’s bad for democracy.
Even though in Australia there may be few cases where a direct link can be established between donations and favours delivered for the donor, the public views the system as corrupt.
Surely this should be enough to convince the major parties that corporate donations should be stamped out?
In NSW, home to some of the most generous donors, successive governments have gradually put the lid on corporate donations in a bid to heal the scar which has so damaged politics in that state.
Federally progress is much slower and the Gillard government has walked away from the job, despite Senator John Faulkner championing the federal government's green paper on electoral funding which provided a clear road map for reform.
Labor and the Coalition parties raised well over $300 million during the last decade for their election war chests, which perhaps helps to explain the inaction.
It’s time donations were cleaned up federally and election campaigns funded with public money. The Greens have long argued that elections should be funded through a combination of public funding and small donations from individuals. If Canada can do it, why can’t we?
Giving donors an opportunity to hog the ear of MPs damages our political process.
Australia’s democracy deserves that all voices are heard equally in important national debates.
Australia’s campaign finance systems are among the most liberal (i.e., least constrained by regulation) in the world. In most jurisdictions, the law does not restrict who can participate in politics or how much they can spend. The core idea is that in a liberal democracy the electorate should judge political actors and activity. The current campaign finance system helps them do that by requiring disclosure of larger donations to political parties and third parties such as GetUp!.
This liberal system is challenged by people who believe that the state should prejudge some political actors by restricting their political rights. These challengers to liberal campaign finance law have had most success in NSW. All organisational donations to political parties—from corporations, unions and NGOs— have been banned, and political donations to third parties severely restricted.
The voters, not campaign finance law, should decide what is in the public interest
Some people believe that prohibiting donors will reduce special deals for vested interests. But the academic literature suggests that special deals are driven primarily by party beliefs and opinion polls. Labor and the Nationals are based on vested interests, and the Liberals are traditionally pro-business. There is nothing inherently wrong with people advancing their interests through politics. It is a routine part of any democracy. Public opinion surveys frequently find significant support for industry handouts and benefits for particular groups in society.
The dividing line between vested interests and the public interest is too unclear to declare any political actor a threat to the public interest. Depending on where you stand, the same state support can look like corporate pork or a vital boost to employment. We have politics because there is no consensus on the public interest. And so we should not disqualify anyone because we believe that they represent a vested interest. Donations to or from them are a legitimate form of political expression, which should be debated rather than prohibited.
Restricting political organisations reduces rather than increases the political capacity of individuals
Sometimes bans on corporate donations are defended as promoting political equality. Even if donations don’t change politicians’ views, they might affect who wins the election. So corporate donations could give an advantage to pro-business political parties, over parties that rely on individual donations. But as in NSW, it is never just corporate donations that are prohibited. Banning corporate donations alone would imbalance the political system in favour of the union-financed ALP. All organisational donors are banned (and some individuals in NSW, but that is another issue).
Yet organisations play a vital role in the political system. Most people lack the time and skills needed to navigate the political system. Organisations represent the interests and views of members, employees, shareholders and supporters. Ultimately, restricting political organisations reduces the political capacity of individuals, by limiting their scope for collective action.
Campaign finance laws protect political parties from political competition
Academics give stricter campaign finance law a gloss of respectability, but ultimately the push for more restrictions is driven by political parties concerned with their own power and survival. They want to replace their donations with public funding, while limiting the fundraising and spending capacity of their political challengers, especially third parties. Strong campaign finance law insulates political parties from outside pressures and influences.
In a democracy, that is a bad rather than a good thing. We want a vigorous political contest over interests and ideas, and donations to political and third parties help finance that contest. Not every political contestant has the same resources. But they all must deal with the prior views of voters and the competing voices of other political parties, third parties and the media. We should trust the voters to make the best choice, and not prejudge the contest by handicapping any participant, corporate or otherwise.
- For a comprehensive overview see Electoral and political financing: the Commonwealth regime and its reforms by Brendan Holmes, Parliamentary Library, Parliament of Australia; particularly p.5, "Some arguments for and against public funding"; and his Political financing: regimes and reforms in Australian states and territories.
- Find out who gave how much to which parties on the Australian Electorial Commission's periodicdisclosures.aec.org.au.
- Andrew Norton, in Democracy and Money: The Dangers of Campaign Finance Reform argues the case against reform in a Centre for Independent Studies monograph.
- Two academics present The case for transparent funding and better regulation of political parties.
- Videos: The team from Chasers War on Everything send up political donations; and on a more serious note, long-time Liberal fundraiser Michael Yabsley epxlains his change of mind on the issue.
So what do you think? Vote and leave a comment below.
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