ESSA

ESSA

Seeing through: national reform on political donations


Eloise Hesse

By

July 27th, 2016


Australia has some of the most relaxed laws on making political donations. Eloise Hesse explores how this allows undue influence from donors, while leaving voters in the dark.


Australia has some of the most relaxed laws on making political donations, allowing undue influence from donors, while leaving voters in the dark about it. Despite the introduction of public funding in 1983, corporate donations have climbed to $202 million (2013-14) and make up the bulk of campaign funds. Australia is behind other parliamentary democracies when it comes to the timeliness and extent of disclosing political donations. Melbourne Law School’s Associate Professor Joo-Cheong Tham, has also recommended that meetings between donors and ministers should be disclosed, and the ministers absent from fundraising events. Inadequate regulation of spending is equally concerning, with loopholes on parliamentary entitlements advantaging incumbents, combined with a lack of accountability for government advertising. Tham argues current election spending limits should start 6 months out from election day, as opposed to the current system which begin on the day of the official campaign launch.

More transparency is needed, particularly for political donations. The inadequacy of current safeguards is impacting our ability to implement much needed economic reforms, as “a new ethos has developed in which there can be no losers from reform,” according to Professor Ross Garnaut. The vested interests of individuals and corporations can be seen as rent-seeking, as many try to obtain economic gain without creating their own wealth or other benefits to society. Rent-seeking behaviour in Australia has increased in the last 20 years, according to Garnaut, making micro-economic reforms less likely. Debate on economic policy in Australian politics is increasingly between what the American economist Mancur Olson terms “distributional coalitions”. Lobbyist groups attempt to shape policy strictly in their favour, to the detriment of more substantial reforms which could benefit the Australian economy, but might harm their own interests.

In March, the NSW Electoral Commission ruled to withhold $4.4 million in public campaign funding from the Liberal Party’s NSW division, because the party would not disclose donors who gave through the Free Enterprise Foundation. The Party, via the Foundation, was found to have accepted ‘major’ private donations from property developers and other prohibited donors, prior to their 2011 campaign.

Donations over $13,000 must be disclosed to the Australian Electoral Commission, although this does not become publicly available until February 1 in the year following the election. In NSW the threshold is $1,000. The Electoral Commissions of each state and territory have adopted various restrictions, particularly in NSW, which are yet to be introduced at the federal level. In late 2015, the Victorian Ombudsman found an urgent need for greater restrictions, to restore public confidence in the integrity of the political process. It reiterated that “Victoria, along with the Commonwealth, is amongst the least regulated jurisdictions in the western world in terms of political finance law.”

By comparison, Canada has banned donations from corporations and foreign entities altogether. Unlike 114 other countries, Australia does not ban foreign donations, for which transparency is particularly hard to ensure. Neither does the Commonwealth cap the amount donated by an organisation or an individual.

Attempt at reform with the 2009 Commonwealth Electoral Amendment (Political Donations and Other Measures) Bill, did not go through. Additionally, the High court has previously stuck down certain limitations on election advertising, and restrictions on who can donate, based on our constitutional ‘freedom of political communication’. However, a subsequent ruling did allow NSW to prevent certain donation sources if it could be justified.

Labor and the Greens both want to reduce the disclosure threshold to an accumulative $1,000 per year from any donor, ban anonymous gifts over $50 and to provide public disclosure in ‘real time’. Malcom Turnbull has agreed the issue needs to be looked into, and former NSW Liberal party treasurer Arthur Sinodinos, has also called for political donations to be listed in “continuous real time”.

Additionally, the Greens have proposed banning donations from mining, development, tobacco, alcohol and gambling industries. This is in the context of almost $3.7 million of political donations by fossil fuel companies in the last election cycle. It is also a reminder of the political influence of the mining industry, who’s heavy spending on a scare campaign against Kevin Rudd’s Minerals Resource Rent Tax, prevented its full implementation (and helped topple the Rudd leadership).

Creating the right environment for honest economic debate and reform goes beyond political finance laws. For instance, having longer terms with fewer campaigns would make a difference. Our three-year terms are much shorter than the 4 or 5 years of most parliamentary democracies. But more immediately, Australia’s political parties seem ready for another attempt at electoral reform before the next election rolls around. If our government is to make economic policy independent of the most influential donors, this time they need to see through a bill on transparency.

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

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