Donations a dilemma of modern democracy

Can’t live with them, can’t live without them: political donations are an awkward fixture in modern politics but banning them may not be the answer.


NSW Premier Mike Baird was shocked and appalled on Monday – though probably not for the last time this week.

Sensational evidence on the first day of an Independent Commission Against Corruption inquiry into political donations was laying bare, in the words of counsel assisting Geoffrey Watson SC, “the systematic subversion of the electoral funding laws of NSW”.

Mr Baird wasted no time issuing a statement stating his shock and asserting “the book should, and will be thrown” at any wrongdoers.

He also said it was time for a discussion about electoral funding and “the corrosive culture of political donations”.

Donations to political parties have been an increasingly problematic part of public life in recent years.

In 2009, NSW introduced laws that banned donations to politicians by property developers – a move designed to remove the potential for improper influence by developers on decision makers.

But the ICAC’s Operation Spicer, which began on Monday, has revealed a web of slush funds and money trails involving NSW Liberal party MPs and staffers, all allegedly set up to get around the donation bans.

Since Mr Watson’s shock-and-awe opening on Monday, the bombshells have continued exploding and the number of names caught in the fallout has grown.

Planning minister Chris Hartcher and MPs Darren Webber and Chris Spence had already voluntarily withdrawn from the Liberal party following ICAC allegations relating to slush funds; MP Marie Ficarra has stood down over an allegation she accepted a developer’s donation; the chairman of Liberal fundraising body the Millennium Foundation, Paul Nicolaou, has resigned his position.

And on Friday police minister Mike Gallacher resigned from his portfolio after corruption allegations involving donations were heard at the ICAC.

Mr Watson identified the difficulties around donations as one of the structural problems of a modern democracy.

“Politicians and political parties need funding to succeed in elections. If they do not get seats in parliament, they will wither and die,” Mr Watson told the commission.

To mount a successful campaign, politicians needed to attract donors, Mr Watson said, and there was not necessarily anything wrong with that.

“But there are also other donors whose donation is merely an attempt to buy access to politicians,” he said.

Mr Watson raised full public funding of election campaigns as a possible solution “to free political decision makers from the insidious effect of improperly motivated donations”.

While Mr Baird quickly embraced the suggestion, one expert in the area cautions public funding is not a cure-all.

Professor Rodney Smith, a politics and ethics researcher at the University of Sydney, said the idea of public electoral funding was initially driven by Labor governments as a way to counter the perceived greater access to money enjoyed by the Liberal party with its business supporter base.

NSW premier Neville Wran, who was farewelled in a state funeral blocks away from where the ICAC’s exposures were taking place on Thursday, introduced the country’s first partial public election funding in 1981.

The Liberals initially opposed public funding, before seeing the financial reality and embracing it.

Today, public funding plays a minor role in campaign spending.

The maximum in public funds a political party could receive for the 2011 NSW elections was $6,975,000, but Prof Smith says the major parties raised about 80 per cent of their funding themselves.

The reason is simple: a huge increase in the cost of campaigning.

“Elections increasingly get more and more expensive – with direct marketing, polling, focus groups and all the things parties want to do, like sending leaders around the state,” Prof Smith said.

The ALP is now adept enough at fundraising to no longer need taxpayer support but, Prof Smith says, public funding does play a role in diversifying the political system – helping small candidates challenge the Labor-coalition duopoly.

But he cautions that a sole public-funding model could be unworkable.

“It’s not something that we’ve seen anywhere in the world,” he said.

There are numerous difficulties, such as how to allocate funding: if funding were based on votes at the last election, no new party would ever be eligible, but a more open system might open up funding to joke parties and candidates.

“I also think there is a question about whether candidates who run for office have some expectation that their supporters should put up some money to help them get there,” Prof Smith said.

Instead of heat-of-the-moment calls for more reform, Prof Smith advocates better use of present laws.

He points out that the NSW Election Funding Authority, like its federal counterpart, does not have the resources to investigate if funding disclosures aren’t made.

“There’s been a lot of talk about the need to reform the campaign funding rules – we may not need to do that; what we may need to do is enforce them better.”

And Prof Smith points out that if parties can get around donation rules now, they could still try to do the same under a full public funding model.

By Peter Trute, AAP




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