SECTION 2. ACCOUNTABILITY MECHANISMS – PROBLEMS & OPPORTUNITIES FOR REFORM
18. MONEY AND POLITICS
Most Australians believe in both democracy and the market. Both involve individual choice. However, the counting principles are different – one vote one value as opposed to one dollar one value. The ever-present danger is that those with more dollars may use them to buy votes for their preferred MPs (or employ them when they retire) and receive benefits in access and policy preferences. Where political campaigning is expensive (as in US and Japan), campaign finance is at the centre of their corruption systems.
Some may see that political donations are an exercise in free speech. ART emphatically rejects that notion.[i]
- Money is not speech;
- Money enhances speech;
- Enhanced speech for some drowns out the speech of those with less money.
Once the free speech argument has been parried, we can fully recognise that only a tiny number of corporations and other businesses make political donations and of those that do, a disproportionate number are beneficiaries of direct or indirect government approvals and contracts.
Political donations need to be regulated with: –
- disclosure in real time;
- limits on any single donor;
- retention of public funding for elections (this is actually cheaper as most of those who invest in politicians expect a high rate of return);
- bans on some donors such as foreign governments and corporations (as in US) and industries that have too much to gain from governmental decisions. There is a respectable case for banning corporate donations on the basis that they are either for corporate benefit (which makes them corrupt) or not (which makes them in breach of their duties to shareholders).[ii] This argument does not technically apply to union donations but we would argue that there MUST be a level playing field and, if freed from the burden of funding political campaigns unions could concentrate on other needs of their members;
- broad coverage of entities to prevent avoidance through US style ‘Super Pacs’ and less spectacular Australian arrangements like the Greenfields Foundation;
- While charities should not be used to circumvent political donations’ caps, those engaged in advocacy for the charitable purposes they were established to pursue should not have their charitable status threatened. The removal of charitable status should be subject to AAT merits review and judicial review. Any review should include, and possibly start with, the oldest charities engaging in politically relevant comment.
In -kind donations should also be considered: –
- Volunteering of time– from leafleting to pro bono legal work. This probably does not have to be changed
But what about provision of:
- office space;
- telephone banks (political call centres);
- seemingly endless column inches attacking one side of politics (this would be enormously expensive if a paid for advertisement which would not be as effective in swinging votes , Should these be treated as campaign donations with relevant expenses and forgone revenue denied tax deductibility? (See below.)
However, one of the key drivers of political donations is the absence of caps on campaign expenditure. Caps restricting campaign spending release the pressure to solicit donations, as in New South Wales as well as in many countries including New Zealand, Canada and the United Kingdom. Australian federal election spending should be capped at the per-voter equivalent of the NSW levels.
[i] Colleen Lewis (2016) When political self-interest decides donations rules, what chance reform in the public interest? Available from https://www.accountabilityrt.org/2165-2/
[ii] While we do not adhere to this strong view and consider that boards are entitled, even obligated, to take into account principles of corporate social responsibility there is a concern.
Recommendation 19
Money and Politics: Cash and in kind Political donations be regulated with: disclosure in real time; limits on any single donor, retention of public funding for elections, anti avoidance mechanisms, bans on some donors such as foreign governments and corporations (as in US) and industries that have too much to gain from governmental decisions.