The ethics of political donations
A version of this article was first published: www.ethics.org.au - July 2012
It is one of the longest running, most controversial and yet most neglected political debates of all time. The USA has its long-enduring Super PACs, and Mitt Romney's embarrassment over the W Spann LLC corporation in 2011. The UK had 'Cash for Honours', Peter Hain and Peter Watt. More recently they had Peter Cruddas and 'secure access to the prime minister'. Japan has taken serious action on the matter, and Germany's government was rocked to the core, but the majority of nations (including Australia) have so far chosen to ignore the issue.
The issue of political donations by individuals, businesses or lobby groups has raised the ire of virtually everyone at one time or another. Opposition parties and civil rights advocates regularly cry ‘corruption’, with special interest groups and libertarians shouting back ‘freedom of speech’.
Only one thing is clear—political donations must have a significant impact on politics to be worth all this fuss. So, the question must be asked; can they be justified ethically?
At the time of writing, Australia is one of the least regulated nations in the world when it comes to political donations. There are no caps or limitations on donations and federally-registered political parties are only required to disclose donations of more than $10,900. This figure is somewhat meaningless however, as there is nothing to prevent multiple donations under this limit to any value they wish, completely bypassing disclosure requirements in a practice bizarrely known as 'smurfing'.
Each state has its own additional restrictions for state-level candidates and the parties they represent. Victoria in particular places a cap on donations from the gambling industry, but has no additional limitation or disclosure requirements whatsoever, meaning that a party registered only in Victoria can receive donations of any value without having to disclose them publically.
Attitudes towards the restriction or disclosure of political donations vary widely.
On the one hand, advocates of the current system claim that placing any restrictions on political donations curtails free speech. Without funding political parties cannot communicate with their constituents, raise awareness of their policies and achievements, and consult for the community's desires.
Providing donations is one of the most effective ways for individuals and lobby groups to get action on their particular areas of concern; the rise of the Greens in Australian politics was fuelled almost exclusively by the party's individual members and the Greens have been instrumental in tabling a number of key policies under the current Federal government that would otherwise never have been considered, including both a carbon tax and same-sex marriage.
And since Australia's political systems are not considered to involve real issues of corruption, with Transparency International ranking Australia as 8th best in the world in 2011, why change a winning formula?
But on the other hand, it is argued that political donations are just bribery with a business suit on; why else would third parties contribute large sums to the electoral success of a political party if they didn't think their election would benefit them? Does not such influence completely undermine the 'one man, one vote' representative democratic system that Australian politics is based on?
Even if these donations were made in the best of faith, based entirely on the existing values of the party, how long would it take before that party began to become very aware of the importance of keeping these third parties happy to ensure the money kept flowing? While removed from the old 'suitcase full of cash' level of bribery, such an influence on government policy is still corruption and has the potential for profound impacts.
When the current Victorian government swept to power in 2011, one of their earliest actions was to intervene in the planning scheme surrounding the Shrine of Remembrance, preventing further nearby high-rise development of more than 60 meters. While puzzled over such a specific intervention, many members of the public were happy with the move to prevent the Shrine being obscured. And then it surfaced that the decision would prevent one specific development from blocking the harbour views of the Domain building, a building whose investors included several prominent and very vocal Liberal Party donors.
While no formal allegations of corruption were ever raised, the spectre of influence is clearly felt. And since the only body that could effectively act on such an accusation is the Parliament itself, by way of a joint investigatory committee, majority vote and internal sanctions if any wrongdoing were found, why would anyone bother?
The Australian public's attitude to all of this appears to be one of disinterest. The vast majority do not know anything about political donations or where to find any disclosures, and given there's nothing they can do about the information if they did, this is understandable. More distressing, however, is the attitude amongst the public that the questionable influences of political donations are simple par for the course—what else do you expect from politicians?
Such disengagement is problematic for a representative system of government that requires public scrutiny in order to function well and ensure accountability. Membership in political parties has steadily decreased in Australia and as public disengagement increases, the influence of third party donors in only likely to increase to fill that gap.
So what is the answer? Should political donations be restricted at the potential cost of freedom of speech and voter consultation? Should disclosure be expanded and enforced to maximise transparency? Or should the current system be maintained, even though it may encourage undemocratic influence on politicians?
None of these options are satisfying, but a third option may already be provided by Parliament; the Register of Interests. This is a simple system used by the Commonwealth, State and local governments that requires MPs to register any private interests, gifts or memberships that might create a conflict of interest with their duties to uphold the public good. Combined with the Standing Orders of each house of parliament, any MP (or local Councillor) with registered interests cannot speak or vote on any issue directly affecting that interest.
So, if an MP receives a large cash 'gift' or a luxurious trip to the Bahamas from an oil company, that MP cannot vote on any bill that will affect the interests of that oil company.
By extending the application of this well-established system to political donations, parties would still able to receive external funding to conduct campaigning, but would be prohibited from voting on bills that directly affect the interests of those donors. This ensures that donations are only given with the public interest in mind by preventing those donations from having any effect on policy decisions, thereby removing the issue of undue and undemocratic influence.
This solution is both radically different and conservatively consistent with current parliamentary practice, and should be acceptable to politicians and easily implemented given its precedence. With such reforms, it could be hoped that public confidence in parliament would increase along with participation, gradually improving both the representative quality and the outcomes of Australian government.