Political donations in Australia

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The term political donations refers to gifts to a politician, a political party, or an election campaign.

In Australia, the majority of political donations come in the form of financial gifts from corporations,[1] which go towards the funding of the parties' election advertising campaigns. Donations from trade unions also play a big role, and to a lesser extent donations from individuals. Donations occasionally take the form of non-cash donations, referred to as gifts-in-kind.

The Australian Electoral Commission regulates donations to political parties, and publishes a yearly list of political donors.[2] Donors can sometimes hide their identities behind associated entities.[2]

Corporate political donations[edit]

Between the years 1995-1998, corporations donated $29 million to Australian political parties. The largest corporate donor during this period was Westpac.[3] By the year 2002-2003, the amount of corporate funding to Australian political parties had risen to $69.4 million.[4] In 2004-2005, the Labor Party raised $64.8 million from both the corporate sector and public funding, while the Liberal Party raised over $66 million.[2] Most of the large corporate donors conduct business in an area greatly affected by government policy, or are likely to benefit from government contracts.[3]

Corporate fundraising[edit]

In Australia, there is a growing trend for MPs to become directly involved in the corporate fundraising efforts of their parties. Ministers and staff are encouraged to engage with donors and business supporters, with the aim of raising cash for their political parties.[2] It is known for business leaders to pay $1400 to get near a federal minister.[2]

When political parties lodge their return to the AEC, they are not forced to divulge the identities of corporations attending party fundraising events. This allows companies to deny they are political donors.[2]

Public funding to reduce corporate donations[edit]

In 1984, the Hawke government introduced public funding for political parties, with the intention that it would reduce the parties' proportional reliance on corporate donations, vs public funding.

During the 2004 election, the government paid $41.9 million in public funding to political parties. The Liberal Party received $17.95 million in public funds, while the Labor Party received $16.7 million.[2]

Trade union political donations[edit]

The Australian Labor Party is the main beneficiary of trade union donations in Australia. During the years 2004-2005, trade unions donated $49.68 million to the Labor Party's head office. Critics have accused the unions of buying seats at ALP state conferences.[5] In 2001-2002, money from trade unions amounted to 11.85% of the Labor Party's income.[2]

2006 law change[edit]

In May, 2006, the Australian government increased the disclosure threshold for political donations from $1500 to $10,000. In announcing the laws, the government said it will result in a "fairer" and "more competitive" electoral system,[2] however, failed to discuss how the changes achieved these goals.

Critics allege the new law will increase the chances of corruption, by making political donations harder to track, and by making conflicts of interest harder to detect. The change in disclosure allowed corporations to secretly donate up to $90,000 spread across the national and eight state/territory branches of political parties without public disclosure of that funding.[2][6] Donations up to $1500 were also made tax deductible.[6]

The Commonwealth Parliamentary Library estimated this disclosure change will increase the number of secret political donations from 25% up to 36%.[7]

Since 2006, the threshold has increased two or three hundred dollars each year (adjusted for inflation) so that in 2011 the threshold is $11,900. That means a total of up to $107,100 from each donor can be received by political parties (spread across the national and state/territory branches) without a need for disclosure.[8]

Associated entities[edit]

Despite the Australian Electoral Commission publishing a yearly list of political donors, it is often difficult to ascertain who made the donation, as political parties sometimes use associated entities as front organisations to hide the source of the donations.[2]

Front organisations such as the Cormack Foundation and John Curtin House Limited provide individuals and corporations with a means of passing funds to the major parties anonymously. Under the current electoral act, these organizations are not required to disclose where the donations came from.[9] Associated entities have become huge political donors in Australia, in 2003-2004 donating $72.6 million to political parties.[2]

Criticism of political donations[edit]

The Australian Shareholders Association has called for political donating to end, arguing that the donations are a gift and a form of bribery.[2]

Former Qantas chief, John Menadue, said:

"Corporate donations are a major threat to our political and democratic system, whether it be state governments fawning before property developers, the Prime Minister providing ethanol subsidies to a party donor, or the immigration minister using his visa clientele to tap into ethnic money."[4]

Political researchers Sally Young and Joo-Cheong Tham from the Australian National University concluded:

"There is inadequate transparency of funding. Moreover, there is a grave risk of corruption as undue influence due to corporate contributions and the sale of political access."[2]

Some critics say Australia should follow the example of the United Kingdom, where corporate donors must disclose their political donations in the company's annual report to shareholders.[3]

Other critics have called for limits to cap the amount that corporations and unions can donate to political parties, similar to the $5000 personal donation limit in Canada, with a virtual ban on union and corporate donations.[4][10] Some point to the success New Zealand has had, limiting the amount of money that political parties can spend on their election campaigns.[10]

In January, 2008, New South Wales Opposition Leader Barry O'Farrell demanded political donations be limited to $30,000 per candidate, and a cap of $250,000 on what a corporation or union can donate to a political party. Describing the NSW government of Morris Iemma, O'Farrell said: "This is a Government where many people are of the view donations buy influence and decisions. That's why we need to take action to clean up the system." [11]

Under a proposal launched by Shadow Federal Treasurer Malcolm Turnbull in January 2008, only individuals who are Australian citizens or on the Electoral Roll would be eligible to donate to political parties, and must declare the money came from their own funds. Turnbull said that the democratic system was not working properly when there is such a disparity between the amount of political donations a government can raise compared to the opposition.[12]

State political donations[edit]

New South Wales[edit]

The New South Wales government is the seventh biggest advertiser in Australia, ahead of McDonald's and Coca-Cola.[10]

On 30 October 2006, former Prime Minister Paul Keating called for an end to political donations from property developers. He said that in NSW, property developers were sending a "wall of money" towards the planning minister.[13]

In September, 2007, the Independent Commission Against Corruption cited political donations as a risk for corruption. The ICAC recommended that the state premier make changes to the Election Funding Act to force property developers to publicly disclose any donations made to the minister for planning, or the minister's political party.[14] The ICAC also recommended that local government councillors step aside from any development applications involving political donors.[14]

On 27 June 2007, the New South Wales Legislative Council established a committee to investigate electoral and political party funding.[15][16] Critics have said the inquiry will be a toothless tiger, due to it being stacked with government-friendly members. [10][17]

On 14 September 2011, a radical bill was tabled by Premier Barry O'Farrell which would ban any donations from corporations, unions or other organisations; only individuals would be permitted to donate, up to a cap of one thousand dollars.[18] The bill was passed on 16 February, 2012.

Victoria[edit]

In Victoria during the year 2001-2002, the Victorian Labor Party received $7.2 million in political donations, with trade unions, gaming companies and property developers on the list of donors. In the same year, the Victorian Liberals received $11.3 million in political funding, including $3.8 million in public funding.[19]

Former Victorian premier, John Cain, presented a speech on political donors:

"All of them want access and, some would say, favours. We seem to have accepted this situation provided that the donation, the giver and receiver are known; that is, that disclosure is the key.
"But the driver is hunger for money by the parties. Despite public funding in the Commonwealth and some states, this hunger explains the drive only in part. Donors want the parties (and so, governments) to be beholden to them and to be preferred over their business competitors. It is a neat, cosy arrangement. It grows more blatant.
"The parties in Australia now openly call for donations that provide access at rates of $10,000 to the Prime Minister or premier. It costs less to get to see a minister.
"Parties are like football clubs - no matter how much money they get, they will spend it and then want more."[20]

Former Victorian auditor-general Ches Baragwanath said it is naive to believe that political donors don't expect favours in return for their money.[2]

See also[edit]

International:

References[edit]

  1. ^ Young, Sally (2006). Political finance in Australia : a skewed and secret system (PDF). Australian National University. Retrieved 2007-09-29. 
  2. ^ a b c d e f g h i j k l m n o "Are our politicians for sale?". Melbourne: The Age. 2006-05-23. Retrieved 2007-09-21. 
  3. ^ a b c "The National Interest: Political Donations". ABC Radio. 2004-06-25. Retrieved 2007-09-25. 
  4. ^ a b c "Can power be bought?". Melbourne: The Age. 2004-02-08. Retrieved 2007-09-26. 
  5. ^ Albrechtsen, Janet (2006-11-08). "Of course donors expect something in return". The Australian. Retrieved 2007-09-26. [dead link]
  6. ^ a b "How red tape strangles the ballot boxes". The Sydney Morning Herald. 2007-09-01. Retrieved 2007-09-26. 
  7. ^ "Our democracy encourages corruption and undue influence". Melbourne: The Age. 2007-02-02. Retrieved 2007-09-26. 
  8. ^ "Disclosure Threshold". Political Parties & Funding and Disclosure > Election Funding. Australian Electoral Commission. Retrieved 18 October 2011. 
  9. ^ "Mysteries remain in political donations". ABC Radio. 2004-02-02. Retrieved 2007-09-25. 
  10. ^ a b c d Stoner, Andrew (2007-09-26). "Counting the cost of political advertising". The Daily Telegraph. Retrieved 2007-09-29. 
  11. ^ Clennell, Andrew (2008-01-28). "Anger over Iemma's lopsided election campaign war chest". The Sydney Morning Herald. Retrieved 2008-01-28. 
  12. ^ Clennell, Andrew (2008-01-29). "Turnbull backs call for cap on donations". The Sydney Morning Herald. Retrieved 2008-01-29. 
  13. ^ "Property developers' money still keeping all sides of politics afloat". The Sydney Morning Herald. 2006-11-01. Retrieved 2007-09-26. 
  14. ^ a b "ICAC recommends applicants declare political donations to minimise DA process corruption risk". ICAC. 2007-09-04. Retrieved 2007-09-25. [dead link]
  15. ^ "Legislative Council Select Committee on Electoral and Political Party Funding". Parliament of NSW. 2007-06-27. Retrieved 2007-09-25. 
  16. ^ "Coalition wins vote for donations inquiry". The Sydney Morning Herald. 2007-06-28. Retrieved 2007-09-25. 
  17. ^ "Donations inquiry stymied by Iemma Government". The Sydney Morning Herald. 2007-09-27. Retrieved 2007-09-29. 
  18. ^ "Election Funding, Expenditure and Disclosures Amendment Bill 2011". Parliament of NSW. Retrieved 7 November 2011. 
  19. ^ "Fuel firm doubled gift to Coalition". Melbourne: The Age. 2003-02-04. Retrieved 2007-09-26. 
  20. ^ Cain, John (2006-10-18). "The politics of greed". Melbourne: The Age. Retrieved 2007-09-26. 

Other sources[edit]

Colin A. Hughes: Fifty years of campaign finance study in Australia, Democratic Audit of Australia, Discussion Paper no. 35 of December 2006 (http://democratic.audit.anu.edu.au)

Iain McMenamin: Business, Politics and Money in Australia: Testing Economic, Political and Ideological Explanations, Working Papers in International Studies, no. 4 of 2008, Centre for International Studies, Dublin City University (http://www.dcu.ie)

Graeme Orr: 'The Law of Politics. Elections, Parties and Money in Australia', Sydney: Federation Press, 2010.