Why I don’t support the full public funding of elections

The ongoing revelations at ICAC are strengthening the case for reforming donation laws in NSW and there is an emerging consensus that change needs to happen. NSW Liberal Premier Mike Baird has said he favours full public funding and has commissioned an expert panel to investigate it as an option by December. Labor Opposition Leader John Robertson has also called for a ban on all donations and the implementation of full public funding for elections.

While I agree that political donation and expenditure laws need to be reformed, I do not support full public funding of elections. Constitutional law experts Anne Twomey and George Williams have both argued against it with good reason. Questions remain about the constitutionality of such a ban and about the practical implementation of such a scheme.

Much of the debate about reforming donation laws is based on the premise that donations equals corruption, that interest groups are “buying” democracy and influence. It ignores the fact that all political parties represent some kind of interest groups and that meddling with donations is unlikely to change that. It is also naive to think that by banning donations, groups will not seek to exercise influence in other ways, particularly seeking leverage through third party campaigns (or threats of campaigns) to extract concessions. Donations are not the only form of transactional politics.

The fact is that NSW already has the toughest set of laws in the country as this summary from the Expert Panel shows. The laws include caps on expenditure and donations, prohibited donors and regulation of third party campaigns. If anything, the recent ICAC investigations have shown that where laws are introduced, there are attempts to get around the new laws. Rather than for elections to public office, donor money may shift to factional slush funds for internal contests to preselect MPs in safe seats and the Upper House. There needs to be a greater focus on enforcement as there will be attempts to circumvent whatever reforms are adopted.

There are also practical questions about the amount of public funding available under a fully funded model and how the allocation of funding be determined. Then there is the issue for parties that do not have representation or are newly formed – how much funding do they get? How will administrative funding for political parties and membership fees be treated?

Within parties there will be questions about who gets to determine the distribution of public funding within the party to campaigns and candidates. Will it be based on previous results in the seat or left up to head office? This is my biggest concern given that political parties are not always the most democratic organisations and scarce resources will mean that candidates who are not favoured by the party machine will not be able to get the resources needed for their campaign.

Finally, there is also the assumption that public funding will not be rolled back. It ignores changes to public funding that often have a partisan undertone, for example, the Liberals decision to target unions by changing donation and expenditure legislation. It isn’t an isolated case in Australia, in Queensland, the Liberal National Party have raised the threshold to receive public funding. Overseas, Italy is ending state financing of political parties and the Canadian Conservatives raised donation thresholds and ended per-vote subsidies. It is not inconceivable that a future government tries to roll back public funding.

There is a lot that could be done such as real-time public disclosure, lower donation and expenditure caps and tougher penalties but what needs to be addressed the most are the inconsistencies between federal and state laws. The implication of Brian Loughnane by ICAC shows that there is a level of co-ordination between state and federal branches to get around donation laws. It would also address a major loophole in the NSW legislation that allows the transfer of funds from other branches of the same political party. Until these inconsistencies are addressed and the loophole is closed, there cannot be full confidence in any donations and expenditure regime.


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