What's with the Back Flip?


Damascus conversion metaphors flew thick and fast when NSW Premier Morris Iemma announced plans to ban political donations. This was not surprising considering the timing of the announcement – Easter Saturday – and the complete policy back flip involved in the new position.

Iemma’s reversal of his party’s policy came after years of NSW Labor leaders dodging calls from the Greens and many community groups to ban corporate donations to political parties.

For over a decade, NSW Labor has justified its refusal to act on political donations by arguing that any changes to the law needed to be undertaken at the Federal level so there would be conformity between all State and Federal electoral systems. This was the main ploy to block a Greens initiated Upper House inquiry into political donations. Even when an inquiry went ahead, Labor continued to argue that NSW could not go it alone on reform.

As recently as 15 February this year, the NSW ALP General Secretary Karl Bitar was still diligently following the Party line in a submission to the NSW Inquiry into Electoral and Political Funding. He argued, "Funding and disclosure reform must be introduced at a Federal and State level simultaneously, otherwise it will not address the current problem where companies or individuals can manipulate differences in the laws."

Then we all woke up on Easter Saturday to find that the Premier had seen the light and was ready to lead the way and reform NSW electoral funding laws. Iemma told the Sydney Morning Herald that "the time has come for us to now seriously consider moving away from donations and having a fully public-funded system … It’s now got to the point the mere fact of giving a donation creates the perception that something has been done wrong. The time has come to test the viability of a full public system."

The reason for this dramatic change in policy on political donations can be summed up in one word: Wollongong. In the five weeks from 15 February to 22 March, media outlets were saturated with the cash-for-planning-approval stories that many people across the Illawarra had been warning about for years.

The merry-go-round of nightly television appearances of Labor mates caught up with these shameful acts of self interest and greed was a political disaster that no publicity relations firm could put a good spin on. It became increasingly difficult to distinguish between political donations and bribes.

With reports that Labor’s internal polling was showing their vote in freefall we can only imagine what was being said in Sussex Street. Clearly Labor had to move to stem the bad news stories, which were going to continue as long as the developers, hotels, insurance companies and many other corporate interests kept donating millions of dollars to political parties.

Suddenly Labor had found the answer: NSW would create a new and world-class election funding system banning all political donations! Positive headlines in newspapers and on TV quickly followed.

This week, Labor’s General Secretary Karl Bitar is meeting with representatives of political parties to discuss how the proposed ban will work. When we met we thanked him for arranging these meetings and said that the substance of our dialogue needs to be on the public record.

The Greens have welcomed the Premier’s willingness to change his position on donation reform. However, we are wary of some of Labor’s plans – especially those involving changes to the funding of elections.

Iemma has proposed that as well as the ban on corporations making political donations, the ban should extend to individual donations. While there needs to be a cap on such donations as some wealthy individuals could obviously use their money to influence decision makers, a complete ban would make it close to impossible for emerging parties and independent candidates to contest elections.

The role of third parties is another area where we need policy change to ensure that big money donations do not continue to distort the democratic process. Third parties are individuals and organisations that spend money campaigning in elections (think the Swift Boat Veterans for Truth during the 2004 US election, or the Australian Chamber of Commerce and Industry’s anti-Labor ads during the 2007 Australian election). The Greens support a model similar to that adopted in Canada which limits third party election advertising expenses to C$168,900 during an election period.

The other key change that needs to go hand in hand with a donation ban is a cap on election expenditure. Canada, the UK, Spain and New Zealand are some of the 27 countries that have already taken this step. The Greens in our meeting with Bitar argued the case for caps. If unlimited election spending is allowed there will be greater incentives for parties and their backers to find loopholes in any ban or cap on donations.

Interestingly, it was on this issue on election expenditure that the Labor secretary was most resistant. His arguments were revealing. While he explained that the donation ban was needed to "remove the perception" of the corrupting influence of donations, he argued that when it comes to limits on election spending the public are not clamouring for change so business can continue as usual.

Maybe there is no vocal public outcry on this issue but we are confident if voters were given a chance to have their say there would be strong backing for less money to be spent on election campaigns. The Liberal Party is now backing limits on a spending cap.

Caps on expenditure are also critical to limiting the amount of public money that is required to fund political party activities. If this amount blows out, there would understandably be widespread public anger.

Coming into these discussions on election funding, Labor obviously has a credibility problem. Their donation ban plan could help reverse some of the public anger. But the Premier and Bitar need to realise that NSW voters are very suspicious of the Government’s motives. If they fail to rein in election spending, the goodwill that Labor may generate from their donation ban plan will be diminished.

Labor needs to be careful that its reform plan does not favour the major parties, make it harder for minor parties, or lock out emerging parties and independents.

Changes to electoral funding laws are complex. At some point in the process Bitar has started members of the public must have their say. Considering the Premier has indicated he wants the changes in place by the 2011 NSW State election, there is plenty of time for that to occur

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