For Sale: One State with Harbour Views


The NSW Iemma Government continues to lurch from crisis to crisis. Over the past weekend it suffered what Labor Party historian Peter Botsman calls a loss "as close to [unanimous]as could ever be at a State Labor conference" over the issue of privatisation of the State’s electricity industry. Only the top end of town and those former Labor leaders with positions in the financial companies standing to gain from the privatisation applauded the Premier’s stance.

On the Monday after the Government’s conference disaster, one of Iemma’s senior ministers, Frank Sartor was referred to the Independent Commission Against Corruption (ICAC) by Greens MP Sylvia Hale over donations from property developers to political parties and candidates. The allegation is that the donations taken represent "a systemic corruption of the planning system in NSW".

The entire Greens democracy4sale team worked for weeks analysing the outcomes of development applications that Sartor has designated "major projects", making him the consent authority. This research shows the political donors receive favourable treatment compared to non-donors.

Several months before the conference disaster and the Sartor ICAC referral, Iemma announced that his Government would consider banning all political donations in NSW. It was a bold attempt to stop the constant negative headlines from the unfolding Wollongong scandal involving Labor politicians and their developer mates.

Sceptics argue this is another grand proposal by the Premier that will quickly disappear like so many of his "visions" to cure problems in the State.

The general secretary of Labor’s NSW Division, Karl Bitar, is currently holding talks with the various political parties in the State, making it a good time to examine some of the ramifications of Labor’s plan. This is important if we are to ensure that changes to our political funding regime enhance the democratic process and do not further entrench the two-party system.

Labor’s current proposal to ban all political donations would favour Labor and the Coalition. These parties have major investments and to that extent are less reliant on individual donations than small parties. There are no limits proposed on money coming from investments, which can be used to fund elections.

While it will be healthy to ban corporate donations, if individual donations are completely banned an important revenue stream for emerging parties, minor parties and independents would dry up.

The Greens support retaining individual donations with a tight cap, such as $1,000 per year per donor. If donations from individual citizens are banned, smaller parties in NSW such as the Greens, Christian Democrats and The Shooters probably would survive. But life would be more difficult for these small political parties, parties not currently represented in Parliament and independents.

We also need to consider how emerging parties will fare. Nearly every election throws up a new political party. If we ban individual donations it is hard to see how they would be able to contest elections. This would be true for independent candidates as well.

Various people have raised the very real possibility of individual donations being exploited, even with a cap of $1,000 per year per donor. We could have US-style "bundling" of many $1,000 donations coming via senior management but apparently not from the one source. Unscrupulous people will attempt to find loopholes. If this did occur the resulting donations would still be a much less than the millions of dollars that change hands now. Canada has capped individual donations and their system is working well.

Laws against corporations providing employees with funds to donate to a party would help to limit these unscrupulous activities.

Individual donations are part of the democratic process. It creates a healthy sense of involvement in the entire process by allowing people to show their support for candidates, political parties and the values these represent.

One point that Labor has not discussed is the amount individual candidates can contribute to their own campaigns. In NSW, money candidates spend on their own campaigns isn’t considered a donation and, therefore, isn’t reported to the NSW Election Funding Authority. If these contributions aren’t classified as donations under the law and treated like any other donations, it would allow wealthy individuals to spend an unlimited amount on their campaigns and possibly buy their seats in parliament or local councils.

As the sytem stands, public funding for political parties kicks in when parties obtain 4 per cent of the vote. That money only becomes available after the election. Individual donations will allow emerging parties and independent candidates to raise some money for how-to-votes and all the other costs associated with running an election campaign.

Even those small parties that have parliamentary party status does not give them extra funding. It only gives the parliamentarians some extra resources such as some additional parliamentary staff. Public funding is crucial for all parties to run their offices between elections as well as fund their election campaigns.

We believe that public funding using a reimbursement system should be introduced for candidates, groups of candidates and political parties in local government elections who receive 4 per cent of the vote. Reimbursement systems such as the one used in NSW State elections avoid the problems we see in the entitlement system used in Federal elections.

Limits also need to be adopted for third party activities during an election campaign. Without such limits corporate donations will move from political parties to a plethora of third party organisations such as companies and lobby groups. The right wing corporate lobby groups would most likely have the larger amounts of money to spend than the more progressive third parties like Greenpeace.

Considering many third parties such as Get Up! are active outside of election cycles, we propose that limits are put on their election expenditure and not on the donations they receive. The Greens proposal to the NSW Political Funding Inquiry advocated third party expenditure be capped at $50,000 for the four months leading up to a State election. This suggestion is along the lines of the section on third parties in the 2000 Canadian Election Act. The new law is working well in Canada and has survived at least one legal challenge in the Supreme Court of Canada.

The greens’ proposal is linked to fixed term elections. This proposal would vary for Federal elections.

The Greens are keen to hear the viewpoints of others on these and other issues. One we wrote about earlier is also important to discuss in detail – limits on campaign spending which Labor strongly opposes. We will be able to devise a better system with fewer loopholes if there is wide consultation.

We have written to NSW Labor’s Karl Bitar asking him to extend his consultations on electoral funding reform from the political parties to the general public. Input from the public would put more pressure on the Labor Government to proceed with reform rather than quietly dropping it as they have so many of their other proposals. will be closely following this issue over the next few months
and encourages readers from all States to weigh into the debate about political
donations. Have there been questionable developments in your area that should be
investigated? How would you like to see the system reformed?

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.