The chance of NSW giving a lead on political funding reform took a severe nosedive in November when Premier Nathan Rees announced his response to a report by Sydney University law academic Dr Anne Twomey, The Reform of Political Donations, Expenditure and Funding.
Just eight weeks earlier Premier Rees pledged to overhaul political donations with a "very significant package … that cleans this up once and for all". But the Premier responded to Twomey’s report by declaring that it was all too hard and that reform required state and federal governments to work together. He was adamant that NSW could not go it alone.
Rees’s response has frustrated a large number of people calling for reform, including the Greens and commentators such as Robin Banks, head of the Public Interest Advocacy Centre, who told ABC Radio, "I am extremely disappointed. It sounds like an excuse."
While there is a clear need for nationwide reforms, any political observer knows that the fraught issue of putting limits on political donations and how much parties can spend on elections requires courage.
We need a leader who will stand up to both the vested interests in their own party — for whom political lobbying equates to another donation opportunity — and corporations and interest groups, who populate those infamous fundraising events that have become a lifeline for the Liberal, National and Labor parties.
The Premier would gain public support if he took the lead and moved to clean up political donations. But he has decided to leave these vital reforms to his federal colleagues. This decision looks set to create more delay, since there too, urgent reforms are long overdue. The federal Special Minister of State, John Faulkner is now four months behind his promised release date of a Green Paper outlining federal Labor’s options for political funding reform.
Meanwhile federal Labor is pushing ahead with a massive fundraiser that could reap $1 million. Holding this event to mark the first year of the Rudd Government is effectively saying to Labor donors it is "business as usual" when it comes to taking their money. The subtext of this event is that funding reform is a long way off.
Talk of the Green Paper and federal Labor’s reform plans could well become a smokescreen while the major parties indulge in massive fundraising activities in the lead up to the next round of state and federal elections.
Dr Twomey did not rule out a state acting unilaterally as suggested by the Premier. She does acknowledge that it would be difficult for one jurisdiction to impose bans or caps on donations and limits on spending but this option remains a possibility. The Premier should be using Dr Twomey’s report as a guide to drive reform. She sets out the foundation for change: finding a balance so that those who wish to involve themselves in the political process by making donations can do so while ensuring no one can use wealth to distort a campaign and therefore an election outcome.
This is where Rees has a unique opportunity to provide leadership. He could establish a system that achieves this balance and win the public’s respect for making NSW the first Australian jurisdiction to clean up the damaging impact of private money on the political process.
Twomey says banning donations may threaten the implied constitutional right of freedom of political expression. Commentators have criticised this view, saying it has not been a bar to Canada or the US placing limits on campaign donations. Regardless, this problem is overcome by allowing all enrolled voters to donate but placing a strict cap on those contributions.
Corporations also have a role in the electoral process. But as they are not citizens they should not enjoy the same rights as enrolled voters. Businesses, unions and various community groups that wish to engage in the democratic process could donate to a blind fund that would then be distributed on a proportional basis to parties and candidates. Twomey suggests that the Electoral Commission could administer such a fund.
An increase in public funding of elections — but not to anything like the millions spent by the major parties in the last state election — would also help.
There has always been controversy over the role played in elections by "third parties" — that is, individuals or organisations who are not candidates or associated with parties, but who are financially involved in a campaign. Many jurisdictions have struggled to find the balance between encouraging diverse involvement in the electoral process while not allowing financially influential forces to dominate in ways that are undemocratic.
The solution lies with only placing restrictions on third party operations in the lead up to an election. And it works best where there are fixed term elections — suggesting NSW is well placed to adopt this reform. Further, we can use overseas experience as a guide when we set our caps, as has been approved by the NSW Select Committee on Electoral and Political Party Funding.
The Canadian electoral laws governing third parties provide NSW with a valuable model. In Canada all third parties with electoral advertising expenses of more than $625 after the issuance of the writ have to register. Third parties are currently limited to spending $230,000 on nationwide election activities and $4,600 in any one electorate during the election period.
A similar measure could readily be adopted in NSW in time for the next state election in 2011. Any political funding reform package would need to include limits on third party involvement in elections. Otherwise caps and bans on giving donations to candidates and parties could be undermined.
But we need reforms that go beyond this. While the public has heard arguments about limiting political donations there has been much less public discussion of the need for us to restrict total election expenditure, or of how much public funding should be available for parties and candidates.
Premier Rees should be involving the public in devising solutions to these challenges.
With more than two years to the next NSW state election these two aspects of political funding reform could be the basis of a statewide public dialogue throughout 2009. By the end of that year the Government could then draw on the public’s ideas and put forward legislation on these critical issues.
Premier Rees would get brownie points from the public for this kind of action. Voters would rejoice in having fewer colour glossy election leaflets stuffed in their letterbox and being spared from so many paid TV advertisements.
Such a state-wide dialogue initiated and led by the Premier would help build public confidence in our democratic institutions.
Premier Rees would be wise to recognise that if he fails to work on a NSW reform package he is exposing himself and his Government to more bad-news donation stories.
Labor’s dishonour in Wollongong cemented in the public mind that political donations are corrupting and further damaged the party’s reputation with voters.
While political funding reform is challenging, it may well be much more difficult for the Premier to explain to the public the next donations scandal and why he is doing zero to tackle the issue systemically.
The Greens are ready to trawl through the records released to the NSW Election Funding Authority to get the bad news stories out there.
The Premier could save himself the agony of another Wollongong if he found his backbone and kicked off political funding reform in NSW.