As the NSW Labor Party looks worse and worse to voters, particularly over the issue of political donations from the property industry, the Liberal Party has tried to take the high ground, offering to reform of the election funding system once in office.
But there is a whiff of empty rhetoric here on the part of the Liberals. Leader Barry O’Farrell has promised a major overhaul of the system, but would that really be on the agenda if the Liberals come to to power in 2011? If the difference between what the Liberals say on this issue and what they have actually done is any indication, the chances of reform do not look good.
Recently O’Farrell has strongly advocated major reforms of the electoral funding system, including a call for the Independent Commission Against Corruption to monitor the link between political donations and government decisions.
However, in order for ICAC to be successful in exploring this linkage there has to be complete transparency of the source of donations and to whom this money goes. Current practices of the Liberal Party at all levels of government consistently work against that transparency.
Federally, it was the Liberals who changed the rules to make it possible to donate a lot more money to a party before the source of that money had to be disclosed, raising the disclosure threshold from $1500 to the current level of $11,200. The Liberals then joined forces with Senator Steve Fielding this year to block the Labor and Greens move to lower the disclosure threshold to $1000. This is why federal donation data is of little use in discovering who is donating to whom.
Labor Senator John Faulkner initiated a process for major reform of the federal electoral funding system in late 2008. The first step in this process was a call for submissions to a green paper on donations, funding and expenditure.
But while most of the submissions made strong and positive cases for comprehensive overhaul of electoral funding, the Liberal Party submission by their Federal Director Brian Loughnane dismissed that there was any need for change. His short submission on the green paper concluded:
"In considering the need for further change to our electoral system, the Liberal Party points to the fact that no problems have been identified with the changes legislated in the last parliament. Our current electoral system is working well, and the case for change has not been demonstrated. We caution against reversing reforms that have, in our view, improved the operation and effectiveness of the act. Nevertheless, we remain open to discussion with the Government on proposals to further strengthen our electoral system."
At the state level the NSW Liberals’ form isn’t any better. In 2007 they adopted a policy of hiding all donations to the campaigns of Liberal candidates in both state and local government elections. They did this by channelling donations to individual campaigns through their state head office. This practice effectively laundered all of that money, with all candidates submitting nil returns to the NSW Election Funding Authority.
Yet many donors report on their disclosure forms submitted to the NSW Election Funding Authority that they are specifically supporting certain Liberal state candidates and local council campaigns. Using the forms that donors submitted for the period covering the 2007 NSW election, the Greens Democracy4Sale Research Project found that over $230,000 was given to individual Liberal campaigns. This is probably only the tip of the iceberg since many donors do not submit forms and others don’t specify to which part of the Liberal Party they are contributing.
Four Liberal MPs received almost half of this money — O’Farrell, former leader Peter Debnam, shadow treasurer Mike Baird and shadow minister for community services and women Prue Goward. Much of this money came from hotels, clubs, media and property companies.
The largest donation to an individual campaign was $20,000 to Prue Goward from Alan Jones’s Belford Productions. Barry O’Farrell’s campaign received such large donations as $10,000 from one of hotelier George Thomas’s companies and $5000 from the advocacy organisation Clubs NSW. Peter Debnam was also popular with the NSW clubs lobby, receiving 13 small donations totalling $10,000 from Clubs NSW, and three additional donations totalling $5300 from two leagues clubs. Mike Baird’s largest donations were from two hotel companies totalling $6490 and $5000 from the wealthy founder and chief executive of WorleyParsons, which is involved in the energy and resources industries. Yet according to the Liberals’ disclosure statements, no money changed hands at all.
When Mike Baird was campaigning to be selected as the Liberal candidate for the seat of Manly in the 2007 election, he said one of his strengths was his ability to raise campaign funds. Yet, although he reported spending over $263,000 on his campaign, he informed the NSW EFA that he received no donations, just like all the other Liberal candidates in that election.
While this practice of the Liberal Party is legal, it certainly makes a mockery of their "commitment to transparency". This lack of openness feeds into the public’s disillusionment with the political process. It certainly doesn’t bode well for a future Liberal government keeping its promise for major reform of electoral funding.
This practice of laundering contributions through Liberal head office also applies to local government elections. Such a practice effectively prevents the public from knowing whether or not a developer with a project before council has helped to get those councillors elected. How can the public feel confident that council decisions aren’t being bought by party donors when the Liberal Party has gone to such lengths to hide them?
Clearly it’s a problem, and in 2008 the NSW Department of Local Government issued a code of conduct with which all councils are supposed to comply. This code states that any councillor who received more than $1000 from a donor within the past four years must declare a "significant, non-pecuniary interest" in the matter, not participate in the discussion nor vote on the matter.
Yet there is evidence that some councillors do vote on submissions from major donors, violating that code of conduct. We only know this because in the past all councillors declared their donations to the NSW Electoral Funding Authority. Now however the Liberal councillors have got around this problem with their trick of laundering all their donations through the party’s head office. We have no way of knowing who has been paid by whom, and decisions can now go through without this scrutiny, offering great potential advantages for donors.
That’s the situation as the Liberal Party has made it. If Barry O’Farrell wants the people of NSW to believe his promise for electoral funding reform he must open the books of his party so we can see the source of all their campaign money and to which candidates it flowed. If he does not have the courage to do this, NSW in 2011 may exchange one bad Labor government for an equally bad Liberal one.