Three Ways To Make Political Donations Fairer


In late 2013, the High Court struck down a NSW law preventing anyone other than individuals donating to political parties. Despite arguing before the Court that political donations from corporations could be corrupting, it emerged this morning that the O’Farrell Government has again begun accepting such funds.

Legal issues aside, the 2012 reforms have not restored public trust in politics. A series of corruption scandals have overshadowed the reforms and reinforced negative public sentiment.

Labor’s Eddie Obeid and Ian Macdonald, and the Liberals' Chris Hartcher have all come to the attention of the Independent Commission Against Corruption. Last year Whitehaven Coal executives were fined for failing to declare political donations to the National Party, while gaining approval to mine the Leard Forest near Narrabri.

In response to the High Court decision, Barry O’Farrell has promised to revisit donations legislation this year. If O’Farrell is serious about addressing the "decisions for donations" culture in NSW he must look closely at the following reforms.

1) Capping Election Spending

A clear way to limit the political influence of donations is to restrict how much money a party, candidate or third party can spend in elections.

Under the current laws, a candidate for a political party can spend over $110,000 in just one seat. The party itself can also spend over $55,000 in that seat and third parties, such as a union or lobby group, can each spend over $22,000.

This level of spending is simply too high and is partially responsible for forcing candidates to solicit donations just to be able to compete on an even playing field. Those who can’t are shut out of the race — not because of their policies, but because they can’t match the election spending of the major parties. In this regard, lowering spending caps would reduce the need for donations to run a campaign and therefore their influence on the political process.

2) Transparency and Disclosure

If a political party or candidate can take a donation but not be required to disclose it until long after the election, they can avoid public scrutiny when it maters most. This is the current situation in NSW and federally.

Political parties at the federal level are not required to disclose donations less than $12,100 and larger donations are published long after the donations have been made and the election decided. While the NSW laws are better and donations of $1000 are reported, it can be as long as 15 months after being received that the public is informed.

The recent revelations that the Liberal and National parties took thousands from oil and gas companies in the lead-up to the federal election should have been no revelation at all: these gifts should have been made public before the election.

Timely disclosure of donations, for example within a month outside of election periods, or within 24 hours during an election period, would give the public far more confidence that backroom ‘cash for decision’ deals were not being done. It would also make candidates and political parties think twice, knowing donations would be in the minds of the electorate while they were in the voting booths. The New York model demonstrates that continuous and timely disclosure can work.

3) Fairer Public Funding

Much has been made of free speech in relation to the High Court challenge but there has been little talk of improving the ability for a wider range of voices to be heard in the electoral process. The parties enjoy significant public funding once they get over 4 per cent of the vote, which gives them substantial financial benefit over other political players.

Many parties and independent candidates are effectively locked out of accessing pubic funding and therefore their ideas simply can’t be heard over the media machines of the majors. This leaves these groups increasingly reliant on seeking donations instead of focusing on advocating their policies.

The current arrangements that give political parties with elected MPs additional administrative funding further extends the benefit of the current parties over new entrants. A fairer model of sharing public funding to recognise the broad public support of the major parties while enabling new entrants to be heard needs to be found.

A renewed public debate about how our elections are funded provides an opportunity to strengthen our democracy and improve the public’s confidence in our politicians, political parties and politics in general. It will be a test for Barry O’Farrell given his ongoing rhetoric on this issue and will show whether the 2012 changes were part of a genuine drive for positive reform or just an exercise in scoring political points.

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