In defence of political donations

With this week’s disclosure of political donations by the Australian Electoral Commission, the usual critics were having their say. As he did last year, Stephen Mayne used Crikey to attack what he sees as an inherently grubby process – people giving money to political parties, including (shock, horror) foreigners, something that seems to particularly upset political funding moralisers not otherwise known for their nationalistic views.

In The Age another regular, Melbourne University law lecturer Joo-Cheong Tham complained that:

Money allows some to speak much louder than others. For example, businesses and wealthy individuals are able to secure influence over parliamentarians through the purchase of political access. In the last financial year, both Tabcorp and Tattersall’s gave $10,000 to Progressive Business, presumably for membership of the organisation. Membership of this fund-raising arm of the Victorian ALP would have entitled them to attend closed-door ministerial briefings by Premier Steve Bracks and Treasurer John Brumby. Such secret meetings give rise, at the very least, to an apprehension of undue influence and corruption.

As with other leftist critiques of the political process, Joo-Cheong Tham’s work (you can see his perspective in more detail at the ANU Democratic Audit project) fails to see the bigger picture of the political process. These issues arise mainly because because of politicised processes – in the case of Tabcorb and Tattersall’s because gambling is heavily regulated, and Tabcorp and Tattersall’s rely on government patronage to keep competitors out. If anyone could set up a gambling outfit there would be no need to listen to tedious speeches at Progressive Business functions or to give them any money. There probably wouldn’t be any funding to disclose.

But given that we do exist in a society in which many aspects of business life have been politicised, it seems wrong to deny business the right to attempt to influence the political process, whether this is for specific favouritism (in this case) or more clearly in trying to affect general policies than affect business (taxation, corporate regulation, industrial relations etc). Just as the unions are perfectly entitled to defend their interests at the ballot box by supporting the ALP, business is also entitled to defend its interests.

Though people like Joo-Cheong Tham worry that this breaches formal ‘political equality’ – how many ordinary voters have $10,000 to spend on dinner with the Premier? – the incentive structure of the overall political system remains strongly in favour of the punters. Correspondingly, the main problem we have is not politicians being bought, but politicians buying votes – such as the Prime Minister’s $94 million a minute handout-frenzy of a campaign speech back in 2004. Voters, not interest groups, primarily decide the future of politicians, and the pollies behave accordingly.

I would be interested to hear what Stephen Mayne and Joo-Cheong Tham make of books like Silencing Dissent. If we accept the argument that governments reward supporters and punish opponents – and I think there is enough evidence that this is a realistic concern to have, though clearly it is not a pervasive practice – then disclosure rules automatically favour incumbents. Yet one of the concerns of the ‘Democratic Audit’ is that the system is rigged in favour of existing governing parties. The preoccupation with form and process that we see in proponents of campaign finance regulation causes them to pay too little attention to actual and likely outcomes, which are the product of entire systems, and not just particular rules.

5 thoughts on “In defence of political donations

  1. For similar reasons, I have always wondered why the left is obsessed with ‘multi-national’ or ‘transnational’ corporations. At the end of the day, corporations cannot vote and governments are not accountable to them. However, governments can be voted out if they preside over high unemployment or job losses caused by their policies. Presumably governments have the ability and incentive to trade-off various interests in order to maximise their chances of being re-elected?!

    Perhaps, like the bond market was to James Carville, MNCs represent a faceless scapegoat for why governments cannot fulfil all of their promises.


  2. Campaign contributions are as much politicians extorting money from the private sector (nice little business you have there, shame if we enforce our regulations and destroy it) as the private sector bribing politicians. It is usually the politicians that solicit contributions from reluctant businessmen rather than businessmen using donations to seek access to politicians.


  3. I’m not sure that the operations of government which don’t affect people and vice versa can be neatly demarcated, and I am pretty sure this is naive/disingenuous:

    governments are not accountable to [companies]

    That is the funniest thing I’ve read in a long time, and you don’t have to live in Sydney to find it so.


  4. Interesting the “constitutional” view.

    In the recent Corporations Power case (the take over of industrial relations for workchoices) – the High Court specifically pointed out that the framers of federation were fully aware of the corporation and its role.

    The myths of the corporation as a risk venture (versus a going concern), as a single person rather than a literal ‘company’ of merchants, the capitalisation being real rather than a ‘$2’ company – all these myths had been laid to rest by the 1890s.

    There were plenty of ‘fictious’ companies in the mediaeval sense by the 1890s, and there was emerging corporations law as a result of bank collapses and shady types prior to the 1890s depression.

    Hence the Constitutional delegates were well aware of the power of the modern corporation.

    Yet they didn’t see fit to offer the corporation the vote!

    Legal persons maybe, definitely not persons of the body politic.

    I have some sympathy for the view that in a representative pseudo-democratic system like ours, bad government is still bad government no matter its cause, corporate donations or otherwise. If it is bad it should be voted out.

    In general I sheet the blame in roughly equal proportions to poorly educated and low intelligence electorate (including the pool from which pollies are drawn), poor media coverage of the issues, and the influence of money.

    And these factors tend to bleed into each other a bit – a poorly educated and low intelligence electorate does not demand media scrutiny (prefering Schappel and Shane), and a dim-witted electorate is unreasonably seduced by the sight of money (unrelated to any actual need for same).

    This is something Lefties and Righties would hopefully agree on – in the presence of rich men – the Turnbulls or Packers or whoever – do we need to tremble?

    If we respectfully admire their ability to make money without letting it overwhelm our own senses, their capacity to unreasonably influence the political process is diminished.

    As a decision maker, if I can look objectively at small business man A and his proposal to develop a small bit of land he has, and not be overwhelmed by big business man Rupert M who has a conflicting case for the same piece of land, because I’m a well-adjusted person who’s not insecure in the face of money, then there is no problem with the system.

    I suspect it is an analogy to the “Those that can, do, those who can’t, teach” ie “Those who can make money through enterprise do, those who can’t, become rent-seeking pollies who extort it off them”

    And you get the same car, driver, big house, corner office and thousands of staff for free, that the businessman gets but earns through enterprise and initiative.


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