Political incentives

There is a strange disconnect between the debate on political donations laws, with yet more regulation proposed by the Prime Minister yesterday, and with the problems faced by Australian governments.

We have plenty of bad policies, yet very few of them have even plausible, let alone proven, links to political donations. As I noted last year, the people who are ‘bought’ in Australian politics aren’t politicians, they are voters. Politicians promise to spend billions to get themselves elected. Many bad or ineffective programs stay in place because they create their own constituencies that fight for them. In between donors and voters, donors lose every time. The incentives in the Australian political system aren’t to favour donors, but voters – donors are only ways of getting the campaign message to more voters.

As this theory of Australian political incentives would predict, there are very few cases of proven improper influence by donors, particularly at the federal level. Joo-Cheong Tham and Sally Young’s book on political finance laws, though proposing a bureaucratic extravaganza of regulation that would require the political parties to employ small armies of lawyers, provides little evidence that they are not proposing a solution to an imaginary problem. They suggest that a long-term donor to the Liberals may have received improperly favourable Ministerial discretion in an immigration case, and note that the unions finance the ALP, but they can’t actually nail a case.

If we are interested in cleaner government, the way to improve decision making is not to attack the democratic process but to minimise the number of decisions that give Ministers or their delegates too large a grey area where improper influence is hard to prove. [Update: A good op-ed from Chris Berg arguing this point for councils.] This has been the general trend in any case, but also deals with the problems of favours and friendship as well as donors.

There has been a fuss in the media over the last week about people buying dinners with senior ministers, but clamping down on this won’t clean up government, it will enhance the power of ‘mates’ who can open doors without money changing hands. In NSW, the mates culture of the ALP, which sees incompetent people preselected and made ministers, is a far bigger problem than a few crooked developers, and campaign finance reform risk making the party hacks even more powerful. Their door opening will accumulate even more favours that have to be repaid.

Unfortunately, the Wollongong saga of council corruption is just what the political moralisers who want more regulation were waiting for. Expect to see further reductions of democratic freedoms pass through the parliament in the next twelve months.

11 thoughts on “Political incentives

  1. I would have thought Rudd’s proposed amendments to political donations would have more to do with a gradual plan to squeeze out funding to the Liberal Party (while the ALP’s biggest backer, the trade union movement, is left untouched).


  2. “… to minimise the number of decisions that give Ministers or their delegates too large a grey area where improper influence is hard to prove.”

    Such transparency will also make it easier to uncover downright incompetence, which is a far greater concern than impropriety.


  3. The real area in need of reform relates to the money that flows from taxpayers to the political parties via public funding. We should only take money from people for the most serious of issues. Funding political parties is a lousy deal for tax payers. And the threshold test means that when I vote for the LDP they get no public funding but when my neighbour votes for the APL they do get funding (and candidate fees refunded). Public funding supports incumbants and is undemocratic.

    If we are to have public funding of political parties then it should apply to all political parties and not just the popular ones. However the notion that political parties can get elected and pass laws that move money from government bank accounts to the private bank accounts of political parties, and that people should be so relaxed about it, is really something of a concern.


  4. “The real area in need of reform relates to the money that flows from taxpayers to the political parties via public funding.”

    Yes, I ran a facebook group on this issue prior to the election, and there were actually a few people who joined to object. Green Party members in particular seemed to have this crazy notion that ALL party funding should be public!


  5. For all your ideas on campaign finance reform, and for the 20 million people not invited to the Australia 2020 Summit, the online community created a wiki so people across Australia could post, discuss, and vote on the best ideas for the country. It’s totally a grassroots effort. It’s free, can be anonymous, and isn’t being sponsored by any political party, business, union, or special interests. It’s just people who want to encourage an online national brainstorming session.

    The site is at http://ozideas.wetpaint.com. There are pages for over 20 different issues (including government reform) and even an online petition to get the best ideas heard at the actual Summit.

    The more people know about it, the more ideas are submitted, and the better the discussion. It’s a great way for everyone to participate in the summit.

    Wiki Creator


  6. I always wonder why any political parties dont have some kind of endowment fund or something, and fund their activities from that, then they could actively refuse donations and claim to be more independent than other parties.

    These new laws are nothing to take seriously when they regulate corporate donors but not the unions, Libs have a right to shout about it.


  7. I’m sure they would all have endowment funds if they could find somebody willing to stump up the cash.


  8. Actually Terje, what I’d like to see is that the elected party gets no public funding. After all, funds are usually pretty easy to come by once you are elected.
    I agree that parties such as the LDP deserve public funding more than most parties out there. But would they accept it on principle? 😉


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