The problem of Ministerial discretion

All this week, The Age has been in campaign mode on corporate political donations. But the problem with their analysis (you don’t need to read it, or help from me, to guess what line they are pushing) was there in the very first paragraph on Monday:

CORPORATE donors to the Victorian Labor Party are almost invariably companies with lucrative public contracts or development, gaming or alcohol interests at the mercy of Government discretion. (emphasis added)*

Isn’t the problem, then, that businesses are at the mercy of Ministerial decisions, rather than that perhaps some try to minimise the risks posed to their income by sending a few dollars the ALP’s way? Wherever possible, governments should set rules of the game that are neutral between businesses, and let the outcome be driven by how they play by the rules, rather than by picking winners or playing favourites.

While it is improper to try to influence a tender outcome or property development approval with donations, there is nothing wrong with backing a party that proposes rules of the game that are consistent with how a business or other organisation sees the world. Renewable energy companies should be allowed to back the Greens, unions should be able to back Labor, and corporate Australia should be able to back the Liberals in their occasional tax cutting mood.

These influences will rarely be more than one among several on final political decisions – for example, despite their vast expenditure on Labor, the unions are not getting all they want from the Rudd government, and what they do want is arriving only slowly. But donors should be allowed to help their preferred party during elections. Otherwise the political game would be very lopsided: political parties could do whatever they wanted to unions or business, but unions or business would not be allowed to fight back.

As I have argued before, the attack on political donations won’t end with better governance or more democratic processes. Instead, it will enhance the power of political insiders who will face less political competition.

* One point The Age misses in explaining these donations is that donations tend to come from the personal networks of fundraisers, so particularly for the ALP the people they know will tend to be people who do work for governments, irrespective of whether those people are hoping to win favours when giving money.

One thought on “The problem of Ministerial discretion

  1. Ministerial discretion is a loaded gun pointed at the heart of democracy. Hayek and Popper picked this up under the heading of “rules versus orders”, with the argument that rules should be put in place to achieve objectives with a degree of transparency, instead of trying to get results from Ministerial edicts and directions which result in unpredictability and (often well founded) conspiracy theories.

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