The party paradox of donation bans

With political donations laws, the news only seems to get worse. Following a similar story in the AFR on Monday, the SMH today reported that the major parties are actively discussing banning both corporate and union donations. They are also discussing limiting individual donations to $1,500 to $2,000. Campaigns would rely even more on public funding.

Public funding of campaigns invariably favours incumbent parties as it is based on past electoral support. New parties will struggle to get large numbers of votes until they have significant campaign funds, but they won’t get significant campaign funds until they have large numbers of votes. It’s the current main players trying to maintain their cartel against potential competitors (again).

The downside for the major political parties is that the ban would diminish their role in political life, disconnecting them from their own supporters and the broader community. Much of what parties do between elections is, in various forms, to raise money. To the extent that this is prohibited or made unnecessary by public funding, there will be less need to organise functions and go meet people. Governments always destroy social capital when they take over the functions of NGOs and volunteers, and this would be no exception. Parties will shrink further towards being a core of state-funded apparatchiks.

It would be quite a paradoxical outcome. The major parties would be more secure than ever as controllers of parliaments, while never more lifeless and unrepresentative as organisations.