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.

5 thoughts on “The party paradox of donation bans

  1. Would the proposed reforms stop unions or corporate funded groups from running issue campaigns during elections?
    Would it be illegal for party campaign managers to meet with these groups and coordinate their campaigns?


  2. Don – New Zealand capped issue spending by third parties during campaigns. According to a New Zealand academic’s study of it during the 2008 election its effects were not good, and even Labour supported modifying the law.

    The logic of this kind of reform is to regulate third-party activity. The underlying assumption is fundamentally different to the current disclosure regime, which seeks to reveal otherwise secret financial influences on decision-makers, but to let the public make up their own minds about what weight to put on it.

    Rather, this kind of reform is the political class deciding that some players have too much influence, and trying to scale back this influence. The public’s views won’t come into it; the decision is already made.

    Of course the political class won’t succeed in their aims if companies and unions can just go and run their own campaigns anyway. I suspect the Coalition is going along with this because they are still stung by the size and success of the anti-WorkChoices campaign. But it’s very short-sighted: at some point big business dollars are likely to be needed to help remove a fundamentally rotten Labor government from power (think NSW).

    Because there are so many ways of operating politically, ever-more intrusive and absurd electoral rules will be needed to achieve the original purpose of the legislation. So I think your scenario of prohibiting meetings is plausible.


  3. Banning donations by corporations and unions and capping private donations wouldn’t cause me too much concern if we also did away with public funding. It is public funding that is so corrosive to the political parties.

    Also a good reform to the legislative wing of government would be to appoint senators via lottery instead of via election. Like a jury it could sit in judgement of any proposed legislation without getting too caught up in the popularity and presentation game. And a selection of motivated Australians appointed by lottery would arguably be more representative than the current senate. I’d probably test their motivation by expecting them to gather a quota of nominating signatures (say 500) from fellow citizens. And I’d probably insist that the candidates are not currently and have not recently been a member of a registered political party. That should sharpen the game of government and law making considerably. And without elections senate candidates would hardly need to spend a cent.

    For the executive branch (ie basically the house of reps) I’d stick with elections because whilst elections are no more representative in outcome they do still provide good performance incentives.

    Another advantage of a lottery appointed senate is that it would allow a pathway outside the party machines for articulate public representatives to come to the publics attention.

    An overly obstructive senate could still be dismissed via a double dissolution mechanism that would require a new election for the lower house and a new lottery process for the upper house. Of course both would be administered by the AEC. The AEC already runs public lotteries to determine the position of candidates on ballots so they know the drill.


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