Public funding versus full disclosure

Public funding versus full disclosure

Last month the 10th NSW Liberal MP was named in the Independent Commission Against Corruption’s inquiry into undisclosed political donations. In what will be considered a dark period in NSW’s electoral history, ‘Operation Spicer’ points towards the entrenched culture of political donations and their undue influence in the NSW state election process, and in doing so draws attention to the integral role of economic incentives in the political sphere.

Monetary contributions to political parties have long been considered a dangerous avenue for political influence in a global democratic context – the United States and Canada have both experienced past scrutiny for their failure to adequately implement sound campaign finance reform deterring donation based corruption. This has lead to a variety of reforms and regulations in an attempt to hinder the ability of donators to both exercise undue influence on the political process and increase transparency on behalf of the voters. The main tools utilised in these reform processes are generally (1) increased public funding and (2) restricted private donations. However, like any economic tools exerted, the greater economic and political good are both associated with significant limitations.

To begin with, it’s worth understanding the current state of Victorian political party financing regulation. Unlike New South Wales, that imposes state-specific electoral regulations regarding political donations, Victoria has no regulation regarding political party financing – instead conforming to the regulations set out by the Australian Electoral Commission. Accordingly this legislates for the financial disclosure of all donations amounting to $12,800 and above, with election disclosure returns made available for public inspection 24 weeks after polling (and annual disclosure returns available from the first working day in February following the election). The effect of this lagged protocol is that much of the information – viewed as the primary function of disclosure regulation – is unable to be processed let alone viewed by voters until much too late. Additionally, all candidates or Senate groups are eligible for election funding if they obtain at least 4% of the first preference vote. This renders them eligible to receive $1.55886 cents (based on the 2013 Lyndhurst District By-Election) per the number of formal first preference votes received. In the 2010 State Election the Australian Labor Party received $3,377,119.95, the Liberal Party received $3,536,314.10 and The Australian Greens received $1,081,497.22.

So what is more effective at curtailing the threat of corruption arising from political donations; financial disclosure and restrictions of all donations, or decreasing the dependence on parties on donors through public funding?

Public funding traditionally incites negativity in the voting community – diverting taxpayer funds from health and education (simplistically put) are uneasy policies to push and politicians face the added inhibitor of being the ones who benefit from any increases. However, as noted in the Parliament of Australia report ‘Electoral and political financing: the Commonwealth regime and its reforms’ the primary benefits of public funding are redressing candidate financial inequality, and suppressing the role of ‘strings attached’ public donations. Initially introduced in 1984 by the Hawke Government for these very reasons, the extent to which it has been able to achieve this is uncertain – given the limited data available to truly analyse both the occurrence of excessive campaign expenditure due to the available resources, and the non-occurrence of unethical political decisions. The NSW Working Paper 3, spurred by the ICAC revelations, further questions the aims of (in this case full) public funding highlighting “it is not clear if full public funding does in fact achieve these results”.  Most importantly the paper highlights the potential disengagement of elected officials with their voting community, characterising political donations as “an incentive for grassroots engagement”.

Financial disclosure on the other hand faces its own limitations. In this paper produced by Georgetown University, Wilcox highlights both the strengths and weaknesses accompanying the imposition of forced disclosure; namely apt means to regulate corruption, and increased accountability to the electorate. Unfortunately again, however, the outcomes are not straightforward – many forms of disclosure regulation have only sought to reduce corruption rather than eliminate it (as is clear from the ICAC revelations), and increased accountability will only be awarded in the event the data is readily presented in an informative manner. Additionally, the “principal disadvantage” of disclosure policy is its imposition on individual privacy and hence what individual liberties we are prepared to forego for the sake of democratic transparency.

So what is the solution? The economic incentives at play in the political landscape are too significant to ignore. With corruption posing a clear threat to both our political and economic liberties it is time the Victorian Government give due consideration to the best ways to secure the integrity of our democratic process. If “full public funding is the price of democracy” is it worth paying? Or should we rely on the disclosure alone to protect the sanctity of election protocol?

Suffice to say it is at the very least time for Victorians to stand up and demand answers to these important questions. We will only have ourselves to blame should the NSW ICAC revelations come to fruition in Victoria because we were too complacent with keeping the status quo.