It is the fourth day of The dirty country: corruption in Australia. Read it the whole series here.
When we think of the pernicious influence of money in politics, we naturally think of the United States.
In the 2016 US presidential election cycle, Hillary Clinton raised $ 1.19 billion for the general election alone, and Donald Trump raised $ 647 million. Add the fact that the primary elections also involved huge sums of money. Count races in Congress, the total price for the 2016 elections was approximately $ 6.5 billion.
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Compared to this, the money in Australian politics looks positively picturesque. In the 2016 Australian Federal Election, there was approximately A $ 63 million in public funding for all parties and total spending from all sources for the entire year. was approximately A $ 156 million.
Australia’s electoral donations were only one-fifth of that of the United States on a per capita basis.
So does this mean that money has relatively little influence on Australian politics? No.
Start with this fact: most donations go directly to the political partys. There was just over A $ 1.7 million in individual donations to applicants in 2016; 77% of applicants declared zero donations.
This gives political parties enormous power over their candidates, even before they potentially enter parliament. Those who do not follow the party line risk having their campaigns underfunded. This directly restricts what political scientists and economists call “political competition”. And, like in any market, the lack of competition is bad. In this case, it hurts voters.
Moreover, federal political donations in Australia are anything but transparent. Any donation under $ 14,300 does not need to be reported to the Australian Election Commission. Considering the relative scarcity of money in Australian politics, this is a very high effective threshold.
Incredibly, multiple donations of $ 14,299 do not need to be reported. It would be hard to find a less well-crafted political rule in modern Australian history. Even in the United States, the maximum individual donation per election to a candidate is $ 2,800 – and even $ 200 (or donations totaling $ 200 in an election cycle) must be reported.
Worse yet, it’s relatively easy for donors in Australia – especially the larger ones – to hide their donations by passing them through shell companies and other entities that obscure their true source. It is no wonder that the Esteemed Center for Public Integrity that since 1999, over $ 1 billion in “black money” has been given to parties and candidates.
The absence of any cap on the amount of donations leads exactly to what one would expect: a small number of donors make up a huge proportion of total donations. The Center for Public Integrity reports that since 1999, five people have made more than a quarter of all Australian political donations. Donations over $ 1 million represent over 30% of total donations.
There are stricter rules at the state and territory level, with disclosure thresholds also low at $ 1,000 (in New South Wales, Queensland, Western Australia and ACT), and caps of $ 4,000 in Queensland, $ 4,160 in Victoria and $ 6,600 in New South Wales. But the rules at the federal level are incredibly weak.
Major donors often make similar donations to both parties. In the most recent fiscal year, the Australian Hotels Association gave $ 154,000 to the Coalition and $ 271,000 to Labor. Woodside Energy donated $ 198,000 and $ 138,000 respectively. ANZ donated $ 100,000 to both parties.
It’s not about supporting the political platform on one side. The correct way to look at it is as a sort of hedge. The less pleasant way is that it guarantees access no matter who is in government.
There is little direct evidence misunderstanding following political donations in Australia. But how will we know that over the past two decades, $ 1 billion, or 35% of total donations, came from unknown sources? Remember that the Mafiosi do not need to give direct orders; their wishes are well known and, literally, go without saying.
In addition, it is not necessary to have a direct relationship misunderstanding for money to buy a lot. Even simple access to politicians is valuable. It allows donors to make their case on all kinds of public policies in a way that non-donors – at least those who do not represent major pressure groups – are unlikely to do so. It is not difficult to point the finger at Coalition and Labor Party policies which look dreadfully like what the business community or the labor movement want them to be.
Perhaps this is reverse causation – that donors are giving money to other like-minded political travelers. But maybe not.
There is, functionally, a lot more money in Australian politics than you might first think. And our federal campaign finance rules, as they are, are actually a joke.
As the saying goes, “It would be funny if it weren’t so bad.” “
Should the rules concerning political donations be reviewed? Write to [email protected] with your thoughts. Please include your full name to be considered for publication in Crikey’s Your Say section.
Richard Holden is Professor of Economics at UNSW Business School.