A complete ban on political donations would level the playing field – but is that the best approach?

Labor Senator Sam Dastyari called for a complete ban on all political donations from individuals and corporations. Dastyari is no stranger to this issue: he was forced to resign from the shadow bench in 2016 following revelations that a Chinese company had paid for his travel expenses.

Opposition Leader Bill Shorten said he is not in favor of Dastyari’s position:

When it comes to donations, I don’t think the taxpayer is ready to foot the bill for all political spending in Australia, so I still think donations have a role to play.

Both Labor and the Liberal Party favor banning foreign political donations, but not all donations in general.

Further Reading: Banning Foreign Political Donations Won’t Solve All of Our System’s Problems

Why ban donations?

The key issue with political donations is whether large donations guarantee better access to politicians than ordinary people.

Another question is whether large donations influence politicians to grant illegitimate favors or adopt policies that directly benefit donors.

Dastyari was the main fundraiser for the Labor Party in New South Wales from 2010 to 2013. He explained that some donors give money for philanthropic reasons or to support an ideological cause, while those from ethnic communities can donate as a sign of prestige. But he also explained:

Frankly, some people do it because of this very, very murky world of access. And they want access to the results.

The suggestion is that it is possible to “buy” political access and influence through political donations.

Transfield Holdings chief executive Luca Belgiorno-Nettis compared political donations in latin saying do it: “you give for having given back”.

Where will the money come from?

Campaigning for elections is expensive. To promote their cause, political parties tend to spend a lot of money on high-impact TV and radio slots, travel a lot, and perhaps hire fancy political consultants.

Membership of Australian political parties has declined over the years, so they are now less able to fundraise from membership fees. The parties receive certain public funding, but not enough to pay for an expensive election campaign. This has led parties to be very dependent on political donations.

If we ban all donations from individuals and corporations, political campaign funding must come from elsewhere. Public funding of elections is expected to increase, which means that taxpayers would bear a greater burden in funding elections.

The current level of federal public funding is about half of what an election campaign costs. In parts of Europe and in Canada, the level of public funding elections is higher, representing between 50% and 90% of the costs.

It is difficult to calculate the amount of public funding that should be allocated to parties, including the right of new parties or microparties.

Further reading: Explainer: How does our political donation system work – and is it good?

Is a ban constitutional?

Any regulation of political donations must be consistent with the Constitution. Australia has a constitutionally protected freedom to communicate on political issues.

The ban on donations limits political communication by restricting the source of funds available to political parties and candidates to cover political communication costs.

The High Court has ruled that any restrictions on freedom of political communication must be proportionate and have a legitimate aim. The ban on donations would appear to have a legitimate aim: to reduce undue influence on Australian politics and public policy. But it’s hard to predict how the court would rule on proportionality.

The High Court has yet to rule on an outright ban on political donations, but it held that donation limits are constitutional.

Is it a good idea?

Dastyari’s proposal would certainly level the playing field. It would eliminate the perception and reality that wealthy donors can “buy” access or influence in politics.

Apart from banning donations altogether, another option is to limit donations to, say, 1000 Australian dollars. For example, NSW has an annual cap $5,800 per party and $2,500 for candidates. It would also level the playing field and reduce the influence of wealthy donors.

Dastyari is right: it’s time to act in the murky world of political donations. Hopefully the government will heed the call for change.