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Can secret political donations be justified?

By Max Atkinson - posted Friday, 26 August 2016

A striking feature of the controversy over political donations is the absence of debate. For despite a plethora of articles, documentaries and TV programs highlighting the flaws of the present system, no one seriously defends it. Spokespersons for the major parties, trade unions and captains of industry alike remain silent or offer token remarks hoping, it seems, to ride out the storm - no one disputes the evidence that radical reform is needed.

A defence of sorts was, however, recently offered by Frank Lowy, chairman of Westfield Holdings, a billionaire business leader respected for his contributions to sport and the nation's intellectual life, who gives millions to both major parties. On the ABC program 'Money and Influence' on May 24, he said:

I think, in my opinion, contributing to political parties is, ah, not a bad thing, provided it is done appropriately and is not - you're not looking for, ah, any kind of favors - because it's … ah, customary in a country like ours to make donations and, er, require no benefits. But you know that the democratic process is helped by this way.


Whether this is good for democracy is, of course, the issue, for the truth is that corporate donors give confidentially but not anonymously - they want the party and candidate to know but not the voting public or competing parties. This is a good sign something is amiss.

Their aim is achieved by laws, supported by the major parties, which permit donors to keep gifts secret until up to eighteen months after the election, when there is little media interest and no risk of a voter reaction against blatant attempts to buy political influence.

For no one doubts that influence is the name of the game - by gaining access to ministers and other officials, but also by an unspoken reminder that the donor's interests are tied to the party winning government, and thus to the political aims and careers of these decision-makers. It would be interesting to hear Lowy's response had presenter Sarah Ferguson asked if this philanthropy might dry up if the funds were re-directed by law to the Australian Electoral Commission, to be disbursed in line with its criteria.

Another leading businessman, also fabulously wealthy, explains how the present system works. Luca Belgiorno-Nettis is the managing director of Transfield Holdings and, as reporter Quentin McDermott notes, has lived for years in the 'shadowy world of donations and lobbyists'. His company was, he said

… fairly standard in terms of, ah, organisations that were seeking to curry favour with our political masters…. we would make the donation to the major political parties, whether it be the Liberal Party or the Labor Party. And we'd often do that equally to both sides.

When McDermott reminded him that in 1987 Transfield had proposed a $750 million unsolicited contract for a Sydney harbor tunnel, he agreed that the donations helped Transfield win the contract. To balance the picture it should be noted that he later had an epiphany and came to regret his role; he set up his own system of donations based on an expert assessment of the value to the nation of specific projects.


Reformers face two major problems: the first is a mutually supportive financial dependency; Liberals argue a need to match the millions Labor gets from trade unions while Labor argues a need to balance the millions big business gives Liberals. It is relevant to the debate that the bulk of this money comes from union members and shareholders who have no say in the matter.

The second is a degree of public apathy and reluctance to support a tax payer-funded system (predicted by Election Watch to cost around $227 million for the 2016 election). Many will share Lowy's view that donations are a useful form of philanthropy and argue that, so long as there is no corrupt dealing, those who contest political power should be allowed to use whatever money they can attract to help pay the bill.

While this is understandable with current budget problems, there is a more important issue at stake. This is the integrity of the democratic process, and the idea that electors should decide who governs, not big business or unions. At present party leaders need only persuade themselves that the benefits are, for whatever reason, also in the public interest. This is how NSW clubs prevent poker-machine reform and why the Manildra group is a beneficiary of laws which force small service stations to sell their monopoly product.

Support for reform would be greater if a principle was adopted restricting the use of public funds to inform and educate voters, but not to advocate support for parties and candidates. This would save the huge sums spent on expensive full-page advertisements and repetitive TV 'sound bites' during the final days, when there is little time for 'fact-checking', and the aim is to highlight one party's promises and arouse fear, anger and suspicion against others, often by claims of deception which cannot be tested.

As to reform, while the problems are complex and deeply embedded, the solution is surprisingly simple. Donations should be permitted only from those on the electoral rol, and only for amounts to $100. The other necessary reform, which will also save the taxpayer huge expense, is a ban on political advertising during the actual campaign. Both these reforms may give rise to constitutional issues of free speech, but none which cannot be resolved in favour of electoral integrity.

The proposals are radical, and call for more argument than the present paper offers. There is also a need to explain just how bad the present system is, with no limits on spending by multi-millionaires like Clive Palmer, and no constraints on donations from any source, including foreign governments, trade unions and giant international corporations, many of which pay little or no Australian company tax.

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About the Author

Max Atkinson is a former senior lecturer of the Law School, University of Tasmania, with Interests in legal and moral philosophy, especially issues to do with rights, values, justice and punishment. He is an occasional contributor to the Tasmanian Times.

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