How political donations distort democracy

Recent revelations that a Labor front bencher accepted funds from a company linked to the Chinese Government, and that Chinese companies have donated over $5 million to the major parties, raise concerns about the influence of foreign interests, political as well as commercial.

While both parties have rebuked Sam Dastyari, and Labor is talking about banning foreign donations, neither is interested in substantive reform. Both parties take a firm stance against corruption - where a donor’s interests are supported in return for cash - but they steadfastly ignore the real problem, which is not the criminal conspiracies seen in NSW in recent years, but a systemic distortion of the whole democratic process

This arises from what critics call ‘soft corruption’, where there is no secret deal, but a symbiosis in which each side knows where its interests lie and acts accordingly. It gives rise to a financial co-dependency which puts pressure on party leaders to argue that the benefits to donors are, for whatever reason, also in the public interest - hence the poker machine problems in NSW and the Manildra ethanol scandal.

Whether the relationship is corrupt in this sense may be difficult to judge, as in the recent decision by the European Commission to fine Apple 11 billion pounds for transfer pricing schemes which appear to have been aided and abetted by the Irish government, in line with its aim to attract investment with the lowest company tax in the Common Market. The government is still split on whether to appeal against this inconvenient ruling.

A second concern, rarely discussed, is whether the public makes a free, rational choice when huge sums are spent to get an emotional response. The judgment is free in the sense that it is not coerced by others, but not in the Kantian sense of not being swayed by transient passions. Reflection on this feature suggests public funds should be used to inform and educate, but not for advocacy and persuasion. The adoption of this principle would, in fact, permit huge savings. This is not to dismiss emotions and feelings - we would not be human without them - but they should reflect our judgments not determine them.

It is not hard to see what happens when this order is reversed. America is witnessing a presidential election in which the campaign of Republican leader Donald Trump consists largely of personal attacks on Hillary Clinton and others who support her or disagree with him, with little discussion of foreign or domestic policy. The strategy attracts those who see Clinton as a symbol of a corrupt and unresponsive Washington, often with good reason. It dominates the media and promotes Trump as a messiah rather than a demagogue.

A third concern is polarisation. Democracies are supposed to thrive on a competition of opinions, ideas and values, but in harsh economic times the arguments may become more ideological and polarizing. In Australia Liberals - like Republicans in America - stand for ideals of freedom, especially entrepreneurial freedom, personal responsibility and conservative values, while Labor - like US Democrats - sees itself as the party of social justice and progressive values.

But for most people these ideals are not mutually exclusive. The fact that Liberal charters have never included a general principle of fairness does not mean members and supporters lack a sense of fairness. Nor does Labor’s concern for social justice mean it does not value freedom, the need to take responsibility - as much as we can - for our own lives, and even conservatism which, when read as a common sense cautionary principle, is compatible with any political theory.

But the fact that big business funds parties which support its interests while unions support the socio-economic policies Labor stands for is inherently divisive because each sees itself as having a sacred mission to defend those values which further its aims. The division is self-perpetuating as long as major parties are funded in this way.

The 2014 Hockey/Abbott budget showed just how extreme this ideological divide could become and the public response was swift, bitter and salutary. For the first time in decades it saw a Liberal Prime Minister and his Treasurer citing fairness principles and trying to take them seriously. This is, surely, a good thing, albeit a long way from the original Liberal party, which in Britain under Lloyd George laid the foundations for the modern welfare state.

All of which highlights the need for an ongoing public conversation to reconcile the policies of major parties with these widely shared ideals of freedom, fairness and human dignity. For despite the perennial appeal of skeptical theories - now pervasive in the social sciences - most people believe all these values are important.

In which case the best way avoid systemic corruption of the democratic process is to continually remind ourselves of the importance of these values by arguing for the best interpretation of their requirement and importance.