The price of democracy

The price of democracy in Australia is about to rise, becoming out of reach for many Australians. This is due to the Howard Government’s electoral reform legislation, which is currently before parliament.

The Electoral and Referendum Amendment (Electoral Integrity and Other Measures) Bill  2005 contains numerous clauses that are a serious affront to the democratic principles of political equality and the quality of public debate. The two main areas of concern are: electoral roll changes, which are set to prevent many from participating in the electoral process; and changes to the political finance laws, which will skew political debate in favour of the wealthy.

While this paper will concentrate on the political finance aspects of the legislation, the government is also set to remove voting rights of all prisoners, thereby disenfranchising about 20,000 Australians and disproportionately affecting Indigenous Australians.

In the inquiry into the Bill, conducted by the Senate Finance and Public Administration Committee, 35 of the 52 submissions received by the committee were strongly opposed to this move, with only three (the Festival of Light and understandably, the Liberal and National parties) in support.

Similarly, there have been many objections to the government’s proposals to bring forward the closure of the electoral roll for new enrolees. This will deny many people, mostly young people, from getting onto the roll following the calling of an election. Likewise, the proposal for more stringent proof of identity requirements will encourage many people to simply opt out of the democratic process, because it has become too difficult.

In the political finance area, the government is set to increase the political donation disclosure threshold from $1,500 to $10,000. This means that donations of $10,000 a year will remain anonymous. Of course, if a donor decides to contribute to all of the state, territory and federal divisions of the same party, $90,000 a year (and the influence that buys) will remain hidden from the general public. The government’s main arguments for this change are to bring Australia into line with comparable countries, and that the $1,500 figure has not increased for more than a decade.

In response to the first argument, while the proposed new threshold is comparable with New Zealand ($NZ10,000) and the United Kingdom (₤5,000), it is well above limits imposed by Canada ($C200) and the United States ($US1,000). However, these otherwise comparable countries all place campaign spending caps on parties and candidates, unlike Australia. These caps mean that there is less likelihood of being able to “buy” an election. In Australia, the lack of spending caps or upper limits on donations, means the capacity to unduly influence an election result remains real, and actually increases with the increased level of anonymity.

On the second point of the need for indexation, Joo-Cheong Tham, from the University of Melbourne, shows in his recent submission (pdf file 630KB) on the Bill that the figure of $1,500, set in 1992, equates to a little under $2,100 in today’s currency. On both counts, the government’s arguments are weak.

Compounding the problem of political donations is the lack of timeliness in disclosing donations above the threshold. This was borne out recently when Lord Michael Ashcroft’s $1 million donation to the Liberal Party prior to the October 2004 federal election, did not become public knowledge until February, 16 months after the election.

How can voters make an informed decision when lodging their vote if such information is kept hidden until long after the event? By comparison, in the United Kingdom significant donations are reported quarterly, and weekly during election campaigns. This allows voters to take such information into account when making their choice.

The government’s legislation also proposes to increase the tax deductibility of political donations, from the current maximum of $100, up to $1,500 a year. The government’s argument is that this will encourage participation in the democratic process by providing tax relief. The argument is nonsensical, as the ability to donate money should not be a requirement for participation in political debate.

Also, the current level of tax relief should be sufficient for people wanting to become actively engaged, for example, through party membership. An increase to $1,500 will not alter this. The government’s argument for indexation is again flawed, as a figure of about $250 would be far more appropriate on this basis. It is also illogical that corporations, that have no claim to democratic representation, will also be eligible for this government subsidy under the proposed changes.