The politics of giving

The unveiling of the latest political donation figures last week highlights the virtuous argument, but hopeless cause, for legislation separating money and politics.

While there’s no denying the danger of corporate and institutional political donations to our democracy, there appears to be little chance of either major party renouncing them anytime soon, especially as they reaped in nearly $12 million between them in the last year.

This is bound to rise in an election year, but as strange as it sounds, the hope for a more accountable political system lies not with less money, but with even more flowing in to the parties.

Though not from companies, unions and institutions, but from the wallet of the humble individual - Joe Citizen. Or to be more precise, thousands of small-donors who are keen to contribute to the democratic process and who collectively could reduce the power of business, union and lobby groups.

We only have to look to the United States to see how.

As a collective, individual donors have become the most powerful force in US elections; ready and willing to rack up tens of millions of dollars for a candidate at rapid speed. Their value to the parties and candidates is now greater than corporate and institutional donors, with individual donations accounting for 62 per cent of total donations in the 2006 mid-terms, and a whopping 93 per cent in the highly polarised 2004 Presidential election.

For all the presidential candidates combined, it added up to US$602 million. For last year's mid-terms, with it's hundreds of Congressional and Senate races, it was a cool US$861.5 million. The enormous amount of money from individual donors is not so much the point here - after all, many top donors are linked to businesses, hence the line between large individual and corporate donations is somewhat blurred.

But what is significant is the number of small donors who are giving below the disclosure cut-off point of US$200. Thirty-one per cent of President Bush's and 37 per cent of John Kerry's campaign contributions were under US$200. This means about a third of campaign finance came in from ordinary people, without a huge amount to donate, but who were keen to play a part in the political process. As the mid-terms showed, this trend continued beyond 2004, and with 2008 hysteria already rife, it’s unlikely to wane.

When small individual donations are combined with larger ones, the amount of money they raise now makes them the most vital supporters that US politicians have - and this is good for democracy.

The cumulative contribution of their donations decreases the total proportion of campaign finance that business and special interest groups account for. This means parties rely less on business, unions and interest groups for funding, and logically, are less likely to pander to them through policy.

Over here, things couldn't be more different. In the last federal election period, only 8.4 per cent of total campaign contributions came from individuals, and that included the million dollar donation to the Liberal party from British Tory politician Michael Ashcroft.

So what's so different over here? Why haven't the parties courted the individual donor like their US counterparts have?