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?

The first answer could be that there's a significant difference both in the American political system and the culture that surrounds it. The US primary system fosters a cult of the individual, where supporters get firmly behind an individual candidate and load them up with money knowing that dollars, rather than sensible policies, are required to get them off the ground.

In Australia, no matter how much you love Howard or Rudd, you know they'll be contesting the poll whether you give them money or not. However this doesn't adequately explain why thousands of Americans donated both big and small amounts to Bush in 2004, given that he didn't have to fight a primary. Instead, it may be that Americans recognise and acknowledge the role that money plays in politics more than Australians, and in particular, how essential it is for successful election campaigns.

This has been reflected in the tech-savvy fundraising methods that have been used by both US parties in recent years. Inviting average citizens to donate small amounts through appealing, accessible websites has proved to be highly successful, even in a country that normally struggles to get half its citizens to vote.

Unfortunately, Australian parties still seem to believe that the small individual donor won't embrace the idea, despite disclosure law changes that should encourage them.

Fundraising pleas still tend to go out to party members and previous donors. While they do invite donotions on their websites, it's a fairly half-hearted affair.

Labor's federal site doesn't even offer the ability to donate right then and there with a credit card. You have to make a call. The Liberal website allows instant donations, but doesn't do much to encourage them. Compare it to the creativity of Howard Dean's site in 2004, where a baseball bat lit up like a thermometer as the dollars increased, or initiatives like Democracy Bonds for the Democrats, where people contribute an ongoing $20 a month, and the Australian parties look woefully behind.

Perhaps they’re sceptical about the willingness of Australians to give generously to politicians, but as the US has shown us, there’s huge potential. While the parties may feel content to keep tapping the traditional sources, that potential to significantly top up their war chests will surely spark more concerted efforts to woo the small individual donors of Australia. It’ll be a win-win situation - good for the parties and good for democracy.