Politics: who gives how much to whom?

The failures of Australia's political funding regime are transparent. This week’s release of party donation returns reminds us of its inadequacy.

Political parties are required to disclose on an annual basis, resulting in a long lead-time between receiving the money and the details being made public. So, while the 2007 federal election, more than 14 months ago, seems like a distant memory, it is only now that we have some idea of how party campaigns were funded.

The effectiveness of the disclosure scheme is also undermined by its sizeable loopholes. As the situation is now, parties, candidates and other groups are required to itemise only those sums exceeding $10,900. Moreover, for parties with separate branches, they get the benefit of this threshold many times over. As it applies separately to each party branch, the effective threshold for the ALP and its nine federal, state and territory branches, for instance, stands at a staggering $98,100. In a three-year electoral cycle, contributions of up to $300,000 can legally go undisclosed.

To its credit, the federal Labor Government has moved to fix the more egregious faults of the disclosure scheme. A bill currently before Parliament proposes twice-yearly disclosure with parties required to itemise sums exceeding $1,000. It also goes further by treating party branches as a single entity for the purpose of the disclosure threshold and bans foreign-sourced contributions.

More than just transparency is on the reform agenda. In December last year, the Special Minister of State, Senator John Faulkner, tabled a green paper that raised the prospect of a significant overhaul of Australia's political funding regime. A key problem in this area, as the green paper correctly notes, is the "arms race" among the major parties with increasing amounts being spent on electioneering. As the demand for funds increases so does the pressure to raise money, bringing with it the sale of access and influence by the major parties.

Arguably, the most important measure to deal with these problems are limits on election spending. In Canada, New Zealand and Britain, for example, parties, candidates and other political groups are limited in what they can spend both nationally and in their constituencies.

The virtue of such limits is twofold. First, they can promote greater fairness and competitiveness in elections by allowing greater access to the electoral contest as campaign costs are reduced, or at least contained, and so prevent wealthier parties and groups from dominating elections through their greater ability to spend. Second, they ameliorate the risk of corruption by reducing the temptation to engage in unsavoury fund-raising practices.

Do these limits, however, unduly limit freedom of political expression? Caps on election spending clearly burden this freedom but that does not mean they are unjustified.

Freedom of political expression is not an absolute value and is rightly regulated to promote other values. In this case, the interests of fair elections and prevention of corruption provide compelling reasons for regulation. The former rationale has particular force: the value of this freedom largely derives from its role in promoting democratic accountability and deliberation. It is the same rationale that is advanced by fair elections.

Moreover, and this is a point that is often neglected, the argument from freedom of political expression does not run one way. It is true that the introduction of spending limits increases state regulation of political expression.

But when "freedom to" is weighed together with "freedom from", we see that spending limits, by regulating the speech of the wealthy, can enhance the voice of those with fewer resources. For the greater number of political participants, state regulation, rather than being a threat to political expression, is necessary to counter the silencing effects of private power.

A related objection to election spending limits is that they are likely to be unconstitutional because they breach the implied freedom of political communication. If properly designed, these limits are not likely to be unconstitutional. No High Court case has ruled against these limits and the approach of the court clearly allows for some form of spending limits.

Under this approach, freedom of political communication can be validly regulated when there is a legitimate objective and the law is reasonably appropriate and adapted to this objective. Spending limits that are carefully tailored to prevent corruption and promote electoral fairness would very likely pass this test.

Australia's laissez-faire approach to political funding has not served it well and has resulted in serious threats to the integrity and fairness of the political process. The vigorous efforts that the Federal Government is making on the transparency front go some way to dealing these threats. The next instalment should tackle election spending limits.