How political donations are undermining Australia's democracy

The latest statistics show our system is neither fair nor good for democracy, says Joo-Cheong Tham Last week’s release of the parties’ annual returns by the Australian Electoral Commission gives us a glimpse into the parties’ finances. While the media focus has been on individual instances of donations and questions of transparency, these returns also illuminate certain structural features of Australian politics. For one, they reveal dramatic financial inequalities between the main parties. This clearly emerges when the parties’ budgets for the financial year 2002-03 are divided by the number of the first preference votes they received in the last election. This measure reveals a sharp cleavage, with the ALP, the Liberal Party and the National Party on one side, and the Democrats and the Greens on the other. The ALP and the Liberal Party received more than five times the amount of total funding per vote compared to the Democrats and the Greens. The National Party led the pack with its funding per vote more than nine times that of the Democrats and the Greens. This divide means that the ALP, the Liberal Party and the National Party, armed with much larger war chests, will be able to outspend the other parties in the coming federal elections. The other feature of the political landscape revealed by the annual returns is that corporate donations have become a primary source of party funding . Of the amounts declared to be donations by parties, corporate donations outstrip both trade union and individual donations for all parties except for Greens. The primacy of corporate donations is not a recent phenomenon, with the parties’ returns for the financial years 1999-2000 to 2001-02 showing a similar pattern. As part of that trend, large corporate donations have become normalised. This development grows from the practice of large corporate donors hedging their bets by donating to several parties. For example, nine of the top ten corporate donors in the financial years 1995-96 to 1997-98 gave to both the ALP and the Liberal Party with seven of them donating to both these parties and the National Party. The normalisation of corporate donations poses two problems. First, it contributes to financial inequalities between the parties. Second, it is likely to mean that the parties’ policies are skewed towards the interests of corporate donors. The latter poses a serious challenge to the health of Australia’s democracy. This stems from ambiguous status of commercial corporations in a capitalist democracy like Australia. On the one hand, the reality is that such corporations wield enormous economic power with their decisions affecting the livelihoods of most Australians. In such circumstances, they rightly have the ear of politicians. On the other hand, such corporations, from the democratic perspective, do not have a legitimate claim to representation. They do not have a direct claim to democratic representation as they are not citizens, the ultimate bearers of political power in a representative democracy. More than this, such corporations, unlike democratically structured entities like most parties, community organisations and trade unions, do not even have a derivative claim to political representation. This is because they are singularly undemocratic in their decision-making structure. Shareholder control must necessarily mean that power in a business is parcelled out according to the criterion of wealth. In sum, democratic principles would seem to dictate that commercial corporations should not be able to directly translate their economic power into political power through the medium of political contributions. A proper representative democracy should, at the very least, provide for free and fair elections. The flow of political donations, however, means that the coming federal elections will fall short of this imperative. They will not be free from the corrosive influence of corporate donations. Nor will they be fair with parties competing on an equal footing. Joo-Cheong Tham is an Associate Law Lecturer at La Trobe University. His latest publication on the regulation of party finance is a chapter on campaign finance reform in Graeme Orr, Bryan Mercurio and George Williams (eds), Realising Democracy: Electoral Law in Australia, Federation Press, 2003