nsw politics
7 May 2008
For Sale: One State with Harbour Views
This week, amid Iemma's power dilemma, MP Frank Sartor was referred to ICAC over donations from property developers. The cash-for-approvals scandal is not going away in NSW
The NSW Iemma Government continues to lurch from crisis to crisis. Over the past weekend it suffered what Labor Party historian Peter Botsman calls a loss "as close to [unanimous] as could ever be at a State Labor conference" over the issue of privatisation of the State's electricity industry. Only the top end of town and those former Labor leaders with positions in the financial companies standing to gain from the privatisation applauded the Premier's stance.On the Monday after the Government's conference disaster, one of Iemma's senior ministers, Frank Sartor was referred to the Independent Commission Against Corruption (ICAC) by Greens MP Sylvia Hale over donations from property developers to political parties and candidates. The allegation is that the donations taken represent "a systemic corruption of the planning system in NSW".
The entire Greens democracy4sale team worked for weeks analysing the outcomes of development applications that Sartor has designated "major projects", making him the consent authority. This research shows the political donors receive favourable treatment compared to non-donors.
Several months before the conference disaster and the Sartor ICAC referral, Iemma announced that his Government would consider banning all political donations in NSW. It was a bold attempt to stop the constant negative headlines from the unfolding Wollongong scandal involving Labor politicians and their developer mates.
Sceptics argue this is another grand proposal by the Premier that will quickly disappear like so many of his "visions" to cure problems in the State.
The general secretary of Labor's NSW Division, Karl Bitar, is currently holding talks with the various political parties in the State, making it a good time to examine some of the ramifications of Labor's plan. This is important if we are to ensure that changes to our political funding regime enhance the democratic process and do not further entrench the two-party system.
Labor's current proposal to ban all political donations would favour Labor and the Coalition. These parties have major investments and to that extent are less reliant on individual donations than small parties. There are no limits proposed on money coming from investments, which can be used to fund elections.
While it will be healthy to ban corporate donations, if individual donations are completely banned an important revenue stream for emerging parties, minor parties and independents would dry up.
The Greens support retaining individual donations with a tight cap, such as $1,000 per year per donor. If donations from individual citizens are banned, smaller parties in NSW such as the Greens, Christian Democrats and The Shooters probably would survive. But life would be more difficult for these small political parties, parties not currently represented in Parliament and independents.
We also need to consider how emerging parties will fare. Nearly every election throws up a new political party. If we ban individual donations it is hard to see how they would be able to contest elections. This would be true for independent candidates as well.
Various people have raised the very real possibility of individual donations being exploited, even with a cap of $1,000 per year per donor. We could have US-style "bundling" of many $1,000 donations coming via senior management but apparently not from the one source. Unscrupulous people will attempt to find loopholes. If this did occur the resulting donations would still be a much less than the millions of dollars that change hands now. Canada has capped individual donations and their system is working well.
Laws against corporations providing employees with funds to donate to a party would help to limit these unscrupulous activities.
Individual donations are part of the democratic process. It creates a healthy sense of involvement in the entire process by allowing people to show their support for candidates, political parties and the values these represent.
One point that Labor has not discussed is the amount individual candidates can contribute to their own campaigns. In NSW, money candidates spend on their own campaigns isn't considered a donation and, therefore, isn't reported to the NSW Election Funding Authority. If these contributions aren't classified as donations under the law and treated like any other donations, it would allow wealthy individuals to spend an unlimited amount on their campaigns and possibly buy their seats in parliament or local councils.
As the sytem stands, public funding for political parties kicks in when parties obtain 4 per cent of the vote. That money only becomes available after the election. Individual donations will allow emerging parties and independent candidates to raise some money for how-to-votes and all the other costs associated with running an election campaign.
Even those small parties that have parliamentary party status does not give them extra funding. It only gives the parliamentarians some extra resources such as some additional parliamentary staff. Public funding is crucial for all parties to run their offices between elections as well as fund their election campaigns.
We believe that public funding using a reimbursement system should be introduced for candidates, groups of candidates and political parties in local government elections who receive 4 per cent of the vote. Reimbursement systems such as the one used in NSW State elections avoid the problems we see in the entitlement system used in Federal elections.
Limits also need to be adopted for third party activities during an election campaign. Without such limits corporate donations will move from political parties to a plethora of third party organisations such as companies and lobby groups. The right wing corporate lobby groups would most likely have the larger amounts of money to spend than the more progressive third parties like Greenpeace.
Considering many third parties such as Get Up! are active outside of election cycles, we propose that limits are put on their election expenditure and not on the donations they receive. The Greens proposal to the NSW Political Funding Inquiry advocated third party expenditure be capped at $50,000 for the four months leading up to a State election. This suggestion is along the lines of the section on third parties in the 2000 Canadian Election Act. The new law is working well in Canada and has survived at least one legal challenge in the Supreme Court of Canada.
The greens' proposal is linked to fixed term elections. This proposal would vary for Federal elections.
The Greens are keen to hear the viewpoints of others on these and other issues. One we wrote about earlier is also important to discuss in detail - limits on campaign spending which Labor strongly opposes. We will be able to devise a better system with fewer loopholes if there is wide consultation.
We have written to NSW Labor's Karl Bitar asking him to extend his consultations on electoral funding reform from the political parties to the general public. Input from the public would put more pressure on the Labor Government to proceed with reform rather than quietly dropping it as they have so many of their other proposals.
newmatilda.com will be closely following this issue over the next few months and encourages readers from all States to weigh into the debate about political donations. Have there been questionable developments in your area that should be investigated? How would you like to see the system reformed?
Delicious
Digg
StumbleUpon
Newsvine
Facebook
Kwoff
Discuss this article
To participate in the discussion Sign in or Register
This is a great article and the culmination of years of hard work by the Greens NSW upper house representative.
Yes the system needs to be cleaned up as many of us have lobbying for this for many more years than the Greens have even existed. But let’s also remember the Greens have also proved adept at working the electoral funding laws.
Many of us in Ashfield still await with some interest the Greens electoral funding return after this years council elections. We want to see how well they disclose the political donations received and the electoral expenses made during the 2006 by-election in Ashfield. For more information see Inner West Weekly 22/2/07 page 10. In this case their candidates return showed she made no electoral expenditure and received no donations yet produced a lot of electoral material.
Sure it was small beer but the principle is the same.
Some questions come out of any complete ban on private donations to political parties/candidates:
1. How do independent candidates, new parties and small parties fund their election campaigns? How does it affect the entry of independent and new parties into electoral politics?
2. Who would the public funding work? Would the funding for an upcoming election depend on the last election results? Is this reasonable?
3. Would this system have effectively stopped the Greens moving from being a very small party 20 years ago to their current third-party status?
4. Does the proposal make the political system less flexible in responding to the electorate? Does it ossify it?
5. Why should people be prevented from donating to parties or candidates if they genunely think that that’s a good thing to do?
6. If parties or independent candidates could fundraise for "administrative" purposes rather than "campaign" purposes, how could these administrative funds be quarantined?
7. Would the incentives on political candidate/parties in a system of no private donations and only public funding lead to these candidates/parties changing their behaviour so that they don’t do activities disapproved of by the state? Why should funding for campaigns (and money is essential in electoral campaigns) be dependent on obtaining approval in some form from the state? This is anti-democratic.
Lee Rhiannon and Norman Thompson, the authors of this article are spot on. Australia’s democracy owes a debt of gratitude to these 2 people for the enormous effort they have put in over the years to expose the corrupt donations system in NSW. The Australian media needs to give greater critical attention to the blatant ‘legalised’ bribery that is rife throughout both the Liberal Party and the Labor Party.
One subtle aspect of this whole issue is the conflict of interest our commercial media has. In the end, the commercial media are the final beneficiaries of the donations game. The vast majority of these donations are spent as dis-educating, stupefying, superficial media campaign commercials. The commercial media may be interested in publicising the ongoing donations scandals. But the last thing they would want is for the donations game to stop. It’s just too profitable. After all, everybody wins; the donors, the major parties, the media. They are all winners. It is only the people of Australia that suffer. And who gives a shit about them.
Brad Pedersen
President of democracywatch.com.au
Sacha B’s questions are quite perceptive. Give the "policy on the run" feel of the ALP’s response to the donations scandal it’s quite likely they haven’t spent a lot of time thinking through the full implications of a ban on donations from all sources, even individuals and party members.
The existence of the Greens as the third force in Australian politics has only been possible because of the support of individuals - a support that allowed the party to reach election funding thresholds about 15-20 years after its foundation. I imagine that there would be plenty of people in both Labor and the Coalition parties who would be happy to see this process made even more difficult.
The Greens support a funding system which prevents all donations from corporations, unions etc, but still allows individuals to donate within reasonable limits. A cap would be imposed on those donations, with a larger cap for genuine party members.
A limit on total spending on election campaigns is also needed, both to prevent distortions by wealthy candidates and parties and also with the expected benefit of cutting out a lot of the expensive negative TV ad campaigns. Note that Labor’s proposal would still permit millionaire candidates to generously fund their own campaigns.
These changes would require additional rules to prevent the kinds of funding channels that operate in the USA - with similar caps on the campaign activities of third-parties like unions or industry lobby groups and the like, and to minimise pressure to donate on employees.
Funding regimes similar to these are now working well in Canada and New Zealand among other places. There probably isn’t a perfect system, but a simplistic ban on all donations is likely to do as much harm as it does good to truly representative democracy.
And the prize goes to the greens on their superb hypocrisy in using public funds to push failed pet hobby horses sold as facts but clearly exposed as entertaining fiction. Those who live in greenhouses should be careful in throwing stones as the left do not have any mortgage on honesty in government. Honesty was replaced by expediency years ago. But that shouldn’t stop a full review of political donations, including financial exchanges.
Hey Dallas, are you just sore about the Greens role in the donations issue because the former pillars of support for parties of the Right have shown themselves to be more interested in their own interests than those of their supposed political allies?
Brad Pedersen makes a very good point that the commercial media industry has a vested interest in the ever increasing amounts of money being spent in election campaigns. Unfortunately he is probably correct that they want the donations game to continue.
When the Hawke government moved in 1991 to ban political advertising on television during federal election campaigns, TV stations and the Liberal NSW government fought the ban all the way to the High Court. They won since the ban was considered a violation of freedom of speech. Limits on campaign expenditure in certain American jurisdictions have also been overturned by courts although they allow limits on political donations.
Certainly in the US the failure to limit campaign expenditure has seen the runaway spending on campaigns such as the current race for nomination for the presidency. Some are predicting a total of US$1 billion will be spent by the time the presidential election is over in Nov 2008. Do we want Australia to continue to move down the American path?
However, limits (not bans) on campaign expenditure has worked in countries such as Canada and New Zealand. If the laws are carefully written they hopefully will be able to withstand court challenges - preserving freedom of speech while stopping the constant push for more and larger political donations to fill the parties’ coffers.
Norman Thompson
Hi Chris I don’t support developer donations either, but when the greens and the left on both sides of politics corrupt the approval process, then I’ll express my disappointment
What about donations from foreign companies and people who aren’t citizens of Australia?
I see for your web site that people like Lord Ashcroft of Britain gave the Liberals $1,000,000, the Macau casino king Stanley Ho gave the ALP $50,000 and Hong Kong property companies gave considerable money to Labor.
Why should people who aren’t Australian or property companies in other countries be influencing elections in our country?
Good point about foreign donors. Some countries have explicit laws to prevent donations from citizens and companies based in other countries. The idea of a ban on foreign sourced donations runs into problems if you allow corporations to donate - for example, is BHP-Billiton Australian or foreign?
I would support a model where only citizens (and maybe permanent residents actually living in Australia) would be able to donate to political parties and candidates - no corporates, no foreigners - only those people with a direct voting role in the democratic process.
Dallas,
I’m a little confused about your precise meaning when you say "when the greens and the left on both sides of politics corrupt the approval process". Can you elaborate on your concern?
regards,
Chris
Mark Drury asked about the disclosure by the Greens candidate in the 2006 by-election in Ashfield.
Our research team has checked with the Greens in Ashfield and they said, "The candidate in the 2006 Council by-election has lodged her electoral funding return. And guess what? No donations from pubs, clubs, gambling dens or rapacious developers."
Mr Drury you should be able to find the candidate’s return either at Ashfield Council or the NSW Election Funding Authority.
Perhaps I did not make myself clear.
1/ The candidates return is known to me and here is the link www.efa.nsw.gov.au/local_government_elections/election_funding_reports/2…
2/ It shows no electoral expenditure and no donations yet the Green candidate produced electoral material. The return shows nothing
3/ Apparently this is ok if the Greens declare their expenditure and donations after the next local government elections. This is what many of us in Ashfield are waiting for.
4/ As part of her piece Ms Rhiannon asked for to hear the viewpoints on electoral funding and expenditure.
Mark Drury
Perhaps I did not make myself clear.
1/ The candidates return is known to me and here is the link www.efa.nsw.gov.au/local_government_elections/election_funding_reports/2…
2/ It shows no electoral expenditure and no donations yet the Green candidate produced electoral material. The return shows nothing
3/ Apparently this is ok if the Greens declare their expenditure and donations after the next local government elections. This is what many of us in Ashfield are waiting for.
4/ As part of her piece Ms Rhiannon asked for to hear the viewpoints on electoral funding and expenditure.
Mark Drury
Mark’s point about candidate returns is an important one. The current rules at local, state of federal level don’t require disclosure of all financial details relating to any specific campaign, just donations received by the candidate personally, and expenses incurred by the candidate.
The AEC has just released candidate statements for the 2007 federal election and nearly all are nil returns or show only a small part of campaign expenditure. For example, Malcolm Turnbull discloses $71,772 of expenses which wouldn’t have paid for even a single one of his multiple electorate wide mailouts.
Donations received by parties or other organisations who may campaign in elections are disclosed annually to the AEC or after every general election in the case of NSW local and state elections. Similar rules apply to expenses incurred. The NSW funding system for state elections does provide an incentive for full expense disclosure as election funding is only available for expenses disclosed. But if the campaign expenditure will exceed the funding pool there is no need to be exhaustive in the candidate’s return.
I wouldn’t be making a big issue out of a nil return by a particular Greens candidate - and perhaps you could ask the Greens local group for details - after all, they will be on the public record after the September elections and I strongly doubt that disclosure now would prove embarrassing to the Greens.
But obviously any genuine reform of the funding and disclosure rules would include a requirement for all funding and expenses associated with a particular campaign to be disclosed - with donations on the record prior to the election.