The democracy we can’t afford

The integrity of representative government is under challenge by the current flows of private and public money. Foremost, there is a lack of transparency associated with private money. When devoted to lobbying, it can sometimes result in covert influences over the political process. When given directly to political parties and candidates, it can be shrouded in secrecy – there are no disclosure schemes at all in some states, and the federal, state and territory and local government disclosure schemes do have significant weaknesses.

There is also corruption through undue influence due to the sale of access and influence, a practice fuelled by the increasing demand for campaign funds, which itself stems from the intensifying ‘arms races’. Lobbying too can lead to corruption and misconduct. Neither is the provision of public money free from such afflictions – corruption through the misuse of public resources occurs when parliamentary entitlements and government advertising are used for electioneering. Corruption relating to political funding often takes the form of institutional rather than individual corruption; this especially applies to corruption through undue influence, and through the misuse of public resources involving electoral unfairness.

The flow of money into Australian politics also results in various forms of unfairness. The sale of access and influence provides another avenue for the rich to secure a greater influence over the political process because of their wealth. So does paid lobbying. Tax subsidies, which benefit the wealthier sections of society, are another source of unfairness. Private funding in general produces a funding inequality between the major parties and their competitors, a disadvantage that is severely compounded by election funding formulas that discriminate against minor parties and new candidates, and by the access of parliamentarians and parties in government to public resources such as parliamentary entitlements and government advertising which can be used for electioneering. There is also an unfair playing field in elections, with a serious imbalance between the election spending of major parties and that of minor parties, as well as a lack of ‘equality of arms’ between the major parties (it currently favours the ALP).

The poor health of political parties is both a cause and effect of the corrosive role of political money. With shrinking membership, the major parties turn to both plutocratic financing and more capital-intensive campaigning, developments that contribute to corruption and unfairness. As the agenda-setting ability of parties is hollowed out, the role of lobbyists is likely to become much more central. All this undermines the health of the political parties. Both the reality and the risk of corruption threaten the performance of parties’ governance function. Unfairness in politics warps their ability to be responsive to the public, and an excessive preoccupation with fundraising diverts parties from their functions more generally.

A distinguishing feature of Australia’s political finance regime is the premium it places on ‘freedom from’ state regulation – the law generally allows all sorts of political contribution: from any sources, in any amounts; it also places few limits on political spending. It is the focus on ‘freedom from’ that characterises this regime as laissez-faire.

These formal freedoms have, however, been ill-used. The exercise of these freedoms has increased corruption (and the risk of corruption) and unfairness in politics and enervated the political parties, and has come at the cost of ‘freedom to’, or the fair value of political freedoms. The large amounts that are channelled to political parties are out of the reach of most citizens. As a result, meaningful election campaigns are the preserve of a handful of political parties.

There was nothing inevitable about this. A laissez-faire approach is not an invitation to vice; indeed, it can be an opportunity for virtuous self-regulation. The major parties have, however, failed to live up to this goal: laissez-faire regulation has been accompanied by laissez-faire attitudes. The crucial issues concerning political funds are skated over, and the raising and use of such money are seen as merely questions of political strategy. Laissez-faire regulation is partly to blame, but so is a political culture that says ‘anything goes’ when it comes to questions of political money.

In order to protect the integrity of representative government and promote fairness in politics as well as support parties in discharging their functions while respecting political freedoms, there need to be fundamental changes to how money in Australian politics is regulated. The laissez-faire approach should be repudiated – self-regulation of political finance has failed abysmally. More democratic regulation of political funding is urgently required.

Money & Politics is out now through UNSW Press. It’s available from the University of Melbourne Bookshop

 http://www.bookshop.unimelb.edu.au/