Weaknesses in the systems of both federal and ACT electoral funding disclosures have been revealed this week. In the federal sphere, the Liberal Party received a loan of $4.6 million in order to avoid scrutiny from the Australian Electoral Commission, according to Opposition Leader Kim Beazley. Apparently only gifts to parties have to be declared.
In the ACT the Liberal Party received $74,000 in gifts without their source being revealed, according to Independent MLA Michael Moore.
Mr Beazley rightly points out that the loan mechanism does nothing for the integrity of politics. The law insists on declarations of donations to prevent undue influence over government or even the appearance of undue influence.
From a donor’s perspective, donations to political parties may be seen as a method of influencing government. Up to a point that is legitimate. It is not legitimate if the corporate donor is seeking special advantage for that corporation over its competitors or for some special advantage for that corporation alone. It is not legitimate for individual donors to seek such preferment. However, it is legitimate for donors to support a political philosophy on ideological or pragmatic grounds and to provide money to the party that pursues it.
Some donors, especially corporations and industry associations give to both major parties and to minor parties. Cynics might suggest they are buying immunity from adverse government action. However, many donors are being good corporate citizens in supporting the democratic process.
Provided there is disclosure, there is no problem. The actions of Governments that do things in a way favourable to party donors can be subjected to public scrutiny. However, if donations are secret, politicians can favour their sponsors without being subjected to public scrutiny. It amounts to bribery and the corruption of public policy. Public good is subjected to private benefit.
Although 1996-97 was a non-election year, federal and state Liberal Party branches attracted more than $21.4 million in donations and investment income ahead of Labor’s $17.3 million. In addition, the Liberal Party received a $4.6 million loan from a secret foundation in what appears to a be a loophole in the rules. Because the money was lent rather than donated to the party, the donor felt it was not obliged to provide any information to the Australian Electoral Commission.
The loophole should be closed as quickly as possible.
In the ACT the Liberal Party received $74,000 without revealing details of where the money came from. The loophole in the ACT’s case is that the source of donations under $500 need not be disclosed. The only trouble is that a donor could give a series of gifts of $499 which could add up to a considerable amount. In the ACT context, it would not take too many gifts to add up to a gift that could have the appearance of seeking undue influence.
It is important that this loophole be closed as soon as possible. The ACT position is worse in that Liberal and Labor MLAs were warned before the law went through that the loophole was there. Yet still they passed it; and they should be condemned for doing so.
The most serious concerns about these loopholes is that the very people with the power to close them are the prime beneficiaries. It has taken a long shaming process to get the disclosure laws were have now.
It might not be enough to just close these loopholes because no doubt others will emerge. It will require a change of mentality on the part or party machines which must be produced by pressure from MPs and sustained public pressure.
The failure to disclose significant donations is the equivalent of condoning the seeds of a climate of corruption.