Intrinstically corrupting

After the Australian Electoral Commission released the 2022-23 political-donation data various think tanks and media commentators painted a picture of corporate Australia sloshing vast amounts of money into the coffers of the major parties to make sure that the bidding of big business is done.

And further that much of it is opaque; cannot be traced; and is only made public months after the money has been handed over.

That is nearly all true and something should be done about it. But the vicious circle dictates that nothing much will be done about it because those very donors do not want much to be done about.

When I say “nearly true”, the part off the mark is the “vast amounts of money”. When you look at the overall picture, corporate political donations are contemptibly small.

The AEC tells us that the total of all donations to the major political parties (Coalition and Greens) in 2022-23 was $210 million. The small donations from individuals do not amount to much and the large donations from individuals are essentially from corporate Australia.

So, you can put nearly all of that $210 million down to corporate Australia. It sounds like a lot. But as a percentage of the total of $57 billion in corporate annual profits in Australia it is just one third of one per cent.

A contemptibly tiny percentage of corporate profits in effect funds the major political parties. The parties get $75 million from public funding, so corporate Australia is providing three quarters of the major parties’ funds.

It is so disproportionate: a tiny fraction of corporate profits provides a giant portion of political parties’ funds.

The corporates must be laughing at how cheaply they can command the political agenda in Australia.

And command the agenda they do. It explains the tardiness over action on vehicle-emission standards; gambling advertising; and competition policy. It explains the continued subsidies and tax breaks going to fossil industries; capital-gains tax concessions; and cash rebates for franked dividends. It explains the slow bleed of Medicare so it is no long an affordable universal health-insurance scheme and the pampering of private schools to the detriment of public schools. And it explains the absurd food-labelling laws. On and on it goes.

Many corporates say they are just being good citizens by contributing to the political process. It is laughable. They give money to political parties to get results.

The gifts give rise to a sense of obligation to reciprocate. That reciprocity arises even if the gift is quite small. That has been shown through the work of French sociologist Marcel Mauss in his 1925 book The Gift, and through the more recent work of Nobel Laurette Daniel Kahneman.

They show that the sense of obligation to reciprocate cannot be easily expunged. That poses a huge problem in the political sphere because the only thing a political party can give in return is the warping of policy to favour the donor against the broad public interest.

They don’t have anything else to give. It is not like a return “shout” in a pub.

The reciprocity can only arise, of course, if the political party knows about the donation – who gave it and what industry they represent. So, a whole lot of small donations by individuals who even if named would not give rise to an obligation to reciprocate because the political party would not know what the individual might want in return. 

It is very different for a corporation whose interests are self-evident and whose donation, from the political party’s perspective, is quite large (even if it is a trivial amount from the perspective of the corporation).

This leads us to the conclusion that corporate donations to political parties are of their nature corrupting of the political process and should be banned.

But that is not going to happen. Labor would never forsake the donations it gets from unions and therefore will tolerate corporate donations overall. Indeed, given that the corporates know that from time to time, Labor will be in government, Labor knows that the corporates will give money to Labor.

One indicator of the corporate expectation of reciprocity is that the amount that many corporates give fluctuates with the fortunes of the party.

They tend to increase the amount to political parties on the rise – when they look likely to win the next election and be in a position to return the favour. For example, three of the big four accounting/consulting firms increased the portion of their donations going to Labor in 2022-23.

Similarly, with fossil-fuel corporations.

Corporate donors might argue a ban would breach their freedom of speech. It is a poor argument. If a ban were in place there would be nothing to stop them putting their views directly to the public. But, of course, they prefer to put their views away from the public eye. They buy access through high-priced breakfasts, lunches and dinners.

There are some obvious other defects in the present system. First, is the time lag. We only get information about donations for a financial year the following February, between seven and 19 months after the money was given. We should have real-time reporting.

Second is the high threshold for reporting. It is now more than $16,000. When split up between candidates and various state branches of parties, a lot of money can be given without disclosure. In 2022-23 it added up to $57 million – about a quarter of donations. Of course, the parties themselves know immediately who is giving (and who they have to pay back).

Clearly, the threshold should be cut to about $1000.

But those two reforms should not distract people from the fundamentally corrupting nature of corporate donations.

Crispin Hull

This article first appeared in The Canberra Times and other Australian media on 6 February 2024.