What could be better for democracy than taking the big money out of election campaigns? Both Victoria and NSW have made moves in this direction, but the feds have done nothing. Until now. The Albanese government’s working on plans for reform.
Last month, the parliament’s Joint Standing Committee on Electoral Matters, now chaired by Labor’s Kate Thwaites, tabled an interim report recommending sweeping reforms to the rules on donations to political parties.
Thwaites wrote that the evidence the committee heard allowed it to “develop clear goals for reform to increase transparency in election donations and curb the potentially corrupting influence of big money, to build the public’s trust in electoral and political processes, and to encourage participation in our elections”.
The committee proposes that limits (“caps”) be set on the maximum permissible donation and the maximum spending by election candidates. Caps would also apply to “third parties”, such as big organisations seeking to influence the election outcome.
The maximum donation that could be made without the donor’s identity having to be disclosed should be lowered from the present $15,200 to $1000. And the disclosure would have to be made at the time, not months later after the dust had settled.
The Labor majority report also urged a new system of increased public funding for parties and candidates in the light of the effect these changes might have in discouraging private donations.
The committee didn’t specify how the caps on donations and spending would work but left it for the government to decide.
Wow. Wouldn’t all that be an improvement? What’s not to like?
Well, I can think of a big risk. At present, the two major parties are at loggerheads, with the Coalition committee members issuing a minority report. They’re particularly – and rightly – opposed to Labor’s desire to regulate donations from big business while exempting donations from big unions.
But as I’ve written before – and will keep writing – the big political development of our time is not the continuing struggle between Labor and Liberal, but the continuing decline of the two-party system of government, as the bad behaviour of both sides turns an ever-growing proportion of voters away to the minor parties and independents.
I think it will become rare for one side to have a comfortable majority, and common to have a minority government. If so, whichever side forms government will be more dependent on winning the support of the crossbenchers – which, I hope, will make them more reformist.
My interest in this is not just that it affects the economic policies governments will be pursuing, but that economists have given much thought to the way small numbers of big firms – “oligopoly” – find ways to compete that are better for them and worse for their customers.
One thing economists know is that the two parties of a duopoly commonly settle into a carve-up of the market that makes life cosier for both of them.
Oligopolists collude – tacitly, of course, since overt collusion is illegal – to keep prices and profits high. This leaves them exposed to some new firm entering their market and taking business away from them by undercutting those excessive prices.
So oligopolists devote much attention to finding ways to raise barriers that stop interlopers entering their market. Often, this involves persuading governments to raise those barriers for them. All for the greater safety of the customer, naturally.
Do you see the parallel with the threat the teals pose to the Liberals, and the Greens pose to Labor? Except that, in the two big parties’ case, when they combine to repel intruders, they don’t have to extract a favour from the government because they are the government.
Surely, there’s some hidden solution to neuter those pesky minor parties that the two big guys could cook up?
Well, the teals, in particular, needed huge donations from badly dressed internet billionaires (and lesser mortals) to knock off so many sitting Liberal members. So maybe we can toughen up on donations in a way that wins much approval and looks even-handed without people noticing it’s disadvantaged the interlopers more than us.
If we have fewer funds from donations, but more public funding, that advantages the established parties because, although every candidate gets the same dollars per vote, the funding you have to spend in this election campaign was determined by how many votes you got last time.
Oh, you didn’t run last time? What a pity.
But that benefit is small compared with the advantages of being the incumbent. Sitting MPs and senators get better paid than most of us, but they also get electoral staff, cars, travel allowances, printing allowances and much else.
All this support is justified as helping the pollie give their constituents good service. But it’s easily diverted to helping them get re-elected. When pollies shake many hands at a school fête, are they just doing their job, or shoring up their vote? Both.
When the government comes up with its plans to reform election donations and spending, we’ll need to examine their implications carefully.
