The need for reform of Australia’s political finance law is pressing. Last month, it emerged that Calabrian mafia figures have used donations to garner influence over members of Parliament. More recently, Bill Shorten’s appearance at the trade union Royal Commission has underlined Australia’s slack donation disclosure regime.
Money has become a potent force in Australian politics. Academic Graeme Orr has observed that, ‘in relative terms, money politics in Australia is not too far behind America’. The amount of money flowing to political parties is increasing dramatically. The amount received by the ALP and the Coalition increased by 37 per cent from 2004-05 to 2010-11. Moreover, the funds raised through private donations come predominantly from large donors. In 2004-05, 45 per cent of the money raised by the major parties came from donations of at least $100,000.
The waves of private money rolling into politics create a risk of corruption: the misuse of public office for private gain. The paradigm case is quid pro quo corruption, or the exchange of an official act for money. However, money also enables private interests to exercise undue influence over public decision-makers. If a donor is granted regular meetings with the relevant Minister, that donor’s interests will be, consciously or subconsciously, at the forefront of the Minister’s mind. Even where donors receive nothing in return, large donations give rise to the appearance of corruption. This undermines public confidence in the integrity of government.
The link between money and politics also undermines political equality. John Rawls thought that people should have a fair opportunity to hold public office and to influence the outcome of political decisions. However, donations confer on the wealthy privileged access to powerful public officials. In the absence of limits on campaign spending, those with financial means are also able to drown out the voices of those without.
To limit the role of private money in politics, most Australian jurisdictions use a combination of public funding and disclosure requirements. Political parties with a sufficient level of public support receive funding from the government, and parties are required to disclose private donations above a specified threshold.
However, this system is not up to scratch. First, public funding does little to reduce parties’ reliance on private money. Without limits on expenditure, public funding merely inflates party spending. Second, the existing disclosure schemes are too easily circumvented. Under the current federal system, only donations of more than $13,000 need be disclosed,