GRAEME ORR. Party Over? Reforming Australian Political Finance

Oct 4, 2016


After decades of halting debate, the momentum for political finance reform has never been greater.   At a national level, this comes off a low base. Australia has the laxest political finance system of all our common law cousins: Canada, UK, US, New Zealand.

But don’t hold your breath. Any systemic reform faces two hurdles: one real, one more imagined. The real hurdle is political will. The perceived hurdle is constitutional. Let’s take them in reverse order.

‘Chosen By the People’ or ‘Chosen By the Court’?

Fact 1. The Australian Constitution is a thin thing. Scour it, but you’ll find no guarantee of anti-discrimination, free speech or even an explicit right to vote. The Founders, good anglophiles, favoured parliamentary sovereignty. So they framed a ‘political constitution’ not a judicial one.

Fact 2. Yet the High Court rules the Constitution.   With reform by referendum a perennial stalemate, the Court drives evolution on this otherwise constitutionally frozen continent. Until 1992 that meant overseeing federalism, typically by expanding Commonwealth power.

But from 1992, the Court ‘discovered’ some implied values, which act as limits on parliamentary power. First was an implied freedom of political communication. Then an implied universal suffrage. And, most recently, an implied equality of political opportunity.

It reasoned that these values necessarily underpin the phrase in the Constitution that Parliament is to be ‘chosen by the people’. Fair enough. It would be a paradox if a modern parliament could abolish the free press or disenfranchise groups based on gender or race.

But the Founders wanted a different value read into the Constitution. Their value was ‘trust the political branches’, rather than ‘trust the High Court’ – even on basic political ‘rights’.

Liberté, Egalité, Intégrité

If money makes the world go round, politics is meant to make the world go fair. Money and politics are in tension.   One vote, one value ought to make citizens more equal, by smoothing out the inequalities of fortunes and misfortunes. Yet money and politics are inextricably linked.

Money helps lobby groups translate interests into influence. And political campaigns and organizations need resources. Here lies a central democratic conundrum: how to regulate to improve political integrity and equality, without unduly restraining political liberty and activity?

In 1992, the High Court alighted, like a butterfly, on one of those values, and began exalting freedom of communication. It began by striking down a Hawke government law to replace paid broadcast ads at election-time with free air-time for policy statements.   The model drew on the UK and NZ, but was deemed too ‘unfree’ by the High Court.

In a brace of recent cases, however, the Court has nuanced its position. Two of these cases grew out of NSW reforms. In that state, both sides of politics have rejected the laissez-faire approach to political finance. The NSW system is now the most comprehensive in Australian history. Coupled with ICAC’s powers and an emboldened NSWEC, NSW is working itself clean.

NSW has limits on electioneering expenditure, bans on donations from property and vice industries, and caps on donations. The spending limits and caps also apply to lobby group campaigns during elections.

But the limits do not apply to union affiliation fees. The O’Farrell government sought to remedy this, by banning corporate and union contributions to parties. But in a 2013 case brought by Unions NSW, this solution was struck down. The High Court reasoned that limiting donations to citizens/electors hurt the freedom of community groups and permanent residents, for little benefit. After all, if donations were capped to $5000pa from anybody, the corruption risk was minimized.

A more significant decision in 2015 upheld caps on donations, and bans on developer donations. This case was brought by Mr McCloy, a developer caught up in the ICAC investigations of unlawful donations to NSW Liberals.

McCloy argued that donation limits hobbled political expression unnecessarily, assuming disclose of donations and a nimble media could deal with integrity concerns. The Court disagreed. But instead of undoing the ‘freedom of political communication’, it doubled-down.   The Court discovered a second fundamental principle, an ‘equality of opportunity’ to participate in politics.

This is like swallowing a spider to catch a fly.   The Court grounded this principle in early commentary about the Constitution being a document to share political power. This was ironic, because of the point of political power was the trust in parliamentary government to express a popular will, not a bill-of-rights empowering the highest court.

Be that as it may, here we are. The judicial bird has two wings: liberty and equality. And it has made clear that caps on donations, selective bans and, by implication, reasonable limits on the size of political campaigns, are all constitutional. As long as regulation is based in evidence and reason, it will be respected by the Court.

Political Will – Union $$$ and Public Funding

If the Court is no hurdle to reform, what is? The simple answer is political will. This isn’t insuperable. Regulatory experiments in not only NSW, but Queensland, South Australia and the ACT prove that.

But achieving a national consensus has proven less easy. The status quo – a system with annual disclosure and public funding worth around $5.50 per voter per three-year term – has been in place since 1983.

A major stumbling block remains union contributions to the ALP.   Limiting union affiliation fees would limit freedom of political association. Labor is the paradigm case, but not alone: the original Country Party and the Shooters and Fishers party have relied on institutional members.

But whatever the democratic arguments for not touching union fees, not touching them leads to an imbalance. Unions protect Labor’s financial base, especially in the drought of opposition. With corporate donations staunched since the GFC, ICAC scandals and in response to shareholder pressure, the Liberal Party lacks such guarantees.   That corporate money follows power more than ideology was proven during the barren decade of Liberal Party opposition in NSW in the 1990s-2000s.

The favoured conservative position is to ban organizational contributions to parties. Limiting contributions to individuals sounds simple. Parties just need to check the electoral roll or ask donors for evidence of permanent residency. This is the Canadian and (roughly) US model.

It’s a model that would benefit the Liberal Party, which embraces a network of well-heeled individual donors.   And within the party, it would further empower MPs in well-off electorates.

This solution is problematic in terms of principle more than law. Politics is not just about individuals, it’s a collective enterprise. On the other hand, unions might do better to spend their money directly on campaigns over issues, to attract more members.

If we did go down the path of limiting donations, some of that shortfall has to be made up with ‘clean’, public funding. Not long ago, the idea of expanding public funding for elections was anathema. But sentiment goes in waves. If Parliament embraced limits on the size of election campaigns, the public would see that the parties are serious about self-limiting the arms race.

Graeme Orr is a law professor at the University of Queensland, specialising in the law of politics. His recent books include The Law of Politics: Elections, Parties and Money in Australia (2010), Ritual and Rhythm in Electoral Systems: a Comparative Legal Account (2015) and The Law of Deliberative Democracy (2016, with Ron Levy).


Share and Enjoy !

Subscribe to John Menadue's Newsletter
Subscribe to John Menadue's Newsletter


Thank you for subscribing!