Peter Menadue. Should corporations have political rights?

May 9, 2014


There is an old legal saying that a corporation has no body to be burnt or soul to be damned.  In other words, it is just a legal fiction designed to confer limited liability upon its shareholders.

Despite that, there is an insidious and very dangerous notion abroad that corporations have political rights and should be allowed to make political donations and engage in political advertising.  That notion is a terrible threat to the health of our democracy.

The United States Supreme Court recently gave that idea a massive boost in the Citizens United case, when it decided (5-4) that the First Amendment right of free speech allowed corporations to engage in as much political advertising as they liked. In dissent, Justice Paul Stevens, one of the great justices in the history of the court, wrote that the First Amendment did not protect corporations.  He said that corporations were not “We the People” for whom the Constitution was established.  Rather corporate spending on politics should be viewed as a business transaction designed by the officers or the boards of directors for no purpose other than profit-making. Stevens called corporate spending “more transactional than ideological”.

In Australia, we have recently seen what happens when corporations are allowed to engage in such transactional politics.  When the Rudd government tried to introduce a mining tax, major corporations (mainly foreign owned) funnelled huge sums into an advertising campaign to force the government to back down – which it did.

Corporations must be pushed out of our political system and denied any political rights.  They should not be allowed to use their balance sheet to either make political donations or engage in political advertising.  Only citizens (including, of course, those who are employees or shareholders of corporations) should be allowed to do either.  Further, there should be a cap on how much individual citizens can spend (say $1,000 a year).  Indeed, one option is for the government to give each citizen a political donation voucher which he or she can direct to the party of his or her choice.

However, that does not mean there will be no role at all for business organisations (like the Mining Council), trade unions or even corporations.  They should be allowed to collect money from citizens (up to the prescribed limit) on behalf of political parties.  However, all donors must be identified (to ensure they are citizens).  That would mean that, to fund its attacks on the Rudd Government, the Mining Council would have had to attract contributions from individual citizens (presumably in the mining community) who felt strongly enough about the issue. My guess is that the money collected wouldn’t have bought the council a 3am advertising slot on a regional TV station.  However then, at least, the citizenry would have spoken through their wallets, not major foreign-owned multinationals.

The next time a progressive party takes power in Canberra,  the very first item on its agenda should be amending our electoral laws to exclude corporations from politics and to cap donations.  If it doesn’t, it might as well throw away the rest of its agenda.

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