Blue Sky Democracy, Part 7: No more donations (kinda?)

I wanted to focus on improving democratic participation rather than democratic integrity with this project, but it’s hard to go ignore political donations entirely.

Rather than advocate for banning or capping donations, I took a different tack: a government clearing house for political donations.

Reforming campaign finance is really hard, mostly because everyone tries their hardest to find loopholes to exploit.

But as a result, the solutions most people offer are either too technocratic to do anything meaningful, too unambitious to change anything or too radical to get support — although South Australia Labor’s recent support for banning all donations suggests maybe radical solutions are possible.

The biggest problem is these campaign finance reforms are usually designed by lawyers or NGO types who have had very little, if any, experience in political parties and certainly very little actually administering a campaign.

Any practical campaign finance reform would need to reduce — not increase — the already-high administrative burden on campaigns to account for donations and expenditure.

Differences between federal, state and local election rules means most parties are operating five or more accounts with wildly varying disclosure, retention and audit rules. These processes are often managed by volunteers, using incomplete or imperfect data.

Short of full public funding of elections, any stronger campaign finance rules needs to be offset by reduced bureaucracy, greater public funding and not hobble a party’s capacity to conduct non-electoral work (things like community BBQs, trivia nights, policy workshops, party conferences, etc). There’s also the problem of how this applies to third party campaigns — especially unions.

My personal view on campaign finance reform is that restricting expenditure is far more important and far easier than restricting donations. In my mind, a reasonable campaign finance structure is a system that is agnostic towards independents, parties or third party campaigners, and to reduces the disclosure threshold to $50 per month per person, reduces the individual aggregate donation cap to $500 per financial year and reduces campaign expenditure caps to $100,000 per candidate per term (or per division per term for third party campaigns).

The outstanding question that activists avoid grappling with is how this is to be administered. Any new restriction on donations, expenditure or disclosure creates new, complicated and time-consuming administration for campaigns, unequipped and inexperienced with dealing with it.

One idea that’s floated around occasionally is that the management of donations be removed from parties altogether, either through a new statutory agency or by moving the responsibility to the Australian Electoral Commission.

Speaking at the Whitlam Institute, Bret Walker suggested:

A practical way of achieving this modest reform would be to forbid any political donations except through the Electoral Commission as intermediary. The statutory duty of those public servants should be to satisfy themselves that they have been credibly informed of the identity or identities of the individuals responsible for the making of political donations. No doubt there can and should be an annual threshold for disclosure, which might be set, say, at around current average weekly earnings.

I suggest having a new statutory agency to control donations.

This would also entail consolidating the management of electoral returns and the payment of election funding away from the Electoral Commission to the new agency.

A spur of this agency could administer all donations and act as a clearing house and might work a bit like this:

All political donations are paid either directly to the agency through their website or via an API into a holding fund. These donations are then processed, audited and disclosed live.

Fundraising events, like under the current arrangements, disclosed in aggregate, with small aggregates (for example from a branch annual trivia night) could be directly deposited with post-fact disclosure.

Being a centralised database, historical disclosures could be hidden or made public as thresholds in regulation change over time.

Parties, individuals and campaigns registered with the agency would receive the donations referred to them at the start of each month. The agency would be empowered to withhold donations for individual breaches or investigations, or a whole tranche for improper party behaviour.

State electoral commissions can opt into this program — reducing compliance issues where parties need to operate multiple accounts to comply with each state’s disclosure and accounting rules.

The trade off for parties and third-party campaigns is increasing the reimbursement public funding rate and a massively reduced administrative burden for the processing and allocation of campaign finance.

The idea has a few obvious problems. Parties like to tightly control everything to do with their campaign and like to get paid quickly. It would also be costly and slow, by the nature of the considered approach the public service has compared to the more rough and tumble world of party self-regulation. It might also encourage more underground, illegal gifts. It might deter donors who don’t want which party they support to be public knowledge. I don’t think any of these are insurmountable but they’re worth keeping in mind.

To round out this series, we’re going to look at some easier to stomach changes: five little things to fix Australia’s democracy.

Starting with Part 8: more Senators for territories.