The weak case for a $1,000 political donation disclosure threshold

Reflecting the current orthodoxy on campaign finance policy, the Age yesterday editorialised in favour of the threshold for political donations disclosure being lowered from $11,500 to $1,000.

Despite the popularity of the $1,000 figure, I have never seen any real argument as to why that number is the right one. The Age said this:

For as long as this situation has been allowed to continue, and various donors are – for whatever reasons – free to conceal themselves from public scrutiny, democracy is under threat. Voters must be confident that political donations are not synonymous with covertly buying influence.

But could $11,500 plausibly buy influence? In 2010-11, a donation of that much was 0.000012% of the ALP’s income. I won’t strain your eyes any further by making you count how many decimal places would be needed to calculate a $5,000 or $2,000 donation as a percentage of the ALP’s total income. And the numbers would be even lower for the Liberals, who raised more money than Labor in 2010-11. The parties have incomes that are large enough, and diversified enough, for a single donor at this level not to be important.

Then there is the question of whether a lower threshold would result in more ‘public scrutiny’, as claimed by The Age. As it happens, the ALP’s practice of disclosing all donations over $1,000 gives us a trial run on the proposed law. Given the implausibilty of small donations resulting in influence, The Age did not report a single one of these donations.

Using Google News, I cut and pasted about 8,000 words of coverage of political donations stories. So far as I can see, only two stories mentioned donations below the threshold, and neither were claiming any influence. One story alleged that a couple of donors were in breach of NSW bans on gifts from property developers, while another noted that the NSW Minerals Council only gave the ALP $1,000. Apart from these donations, only one donations below $15,000 was deemed newsworthy.

Lowering the threshold has multiple actual or potential negative consequences:

1) Donors are left more open to intimidaton for their political views (note that The Age editorial seems to think that it is donors who should be held accountable, rather than political parties).

2) Governments get a convenient list of supporters of their opponents, which they can use to disfavour those supporters.

3) The pool of donors shrinks as a result of (1) and (2), potentially leaving the party more open to influence from its remaining donors.

4) Far more people are caught in the AEC reporting system, adding to the bureaucratic burdens and risks of politcal involvement. Depending on how widely ‘gift’ is defined, many rank and file members of parties will cumulatively pay more than $1,000 a year in events, membership, functions and fundraising. Keeping track of it is a nuisance (keeping in mind that many people who don’t eventually have to declare will need to keep records as they might, depending on what happens over the disclosure period), but failure to do so results in breaching the law. Non-compliance is already an issue, and a lower threshold would make it much worse.

The Liberals think Labor is supporting the $1,000 because they want to deter Coalition donors. There is probably some truth to that, but the bigger problem is groupthink on this issue. The $1,000 has achieved consensus without a clear argument in its favour.

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