The plan by the main political parties to award themselves large amounts of taxpayers’ money showed such naked self-interest that the public awoke from its general indifference to campaign finance law, and forced the Liberals to withdraw their support.
But there was an underlying political logic behind the Liberal position. They were trying deal with a bill to lower the donation disclosure threshold from $12,000 to $1,000 that has already passed the House of Representatives and could still pass the Senate before the election. They feared that this would have a disproportionate effect on their supporters, who for social, employment, business or political reasons don’t want their names appearing on the AEC website. Labor’s main financial backers, the unions, are obviously quite open about their support.
Labor’s problem is less that their supporters don’t want their names disclosed than that too few people want to give them money under any circumstances. Hence their plan for so-called ‘administrative funding’ to finance them year-to-year. They offered the Liberals a higher disclosure threshold in exchange for this taxpayer-financed bail-out. The deal was done, but has now been broken.
Now Julia Gillard is threatening to go back to the original bill. I wrote a lengthy critique of it back in 2011. Around that time I also wrote op-eds that more briefly explain some of the issues:
* why the idea that a $1,000 threshold is needed to stop undue influence is ridiculous; the only plausible purpose of such a law is to deter donors;
* the xenophobic attempts to restrict the influence of ‘foreigners’;
* and the unjustifiable measures to harass NGOs.
There is almost nothing to be said in favour of this bill, and it would be sad day for Australian democracy if it is passed.
I had hoped that Labor’s long-stalled campaign finance reforms would be left behind in the rush of legislation before the election. But that has proved to be an over-optimistic view, and media reports this morning suggest that they have done a deal with the Coalition to get an amended version of the legislation through.
Essentially, it looks like the parties are awarding themselves more public funding and reducing the donations disclosure threshold from $12,100 to $5,000. Labor had wanted to lower the disclosure threshold to $1,000. While I don’t think there is any need to change the disclosure threshold, $5,000 is certainly a lot better than $1,000.
Apart from the problems around disclosure, the threshold is (for no obvious reason) used for other purposes in the legislation, such as the total amount of spending required for third parties to have to enter the campaign finance system. If they spend more than the threshold, they face complex reporting requirements.
Here I think $5,000 is too low, even on the arguments put by advocates of tighter campaign finance laws. Small-scale activism leading to a $5,000 spend on election issues poses no plausible threat to the integrity of government or to political fairness. To the contrary, having the AEC harass minor activists reduces political fairness.
In April, there was fury in higher education circles over billion of dollars in cuts to higher education-related spending (how much depends on how many years of the forward estimates you count). But comparison of the 2012-13 and 2013-14 budget papers suggests that the government is anticipating another large saving that nobody is talking about – revised down estimated future costs of the HELP loan scheme.
The chart below shows that over the future overlapping years of the two budgets (2013-14 to 2015-16) the saving will total about $2.3 billion. A small part of this reduction is the announced removal of the discount for paying student contributions up-front and the bonus for repaying early. But most of it is a big reduction in future anticipated interest costs.
The method they use for calculating the interest cost is apparently in accordance with accounting standards, though it is very confusing and does not aid understanding of the policy issues. The method we have used at Grattan (pages 42-45) is more straightforward (so far we arrive at similar numbers to the Department). We look at the difference between the interest the government is paying on its debt and the CPI inflation interest they are charging on outstanding HELP debt. The difference between them is the interest subsidy (or profit; it’s happened once).
Essentially, the government is borrowing quite cheaply at the moment, and they anticipate that this will continue in the few years covered by the forward estimates. But due to the huge amounts outstanding on HELP even small movements in bond rates could have major cost consequences. At the end of the forward estimates period, every 1 percentage point gap between the bond rate and CPI would add around $500 million to the interest subsidy.
The loan scheme gets little attention from universities; money they or currently enrolled students don’t receive is invisible to them. But HELP is a major part of higher education funding, and controlling its costs needs to be part of an overall higher education funding policy.
Greg Craven on state government control of education, 2007:
Despite a total lack of experience in education, it [the Howard government] has created Commonwealth Technical Colleges, tried to control state school curricula and muttered darkly about controlling state education systems.
Canberra has only been able to intrude because it has the money, not the authority. Perhaps it should leave the money and run. Is it really impossible to argue that an elected Victorian government has a genuine interest in the education of Victorian children and that – horror – it might even bring local insight to the process? …
The mantra “Trust me, I’m with the Commonwealth” has the plausibility of a four-dollar note.
Greg Craven on state government control of education, 2013:Read More »
Science has been one of the most popular university courses over the last few years, with strong increases in applications year after year since 2009. The demand shift coincided with a slashing of student contributions by about 40%. This had seemed to be a possible exception to the general empirical rule that changes to student contributions don’t affect demand (some of the history is in Graduate Winners, pp 77-79).
As part of a long series of measures to reduce higher education spending, science student contributions were put back up to pre-2009 levels for 2013, an 80% price increase in one year. If the discount was driving demand, we would expect to see higher student charges reduce demand. New statistics released today show that this has not happened.
In fact, as can be seen in the chart below, numbers continued to grow strongly. They were up another 4%, in a market that was up only 0.5% overall. Only agriculture grew by more in percentage terms, and only health grew by more in absolute numbers. Science offers increased by 3.3%, with overall offers up 0.6%
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The higher education budget papers let us see in more detail what is going with spending after last month’s cuts.
The chart below tracks successive budget forecasts on the core tuition subsidy program, the Commonwealth Grant Scheme, since the demand-driven system was announced. In the early years especially there was a significant under-estimate of costs. Cuts announced over the last 6 months essentially put the budget back on the trajectory it was on in 2011. Over the forward estimates to 2017, spending on the CGS will still increase by an estimated $945 million on 2013.
The trouble with these open-ended programs is that a government can spend nearly $1 billion more and still get condemned for cuts, because the new places are not ‘announceables’. This chart puts the increases in Commonwealth-supported places into historical perspective, going back to 1989. Uncapping of CSPs has led to a massive increase in their numbers. They are up 23% between 2009 and 2013, and expected to be up 35% between 2009 and 2017.
My Crikey article today has been cut and edited in ways that leave out important parts of the argument and create a non sequitur (high private returns do not, obviously, justify subsidising private higher education). The original version is under the fold.
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