Campaign finance reform back on

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.

Union and business political activity under threat in Queensland

One of my main interests in campaign finance law has been the increasing attempts by political parties to limit ‘third party’ opposition. Governments dislike the campaigns being run against them by interest and issue groups, and since 2006 a series of laws have been passed to obstruct or discourage third party political activity.

Queensland went down this path in 2011, introducing laws restricting political donations from and to third parties, and limiting their spending during campaign periods.

And now there is a new attempt to impose yet more controls. This time the Queensland government proposes using industrial rather than electoral law to implement its policy. This means that it will affect unions and employer associations, but not other third parties. In practice, unions and business tend to be the biggest-spending third parties.

If this bill passes, Queensland unions and employer groups will have to run Electoral Commission ballots if they want to engaged in political expenditure of $10,000 or more in a year. The political expenditure is defined broadly to inlcude a political cause of belief, and not just partisan campaigning (full definition below the fold). Presumably this would cover routine unions campaigns such as those currently being run by the Queensland Council of Unions.

For the expenditure to be approved, 50% of eligible voters must cast a ballot, and of those more than 50% must approve. The cost of the ballot has to be covered by the organisation proposing the expenditure.

Effectively this law imposes huge decision costs on unions and employer groups, since especially mass membership groups like unions will have to spend a lot just informing their membership of the issues. Otherwise, they are unlikely to get the 50% turnout required. The inevitable (and presumably intended) result is that there will be many fewer third party campaigns in Queensland.

The bill is supported by the minister with the usual rhetoric about transparency and accountability. But members of political organisations do not necessarily want to be involved in the detail of campaigns or activism. Joining is an act of delegation, paying others to sort out the detail of a cause or interest the member supports.

Political campaigns are normal business for unions and employer groups. If their members are unhappy with these campaigns they can say so, and vote out the leadership or leave the organisation if they are not satisfied with the leadership’s response. This is all the accountability that is required.

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Business groups again outspend left-wing third parties

The annual AEC third party political expenditure returns were released this morning. Annual reporting was introduced by the Howard government with the pretty express purpose of harassing left-wing third parties such as green groups and GetUp!. However it catches industry groups as well, and as the table below for the third successive year they have outspent left-wing groups.

The law does not require disclosure of which issues were pursued, but the main industry players for 2011-12 were industry groups involved in the carbon tax ($9.3 million) and and pokies regulation ($4.3 million). (Updated noon 1/2 to correct misclassified expenditure).

Political expenditure disclosure laws are very complex, including a requirement for disclosure of spending exceeding $11,900 a year on ‘the public expression of views on an issue in an election’. So third parties operating during 2011-12 were required to forecast which issues would be issues in the 2013 election, which we now know will be on 14 September. As it is very hard to predict what will be an issue that far out (quite possibly, not pokies in the end) there is a basic rule of law problem with this provision.

Under the current system, these complexities are largely restricted to major players which spend $11,900 plus a year. But in bill before the parliament, which the government this week announced it would try to pass by 30 June, the threshold for disclosure would drop to $1,000 in any six month period. This will catch many small political groups run by volunteers, few of whom will have any idea that their trivial political activity could land them in serious legal trouble.

Queensland Labor could protect its funding, but not its seats

After yesterday’s disastrous electoral result, one decision of the former Queensland Labor government is looking good, at least from their perspective. This was the change to the public election campaign funding regime.

Previously Queensland, like other jurisdictions, had a pay-per-vote system of election public funding (about $1.65 per vote in the QLD case). In the reforms legislated last year, this was changed to a system of reimbursement, up to a maximum of about $5.3 million. The formula works like this:

All of the first 10% of electoral expenditure
75% of the next 80% of electoral expenditure
50% of the remaining 10% of electoral expenditure

I’m not sure how much Queensland Labor spent this time around, but presumably they will walk away with several million dollars in public funding, while the old system would have netted them $1.2 million on yesterday’s vote.

The main argument for the new system is that it introduces a counter-cyclical element to the system. With donations tending to follow popular support, parties on the downward part of their cycle are dealt a double blow. This system of public funding lets them mount a decent-sized campaign (I’m not sure how big the Queensland Greens or Katter Party campaigns were, but this system also helps small parties, provided they reach a 4% threshold).

However, as the NSW and QLD elections demonstrate there is only so much money can do. From a campaign finance theory perspective, each campaign was a fairer and more even contest than it might otherwise have been. But that did not stop two of the biggest defeats in Australian electoral history.

The pattern of growing information regulation

There has been plenty of negative comment on the Finkelstein review proposal to impose federal regulation of the media. But so far as I have seen this commentary has not focused on how it fits a pattern of increasing central regulation of, or proposed regulation of, information flows in Australian society. Further examples here:

* National curriculum. One of the oddities of Australian political culture is that we have always – and the negative reaction to Finkelstein suggests still – been sceptical of government media regulation, but quite unconcerned about government control of what is taught to the young people who must attend school for 10 to 12 years. Many complain about the content of that curriculum – but think that the wrong people are in charge, not that there is too much centralisation of curriculum in the first place.

* The mechanism now exists for the federal minister of education to impose ‘teaching and learning standards’ that could control what universities teach.

* While the federal proposals for controlling 3rd-party opposition to the government are much milder than the draconian NSW regime, it’s highly likely that we will see more controls introduced during the current parliament. Was Wayne Swan’s speech today softening us up for banning billionaires from buying media space when the government attacks them?

* Senator Conroy’s internet filter seems to be on hold, and while not aimed at political speech it would create a mechanism for regulating it at a future time.

Overall, I think technological changes mean that we are in a better free speech situation now than 15 or 20 years ago. It is important to keep things in perspective. But it is hard to see that the at best very minor gains from the proposed or actual centralisation of information control in Canberra are worth the risks.

Barry O’Farrell’s unintended favour to traditional vested interests

Barry O’Farrell’s campaign finance reforms were intended to diminish corporate influence in NSW politics. Certainly, they will stop corporations donating directly to political parties. But especially after the 2010 reforms capped these donations at $5,000 a year, and bestowed lavish public funding on the major political arties, this was not a very plausible conduit of influence in any case.

Issues politics has long been trending away from the political parties, and corporate Australia has been following the trend with increasing numbers of 3rd party campaigns. And in this space, ironically O’Farrell’s laws favour traditional vested interests like companies over not-for-profits.

This is because NSW’s campaign finance law tightly regulates spending money via donations at all times, but outside the campaign period from 1 October the year before the election does not regulate other forms of spending. So if a corporate spends its own money, or can structure its political payments to other organisations so that they are for consideration and not a gift (for example, paying a peak body to run a specified campaign), they can spend as much as they like.

Not-for-profits, by contrast, are usually reliant on donations. So under the O’Farrell campaign finance regime, on an issue that may affect voting in a NSW election, a not-for-profit can now only receive donations of up to $2,000 a year from people on the electoral roll. Even other not-for-profits are prevented from giving financial support, as are unions, corporates, permanent residents, people under 18, and others not eligible to be on the electoral roll. Because this includes the federal election roll, as a Victorian on the electoral roll I have more political rights in NSW than many people living in NSW.

Of course corporations have always had deeper pockets than most not-for-profit third parties. But NSW campaign finance law further tips the balance against the not-for-profits, severely hampering their fundraising while leaving corporate political funding largely unaffected.

It’s absurd – but it is now the law.

NSW campaign finance law likely to end up in the High Court

What issue has me lining up with NSW Labor, the ETU, the CPSU and the Shooters and Fishers Party against the NSW Liberal Party? Barry O’Farrell’s campaign finance laws, which were passed by the NSW Parliament this week. The report of the Legislative Council inquiry into these laws shows these organisations were my odd issue bedfellows.

As with the federal inquiry last year, I think my views were given a fair hearing. The final report quoted from my submission many times, though for once I was not a solitary voice on many of the issues I raised. Even many of the usual champions of a more regulated political system thought that this bill went too far.

Unfortunately, despite the report clearly expressing significant concerns with the bill, both on its merits and its constitutionality, the Greens in the end backed the bill with a minor amendment.

The two main effects of the legislation are to:

* during the campaign period starting 1 October the year before a NSW election, any campaign spending that has as a dominant purpose the influencing of voting will be included in the spending cap of any political party to which the campaigning organisation is affiliated (in other words, union campaigns will be counted towards ALP campaign caps);

* ban all political donations at all times to political parties and third parties from organisations (coming on top of an ban on donations from people not on the electoral roll – which of course includes permanent residents and citizens under 18).

The only advantage of this over-reach is that it will now almost certainly end up in the High Court. I’d be amazed if the unions did not challenge; while they are not certain of victory there is a viable argument on freedom of political communication grounds. And a victory on this point might curb the campaign finance excesses likely to eventually emerge from the Green-Labor control of the Senate.

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.Read More »

The rise of GetUp!

The Australian Electoral Commission’s political donations and expenditure information for 2010-11 was released today.

For the second year running, business and industry groups outspent left-wing groups, putting more than $21 million into their campaigns (this is an under-count as at least one big-spending industry association has not put in the required report). When the Coalition introduced these laws 2006, the aim was to harass the left-wing third parties that traditionally were the main players. However, increasingly they affect the business community.

Two-thirds of the business and industry spending was an attack on cigarette plain packaging laws. There will be a lot more declared for 2011-12, as the carbon tax and pokies campaigns intensified.

Over the time these laws have been in place, the interesting trend has been the rise of GetUp!, which has increased its spending nine-fold since 2006-07.

The ideological/issue right is much less active than the ideological/issue left in political advertising. For 2010-11 the miscellaneous right-wing groups were the conservative Australian Christian Lobby and the National Civic Council. However, the IPA has taken out a few full-page ads in the last 6 months, so this will add a small-government ideological voice to this political tactic.

Does anybody understand NSW campaign finance law?

I spent part of the day celebrating the founding of NSW politics reading the transcripts from a NSW Legislative Council inquiry into Barry O’Farrell’s proposed amendments to NSW campaign finance law. These amendments would ban people not on the electoral roll from making political donations and count union political campaign expenditure towards the ALP’s campaign spending cap.

While the broad policy goals can be stated simply enough, the detail and its interaction with existing NSW campaign finance law are extremely complex. My submission took much longer than I expected to write, as I worked through various different scenarios and how the actual or proposed laws would apply. Especially if these amendments pass, it would be almost impossible for political activists or NGOs that campaign on poiltical issues to stay within the law without legal training or an extensive background in campaign finance matters. This is a serious problem all in itself, quite aside from the major conceptual flaws behind the whole NSW campaign finance regime.

I’m certainly not alone in thinking it is too complex. Appearing before the inquiry, Professor Anne Twomey from the University of Sydney, a leading scholar in the consitutional aspects of campaign finance law, said:Read More »