Newspaper Editorials

The Donations Game

Sydney Morning Herald, Jun 13, 2001

Distortions of the political system caused by inadequately regulated donations to parties are not on the same scale in Australia as in the United States the old, bitter joke is that Washington, DC, hosts the best Congress money can buy. But they are a cause for serious concern, as this week's series of reports in the Herald has shown. Unfortunately, successive parliaments have failed to implement reforms that have been repeatedly proposed over recent years by the Australian Electoral Commission. Unless Federal and State governments act to fix deficiencies in the electoral laws, the perception that the system is open to shady fundraising practices, hidden gifts and the buying of influence and government favours will continue to erode already low public confidence in the integrity of the political process.

It was not supposed to be like this. Back in the early 1980s the Hawke Government legislated to make political parties less dependent on private contributions to run their election campaigns. That law, providing public funding to parties according to how many votes they received in the previous Federal election, has resulted in the taxpayers' contribution rising from $7.8 million then to almost $34 million in 1998. But, partly because of the higher cost of contemporary campaigning and partly because of new, high-pressure fundraising techniques, it has done nothing to lessen the parties' hunger for extra money from other sources. Neither side is too fussy about how it is raised.

The Herald series has detailed cases of parties accepting sizable donations from people, including foreigners, of dubious and even criminal backgrounds. One anonymous and therefore illegal donation of $25,000 to the NSW Labor Party was channelled through a Philippines lawyer who is now facing murder charges. A major corporate donor to a NSW Liberal fundraising body, the Millennium Forum, has not yet declared its contributions on the semantic grounds that the money was for "marketing expenses". The forum, which has enabled the NSW Liberal Party to pay off $3.6 million of debt in 18 months, provides donors with privileged access to "exchange views" with the Prime Minister, Mr Howard, and senior ministers.

Some companies have made one-off contributions to ruling State political parties after winning government tenders. In 1999 a Sydney dinner for Mr Gough Whitlam raised almost $450,000 for Labor in a night. Yet until the Herald published the guest list yesterday, the names of many of those who paid more than $1,500 (the declarable limit) were hidden because the whole sum could be declared as a single donation by the organiser of the dinner. Another legal loophole allowed the Federal Liberals to pay off a $4.6 million bank debt interest-free by assigning it to the Liberal-linked Greenfields Foundation. The real source of the money did not have to be declared.

Most of these activities have been legal under the current unsatisfactory laws. But the loopholes allowing some political contributions to go undisclosed or to be disguised as loan guarantees need to be closed. The AEC has also called for donations from foreigners to be prohibited and for it to be given power to audit donors' records to check the true source. There are good reasons to cap campaign spending and increase penalties for failure to disclose. With a Federal election looming, each major party needs to declare just what it will do to clean up an ugly game.

He Who Pays the Piper...

Sydney Morning Herald, Feb 15, 2005

When the front door key accompanied the 21st birthday, we would have said public funding of elections had come of age. The law that obliges taxpayers to subsidise candidates according to their shares of votes was enacted federally in November 1983, two years after its NSW equivalent. But instead of growing to maturity and self-reliance - a federal election these days costs taxpayers about $40 million in candidate subsidies alone - public funding has failed to satisfy campaign appetites and thereby allowed public suspicion to fester about the piper, the tune and the payers.

The failure is compounded by the law's noble ambition of removing "necessity or temptation to seek funds that may come with conditions imposed or implied". These words were framed not by judges or philosophers but by a federal parliamentary committee, practitioners of the grasping art of politics.

They appreciated and were willing to articulate what should be obvious to all. Access to positions of power in even the most benevolent democracies is not evenly distributed. Those who buy it necessarily achieve unfair advantage. That is why they buy it. Political parties, tempted by perceived need to outspend rivals, are keen to sell access because it is easy and lucrative, even if proceeds have strings attached. They bank on community gullibility with their assurances that access does not equate with influence or insider knowledge. If so, a lot of money changes hands with little benefit to benefactors.

The state ALP is hoping to get its hands on $300,000 by selling access to the Premier, Bob Carr, and his reconfigured cabinet, now that Michael Egan has departed and his place as Treasurer taken by Andrew Refshauge. An "intimate dinner" with Mr Carr and Dr Refshauge will cost $5000 a seat, while lesser ministers are available at a lower cost.

There is nothing unique in this arrangement. The big political parties have for years practised it, just as they sell to business privileged places at their political conferences and take large donations from land developers with plenty to gain from favourable administrative decisions, and perhaps more to lose from negative responses. The Millennium Forum, a fund-raising vehicle for the NSW Liberals, sells access to federal and state leaders.

But frequent occurrence should not ensure acceptability. The best assurance that political favour is not for sale is in politicians weaning themselves off the largesse of self-interested big spenders and learning to live within the generous restraints of public funding.

Turning Off Meriton Cash

Sydney Morning Herald, Apr 24, 2004

The wealthy attract the politically powerful. Their money opens doors. Sydney's biggest housing apartment developer, Harry Triguboff , has got plenty of it. He is feted by both sides of politics because he has been a big donor to both sides. His largesse has been legendary and other property developers also recognised the need to support the democratic process. The Property Council of Australia equated it with every citizen's "democratic right" to "provide assistance to political parties". What can be given freely, however, can freely be withdrawn.

Long a beneficiary of Mr Triguboff and other developers, the state ALP has been reminded (because it always knew the reality) that the Meriton founder's generosity did not come without strings. Only a political mug would have thought otherwise.

Not unexpectedly, Mr Triguboff is furious at the State Government's property tax changes announced in this month's mini budget. They expose many of his buyers to land tax for the first time and impose an exit tax on investors when they sell properties bought from Meriton, although half the exit cost in most cases is recoverable in federal tax advantages.

When Mr Triguboff learned of the changes, he summoned to his office the ALP state secretary and chief fundraiser, Eric Roozendaal, and told him the Meriton donations "tap has been turned off" until the Government changed its plans. On those terms, it will be turned off for a long time. Meriton topped the ALP's donors list before the last state election, contributing $175,000 in the previous 2 1/2 years and more than $280,000 since 1998.

Mr Triguboff 's actions are helpful. They dispel any residual nonsense about altruism and civic duty having roles in the largesse of these key political donors, who see their contributions as the cost of buying access and a favourable ear or, at the very least, insurance against political payback.

Unquestionably, Mr Triguboff has the right not to give. But developers have a right to donate only because flawed law allows it. The issue is as much about the potential for unfair advantage as any exercise of it. Since Paul Keating put his proposed ban on developer donations to political parties three years ago, obfuscation an illegitimate progeny of self-interest has suffocated the debate's advancement. By showing his hand, Mr Triguboff may just have breathed new life into it.

Scratching Each Other's Back

Sydney Morning Herald, 05/02/2003

Some truths are as old as the human condition. The Latin epigrammatist Martial noted in the 1st century that "whoever makes great presents expects great presents in return". John Boyle O'Reilly, Fenian escapee and19th-century writer of note, urged us to "take gifts with a sigh; most men give to be paid". Too often, recipients are compromised by the "generosity" of others. It happens from policing to planning to procurement. Increasingly, the political system is compromised by the big money sums flowing to major parties from the pockets of rich individuals and corporations and from trade and mercantile associations seeking influence. Whether real or perceived, influence peddling has done much to weaken public faith in our system of government.

Rather than weaning themselves off the teat of wealth's largesse, the addiction of political parties has only intensified, to judge from latest figures released by the Australian Electoral Commission. The sources of money are as worrying as the size of the cheques because they go to the heart of the Martial and O'Reilly equations.

Take, for instance, the ALP's fundraising for NSW. Donations made up about $11 million of NSW Labor's $14 million revenue in 2001-02. Of that, $1.6 million came from hotels, poker machine clubs and gaming companies. In 1997, the Carr Government cleared the way for poker machines into hotels. It proved a great financial bonus to publicans. It also weakened registered clubs. The public record now illustrates the effect grateful publicans and anxious club directors signing on the dotted line for a political party they think can perpetuate their good fortune or remedy their ills.

By contrast, the Liberals got $115,000 from these gaming and entertainment sources but, combined with the Nationals, outstripped ALP revenue overall by about$3 million. Donors were not unkind to the Coalition. Developers delivered more than $1.1 million to Labor and $720,000 to the Liberals. Nationally, there was a drift away from Labor, reflecting not much more than the propensity of corporate donors to limit their backing of the ALP to occasions when they think Labor might win. Hence, some explanation of the pro-Labor cash flow in NSW.

Public election funding, of course, was meant to put a big dent in the clamour for private donations. At the last state election, $10 million was distributed to political parties according to their shares of first-preference votes. But it covered only half their election costs, most of which went on television advertising. Fund raising gets out of control because people who run a party's election campaign want nothing left to chance. If budgets allow the tripling of advertising, triple they will.

There are other absurdities. An executive of the club industry was on radio yesterday. His sector's political contributions, he said, were not aimed at buying influence but at facilitating dinner access to government ministers. "Government has a duty to treat everyone in NSW equally," he said, apparently unaware of just how ridiculously juxtaposed were his remarks.

Tackling the Donor Developer

Sydney Morning Herald, 13/12/2002

After its damning revelations about corrupt development approval processes at Rockdale Council, the Independent Commission Against Corruption appropriately set out to restore public confidence by elevating transparency and restricting the pathways to nefarious activities in local government. The initial draft code of conduct, now before an apparently underwhelmed Carr Government, includes commendable proposals. Human nature and political ambition, however, suggest they do not go far enough. As the ICAC devises further recommendations, it needs to consider severing the most obvious conduit for town planning corruption political donations from developers.

So far, the corruption watchdog has recommended local councillors be required to declare political donations before they vote on planning applications related to the donor. The most surprising aspect of this recommendation is that it is not law already. But there are difficulties with its application, too. Most developer donations are directed not at local council level but at a political party's state head office. That can make it difficult for individual councillors to be aware of whether their political party has benefited from a particular developer's largesse.

The ALP's Sussex Street headquarters, for instance, receives more than

$1 million a year in developer and construction company donations, its biggest single source of private funds. Other political parties are similarly courted. These donations, as a general rule, are not made because builders are disproportionately blessed with civic responsibility. They give large sums because they expect their donations will at least help open doors to those who make decisions about expensive capital works projects or those empowered to decide a project's success by approving or rejecting its development.

Increasingly in NSW, the planning consent authority is not local councils but the state's planning minister, currently Andrew Refshauge.

He now gives the nod or thumbs down to development applications for the Sydney Harbour foreshore, most of the NSW coast and most industrial developments worth more than $20 million. All council rezonings also require his consent. This transfer of power, of course, should serve as a helpful brake on corruption opportunities. It facilitates consistent planning of icon sites, overrides local stymying of the economy and jobs and impedes councils doing dodgy rezonings for mates and benefactors.

But it also raises the issue of whether ICAC's conduct requirements should be extended from municipal level to ministerial, given development donations more specifically target the state level.

Paul Keating, who knows a thing or two about internal political processes, argued 20 months ago that the only meaningful way of assuaging public concern about planning favouritism was to ban political donations by developers. The ICAC should pick up on his suggestion. And as a gesture to transparency and accountability, the Carr Government should endorse it ahead of the March 22 election, even if it means Labor Party coffers are not overflowing. At least voters' anxieties might be lessened. That might prove electorally more bankable than the benefits of a fat chequebook.

Rising Risk of Developer Cash

Sydney Morning Herald, 03/02/2005

Now that big-end business houses are turning off or tightening the cash flow to political parties, the donations of property developers are getting sharper examination. If some traditional donors turn their backs, it follows that the remainder become even more important to political beneficiaries. That would not be a problem if the Property Council of Australia, commenting on the disproportionate representation and generosity of developer donations, was correct in equating it with every citizen's "democratic right" to "provide assistance to political parties". Forgive us our scepticism but we suspect an earthier motive, more akin to Martial's first century observation that "whoever makes great presents expects great presents in return".

Political party returns for last financial year show NSW Labor was particularly dependent on developers. Walker Corporation was its biggest donor, with $152,000, while 18 other developers also dug deep. The Chinese property developer Chau Chak Wing gave the Coalition $200,000 and Harry Triguboff's Meriton, once a big donor to the ALP, cut Labor to just $16,000 and gave the Liberals, state and federal, a combined $137,000.

In NSW, the Liberals' donations base was more diverse but, nationally, the Coalition suffered more than the ALP from rising shareholder pressure on big companies to justify donations. BHP Billiton, National Australia Bank and Rio Tinto explicitly ban donations. So, too, do AMP and Lend Lease, two developers which think they can do soundly in business without having to make a political statement of financial generosity.

Democracy would be stronger if the rest of the developer fraternity followed suit. If they cannot be persuaded voluntarily to keep their chequebooks locked away, political donations from this particular sector should be banned.

This is not to say developers as a whole are any less honest than the general community. Unlike other sectors, however, they are extraordinarily dependent on councils and government to get projects started. A blind eye, steered approval or malicious rejection can make the difference between big profits and financial ruin. Some developers donate because they want to curry political favour; others because they want at least insurance against political payback. Politicians are not too fussy about why the cheques are forthcoming, just so long as they are. In the meantime, the potential for the public to think the worst - that he who pays the piper calls the tune - is often irresistible. And every instance of that further damages democracy.

The biggest shortcoming of election funding reform is that responsibility for it rests entirely with mainstream political parties - the very groups with vested interests in blunting it. Taxpayer-funded campaigning, tied to a candidate's share of the overall vote, was meant to put a big hole in the clamour for private donations and, hence, lessen the propensity of candidates to be beholden to benefactors. But political parties seek to leave nothing to chance. If they raise more than they need, they will find ways to spend it. Turning off the developers' tap, therefore, must be only the minimum reform. But it is the best place to start.

The Politics of Money

Sydney Morning Herald, 02/02/2002

American cynics say they have the best form of government that money can buy. The sour witticism is the product of regular scandals arising out of allegations that big business and wealthy individuals have gained favours from the White House or Congress by making lavish political donations. Just now, the President, George Bush, is under severe scrutiny over suggestions that his administration's energy policy might have been influenced by the since collapsed Enron Corporation, whose boss, with his family, made large financial contributions to Mr Bush's election campaign.

The release by the Electoral Commission yesterday of the latest details of donations to Australian political parties is a disquieting reminder that this democracy, too, is far from immune to the potentially corrosive effects of cash on politics. The depressing thing is not that the new AEC statistics produced huge surprises although some of the sources of donations in the year to June 30 last were intriguing, and worrying but that the political fundraising business went on as usual.

Big players, many with financial interests in state or federal government contracts or policy decisions, paid out hundreds of thousands of dollars in contributions. In spite of all the calls over the years for the system to be made more transparent and less open to abuse and tricky accounting, governments still baulk at reform.

Taxpayers provide substantial sums to finance election campaigns political parties and individual candidates received more than $38 million in public funds to cover their costs at the recent federal election alone. Yet ministers and other senior political figures devote an inordinate amount of time to attending dinners, lunches, sporting occasions and other fundraising events to woo corporate or union dollars to top up their war chests. In large part, such activities are driven by the increasing cost of modern election campaigns, but the money hunt poisons public perceptions of the political process. It sends a message that the rich and powerful can buy what is usually unavailable to the ordinary citizen or community group: access to a ministerial ear.

True, it is difficult ever to prove that such access, or the financial donation that made it possible, has influenced a government decision or policy. Many politicians argue that it is the right of citizens and organisations, if they choose to exercise it, to participate more fully in the nation's political life by financially supporting a party or parties. If some can afford to give more than others, well, that is just a reflection of social realities. Besides, they say, it is good for them to exchange views with private sector makers and shakers. Fair enough, but they should not be surprised if sceptical voters suspect that the big donors do not hand out large sums of money, for which some are answerable to their shareholders, unless they think the investment is likely to produce dividends.

There are many proposals for reform. They include independent audits to check the true source of payments, increasing the $1000 penalty for non-disclosure, closing loopholes that allow what are effectively gifts to be presented as loan guarantees or enable private fundraisers to hide the identity of the original donor, and capping campaign spending. A useful start would be for the Howard Government to allow the joint parliamentary committee that started an inquiry into such issues in 2000, and was then diverted, to get on with the job.