Let’s talk about party funding

The public perception, in Australia as in most of the world, is that politicians are a mercenary and unscrupulous lot, out to feather their own nests at the expense of the taxpayers. The description certainly fits some of them, but in most cases it’s unfair; politicians on average are no better and no worse than the rest of us.

There’s no doubt they display a strong inclination to divert public money to themselves and to the political parties that support them. But I think most of them act in complete sincerity. They behave in very much the same way as other members of that small minority who have the power to set their own salaries – indeed, compared to senior corporate executives and directors of public companies, politicians could be said to be reasonably restrained.

That’s the backdrop to the controversy in Australia this week over a government proposal to provide recurring funding for major political parties, not just grants to cover election campaigns. The legislation is now dead in the water after the opposition took its cue from public outrage and went back on an earlier agreement to support it.

Yet I’m sure many MPs on both sides still don’t really understand what all the fuss was about. They would say (correctly) that the sums of money involved are small in the context of the federal budget, and to them it’s self-evident that political parties are worthy recipients of extra cash. One of the strongest features of human nature is our capacity to sincerely believe whatever happens to be in our own self-interest.

For an even better illustration of the same mentality, have a read of the speech made in the Victorian parliament on Wednesday night by Geoff Shaw, the independent (renegade Liberal) MP for Frankston. (It’s at pages 88-89 of Hansard, and reported in this morning’s Age.) He’s speaking in support of legislation to increase MPs’ salaries, but the thrust of his argument is that the increase does not go nearly far enough.

Shaw is a thoroughly unappealing figure, a right-wing fundamentalist under investigation for misuse of his parliamentary car. But the points he makes in support of more money are not silly, they’re just incredibly one-sided: he sees only the disadvantages of the parliamentary lifestyle, not its non-monetary benefits.

It’s not just the politicians themselves, either. The same habit of rationalisation infects those close to the political process, especially in the media, who happily repeat the justifications offered for public funding – such as the idea that it would reduce the parties’ unhealthy dependence on rich donors. A perfectly logical idea in theory, but there’s no evidence at all that it actually works that way: parties just line up for as much money as they can get, whatever the source.

So too the hapless Michelle Grattan, who yesterday seemed to have convinced herself that Abbott’s about-turn on party funding would be a negative for him, not for the government that came up with the idea.

Public funding of political parties and campaigns has now established itself across the developed world. So, of course, have non-means-tested payments to MPs. The amounts spent keep increasing, but we don’t seem to get better politicians or better politics as a result; we just hollow out political parties as they rely more on the taxpayer and less on grassroots members.

MPs and their cheerleaders keep telling us that we need to pay more money to attract good people into politics, but again the assertion lacks any actual evidence. It seems to me that encouraging the perception of politics as a money-making business is much more likely to have harmful effects. Far from reducing the incidence of bribery and misappropriation, sending out a clarion call for mercenary politicians will probably increase it.

If the incentive structure is wrong to start with, increasing the amounts of money involved isn’t going to help.

10 thoughts on “Let’s talk about party funding

  1. It’s a good description of the situation, but unsurprisingly I only partly agree with your conclusion.

    It’s certainly true that the idea that higher pay will attract better politicians lacks evidence above a certain level (I’ve seen an example quoted from Brazil where it seemed to work, but the original pay was so low that no one could live on it who was not independently wealthy. What works when you’re starting from a level the same as the dole is hardly a reliable example of what will work when the salary is already $150,000 a year).

    However, I think there are a few reasons to support public funding for political parties (and independents for that matter).

    While it is certainly true that parties don’t stop seeking money from big donors when they get public funding, it does put them in more of a position to walk away under the most egregious circumstances. If major donors are 20% of your income it is much easier to reject those you find most problematic than if they are 60%. I think that Labor’s decision to reject funding from tobacco companies, for example, would have been much less likely if they had not had the public funding to reduce the dependence. I wonder whether the LNP could have told Clive Palmer to go jump if they hadn’t had alternative sources of income. From the Green’s perspective we’ve turned down donors we thought were too problematic on occasions, and I know that would have been harder without the public funding.

    The second reason is that parties with MPs are already publicly funded, as we know that staff for the MPs spend a lot of their time promoting the party (or often factions within the party). Ideally it would be best to stop this, but that is genuinely hard, as you would know. If this is the only source of funding it overwhelmingly tilts the playing field towards parties that have large numbers of MPs. It makes it very hard for new parties to enter the field, or for existing ones with moderate support to maintain themselves. I very much doubt the Democrats would have lasted as long as they did without public funding for the votes they got. I’m not certain whether the Greens would have become a political force without it, and it certainly would have been a slower march.

    Much as I disagree with Katter, I think its probably a good thing for democracy for a party like his to be a functioning organisation offering people a systematic set of policies to vote for, rather than some fly by night operation that can’t sustain itself because they can’t afford a permanent office. Public funding helps with that, at least for parties who pass the 4% threshold in a number of places.

    Ideally parties should be funded by large memberships. However, with engagement in all sorts of civic activity in decline it is not surprising there are few political parties in the world that can sustain themselves this way. I think being dependent on a source of funds based on the numbers of votes they get is far less likely to accelerate the process of parties hollowing out than being dependent on a small number of wealthy donors.


  2. Thanks Stephen. That’s certainly a better defence of public funding than most people come up with, but I remain unconvinced.

    Basically if a party is worried about being corrupted by large private donors, it has two alternatives: (a) raise money instead from lots of smaller donors, whether members or supporters; (b) rely on public funding instead. The availability of (b) just reduces the likelihood of them doing (a), and I think that’s a bad thing.

    I might feel differently if I thought there were a lot of parties that were reluctantly dependent on a few major donors. But there don’t seem to be; I think parties that get into a position of dependence do so because they want to, or at least they don’t see it as a problem. That’s why, when public funding comes along, they don’t actually take less from the donors, they just spend more money.

    The point about paid staff being used for political purposes is a good one, but the solution of course is to stop that happening. You say that it “is genuinely hard” to do that, but technically it’s not at all hard, it’s just there’s no political will to do it – just as there’s no political will to stop public funding in general. The two stand or fall together.


  3. ‘One of the strongest features of human nature is our capacity to sincerely believe whatever happens to be in our own self-interest.’

    I loled. Working, as I do, for a political party (as does Stephen), I totally agree with this statement. I personally believe that the psephology staff in political parties deserves public funding. That alright with you, Mr. Luntz?



  4. Also, ‘Much as I disagree with Katter’ is a very dangerous start to any statement. Let’s not get into the habit of it.

    Or perhaps we should. Somebody has to bring the lulz.


  5. On a serious note: in what other ‘democratic’ countries do political parties receive public funding, and are there any significant anomalies which we might find edifying?


  6. Good question, cvs. If you follow the last link in the post (this one) you’ll find the Electoral Knowledge Network’s database on the subject, which seems pretty comprehensive. Basically almost every developed democracy has some sort of public funding, usually based on either votes won or seats held, but there’s a huge variety in just how it works. I can’t see any obvious correlation between types of funding and functioning of democracy, but no doubt someone’s thesis is already being written on the topic.


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