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Big money politics: why we need third party regulation

There should be more regulation of third parties to help preserve Australian democracy. AAP/Alan Porritt.

MEDIA & DEMOCRACY: In the latest instalment of The Conversation’s week-long series on how the media influences the way our representatives develop policy, Marian Sawer examines the need to regulate third party spending. Andrew Norton disagrees. Read his take here.

Why does GetUp! campaign for third party regulation when this means it’s arguing to regulate itself? The short answer is that some 50,000 of its members signed a petition to get corporate and third party influence out of politics and end all large-scale political donations.

The longer answer is more complicated; it goes to the heart of how our democratic system should work, without money influencing the political process.

The founding principles of democracy

The fundamental principle of democracy is, as Jeremy Bentham put it, “everybody to count for one and nobody for more than one”. Accordingly, all should be able to participate in the electoral process on an equal basis, not determined by wealth.

This principle is undermined by the unrestricted role of big money in democratic elections, which skews the playing field for electoral competition, arouses suspicions of undue influence on the part of political donors and allows wealthy voices to drown out others.

Australia for sale?

Over the past thirty years Australia has taken a laissez-faire approach to the role of money in elections and has been slow to follow other Western democracies in regulating political donations and political expenditure.

The escalating cost of elections and dependence of political parties on corporate money has led to concerns here and elsewhere about democracy being “for sale”. Yet while other countries have taken action, Australia has lagged behind.

Successive scandals at the State level have at last led to political finance reforms in NSW and Queensland. These reforms are modelled on similar reforms in other democracies, particularly Canada.

They cap political donations and the amount the parties can spend in elections. To prevent money simply flowing to like-minded third parties, the new NSW and Queensland legislation also regulates third party donations and expenditure during campaign periods.

In both Canada and Australia, free-market think tanks have opposed third party regulation using a range of arguments, some better than others.

Learning from North America

One that has been adopted by the US Supreme Court equates financial donations with free speech. The US Supreme Court last year struck down limits on third-party spending in elections, describing them as a form of censorship.

However, the US is the outlier among Western democracies in its approach to free speech. In Canada, which has a Constitutional Charter of Rights and Freedoms, the Supreme Court determined in 2000 that while third party regulation represented a restriction on freedom of expression, the restriction was reasonable in the interests of electoral fairness.

The Court accepted that the purpose of third-party spending limits was to provide equal opportunity to participate in the electoral process and to prevent wealthy voices from overwhelming others.

Limiting opposition

Beyond the argument about infringement of the individual right to free speech, is a further argument that limiting the expenditure of third parties in elections serves to limit opposition to government. This is an argument that deserves serious consideration.

Andrew Norton of the Centre for Independent Studies suggests in The Conversation that: “The practical effect of third party campaign finance laws is that the state can do what it likes to third parties, but they only have a limited licence to protest”.

Certainly we have seen attempts to silence third parties in recent times. Under the Howard Government “gag” clauses were inserted in funding contracts of non-government organisations (NGOs) and there were also threats concerning eligibility for tax-deductible donations where criticism of government policy had been aired.

In 2004, a survey conducted by the Australia Institute found that 90 per cent of NGOs believed that criticism of government policy would put their funding at risk.

There is a strong argument for a Charities Commission that would help insulate third parties from such direct government pressure and would contribute to a plurality of voice. However, third party campaign regulation can also have this effect. Limiting the domination by top spenders can lead to more third parties participating in election campaigns.

Regulating advertising

A good point made by Norton concerns the unfair advantage obtained by governments through the use of government advertising to promote partisan policy. Like the role of large-scale private money, the misuse of public money tips the balance away from equal opportunity to participate in political discourse and electoral processes.

Political finance regulation needs to be accompanied by statutory regulation of government advertising. So far the ACT is the only Australian jurisdiction to have a statutory code for government advertising; this should be a priority elsewhere as well.

The second half of 2011 presents an important opportunity for political finance reform. NSW and Queensland have led the way but loopholes are inevitable until there are national reforms. Although there are doubters as well as champions within Labor, the existence of minority government and the strong position taken by the Greens will hopefully win the day for political finance reform and democratic renewal.

This is the tenth part of our Media and Democracy series. To read the other instalments, follow the links here:.

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