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Malcolm Turnbull’s donation of $1.75 million to the Liberal Party is the largest single donation in Australian political history. AAP/Mick Tsikas

Turnbull’s $1.75 million donation is bad news for Australian democracy

After some obfuscation, Prime Minister Malcolm Turnbull has finally revealed that he made a A$1.75 million donation to the Liberal Party in the lead-up to the 2016 federal election. Turnbull said on the ABC’s 7.30 on Wednesday:

I’ve always been prepared to put my money where my mouth is. Now, here’s the difference: I put my money into ensuring that we didn’t have a Labor government.

Labor has accused Turnbull of “buying himself an election”. Labor’s finance spokesman, Jim Chalmers, said:

I think the Australian people will be shocked by this admission – it stinks. Malcolm Turnbull had to buy his way out of trouble in the dying days of his disastrous election campaign.

So, how does Turnbull’s donation compare to others? And what does it all mean for Australian democracy?

Turnbull’s donation in context

Turnbull’s donation is the largest single donation in Australian political history.

The runners-up for this title are Wotif founder Graeme Wood, who donated $1.6 million to the Greens in 2011, and mining magnate Paul Marks, who donated $1.3 million to the Liberals in 2016.

Ahead of the 2016 election, Immigration Minister Peter Dutton donated $50,000, while Education Minister Simon Birmingham and Finance Minister Mathias Cormann donated $20,000 each. However, The Australian reports that these donations were declared incorrectly and were not personal donations, but donations their local branches collected.

Other major individual donors during the last election campaign were Wood and Duncan Turpie, a reclusive gambler, who donated $630,000 and $500,000 respectively to the Greens.

Former industry minister Ian Macfarlane, who retired at the last election, contributed almost $70,000 to the Queensland Liberal National Party. Greg Mirabella, husband of former Liberal frontbencher Sophie Mirabella, donated $35,000.

Implications for democracy

There are two competing issues about large political donations.

First, there’s the freedom of individuals to express their political preferences, including giving money to political parties they support. This includes prime ministers with a lot of money to spare. They have the freedom to bestow their largesse on their own party.

This has to be counterbalanced with the pernicious influence of money in politics. In the Liberals’ struggling campaign, $1.75 million carefully spent in marginal electorates could have been the difference between winning and losing. Indeed, the Coalition won the election with only a one-seat majority. The question is whether that $1.75 million donation made a difference to the election outcome.

The second issue involves the principle of political equality. We do not want a system where a rich person running for political office has a greater ability to get elected than a poor one.

More broadly, we don’t want individuals who can afford to give large donations to secure greater access to and influence on politicians than ordinary people have. The managing director of Transfield Holdings, Luca Belgiorno-Nettis, has previously likened political donations to the Latin saying do ut des: “You give in order to have given back.”

According to democratic principles, we’re entitled to equal access to political office and representation by our elected representatives.

How can we fix the system?

The best solution is to have a yearly cap on donations to each party and candidate of, say, $1,000. New South Wales has such caps, which the High Court has ruled are constitutionally valid.

With caps for each individual and corporation, we can ensure people do not have a larger voice just because they have a larger wallet.

Obviously, it is not ideal that Turnbull revealed his donation only under political pressure. The current rules don’t legally oblige him to reveal his donation until almost two years after the election, in February 2018. Like Queensland, Australia should move to real-time disclosure of donations at the federal level.

Other problems include the way donations disclosures are structured, in allowing donation-splitting and donations through associated entities. It must be hoped the parliamentary committee investigating this matter will look holistically at the system and recommend strong reforms.

The struggle for political equality has shaped Australian democracy. But it’s undermined by having a political donations system that benefits the rich at the expense of other Australians.

Catch up on what the 2015-16 donations data revealed here.

This piece was amended to correct Luca Belgiorno-Nettis’ job title.

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