Saturday, January 10, 2009

Ringside at a price, by Mike Steketee, National affairs editor - The Australian - 10th January 2009

Business people who needed to see a politician used to ask for an appointment and hope for the best. These days, they have an alternative: they can shell out $5000 or $10,000 to guarantee a spot near the front of the queue.

Political parties hit on the idea of selling access to ministers years ago and it has grown like topsy, driven by the arms race that election spending has become. There is the mass fundraising approach, where mere hundreds of dollars can buy you a seat with others at a table with a minister. At the other end of the spectrum is the selective approach, where an intimate dinner for a few with a heavy political hitter starts at $5000. In the Howard years, the Liberal Party took their fundraising on to the open market, auctioning off opportunities such as a jog with Tony Abbott or a harbourside walk with Philip Ruddock.

All good harmless fun? Gary Crooke, the Queensland Integrity Commissioner, doesn't think so. In his latest annual report, he raises some uncomfortable questions for politicians, such as what is being sold and whose is it to sell.

"Is what is on offer being offered on equal terms to all members of the community?" he asks. "If there is a government decision to be made, is a perception likely to arise that those interested and not attending the function, whether competitors for a tender or opponents to a proposal, are at a disadvantage?"

Unless there are satisfactory answers to such questions, Crooke says, these fundraisers should be banned. Of course, the answers and the conclusion to which they lead are obvious, particularly given Crooke's observation to Premier Anna Bligh: "I note that you have made several public statements confirming your commitment to high ethical standards."

Not that Bligh is willing to be led there. The Labor Party would continue to organise such functions and she would continue to attend, she said in November. "These events are clearly political donations and subject to disclosure provisions of the Electoral Act and I am satisfied that this is the appropriate way to deal with such events."

Actually, it is not as clear-cut as that. As the federal law stands now, only political donations over $10,900 need to be disclosed. The Rudd Government wants to bring the threshold down to $1000 but the bill to do so is stuck in the Senate. The Bligh Government has reduced the threshold to $1000 in Queensland, meaning political parties have to disclose any payments they receive above this. While businesses or individuals also have to disclose donations they make over the threshold, fundraising events are a grey area.

As the Australian Electoral Commission put it in response to questions from Inquirer: "Payments made to political parties for fundraising events may not involve any donation. Attendees may simply be paying appropriate value for the entertainment or service provided. ... A company that chooses to pay $10,000 for a table at a function might consider that payment a good commercial investment if a number of the company's senior executives have the ear of a couple of senior party policymakers for several hours."

In other words, if company executives manage to swing deals that more than recoup the payments they made to get privileged access, they do not need to declare the donations. The law is an ass, indeed.

The AEC recommended in 2000, and not for the first time, that this area be cleaned up by requiring that all payments made at fundraisers be deemed under the Electoral Act to be donations. Neither side of politics has taken it up. Politicians like to say they keep fundraising and decision-making separate. It is just that sometimes they happen to coincide.

In May, 18 business guests paid $5500 each for a Brisbane dinner at which the star attractions were Kevin Rudd and Bligh. One of the guests was Jim Raptis, whose proposal for a high-rise development on the Gold Coast happened to be before the Queensland Government. Two weeks later it was approved, complete with floor space additional to that allowed by the normal planning rules.

Bligh's chief-of-staff Mike Kaiser told The Courier-Mail that Raptis had raised problems with the development with him at the dinner but he did not pass on the comments to the Premier or Planning Minister Paul Lucas. But, as federal Special Minister of State John Faulkner put it recently: "The perception of undue influence can be as damaging to democracy as undue influence itself."

An example of where fundraising can lead emerged last year with the finding of the Independent Commission Against Corruption in NSW that three Labor councillors in Wollongong sought donations of $20,000 from a developer in return for supporting his project. The fall-out from that scandal prompted then premier Morris Iemma and his successor Nathan Rees to advocate a complete ban on private donations. That lasted just long enough for the political temperature to come down, with Rees dropping the idea in November, citing constitutional difficulties.

A total ban is canvassed as one of many options in the green paper on electoral reform Faulkner released last month. It certainly would help to restore faith in democracy. But it will never happen. Quite apart from the constitutional hurdle of infringing freedom of political communication, it is a step too far for the political parties. The green paper says that public funding covers only 20 per cent of the budgets of the Labor and Liberal parties. It still is a tidy sum: $49 million went from taxpayers to the two main parties for the 2007 election. But politicians would have a hard time convincing voters that, in the absence of private funding, they should kick in substantially more, particularly since public funding grew by 162 per cent in real terms between 1984 and 2007.

Faulkner's legislation before parliament bans foreign and anonymous donations, which is in line with the practice in the US. The US and Canada go further, to ban contributions from corporations and unions. That this is not a complete solution is plain enough from the obscene amounts of money spent on elections in the US where politicians complain that they have to devote several days a week to raising money.

Certainly, something needs to be done to curb the election arms race. The green paper calculates that spending by the parties in the 20 years to 2004 increased by 116 per cent in real terms for the ALP and 136 per cent for the Liberals. Voters can judge for themselves whether they enjoyed a commensurate increase in the quality of the information they received during elections.

Labor national secretary Tim Gartrell warned just before he left the job last year that "if this continues, we'll end up with a corrosive big money political system like they have in the US". He advocated caps on campaign spending, covering outside groups as well as the political parties and enforced by a watchdog such as the AEC with real teeth and resources.

Faulkner says he wants to see a new system in place by the next election and that limits need to apply not only to the parties but to trade unions and other outside groups as well. If it is to be serious reform, it also needs to improve disclosure requirements: at present, voters find out only after the election where the parties' money came from, and even then 60 per cent of the funding from private sources requires only a single-line accounting in the parties' returns. (Credit: The Australian)

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