Whither Democracy? Political donations triple as AEC prepares 2021 data drop

Money in politics; “donations” from large corporations and billionaires are on the rise. And when the yearly data from the AEC is released in the morning, it will almost certainly show Australia hard on the heels of the US, where true reform in the public interest is so routinely impeded by wealthy private interests. 

“Campaign finance”, as they call it in America, doubled in the 2020 Election, that is, private money in politics doubled from the time Donald Trump won the election in 2016. Here in Australia, donations to the two major parties tripled between the 2016 and 2019 elections.

Labor raked in a little more than the Coalition. This may come down to flawed data, the fact that Labor’s donations disclosure is better than the Liberals and Nationals – and let’s not forget Bill Shorten was tipped to beat Scott Morrison at the last poll so Labor probably attracted more corporate money on the expectation it would defeat the Coalition.

It may also come down to the fact that, while corporations and billionaires tend to donate more to the Coalition, Labor gets a large slice of this “largesse” as well as support from its union base.

Of greater significance is that the trend is up strongly worldwide – more and more money in politics – and Australia is tracking the US, where money has perverted the political process to such a point that gun reform remains elusive even in a country which averages more than one mass shooting every day. 

Such is the deluge of money in American politics that, in the recent Georgia senate race, the cost of the contest between just two candidates, David Perdue and Jon Ossoff, attracted spending of almost $470 million – almost half a billion Australian dollars for just two candidates.

The Georgia Senate race between Kelly Loeffler and Raphael Warnock was the second most costly race in history – after Perdue and Ossoff – with $361 million spent.

A Biden record v Trump

The main event, the election of Joe Biden as president, cost donors a record $US14 billion ($A18 billion). The 2020 election cost more than the two previous election cycles combined, with the 2016 race costing $US6.5 billion and the 2012 race costing $US6.3 billion.

Biden himself pulled in $US1 billion, the first candidate in history to surpass $1 billion) and Donald Trump raised $US596 million.

Political donations in Australia

Donations in Australia are following the same trend as the US, with total receipts of the two major parties more than tripling between the 2016 and 2019 elections. Here is the data is for federal branches alone.

• 2016 election total receipts 
  • Labor: $15,410,098
  • Liberal: $14,710,660
• 2019 election total receipts
  • Labor:$49,995,144
  • Liberal: $48,031,905

System flawed

These figures don’t show the whole picture. They only include amounts that the parties declare. Donations below $13,800 made during the 2018-19 financial year don’t have to be declared although Labor voluntarily declares contributions above $1000 (perhaps one reason why its total is slightly higher than the Coalition because typically, corporations and wealthy Australians tend to donate to both sides but favour the Liberals.

There are many ways to game the system. 

In the US, the federal limit for donations is $2,800 and donations above $200 must be declared. It’s a tighter regime than Australia – where the threshold for disclosure is far higher. However, America’s large donors bypass the limit by donating to “super PACs”.

There is a similar thing going on here too. Australian fundraising bodies such as the Free Enterprise Foundation and the Cormack Foundation are effectively set up as “pass-through” vehicles to wash money from donors through to political parties; and many corporate industry bodies – such as lobby groups and industry associations – also funnel donations to political parties on behalf of their constituents.

Unions too are large funders for Labor, which helps to account for its higher take in recent years despite the typically lower contributions from corporations and billionaires.

Between the cracks

What the donations don’t tell us is what “Other Receipts” are. It’s a large category in the AEC releases. Much of the time they are actually donations (although the AEC has stated that they aren’t). We know this because sometimes the amount shows up on the donor’s original return indicating that it is in fact a donation). 

So, either the political party has dishonestly labelled it as an “other receipt” or the AEC has made a mistake. 

“Other receipts” can also include fundraisers such as dinners which don’t fit the narrow definition of “gift” in the Electoral Act).

In the course of the Secret Rich List investigation into the companies behind the grandfathering exemption, we identified dozens of errors and irregularities with the data.

Investigation: how political donations protect a cosy loophole for Australia’s plutocrats

 

Some of the other key issues: 

• High disclosure threshold.

Contributions made in the 2019-20 financial year that are below $14,000 simply don’t have to be declared. The disclosure threshold for donations made in the 2020-21 financial year was further increased to $14,300. Multiple donations below this threshold are not aggregated. This is one of the factors that has enabled an estimated $1 billion of political funding since 1999 to remain undisclosed.

• Once a year disclosures: donation data from the AEC on Monday will cover the period between July 1, 2019 and June 30, 2020, therefore we won’t be able to see any donations made after June 30. This data won’t be made public until Feb 1, 2022, up to 19 months after the donations were made.

Grand gaps

Our Michael West Media investigation into the grandfathering exemption threw up many instances of data failure. Billionaire property developer Harry Triguboff is one example.

Triguboff’s company Meriton was a significant donor in the 2019 election, giving $60,000 to the Labor party and $380,000 to the Liberal Party which included $50,000 that was not listed on the AEC’s detailed receipts but found on the Meriton properties return. This sort of “mistake” is common in the data; in fact the consistency of errors is perhaps an indicator of the lack of political will to address the corrupting influence of money in Australian politics.

Given the large licks of corporate money for both sides of politics, both major parties have been feeble in response to widespread calls for reform. In fact, most recently, Liberal and Labor effectively teamed up in Parliament to allow property developer donations.

Peas in a pod: Labor, Coalition join forces to weaken political donation laws

They voted for an amendment to allow previously banned donations from property developers. Provided the funds were for ‘federal purposes’, the new laws override stricter state laws and legal precedent set in McCloy v NSW [2015] HCA 34 in 2015.

This from the joint judgement by Justices Kiefel, Bell, Keane and French in the High Court: “This particular concern is that reliance by political candidates on private patronage may, over time, become so necessary as to sap the vitality, as well as the integrity, of the political branches of government”. 

The biggest donor

The single largest industry political donor has been the resources and energy sector with $136,757,553 at the last release (including $116,239,854 from Clive Palmer to himself)

• Contributions to major parties from resources/energy
  • Liberal: $13,320,195
  • Nationals: $1,862,546
  • Labor: $4,884,458
• Peak in donations from resources/energy in 2014 coincided with lobbying efforts to repeal the mining tax.

Whither democracy?

The confluence of corporate money, power, and political influence have entrenched and exacerbated inequality in Australia. It is logical that if corporate interests pay to get the laws they desire then consumers, regular voters, will be disenfranchised. This logic is supported by the numbers.

Billionaires have been the biggest winners in the 2020 pandemic adding a collective 50% increase to their wealth as asset prices have risen. Meanwhile, the ranks of the poor have ballooned along with under-employment and the gig economy.

In the longer term, the influence of money in politics does not only entrench unfairness but it also impedes significant and meaningful political reform. For instance, the years of international pressure for Australia to introduce anti-money-laundering and counter-terrorism financing laws (AML-CTF) has failed to get both sides of politics to act. After 15 years, government response has only been that it is in discussions with “stakeholders”.

These “stakeholders” are the property, law and accounting (Big4) lobbies. It is real estate, lawyers and accountants who remain outside AML laws, quarantined, protected by their influence and their donations. So it is that Australia remains a paradise for money-launderers. So it is that developers and Big Four accountancy firms keep donating to both parties. So it is that black money continues to flow into the property market, distorting prices, disadvantaging younger Australians, locking them out of home ownership.

So it is that, even after 15 years, this latest attempt to reform was knocked out by both Labor and the Coalition just before Christmas.

Money-laundering bill finally back in Parliament despite fight by Law Council, property lobby