The negative effects of campaign finance reforms

It looks as though Labor’s long-touted campaign finance reforms will pass through the current federal parliament before the September election.

According to reports today, the disclosure threshold for political donations will drop to $5,000 from the previous level of $12,100. Political parties will also receive an extra $1 per primary vote to cover “administrative funding” – whatever that is. In an extroadinary leak from Labor caucus, Anthony Albanese told Labor colleagues that ($):

We’ve got to support this measure. The party’s broke and we need the money.

The federal opposition had argued that a reduction in the threshold for donations would discourage donations from supporters.

This is absolutely what is going to happen, and more.

Firstly, taxpayers are going to be paying more of their taxes to all political parties, no matter if they support them or not.

Secondly, reducing the threshold and increasing the payment to parties will place more of a reliance on taxpayer funding of political parties, discouraging those who actually want to voluntarily donate to a party from doing so.

Thirdly, as argued by Andrew Norton, the AEC will have to spend more of its time harassing “minor activists” by chasing all minor donations to parties, reducing political fairness. We simply cannot allow the AEC to be transformed into an agency that intimidates and discourages political participation, as has occurred in the United States. Read more about these important US developments here.

Labor elder statesman, Senator John Faulkner, has bitterly slammed the reforms, stating ($):

We are providing administrative funding to political parties without any public policy purpose.

It is very bad politics and even worse policy.

I’m no longer angry and disappointed. I’m ashamed.

To make things even worse, Victorian Planning Minister Matthew Guy has today called for tough new laws in Victoria to rein in political fund-raising. This could include:

…the NSW model, where property developers, corporations, unions and other organisations are banned from making donations.

The so-called Quebec model is another possibility, where donations have been limited to a maximum of $100, with public funding of political parties lifted to offset the loss of revenue.

To put it simply, reducing the threshold for political donations, and banning certain groups from donating at all, discourages and restricts civic participation in the political process. At the same time, the restrictions put a greater financial burden on taxpayers when they least need it.


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