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Gary Gray: The Funding Of Political Parties

This is the text of a speech on Political Funding by the ALP National Secretary, Gary Gray.

The speech was given at The Sydney Institute.

Thank you, Gerard.

Ladies and gentlemen.

I have not come to the Sydney Institute today to pick over the entrails of the election on 2 March. Today I want to discuss with you an issue which goes to the heart of our pluralist democratic society.

The issue I would like to discuss is how our parties are funded. The inter relationship of politics and business has always been….controversial to say the least. But with our kind of economy and our kind of democracy, there will always be a close relationship between politics and business.

So I would like to flesh out…from the view point of the Labor Party some principles and a philosophy on the funding of parties.

Over the last three year political cycle, the two major parties, counting the Coalition as a single entity, spent over $155 million. The Coalition spent around $88 million, Labor around $67 million.

That’s $155 million in the course of the last Parliament. I stress that because a 3 year Federal cycle can cover State elections in all States or just a few. In the three financial years for which figures are available there was one federal election and elections in all States and Territories. So the $155 million is probably the maximum.

The major parties are substantial businesses – with offices in Canberra and branch offices through every State and Territory, and out into the smallest and most remote communities in the country.

But there is little informed understanding in the general community about the finance and funding of party politics. Most business leaders believe Labor gets buckets of money from trade unions – we do get a lot but no where near the figures that get bandied about.

Let me give you an example. In South Australia union donations are minimal, affiliation fees are substantial. However when our union based income is added to our membership income the figure is roughly equal to the membership based income of the Liberal Party. And then they have a substantial corporate donor base too.

My predecessors and colleagues have never made much in the way of public statements about it. I think there are two main reasons for that. Privacy and Ethics.

The first is still valid, to some degree at least. We have all been raised in the tradition that our vote is a private issue, a personal matter, and no-one else’s business. By extension, this applies to any donation or support in kind we might decide to make to a political party.

In some communities in Australia this privacy argument is very powerful even to the point of potential donors deciding not to make donations if privacy cannot be guaranteed.

The second reason is that there is still a feeling – a whiff of the past – in the idea of political donations. The spectre of Mayor Daley, Tammany Hall and buying the favour of administrations still lingers around the issue and makes people generally coy about their political contributions. The Queensland National Party and WA Inc. still cast long shadows.

But there is no good reason for this because Australia now has very tight, very good laws covering the financial operations of political parties. Even the Coalition’s trust funds will have to be declared, and our companies too. Indeed in an era of deregulation, the major parties themselves have sought more, better and tighter regulations.

But there is a cost to this. Labor and the Coalition have estimated that Australia’s exemplary laws, which make public any donations received, have cost Labor and the Coalition about $2 million per year, because some individuals and corporations do not want to be disclosed publicly.

However, there are many companies who take their obligations to our democracy seriously.

They make financial contributions to help both sides of politics, and they’re not shy about the publicity. These companies take the correct view that in a pluralist democratic society it is important for companies to make moderate, even handed contributions to both sides of politics. This, they argue, guarantees the strength and integrity of our party system.

The only reasonable independent academic work on this subject has been started by Canberra’s Professor Rolf Gerritsen. I’ve circulated copies of Professor Gerritsen’s preliminary work. There is a lot of interesting material in Professor Gerritsen’s lists. It shows, for instance, that the Coalition parties received over $21 million more in donations from the corporate sector than the ALP in the three financial years from 1992/93 to 1994/95.

This tells us something about the incorruptibility of the system. Large donations totaling $21 million more were given to the opposition parties! But it also reflects the old – and now outdated – presumption that, because rich people own shares, and rich people vote conservative, public companies should make partisan political donations….that is, donations favouring the Coalition.

I would argue that that environment has changed. The share registers of public companies are now much more broad-based; workers own shares now….not just rich people.

The Thatcher vision – of turning her nation of shopkeepers into a nation of shareholders – has been influential in Australia too, as floats like Woolworths have brought share ownership into the hands and homes of many workers.

Compulsory superannuation now means that just about every working Australian, indirectly, is an investor in the share market. So the unexamined assumption that the owners of public companies are conservative supporters can no longer be sustained.

Indeed as our economy matures and the financial muscle of our superannuation based institutions strengthens, the old assumption is just wrong.

The financial and ownership structures have changed and so has our society.

Let me digress for a moment.

The political cycle is nothing if not interesting.

Like our economy the nature of politics is changing, how people see the value of their votes and their own political allegiances are changing.

Fewer and fewer people are born into, and stay for a lifetime within, an identifiable and stable group, socially or politically.

It is getting harder and harder to be a long term Government and its getting harder and harder to communicate with people.

Policy options close and change. What were certainties in the 1980s are not so in the 1990s.

And then there are the snake oil merchants…. always around the fringes of politics and economics and now on talkback radio and TV. The snake oil merchants seek opportunity largely by opposing whatever the mainstream want.

Education, immigration, and – for much of our recent history – targeted redistribution of wealth to the least advantaged, has created a society where people’s interests, and therefore their loyalties in politics, are no longer determined by their parents status or limited by their families’ expectations.

Overall, the effect is a very healthy one for democracy. What it means is that no party can be automatically assumed to speak for a well-defined and homogenous interest group any more. Harry Wood’s recent victory in the Clarence by-election is a reminder that much of regional Australia voted Labor for a decade – despite the received wisdom that the bush is a National Party stronghold.

Take a look at the composition of the major parties in our Parliaments.

It goes without saying that there are too many lawyers in Parliament…. I don’t say that because I dislike lawyers, but they do have a tendency to think that all problems can be solved just by passing laws……and making declarations. And they tend not to consider the consequences of their actions …..only the narrowly defined objectives of their actions are important.

The 1994 Northern Territory election stands in my view as a significant event in Australia’s political development. That election was almost certainly the last contest between two leaders neither of whom had tertiary education.

Peter Walsh will almost certainly be the last Finance Minister who left school at 14. Gordon Scholes was probably the last railway train driver to serve in Cabinet. And then there is as fate would have it Professor Paul Keating – his education was as they say through the school of hard knocks and the university of life.

The reasons for all this change is obvious – and it’s not in the least bit sinister. Society, industry and economics have changed, working class kids got university educations and politics is now professional. John Howard, Kim Beazley, Bob Carr and Jeff Kennett: each of them a political professional, and each of them reached the leadership of their respective parties because they are, and were, professionals.

This trend towards professional politics and politics as a career is not happening in a vacuum. It is happening – more pervasively and more quickly – in business and industry. Although some dynasties survive, business and industry leadership is less and less a function of inheriting wealth; and it’s less and less a function of working your way from the mail-room to the board-room.

Now it’s more likely to come via an MBA and professional study. A managerial class has been created. It’s not a group that can assume it will pass on its honours and privileges through inheritance to the next generation: it’s not exclusively Anglo-Saxon or male anymore. And its not exclusively conservative.

The point this analysis makes – sweeping and general and full of exceptions to the rule as it may be – is that it is not just political relationships that are changing. Our parties are changing too.

Political parties are professional. We are developing strategies and tactics, methodologies and processes, which are very powerful tools within the democratic process, a process which continues to work reasonably well despite the changing political, social and industrial environment.

Our parties are a two-way communications system: from the electorate to the elected and from the leadership out into the community. We receive information, analyse it, and funnel it to the parts of the body politic where it needs to go. That is how we create our own political advantage.

We – and by “we”, I don’t just mean the ALP, but the Coalition too – we are like a widespread array of antennas, constantly monitoring the mood and the state of the community and using that information to develop policies and strategies for the future.

But, we – the Coalition and ourselves – are not interchangeable. We come from different traditions. Our core beliefs have been nurtured by different concerns and different agendas.

I don’t want to dwell on this point, but to me the differences are obvious.

Our constituencies are still different; class, tribal and regional loyalties do remain, but they are breaking down.

On March 2 Labor lost many traditional blue collar votes and yet retained many. The electoral coalitions which form at the end of each cycle are more varied than ever before.

As education and opportunity drive greater social mobility, political parties and party organisations will continue to evolve, they will increasingly adopt the principles and practices of merit in order to stay ahead.

The conclusion I draw from all these threads and trends and observations is simple and it takes me back to the core of my argument.

The business community has a responsibility to its shareholders to support stable government, and it should fulfill that responsibility, on grounds of fairness as well as in its own best interest, by an even-handed and open approach to the funding of both sides of politics.

That does not mean I am arguing for equal donations to the Democrats, or the Greens, or Call to Australia. The fringe parties and the one-issue lobby groups masquerading as political parties still see themselves as gifted amateurs, donating their superior wisdom to the less enlightened of our society, and offering snake oil and salvation all in the same irresponsible bottle.

Rigorous disclosure laws compel the bastards to be honest and real public funding gives us compensation.

The main game is about the major parties, and about the service that we provide in connecting the political leadership to the grass roots, and in ensuring that diversity of views in the community is translated into policies which serve the nation.

Increased professionalism on both sides of politics has been delivered through a combination of public funding and the disclosure of private funding.

Neither party can afford to be seen to be favouring donors – and it is too easy to draw a line from a particular donation to a particular policy outcome for either party to risk quid pro quo arrangements.

Even with our most loyal supporters.

Federally, I believe we have had the cleanest political system in the world. For instance the ALP and the Coalition have in the past received some support from the tobacco industry, but our campaign to reduce smoking in the community, and to warn people of the dangers of tobacco products, has never faltered and it is bipartisan.

The donation system, in the absence of favour-buying, is both desirable and necessary.

Necessary because public funding, which should be in place in all the States but which is in place at the federal level, and in Queensland, New South Wales and the ACT – only provides a portion of our funding, in the case of the ALP only one third of the money it takes to run our party comes from public funding.

The balance comes from individual supporters, unions, from major fund-raising dinners and events, from backyard barbecues and street stalls, from the party faithful, in fact.

But the disproportion in corporate funding I mentioned before – $21 million over three years in favour of our opponents – is neither fair nor smart. Nor is it in Australia’s long term interests.

I talk to the business community regularly – I make somewhere over eighty visits a year to various businesses. And, on the odd occasion when I walk out with a donation or a commitment, I know exactly where that money is going – it goes into developing our Party.

It’s going into things like our Leadership Development Program, which helps bridge the gap between the community and politics to improve the Party’s understanding of business by exposing our members of parliament to the business community, and vice versa.

Through this programme weekly dinners were hosted by myself at Parliament House with young caucus members and business leaders, long discussions followed, information exchanged and we believe this had benefits all round.

The important thing is that this programme was about the exchange of information – not about politics.

In fact some of the calls I received after the election were from businesses wanting to keep this programme in place.

And you see that is one of the great values of our donations system…it gets party officials out and about, talking to business and the community….and learning.

In the long term – with the increasing trend towards professionalism – I think we’ll see a more sophisticated understanding of the value and importance of political donations. And that, I believe, will lead to greater equality in the way the corporate sector treats the major parties.

Ideally, I’d like to see the major corporations setting aside a regular contribution and of course – making that contribution equally to both sides.

Why? Well, the advantage for the ALP hardly needs pointing out. The advantage for the business sector generally? Stability, and commitment.

Political stability is a major advantage for the economy. Neither major party is, to any degree, an enemy of the private sector. Commitment to our democratic institutions is essential for stability.

Both parties have, at the top of their agenda, the commitment to using instruments of government to promote and sustain an efficient, export-oriented, prosperous business sector in Australia – for the benefit of us all.

We have different ideas about how to achieve it: and Labor has a distributional agenda which the Coalition ignores, but those differences, and those ideas, are a powerful strength for our nation as a whole.

And those differences, that diversity needs to be maintained.

By donating fairly to both sides, the corporate sector is actually funding two large and talented operations, with positive input to make in the collective task of seeking advantage for Australia.

And that’s where commitment comes in, the commitment to give.

It is a stake in democracy, for companies or industry groups – who do not, as organisations, have a vote or control one.

It helps to fund political activism – because it broadens the base from which the parties derive their incomes, and thereby reduces the power of single interests to hijack debate in either party’s forums.

It increases the quality of political debate, because it provides the means for party organisations to develop policies which deliver advantage to the widest possible constituencies – without fear or favour.

Donations to political parties are, above all, a donation to the system and the processes we have evolved in Australia.

They contribute to stability and predictability.

They help to maintain both parties near the centre of the political spectrum, in the mainstream, because they ensure that neither can become dependent on or captive to narrow sectoral interests.

In the end, all of that translates into good government.

Even the recent past tells us this all makes sense. Look at the difference between the early Whitlam and early Hawke governments. When Whitlam finally achieved office, he did so in the teeth of total opposition from the business community – a much less professional, much more insular business community than we have now. And one which had cut the ALP out completely from its confidence and its thinking.

What was the result?

Unintended economic consequences resulting from a lack of understanding about how the private sector actually operates, and, eventually, chaos in the Parliament.

The Australian electorate is both changeable and critical.

But our system of democracy still works and works well.

Maybe we’ve lost some of the passion, and some of the grand – but ultimately futile – gestures of the era of ideological warfare.

But because the gestures were futile I don’t see their passing as a problem.

The better I do my job, the better chance Australia has for policy outcomes that are coherent, common-sense and representative – and that applies whether Labor is in Opposition or in Government.

Like all Australians, business people are pragmatic. They know you get what you pay for. But more need to understand that corporate partisanship – in the economy of modern politics – is counter-productive, it is unfair and wrong.

Even hands are the steadiest.

Thank you.

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Malcolm Farnsworth
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