The state of democracy – Part 2 of 3 in The Guardian

Political donations corrupt democracy in ways you might not realise

By Warwick Smith

Originally published at The Guardian, Thursday 11 September 2014 10.37 AEST

A consequence of a donation-driven approach to politics is that areas of political debate are in policy areas that the wealthy elite don’t care about, like same sex marriage or abortion

Part 1: Why politicians must lie – and how selling ice-creams is like an election campaign

Part 3: If democracy is broken, why should I vote?

Who would pay $10,000 for a table at a fundraiser? Photograph: Alamy

Corporations don’t give their money away for nothing. There is an understanding (rarely made explicit) that large campaign donations buy political access and favourable consideration in policy development and legislation. Why else would a corporation, which is bound by law to pursue profits, make these donations?

Interestingly, many businesses give money to both sides of the narrow political divide; sometimes different amounts, sometimes exactly the same amount. In the lead up to the 2013 federal election in Australia, for example, Inghams gave Labor and Liberal parties each $250,000, Westfield gave them each $150,000 and ANZ gave them each $80,000. By my count, over one third of donors (excluding individuals) gave to both the coalition and Labor during 2012/13. This is not unique to Australia but occurs in all democracies, just indirectly in those places where direct political donations from corporations are illegal.

Donating equally to both sides is clearly not about helping one side win. It’s an implied threat: “if you don’t treat us well we’ll give you less and they’ll be ahead.” When both major parties have the same policy on an issue, it effectively removes that issue from democratic scrutiny. This is the aim of many political donations from businesses who stand to lose from policy changes that would be popular with the electorate. Only areas of difference between contenders end up being discussion points during elections, the rest is passed over in silence.

Such a big deal is made out of the few policy differences between major parties that during campaigns they can appear to be poles apart. However, as I have discussed previously, the main contenders in developed democracies are actually very closely aligned with respect to political ideology and policy – particularly economic policy.

During their last term in office, the minority federal Labor government in Australia were more or less forced by independent MP Andrew Wilkie to attempt to implement restrictions on poker machine gambling. Prior to the discussion of reforms beginning, gaming industry lobby groups were giving similar amounts of money to both major parties but slightly favouring Labor. As soon as Labor started talking seriously about reform, the donations began to dramatically favour the opposition Liberals. The leader of the Liberal party, Tony Abbott, came out strongly against the reforms and they were eventually abandoned.

During the period in question, surveys showed that a large majority (70-75%) of Australian voters supported poker machine reform to limit the impact on problem gamblers and their families. The voters lost that one as they usually do when wealthy industries are lined up against them.

The gambling interests won the game and showed the Labor party that they weren’t bluffing. If I were a gambling man, I’d put money on poker machine reform not being raised by major parties in federal politics in the near future. The gaming industry has effectively paid to have the issue taken off the national political agenda. The view of the voting public is no longer relevant.

There are many more examples of this process where corporate and other wealthy entities punish reformists by shifting financial support. The best-documented examples in recent Australian political history are the mining and carbon taxes and the Future of Financial Advice (FoFA) reforms. There has been plenty of coverage of these issues so I won’t repeat the stories here.

Once a policy issue is effectively silenced, ongoing donations to both major parties help to entrench major party dominance. Large donations to both the Liberal and Labor parties further marginalise minor parties who may seek to break the silence on policy issues that the corporates or elites have purchased. In Australia, the Greens are strong advocates of poker machine reform so donations that advantage the major parties over the Greens are still worth making for corporates who want this issue out of the spotlight. When it’s a two horse race, the game is relatively easy to control.

A consequence of this donation-driven approach to politics is that many areas of open political debate between and within major parties are in policy areas that the wealthy elite don’t care much about, like same sex marriage or abortion, or represent divisions between corporate interests. Of course, some vestiges of ideological differences remain and show up in areas such as industrial relations and welfare.

It’s clear that policy formation and the legislative agenda of major political parties is not explained simply by following money trails. However, the money trails are our best portholes into the rest of the opaque process. Who attends fundraising dinners with senior politicians that cost $10,000 a plate? What do they talk about? It’s easier to spin a story to voters about why you watered down regulations than it is to tell the bankers whom you mix with socially and professionally why you couldn’t help them out. Personal relationships matter to politicians as much as to the rest of us.

Sitting in the middle of this process are the lobbyists and think tanks who invent public rationalisations for policy positions that serve their clients’ interests. My previous column here discussed why politicians lie. Lies are most effective when the liar believes them. The first step in effective lying is to convince ourselves of the lie. This is where the think tanks and lobbyists come in, telling politicians, for instance, that FoFA regulations have to go because compliance is onerous and damaging to the efficiency of business. Too much red tape chokes economic activity. I’m sure many in the Coalition government really believed this reason for watering down the FoFA reforms but I guarantee the idea originally came from the banks or their lobbyists who simply want to continue to rip off their customers.

This is a complex and dirty game dominated by political donations, vested interests, personal ambition, class and power. Voters are a part of the game but representing their interests may not be a politician’s top priority. Politicians will only act on behalf of voters if no wealthy or powerful group objects – or if the party in question is boxed into a corner by a hung parliament or a combination of marginal electorates and strong community action.

All of this begs the question of why we should bother voting. A video of actor Russell Brand being interviewed by the BBC’s Jeremy Paxman went viral last year precisely because of Brand’s compelling arguments that we should not vote and that voting only legitimises a fundamentally illegitimate system. So next week, I’ll follow this column up with another titled “why vote?”

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