O’Farrell’s Campaign Finance Reforms Are Abominable

As a general rule, any government that changes the rules of elections and political campaigns should be looked upon sceptically.

It’s too easy to dress up a base attack on your opponents in democratic frills.

But even with those cynical expectations, the changes to campaign finance laws in New South Wales are abominable.

The Election Funding, Expenditure and Disclosures Amendment Bill 2011, which passed the NSW parliament last week, is transparently designed to defang the union movement and defund the Labor Party. The bill bans donations to political parties from any organisation, allowing only those from individuals, and maintains the cap on donations from any individual at $5,000 a year.

In one fell swoop, there goes the Labor Party’s reliance on union affiliations.

The Government might argue that if Labor is hurt by this reform, so is the Coalition. Corporations are no longer able to donate either. In Premier Barry O’Farrell’s words, the reform will create an “equal and level playing field for all”.

But the key dynamic threatened is not between Labor and the unions, or between the Coalition and the corporate sector, but that between opposition and government.

Restrictions on donations hurt the party out of power. It is expensive to compete with the soapbox of incumbency. Stemming the flow of money favours the government.

Compounding this, donors like to back winners. And Labor, reeling after a historic loss, is bound to be a loser for the foreseeable future.

Yet that sort of crude political calculation is par for the course when it comes to donations reform. The truly obnoxious part of the NSW Government’s bill is how it restricts third party organisations from conducting political campaigns.

Any third party involved in “promoting or opposing, directly or indirectly, a party or the election of a candidate or candidates, or for the purpose of influencing, directly or indirectly, the voting at an election” falls under the restrictions and can now only be funded by individuals.

In a way you can understand why the bill does this. Donations reform in the United States has demonstrated when you cut off funding to political parties, money will flow into other campaigning bodies to compensate.

But the NSW Government’s solution to this problem is to restrict the ability for organisations to participate in public debate (of course, this would really hurt the unions).

The Premier has repeatedly said these laws will not affect “genuine issues based campaigns” and “genuinely independent” third parties. That’s not very comforting. People are free to advocate policy as long as they do not hint at support for a political party to implement that policy?

And the distinction between genuine and political is not very clear. Indeed, as Andrew Norton of the Grattan Institute pointed out in his submission to a parliamentary inquiry into the bill, NSW election law now draws some awfully fine and complicated distinctions between what political expression is free, and what is regulated.

The reforms intend to restrict participation in political activism solely to individuals, rather than corporations, unions, and peak bodies. Is our right to freedom of speech and participation rescinded when we form groups? Surely not. But that is the basic assumption behind the NSW reforms.

Yet there is a deeper philosophical disagreement here, and it concerns how we understand “democratic” political debate. Broadly, there are two models.

The first imagines democratic debate as a free-for-all. People and organisations should be allowed to say and advocate whatever they want, support whoever they want through words or donations, and argue their case as publically as they can. The rough and tumble of such a debate is natural – the sign of a healthy liberal democracy sustained by a broad freedom of speech.

The second model argues that governments should “manage” the debate. The parliamentary inquiry said the reforms sought to “promote fairness and equality”. As Kristina Keneally said back in 2010, “those with the most money have the loudest voice and can simply drown out the voices of all others”. In the name of democracy, loud voices need to be quietened.

But this second model is puzzling. Free debate informs the decisions made by voters to elect representatives and change governments. Free debate is at the heart of democracy. So what right does a government have to manipulate that debate? How can it legitimately suppress and restrain participants that it has determined are excessively loud, or decide what constitutes a “genuine” – rather than political – campaign?

A government’s legitimacy requires voters to make a free choice about their vote. That choice is not free if the government is managing how those decisions are made – preventing some third parties from endorsing and supporting candidates. Andrew Norton has noted that the losers from these reforms are community non-profits. Corporations don’t rely on donations to run political campaigns.

It’s an appealing idea to “get money out of politics”. But legislative attempts to do so have invariably punished oppositions, entrenched incumbents, and limited political participation. The O’Farrell Government’s reforms are just an egregiously bad example.