Campaign finance: a neglected public health issue

Enjoying the Australian election?  Of course you aren’t.

But campaign finance and political donations are a neglected public health issue.

A few years ago I asked the Chairman of an Australian tobacco company “Why do you do it? Why give political donations at all?”

“[F]or the same reasons as Westfield or anyone else”, he answered.  “We think it doesn’t hurt access. Of course it doesn’t.”

“It doesn’t buy favours but it gives you personal access to the [politicians]?”

“You know, the notion that $100,000, and we’re not talking millions, we’re talking hundreds of thousands, gives you much of anything is really just bizarre.  I mean…”

“Is it noticed?  Does it get you a cup of coffee and 15 minutes or is it just irrelevant?”

“Is it absolutely irrelevant?  No. The truth is, government departments see stakeholders.  [I]f we gave no money or if we gave $1 million to whatever the party is that happens to be in power, the Health Department will accept our submissions about the latest packaging restriction or whatever.  Will it take more notice of us because we give them $1 million?  I think the answer is clearly no….people are aware it’s such a small amount of money”.

Later on:

“The reason we do it is because we are obviously a highly regulated industry and … on balance, we think it’s worth doing.  Would it make any difference if we didn’t?  I doubt it.  It probably would make it a bit harder to call up the minister and get, get access…”

This kind of politicking raises an important question.  Why should industries that harm and destroy health have privileged access to politicians and greater influence on public policies – simply because they have more money?

Restrictions on political donations in NSW

This post briefly reviews restrictions on political donations under NSW law.

Under Commonwealth law, there is no limit for donations to political parties and candidates for political office, although donors must disclose donations above the disclosure threshold (currently $13,000 for the year to 30 June 2016) to the Australian Electoral Office (Electoral Act 1918 (Cth) ss 305A-305B).

In New South Wales, on the other hand, Part 6 of the Election Funding, Expenditure and Disclosures Act 1981 imposes restrictions on political donations and electoral expenditure.  The purpose of these restrictions is to “prevent corruption and undue influence in the government of the State” (s 4A).

Except where specified, the Act extends to both State and local government elections.

There are 5 main restrictions.

Firstly, the Act requires the disclosure of “reportable” political donations and electoral expenditures (as defined) to the NSW Electoral Commission (ss 86-87, 92-93).  The Commission is required to make these disclosures publicly available on its website (s 95).

Secondly, the Election Funding Act imposes caps on political donations (ss 95A-95B) and on “electoral communication expenditures” during the run-up to State elections.  This is known as the “capped expenditure period” (ss 95F, 95H-95I).

For the year ending 30 June 2016, political donations to a registered political party are limited to $5,800, and $2,500 for an elected member or political candidate.  Current caps on electoral communications expenditure are shown here.

However, the restrictions on political donations do not apply to gifts intended for private use by a Member of Parliament (s 85(4)), nor does the cap apply to expenditure by a wealthy politician or candidate on their own campaign.

Although caps on political donations and electoral communications expenditures affect the finances of election campaigns, this is offset by Part 5 of the Act, which regulates public funding of NSW election campaigns.

Thirdly, in addition to caps on political donations and electoral communication expenditure, the Act prohibits a range of “indirect campaign contributions” (s. 96E).  These include the provision of office accommodation, computers or other equipment which are to be used substantially or wholly for election campaign purposes.  It also includes the waiving of payment for electoral advertising expenditure, although this does not apply to the provision of voluntary labour.

Fourthly, in order to remove perceptions that foreign political donors can unduly influence the political process, the Election Funding Act states that political donations can only be accepted from individuals enrolled to vote in the State, or from corporate entities that are either registered to operate a business in Australia or who have an executive officer living in Australia (s 96D).

Finally, the Act prohibits certain donors from contributing to a candidate, politician, or political party at all.  Prohibited donors include: a “property developer”, a “tobacco industry business entity”, a “liquor or gambling industry business entity”, or an industry association representing the donors listed above.

The definition of prohibited donors include “close associates”, including company officers, related bodies corporate, and significant shareholders of property developer, tobacco, liquor and gambling companies (s 96GAA, 96GB).

It is unlawful for a prohibited donor to make a political donation in NSW (s 96GA).

Campaign finance legislation tested in court

In McCloy v New South Wales [2015] HCA 34 (7 October 2015), a property developer challenged the constitutional validity of those provisions of the Election Funding Act that prevent property developers from making contributions in excess of the cap to a political party.

The plaintiffs included a property development corporation, and a director and close associate of such a company who argued that the ability to make substantial political donations in order to gain access to politicians is an aspect of Australia’s implied constitutional freedom of political communication.

Six of the seven justices concluded that the caps on political donations, and the prohibited donor provisions were not invalid by virtue of infringing the implied freedom of communication on government and political matters that is recognised by the Commonwealth Constitution.

This case has interesting implications for political spending by corporations whose business activities come at a cost to public health.

The McCloy case will be discussed in a later post.