Australia’s political donations and lobbying system is broken by design

The Centre for Public Integrity has reported that lobbyist and industry group donations have increased by more than 500% in the past two decades. These lobbyists donated $2.6 million to the major political parties last year; this figure is expected to increase before the federal election next year.

The rules for lobbying and political donations at the federal level are weak compared to several state counterparts. There are no limits for federal political donations and very poor disclosure requirements for lobbying activities.

These issues surrounding lobbyists will be debated as part of a Senate committee inquiry into access to the Australian Parliament House by lobbyists.

Why do lobbyists donate?

In Australia, well-connected lobbyists are greasing the wheels of access and influence to public officials for those who have the funds to pay them. The secret to their access is their insider status: as I note in research, almost 40% of these lobbyists are former politicians, public servants and ministerial advisers. The oiled path from public office to a career as a lobbyist is known as the “revolving door” phenomenon, where former public officials capitalise on their networks to gain access to powerful decision-makers and policymakers — for profit.

Lobbyists and industry groups tend to donate to political parties for strategic, rather than altruistic, reasons. A major reason for these political donations is to secure greater access to politicians than ordinary people have.

As then US presidential candidate Donald Trump put it:

I gave to many people before this — before two months ago, I was a businessman. I give to everybody. When they call, I give. And you know what, when I need something from them two years later, three years later, I call them. They are there for me. That’s a broken system.

Trump suggests it is possible to “buy” political access and influence through political donations. Similarly, managing director of Transfield Holdings Luca Belgiorno-Nettis has likened political donations to the Latin saying do ut des: “You give in order to have given back.”

Lobbyists have a greater need for access to politicians than the average person — their career and livelihood depend on their access and influence. This explains the large number of donations they make in order to curry political favour and access to key political decision-makers.

According to democratic principles, we are entitled to equal access to political office and representation by our elected representatives. We can also expect politicians to be transparent and accountable in exercising their public duties. In particular, politicians should not engage in corrupt behaviour, such as bartering with a lobbyist to make decisions in their favour in exchange for a large sum of money.

But it is not just actual corruption that’s the issue; even the perception of corruption can damage trust in the political system.

What reforms are needed to our lobbying rules?

Lobbying regulation in Australian jurisdictions currently takes the form of a public lobbyist register and code of conduct. However, the regulation of lobbying at the federal level in Australia remains underdeveloped.

Those required to register in Australia are confined to third-party lobbyists, which only comprise 20% of the lobbyist population. This means a large proportion are not covered by regulation, such as those who operate in-house as employees. Such restrictive coverage fails to provide proper transparency of government decision-making in terms of lobbying by “repeat players”.

To enhance regulatory effectiveness, it is essential to expand the lobbyists required to register to both third-party and in-house lobbyists. This is consistent with comparable jurisdictions that have a long history of regulating lobbyists, such as Canada and the United States.

The level of disclosure of lobbying activity required at the federal level in Australia is dismal. The only disclosures required are the names and contact details of the lobbyist and the client they are representing. There is thus a complete vacuum of knowledge about when lobbyists are contacting government officials and over what policy issues.

In New South Wales and Queensland, ministerial diaries must be disclosed, which provides some visibility of who ministers are meeting with and the broad subject matter of the meeting. However, other logical targets of lobbyists, such as ministerial advisers and public servants, are not covered by this form of regulation.

Queensland has the most comprehensive regulation in this regard, with a requirement to disclose all lobbying contacts, as is required in Canada and Scotland.

To enhance transparency, all Australian jurisdictions should require lobbyists to disclose every lobbying contact, as well as require ministers, senior ministerial advisers and senior public servants to provide monthly disclosures of their diaries.

What reforms are needed to donations rules?

The lax rules on political donations at the federal level also need to be reformed. The best solution is to have a yearly cap on donations to each party and candidate of, say, $1,000. New South Wales has such caps, which the High Court has ruled are constitutionally valid.

With caps for each individual and corporation, we can ensure people do not have a larger voice just because they have a larger wallet.

The struggle for political equality has shaped Australian democracy. But it’s undermined by having a political donations system that benefits the rich at the expense of other Australians.

As part of the impetus to improve the declining public faith in democracy and political institutions in Australia, governments should seek to regulate the pernicious influence of money in politics, as well as the strong influence of vested interests and influence peddlers that can drown out other less well-resourced and well-connected voices within a democracy.

Reform of lobbying regulation in Australia should enhance the scope of its coverage and the level of disclosure of lobbying activity. This will improve transparency in an area currently hidden in the shadows, reduce the risk of corruption by lobbyists and public officials, and ultimately promote the democratic norms of political equality and fairness.

What changes would you like to see to political donation rules? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.