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Money in electoral politics: no small risk for democracy and fairness

In 2010 the US Supreme Court ruled—in its controversial Citizens United vs. Federal Election Commission decision—that there could be no restrictions on the amount of money that corporations and unions could spend on Federal political campaigns. As a result, nearly $1.3 billion flooded into candidates' official campaign accounts and nearly $6 billion was spent on campaigning overall. The the vast majority of the expenditure came from big special interest donors. The 2012 US election cycle was by far the most expensive in history.

Now, in another decision (McCutcheon vs. Federal Election Commission—which split the court 5–4 along ideological lines) the Supreme Court has struck down the federal cap on the total amount of money an individual donor can spend supporting candidates and political parties during a two-year election cycle.

According to activists and organisations such as the Sunlight Foundation a single wealthy donor could spread up to $3.6 million among candidates, party committees and some political action groups affiliated with a single party during a single election cycle. The ruling does not touch limits on the amount of money an individual can give to a single federal candidate, which currently is set at $US 2,600.

A dissenting judge, Justice Stephen Breyer argued that the ruling created a ‘loophole’ allowing rich donors to donate millions to candidates and parties, and that, coupled with the Citizens United decision, ‘eviscerates our Nation’s campaign finance laws, leaving a remnant incapable of dealing with the grave problems of democratic legitimacy that those laws were intended to resolve’.

According to the Washington Times, Chief Justice John G. Roberts Jr., in the majority opinion, said that while the government had an interest in preventing corruption of federal officeholders, individuals had political rights that include being able to give to as many candidates as they want, in order to show support. He was quoted as saying that ‘Money in politics may at times seem repugnant to some, but so too does much of what the First Amendment vigorously protects’, the chief justice wrote. ‘If the First Amendment protects flag burning, funeral protests, and Nazi parades — despite the profound offense such spectacles cause — it surely protects political campaign speech despite popular opposition’.

In Australia at the Federal level, although there are clear disclosure rules to be followed by parties and candidates, there are no caps on campaign expenditure. There is little concrete information available on how much is actually spent on election campaigns because since 1998 political parties have not been required to file expenditure returns that explicitly identify amounts spent on election-related items.

In the absence of facts there has been much speculation about campaign spending. In 2009, former ALP National Secretary Tim Gartrell estimated that the major parties had raised and spent about $80 million on the 2007 election.

On 20 October 2010, the Gillard Government introduced the Commonwealth Electoral Amendment (Political Donations and Other Measures) Bill 2010. The 2010 bill did not seek to legislate for caps on campaign expenditure, but sought, among other things, to introduce a claims‐based funding framework informed by the principle of linking public electoral funding to actual electoral expenditure incurred. The bill lapsed, and there is no indication that the current Coalition government will introduce a similar bill.

The question of placing caps on electoral expenditure remains a key issue to be resolved in Australia.

The Rudd Government’s 2008 Electoral Reform Green Paper noted:

7.32       A ban or cap on private funding could substantially reduce political parties’ campaign funds, and potentially reduce their expenditure on campaigning. It could affect their current scope and scale of operations. This could mean that parties are unable to effectively participate in the election processes. The impact of caps or bans on public funding and the extent to which any adjustment to the amount of public funding would be necessary to political parties to ensure their viability would need to be considered.

In NSW, in 2010, the Keneally Labor government capped campaign expenditure and donations and the O’Farrell Liberal government pursued further reforms. In NSW both donations and campaign expenditure are capped.

In Queensland, where donations and expenditure were capped by the Bligh Labor government, the Newman government is poised to scrap them and to raise the disclosure threshold. University of Queensland professor and electoral law specialist Graeme Orr said the changes were ‘retrograde’ and ‘a backwards step for the key goals of political integrity and equality. … Unlimited donations risk political integrity … [and] power in Queensland has few enough checks and balances, given the lack of an upper house or bill of rights’.