John Madigan (Victoria, Independent) Share this | Link to this | Hansard source

For those who did not see Lateline a few weeks back, you have probably seen the footage since. In one of the more excruciating interviews of recent years, former rock star-cum-minister Peter Garrett faced questions from Emma Alberici about ALP election funding and his earlier claims that he had been handed a wad of cash at a Clubs NSW function. While, somewhat bizarrely, he now says his earlier recollection of that incident was mistaken, on Lateline he divulged that the ALP administers clubs, some of them pokies venues, to raise significant amounts of money for sitting politicians' election campaigns and candidates. One venue, the Randwick Labor Club in New South Wales, makes roughly $8 million a year, with $5 million coming from pokies.

While not news to many, the link between political fundraising and one of our most insidious forms of gambling—and one that frequently targets the poorest members of our communities—should shock the rest of us. A critical issue for any democratic political system is how it finances itself and how it funds the political activities of its participants and election aspirants. The instinctive response of most people is that these activities should be paid for by political parties themselves. If individuals or groups want to promote themselves or run for office, why should the cost of this be met by the taxpayer?

However, if these costs are met by political parties, consideration must be given to how they raise these funds. Our experience here in Australia demonstrates that, for the influential players in the political process, raising funds is not overly difficult. Last year the ALP and the LNP raised around $40 million each. Yet, as Mr Garrett's mea culpa on Lateline makes clear, it is worth questioning where this money comes from and what impact it has on the political process. This issue is fundamental to the integrity of our democracy.

While our political system has remained extraordinarily stable over a long period of time, recently there have been signs of stress. The recent change of leadership in the Liberal Party gave Australia its fifth Prime Minister in five years. What are we to make of this? One respected commentator, The Australian's Paul Kelly, argued recently that the leadership instability is indicative of a political system in crisis. He considers the system broken to such an extent that it no longer has the capacity to govern in the national interest. He thinks there is a crisis of confidence among Australian voters.

Various surveys of Australians' attitude to democracy appear to confirm this. In 2014 the Lowy Institute found that less than two thirds of Australians and less than half of 18- to 29-year-olds thought democracy was 'preferable to any other form of government'. Even more worryingly, nearly a quarter of young people thought that 'in some circumstances, a non-democratic government can be preferable'. When asked why they did not see democracy as the preferable form of government, more than two fifths of these respondents said this was because 'democracy only serves the interests of a few and not the majority of society'. Clearly we have a problem. Our parliament's legitimacy depends on it having the confidence of the Australian people.

There are obvious steps we can take to improve public confidence in the system and therefore fortify our democratic institutions. Probably the most obvious of these is to reform the regulatory framework that governs funding of our political parties. The situation described by Mr Garrett is unfortunately part of our contemporary system. It is also self-evident that this is a corrupting influence, preventing decisions from being taken in the national interest—at least, that is how it looks to the Australian people. Nor is this an affliction that bedevils just one side of politics. We have heard repeatedly over recent years of the largesse of donors to the ALP, the Liberal-Nationals parties and the Greens. What these donors expect in return is not hard to fathom. Certainly their motives are not philanthropic.

It is worth considering the way the issue is approached under corporate law, where, as is the case with politicians, company directors are expected to ignore their own personal interests when acting in the capacity of director. Occasionally situations arise when a company decision will impact personally on a director. When that happens, he or she is expected to step aside from the decision-making process. When it comes to corporate governance, the legislature and the courts have created a framework that removes the potentially corrupting influence of financial interests that may operate on directors when making a decision. With good reason, this is considered the best way to ensure that directors act in the interests of the company. Just as importantly, this rule promotes confidence among shareholders in their company directors, protecting against perceptions of bias.

The integrity of our boardrooms is important, the integrity of our elected officials more so. When parliament last sat I moved a motion for the Joint Standing Committee on Electoral Matters to inquire into the issue of election funding. This was co-sponsored by Senators Xenophon and Rhiannon, and I thank them for their support. The ALP indicated that they would support the motion. Ultimately, the government did not oppose it, and so it passed without the need for a vote. The inquiry will consider how much political parties are receiving from private donors and what influence this is having on the political process. It will also consider the approach taken in other democracies to regulate contributions from private donors or particular types of donors, with a view to their application here. No doubt the inquiry will be uncomfortable at times for the major parties, if the information divulged by Mr Garrett recently is anything to go by. But that is certainly not the point. The point is to effect real change in our political system to remove the unhealthy influence of big donors, among other things.

This has been tried previously. The last inquiry into these issues was only a few years back. Ultimately it achieved very little. There is a risk that history will repeat itself. This is certainly what the vested interests of corporate Australia, some unions and some activist groups would like to see. Indeed, many parliamentarians are loath to give up the honey pot on offer from their donors, happy to go on enjoying the lavish functions and hefty contributions to their campaign war chests. They may well see the continuation of the status quo to be in their interests. This is clearly in the interests of their donors, who would hate to see their access to and influence on the political process diminish or disappear. But it is sure as hell not in the national interest. That much is plain, and I can only ask that this remain at the forefront of the committee's mind as it undertakes its inquiry.