David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

The Manchurian Candidate, the story of a cunning foreign power pulling the strings of domestic political affairs, is a work of fiction. But there seem to be a lot of people who have watched the movie and thought it was a documentary. They imagine foreign bad guys seeking to control Australian politics through their political donations. The truth is a whole lot more boring. There is no reason to believe any problem will be solved by prohibiting foreign donations. It is pretty unlikely there is even a problem. A ban on foreign donations is a solution in search of a problem. Regulating just because something sounds bad, without knowing whether it is, is profoundly wrong.

The Joint Standing Committee on Electoral Matters recently recommended banning foreign donations. However, it left some key questions unanswered. For example, how should a foreign donation be defined? Is it a donation from a foreign entity—that is, a person or organisation that is not Australian? What about permanent residents? What about domestic branches of foreign entities? International environmental groups have local branches and local members. International businesses have local subsidiaries and local shareholders. Then there is compliance. How could an independent candidate or minor party possibly know whether their small donors are Australian citizens or companies? And what about an Aussie who sources funds from overseas before donating them to an Australian political party?

The fact is also that foreign donations are insignificant. To the extent there is any data, it shows that foreign donations typically account for only about one per cent of all the funds Australian political parties receive. The committee heard no evidence to validate its claim that there was any significant community concern about foreign donations. Not a single instance of a foreign player using donations to influence domestic policy was heard. No witness even outlined how foreign donations could influence domestic policy.

The committee heard from an organisation called International IDEA, a group that monitors political transparency issues internationally. It explained that there are many countries that do restrict or prohibit foreign donations. However, the group acknowledged there is a lack of correlation between political corruption and regulation of foreign donations. Quite simply, the evidence does not show that restricting foreign donations reduces corruption.

Most of those seeking to prohibit political donations prefer public funding of political parties. Support for increased public funding is inherent in arguments to restrict avenues for private donations. However, the committee heard neither a theoretical argument for suggesting democracy is enhanced by public funding nor empirical evidence confirming such an outcome is achieved.

There is a better way. What is needed is for voters to be aware of donations before they vote, so they can take them into account when deciding how to vote. If voters are indifferent to donations, voting outcomes will not be affected and the fact of the donation is irrelevant. If voters disapprove of any particular source or type of donations, they can take this into account when they vote. It is supremely patronising, and reflects nanny-state thinking, for governments to assume voters are incapable of deciding for themselves whether a recipient of a donation deserves their support.

It is also inherently antidemocratic. If voters are assumed to lack the competence to form a judgement about foreign donations, it follows that they must also lack the competence to form a judgement about party policies generally. Democracy simply requires voters to be adequately informed. Disclosure of donations should occur in an appropriate time prior to voters casting their vote. The only regulation that would assist this is to prohibit donations made so close to the poll that they cannot be disclosed in time.