Proposals for funding reform

I’m not in agreement with the suggestions in the The Irish Times editorial today for improving – in terms of reducing corruption and improving transparency – how our political system is funded. The leader writer is rowing in behind the Director of Public Prosecutions, James Hamilton’s recent comments. I quote today’s piece…

Some senior politicians still defend private sector political funding, even though it contains within it the seeds of corruption. They argue it is an important element in a participatory democracy. Invariably, they insist no favours are provided in return for such unprompted largesse. That self-serving bluster no longer carries any conviction, particularly in relation to planning matters, where the money trail has been easily identified. It is time to make a clean cut with the past.

When Director of Public Prosecutions James Hamilton warns that political corruption will continue for so long as there is private financing of political parties, what remains to be said? Do our politicians favour a continuation of dubious practices? After all, the State now provides alternative and generous funding for the political process. There was never a better time for comprehensive reform.

I’m inherently wary of suggestions that the State get involved in funding politics. As a firm believer in the value of diversity of viewpoints it irks me to think someone in the pay of the State would be deciding who gets what funding when. No matter how independent the office deciding the allocation, it won’t be independent enough. The possibility of tiered political system emerging also worries me.

I also struggle to understand how those in favour of a publicly funded system can disassociate private from public when looking at corruption. By its nature corruption requires some form of State facilitation – whether that be council officials signing off on dodgey rezoning or senior civil servants not speaking out against corrupt decisions of a minister – so removing the private element from political funding will not necessarily remove, or perhaps even greatly reduce, the levels of corruption.

Anyway, in theory our current system represents best international practice, it’s just – like a lot of things ’round these here parts – really poorly implemented. It’s good that under our system it’s publicly disclosed when someone donates more than a specific amount to one party over one year. The problem is the specific amount – €5,079 – is far too high. It’s also good there is a higher limit for the amount an individual can donate to one party, the problem is this upper limit is far too close to the disclosure figure. The maximum donation to a party of €6,348 is just €1269 from the disclosure limit (aforementioned €5,079), so only the top percentile of donations are many public. One move to increase the transparency of our donations system would be to significantly reduce this disclosure threshold.

A similar process is in place for donations to individuals. To begin with, politicians must only open a bank account specifically for political donations after they receive a donation exceeding €126.97. This is a foolish system because it means they can take multiple donations from one person (thereby bypassed the €6,348 limit mentioned earlier) without having to declare a penny. The result of this is that several high profile politicians – Michael Lowry, Bertie Ahern, Roisin Shorthall, Enda Kenny, Dermot Ahern, Leo Varadkar and Mary Harney among them according to my research – have no political donations account. By forcing politicians to open an account once they declare they will be running for office we could take another step forward.

One oddity of the current system for donations to individuals is related to declaration thresholds. Despite being obliged to open an account once they receive a donation exceeding €126.97, politicians don’t have to declare full details of any donations less than €643.97 to the Standards in Public Office Commission. This means the bank account, for the purposes of transparency, is effectively useless unless a donation exceeding €643.97 is made. Reducing the declaration threshold from €643.97 to €126.97 while ensuring all transactions below the lower figure are on record anonymously would be beneficial to the transparency of the funding process. This would mean the public could inspect the credit and debit side of the donations account upon declaration and see if there were excessive amounts of donations made for more than, say, €100. If this was the case and SIPO suspected several of these may have come from one individual, SIPO should have the right to inspect the account in detail.

Of course a significant increase in the level penalties imposed against those who breach the above would also be warranted also. That almost goes without saying.

The most important step the State could take towards a truly functional and transparent donations system would be forcing all political parties to make full income and expenditure statements available for public inspection. When I write on this subject I constantly revert to the figures quoted by Elaine Byrne

… the €10.1 million spent by parties and candidates in the obligatory three-week accounting period before the 2007 general election (never mind that spent in the previous two years!) just €1.3 million was disclosed to the standards commission.

That’s €8.8 million in donations that were not disclosed.

Graph 1 more or less bottoms out after 2002. Fine Gael has returned a nil disclosure to the standards commission since 2001. So too have the Progressive Democrats since 2003. The donation statements of the Labour Party, Green Party, Sinn Féin and the Socialist Party are almost entirely composed of donations from the salaries of elected representatives. This robbing Peter to pay Paul system, where political representatives fund their own political party, is a short-term unhealthy method of financing democracy.

Money received from the party leaders’ allowance and under the Electoral Act is not permitted for election purposes. So where did the undisclosed €8.8 million come from to fund the 2007 election?

The obligatory accounting period should be extended to from the day the party registers with SIPO to the end it ceases to exist, not a day shorter.

The proposal that the State get involved in political funding is unnecessary. The issue is not the current system, it’s with how that system is implemented. Yes it badly needs to be fixed but jumping from a system in need of repair to a wholly different, largely untested, one is not going to be beneficial. Especially when under the proposed new system political entities could – by osmosis, influence or otherwise – effect how another political entity is funded.

We’d be much better off taking a look at how we do things now than attempting to change everything about how politics in this country is funded. It’d be like scrapping an old Merc when a good spit-polish (okay, maybe a proper expensive multi-layer turtle wax and several valet cleaning jobs) would make it a vintage motor.

Footnote: Vincent Browne’s column deals with the same issues, he agree with the DPP and Times editorial. He’s right to draw attention to the relationship between Fianna Fáil and developers.  The advertising income he notes is relevant but that such income is available to a party while not defined as a donation is a problem with how the current system is implemented, not a reason to scrap the system. I’d propose that all income to party above the €126.97 threshold be defined as a donation no matter its purpose, thus parties could not “double-donate” for want of a better phrase. Upper limits could then be set as per the purpose of the donation (advertising or otherwise). Mr Browne is describing an inadequacy in the system’s design not a fatal one.

Footnote II: Yes, I’ve become somewhat less radicalised.

6 thoughts on “Proposals for funding reform”

  1. Another source for all this was Olivia O’Leary’s Drivetime radio column yesterday (Tuesday 04/05/10, for posterity). She made the point that publicly funded would automatically mean less money – therefore less consultants, less focus groups, perhaps less stampeding for the centre and pandering to short-termism.
    Which would be nice. (“,)

  2. Currently State funding is not enormous. Registered parties that get 2 per cent or more of first preference votes get funding. Each party gets c. €125,000, plus a share of a pool of cash (max. €3.8 million) based on the number of first preference votes each party gets.

    So, if 2 million people vote, each first preference vote cast is the equivalent of directing €1.90 towards the voter’s most preferred party. I think that’s reasonably democratic. It would be more democratic if people knew that their first preference was also used as a ‘funding vote’.

    Source: http://www.sipo.gov.ie/en/Guidelines/StateFinancing/GuidelinesforPoliticalPartiesonExchequerfundingundertheElectoralActsMarch2009edition

    1. Thanks for the reply Nat, apols for the delay in response.

      Agreed, at present State funding is small. I agree it’s reasonably democratic, but I’m averse to a system where the only funding comes from the State. Also, thinking about it now, when considering almost €4m of taxpayers money goes to political parties, all the more reason they should be obliged to publish accounts. I think it would also lead to a consistently reinforced status quo. “Radical” would get less and less of a look-in.

  3. does paying the printing bill for a politicians election posters-for example-have to be recorded as a political donation?
    or writing lots of small cheques and paying with them?
    There will always be a ruse or a dodge or a stratagem to avoid disclosure unless every penny has to be accounted for.

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