The general public might be forgiven for thinking that because we get very few stories about political donations and corruption in Federal politics that there must not be a problem. However, delving into the political donations disclosure data gives an entirely different perspective.

The nature of our political disclosures is so poor it is very difficult to analyse it and develop any meaningful perspective on what is going on. I suspect the reason public debate on this issue is thin on the ground is because it is so difficult to develop a picture of what is going on.

I have spent several weeks holed up with massive spreadsheets trying to get some sense of what the political donations landscape looks like.

Here is the trend data for the two parties, and their differing types of income over the last 10 years.

These totals refer to the ‘Liberal Party Group’ and ‘Labor Party Group’ as identified on the AEC website, so it is the combined total  of all the Liberal Party Branches, and all the Labor Party Branches.  This is the most accurate way to get a picture of what is going on because the parties jurisdiction shop and shuffle money between branches.
* Donations – are officially declared gifts to the parties
* Other Reciepts – all other income received by the parties above the $13,200 threshold
* Undisclosed Income = (Total Income reported to AEC) – (Donations + Other Reciepts + Public Funding)
It presumably refers to receipts that are below the $13,200 threshold. Recall that jurisdiction shopping and donation splitting can hide quite large donations this way.)
* Public funding – Includes income from Electoral Commissions, Tax Office, Dept of Finance

Different Financial Position of Two Parties

The first thing to note is the differing financial health of the two parties.  Labor’s income has been in steady decline in the last decade while the Liberal Party’s is growing.  The Liberals have a decisive financial advantage.

These trends in the parties financial positions are consistent with findings of a 2008 study by Ian McMenamin(1) that found big business tended to split their donations 50:50 between the parties when Labor was in power or on the verge of winning, but that they split their donations 90:10 in favour of the Coalition when they were in power. We can see that the parties received similar amounts on the eve of the 2007 election that swept Kevin Rudd to power, however as Labor’s political fortunes have declined so have their donations.

McMenamin concluded that this giving pattern reflected that donations were driven in part by paying for access to power, hence their preparedness to pay Labor when they were in power. However it also reflected a strong ideological belief that the Coalition would advance the interests of big business more than Labor, and a desire to enhance the political fortunes of the Coalition.

Most Payments to Parties are Not Declared as Donations

The second important observation is that ‘declared donations’ make up quite a small part of the parties incomes. The vast bulk of payments being made to the parties are not being declared as donations. The majority of payments are being labelled as ‘other reciepts’ or they are going entirely undisclosed.

The undisclosed payments are presumably because they are coming in under the $13,200 threshold.  The use of donation splitting, whereby donors break their donations into smaller amounts and give them to different jurisdictions, means that quite substantial donations can be hidden under these thresholds.

Nonetheless, the data makes it very clear that the declared donations tell us very little about who is actually paying our political parties.

(1) McMenamin, I., 2008. Business, Politics and Money in Australia: Testing Economic, Political and Ideological Explanations. Australian Journal of Political Science, 43(May 2014), pp.377–393.