Political Donations and the Destruction of Democratic Scrutiny

13 January 2015
Paper

Corporations donate to both sides of politics to ensure sympathetic policies to them. When both major parties share a policy stance it is effectively removed from democratic scrutiny.

Abstract

Many corporations donate to both sides of politics. One of the reasons they do this is to ensure both major parties in an election have sympathetic policies. When both major parties share a policy stance it is effectively removed from democratic scrutiny. The focus of political campaigns and media interest is on areas of policy conflict, the rest is passed over in silence. Corporations often purchase political silence in order to avoid scrutiny of unpopular activities, such as junk food advertising targetting children or the exploitation of gambling addiction.

Corporations don’t give their money away for nothing. There is an understanding (rarely made explicit) that large campaign donations buy political access and favourable consideration in policy development and legislation. Why else would a corporation, which is bound by law to pursue profits, make these donations?

Interestingly, many businesses give money to both sides of the narrow political divide; sometimes different amounts, sometimes exactly the same amount. In the lead up to the 2013 federal election in Australia, for example, Inghams gave the opposing Labor and Liberal parties each $250,000, Westfield gave them each $150,000 and ANZ gave them each $80,000.

By my count, over one third of donors (excluding individuals) gave to both the coalition and Labor during 2012/13. This is not unique to Australia but occurs in all democracies. For example, in the Unites States, a Center for Responsive Politics analysis found that 48 out of the 100 biggest non-individual donors to gubernatorial election campaigns donate to both sides.

Donating equally to both sides is clearly not about helping one side win. It’s an implied threat: “if you don’t treat us well we’ll give you less and they’ll be ahead.” When both major parties have the same policy on an issue, it effectively removes that issue from democratic scrutiny. This is the aim of many political donations from businesses who stand to lose from policy changes that would be popular with the electorate. Only areas of difference between contenders end up being discussion points during elections, the rest is passed over in silence.

Such a big deal is made out of the few policy differences between major parties that during campaigns they can appear to be poles apart. However, the main contenders in most developed democracies are actually very closely aligned with respect to political ideology and policy – particularly economic policy.