Labor at tail end of gravy train as power shifts

THE changing fortunes of Liberal and Labor at state level will have a profound effect on the political donations each major party receives.

THE changing fortunes of Liberal and Labor at state level will have a profound effect on the political donations each major party receives.

Labor is falling out of power around the country. It has already happened in Western Australia and Victoria. Come March next year it will certainly happen in NSW as well, and in Queensland polling suggests that when its election is due in early 2012, Anna Bligh will lose, if she even survives internally to contest the poll.

Throw in the fact that in Tasmania and South Australia as well as the two territories Labor is in power as a minority government or with a simple one-seat majority, and it isn't hard to see that Labor is at the end of its strong period of incumbency at state level.

Liberals in power in the three largest states as well as the resources states gives it ministers with power and influence business people - developers, gaming operators and the service industries in particular - will want access to. Even in states where donations rules restrict what business can offer, loopholes are easy to find.

That means more opportunities for conservatives to raise funds or receive donations. When the major parties hold their annual conferences, they include a business observers section for registration by third parties, wherein businessmen can pay to access time with ministers, for example. It's pretty much akin to buying time with a minister: a form of political prostitution.

As I am sure you can imagine, ministers fetch a higher price at these meetings than do shadow ministers (unless the shadow is on the verge of an election-winning chance to become a minister, of course).

Donations to major parties come in a number of forms: by businesses, individuals and trade unions. Obviously, union donations are only received by the Labor Party, not the Liberals, although the Greens have started to attract some union money as well.

As a result, unions accept that their interests are better served by Labor governments than by Liberal governments. The divide is clear, it's transparent and it's well known. It gives Liberals the PR advantage of painting Labor as beholden to the union bosses (because they are), while Labor gets the campaigning benefits of union money (which can be substantial).

Individuals tend to donate to particular political parties out of ideological reasoning. Such donations are more common in countries such as the US than they are here. I suspect that is partly dictated by a more politically motivated population in the US, and partly by the convergence of our major parties ideologically courtesy of our compulsory voting system, which makes donating to either side as an individual unappealing unless you are tribally involved with either party.

Compulsory voting leads major parties to scramble for the centre ground: voters who probably wouldn't bother to vote if it wasn't compulsory (remember that even in politically active nations like the US and Britain, voting turnouts are still only about 50 per cent).

Business donations are rarely based on ideology, rather self-interest is the guiding principle. Because business needs to be able to work with governments of all political stripes, it is increasingly either donating relatively equally to both sides, or not at all. That is unless one side has a clear mortgage on being in power, as Labor has had at a state level for so long now.

Nothing damages business opportunity like a hostile government. When you think about how important public policy setting are to so many aspects of what business does, it isn't hard to see why ensuring good relations with politicians is paramount.

That is one of the reasons it was such a big call by the mining industry to go to war with the Rudd government over its proposed 40 per cent super-profits tax. Don't forget, at the time the stoush started Kevin Rudd and Labor looked like they were cruising towards certain victory. That the miners were still willing to take the government on should have sent Rudd a signal that there was something amiss with his tax settings.

Attacks by the mining sector damaged Rudd personally and hurt Labor at the polls. It represented a win for the mining sector, which forced changes to the tax, but the approach was unusually heavy-handed.

Business generally prefers soft diplomacy through the giving of donations and the wining and dining that often goes hand in hand with it, rather than the hot-spot wars that a negative advertising campaign against government creates.

The loophole that can allow for one side to get more donations than the other is the already mentioned buying of time with ministers at observer functions or private roundtable dinners. And while much of the business community prefers to donate in equal measure to both major parties or not at all, where there is a disproportionate number of ministers and governments from one side of the major party divide, the register of political donations state by state shows the party in government does manage to raise more money from business than oppositions do, even if sometimes only by a little.

That's because not all businesses observe the emerging rule of donating equally to both sides.

That is one of the reasons state Labor governments have had so much more money to campaign in recent years than have their Liberal opponents. That has been the case for much of the past decade in most states, but the shift to state Liberal parties being in government should tip the advantage in favour of the conservatives over the coming decade.

Donations laws are being tightened, and it is hard not to be cynical about the motivations, causing Labor governments to support that move as they come to the tail end of their time in office. But that doesn't change the fact that limiting donations or ensuring that they are more transparent is an important way of preventing donations wagging the policy dog. But that's another issue altogether.