Political parties are funded through membership subscriptions and donations with donations forming the dominant funding source.  While the persons or businesses contributing large donations are required by law to be publicly identified, recent history shows there are mechanisms available that allow this requirement to be circumvented.

The potential for sizeable donations to enable some parties greater access to our politicians or exercise undue influence over our political process is a real risk. 

The reliance on donations to fund politics can also be inherently more favourable to those parties generally considered to be more pro-business and preservation of the status quo.  The reliance on donations to fund political activity may also have the effect of skewing policy development towards areas that are likely to generate donations rather than the development of policies that benefit the wider economy and society. 

Some form of public funding mechanism of the political process creates opportunity for enhanced voter involvement and the opportunity for voters to effectively control the democratic process. 

Financing politics

• Should political parties be entirely publicly funded?

Public funding options

The establishment of a purely publicly funded political process, if imaginatively constructed, has a range of substantial benefits beyond simply removing the risk of donors buying influence.   Parliament could set an annual budget for the aggregate cost of funding the nation’s political processes.  This budget could be apportioned on the basis of votes gained by each registered political party however democracy might be much enhanced if the allocation was undertaken on an annual basis by the nation’s voters.  The voters after all are the community the parties are meant to be representing and acting on behalf of and  by having an annual voter allocation of funds to political parties the voters are purchasing a service from the elected members. 

Under this funding model registered voters are each able to allocate a share of the public funding each year to one or more registered political parties – effectively this is a pay as you go process for politics – this has a number of benefits, the most important is that it provides voters with what would in effect be an annual review of the various political parties performance and policies.  This would greatly empower voters and substantially enhance voter engagement in our democratic processes.  The funding would not need to be allocated on the basis of sitting members of parliament but would be able to be allocated to any registered political party.

Having voter control of political party finances is the most direct way of maintaining democratic control of political parties – a longer parliamentary term could be managed effectively with such a direct feedback mechanism.

The other benefit is that such a mechanism would do much to increase public engagement with the processes of democracy. 

It is probable that because not all registered voters would participate in this allocation process the funding would need to be allocated on proportionate basis. 

The taxpayer funded component could be augmented by a membership fee that is prescribed to be standard across all political parties and that parties may not derive either direct or indirect funding from any other source. 

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