Campaign finance reform restricts liberal democracy

My CIS paper Democracy and Money, released yesterday, describes the many ways in which private political money is now regulated by Australian governments: not just longstanding donations disclosure requirements but also caps on donations and campaign expenditure in NSW and Queensland, and bans on some donors in NSW.

It’s easy to get lost in the legal detail of campaign finance law, and to lose sight of the broader philosophical issues about how a liberal democracy should operate.

Underlying campaign finance regulation is an implicit assumption that politicians would act in the public interest, if only they experienced less pressure from interest groups, which corrupt the political process through donations to political parties and campaigns on their issues. Democracy and Money questions this assumption.

We all have our own views on what constitutes the public interest, but these are often not shared by other people. Opponents of the Gillard government’s carbon tax are often dismissed as vested interests, but its critics say they represent the legitimate interests of people working in carbon-intensive industries and the broader economic interests of Australians in opposing a tax that could damage the economy without helping the environment.

Which perspective is right? The democratic political process exists to decide this question; neither perspective in a liberal democracy should be able to declare themselves right and suppress expression of contrary views. The insider ‘political class’ does not have unique insights into the public interest that are entitled to go without major challenge from others.

Yet effectively that is what campaign finance regulation does. In NSW and Queensland, there are now limits on how much any organisation except the government itself can spend campaigning on issues. Especially in Queensland, the limits are so low that major campaigns are impossible.

Limiting public criticism and accountability through campaign finance regulation puts too much trust in politicians’ good judgment. We should continue to decide what is in the public interest through unrestricted political activity, with no second-guessing by politicians as to who can participate or how much they can spend.

Andrew Norton is a Research Fellow at The Centre for Independent Studies. His paper Democracy and Money: The Dangers of Campaign Finance Reform was released this week. Click here to watch a short video of Andrew discussing his paper.