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PoliticsOctober 27, 2018

The case for anonymous political donations

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In the aftermath of the Jami-Lee Ross saga many have called for increased transparency around political donations, saying it’s better for a healthy democracy. But what if that’s completely backwards? Liam Hehir makes a case for mandatory anonymity. 

One thing the Jami-Lee Ross saga has stirred up is the issue of political finance in this country. He has accused Simon Bridges of complicity in avoiding donor disclosure rules. While the claim remains unsubstantiated, police have confirmed they are looking into the matter.

We will have to wait and see what happens.

Whatever happens, the question of donor influence has been asked again and the usual answers have been supplied. The prime minister would like further taxpayer funding for party political operations.

The problems with even greater levels of public funding for political parties have been ably summarised by Bryce Edwards here. I’d also commend Geoff Simmons’ contribution on the subject as well.

What’s rarely questioned, however, is whether the compulsory disclosure of donations is a good idea at all. We just take it for granted that it serves democracy to know who is funding politicians. But what if we’re looking at things backwards?

Requiring disclosure for political donations is an inherently intrusive act. If people want to use their own money to support a cause they care about, that’s really their business. Requiring them to disclose it is an invasion of their privacy that would be intolerable in most other circumstances.

Furthermore, public exposure can limit support for unpopular, but just, causes. Laws requiring disclosure were used to intimidate opponents of Jim Crow in the American South, for example. Whether people like it or not, there is a free speech issue involved.

And yet there is a countervailing need to protect the integrity of our public processes. If people are buying influence with our political masters, we have an interest in knowing about it. Disclosure laws, in theory, allow voters to make a more informed decision about what they may be getting for their vote.

So what if there was a way to square the circle? If we reject transparency and embrace opacity, we might just be able to do that. But it would need to be an impenetrable opacity.

In a 2001 paper, Yale Law School’s Ian Ayers suggested a regime of mandatory anonymity. You can read the paper here. The short version, however, goes something like this:

  • All parties would establish a blind trust with a suitable trustee (here, the Public Trust could serve in this role);
  • Parties (and candidates) would be forbidden from accepting donations directly, which would have to be made to the trustee instead;
  • The trustee would be forbidden from disclosing the identity of donors to anyone; and

Crucially, the trustees would only be permitted to report (at regular intervals) the total amount of donations received – not any individual amounts.

The essential idea is that parties and candidates would not be in a position to know to whom they owed favours.

So what if a donor tipped off the party? Ayers agreed this was possible – but saw it as another feature of the system. Since a claimed donation could never be verified, this would only add to the confusion on the part of the campaign. You can guarantee you’d soon get plenty of false claims and insinuations about being a major donor.

This system is not perfect. What is? The principles on which it is based are sound, however. There would need to be further adaptations for local conditions and plenty of kinks to work out.

But that’s what working groups are for, right?

Keep going!