Party funding proposals

Parliament’s ad hoc committee on the funding of political parties has recently received numerous detailed submissions in support of its review of party funding.

Parties need resources to organise and educate citizens, formulate policy alternatives and campaign. But private donations create opportunities for corruption and influence buying. Donors can receive licences and concessions, selective policy advantages, or public sector contracts. Meanwhile, rich parties can dominate election campaigns. The international trend has been towards greater or exclusive public funding of parties, transparency of donations, and heavier regulation of expenditures.

After a decade of foot-dragging, the ANC has finally initiated a reform process. Its own submission last week calls for heavier regulation, donation caps, transparency and spending to promote participation and democracy.

Parties that agree to regulation and disclosure will be compensated by increased public support.

It will also consider bans on donations by party-or state-owned companies and multinationals.

The ANC document has many merits. It recognises the advantages of greater openness and acknowledges the needs of smaller parties and new entrants. It accepts opposition parties’ fear that disclosure will drive donors away or underground.

Nevertheless, opposition MPs will need to keep their wits about them if they are not to be disadvantaged by new legislation.

First, international experience points to the dangers of evasion and selective regulation. When donations are banned or capped, they turn into “loans”, are hidden in commercial deals or opaque legal trusts, or are packaged to fall under thresholds.

Disclosure also encourages donors to divert funds to political foundations or other party-aligned institutions in civil society: interest groups, NGOs and partisan newspapers.

Such practices encourage intrusive regulation of targeted political parties and civil society organisations. Factions within governing parties, moreover, inevitably try to penetrate regulatory institutions — even those deemed independent, such as the electoral commission.

Regulation must be nondiscretionary to reduce partisan and factional bias.

Second, it is desirable to ban donations from state and foreign corporations, but such controls can be circumvented fairly easily. Transfers from parastatals to ANC vehicles — for example from Eskom to Chancellor House — demonstrates just how simple this can be if a party is sufficiently brazen.

Third, state elections are often dwarfed by intraparty elections. Money should not be allowed simply to migrate from regulated contests to unregulated ones within parties. But how can this be done without destroying party independence?

Fourth, most parties in SA oblige their elected representatives to donate a share of their salaries to the party — ANC treasurer-general Zweli Mkhize has tried to extend this “tithing” to purportedly nonpartisan directors-general. This practice is widespread in provincial governments and provides a major advantage to governing parties.

Finally, public funding increases are no panacea. There is already more than R1bn of public funding in SA annually. The Represented Political Parties’ Fund distributes more than R135m, and Parliament appropriates R530m to support ill-defined caucus and constituency activities.

Some ANC-governed provinces dole out R630m for party and constituency activities. Order should be brought to this chaos before increases in public funding are even considered.

Opposition parties and the ANC have an interest in bringing monetised politics under better control. There is a need for a regulatory and legal framework that is fair, robust, and resistant to manipulation.

• Butler teaches public policy at the University of Cape Town.

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