IF Australia’s governments are conceived as being there for all taxpayers, how can net tax recipients like subsidised corporations, have more say than the voters? And why are politicians so frequently found to be working against taxpayer interests?

What’s this ear

Given the escalating costs of political campaigning, for parties to be able to afford to get into government, substantial party donations are essential. To attract donations, the entire party revenue collection system must rely on the donors’ belief that a donation will get some result – i.e. that when the donor recipients get into government, the deals made will be fulfilled without equivocation.

In Australia, corporates and unions make substantial donations to political parties, which buys them the ear of government if the party gets into power, but this also means that our parties come to office with some heavy baggage that they dare not drop.

When the needs of political party donors conflict with taxpayer interests, our polity works hard to find ways to either ignore, or overcome, taxpayer objections. A government that went against a previously made deal would risk losing the trust of other donors and consequently may become unable to raise campaign funding.

As a consequence, governments become ‘rigid’ in particular areas, and unable to respond effectively to taxpayer concerns, not because governments don’t care but because they are compromised by their party’s revenue collection deals.

This entire situation is undiscussable because it flies in the face of party claims like equal treatment, fairness and honesty.

Our method of campaign/party funding creates an environment where corporate and other donors have more influence than taxpayers, even to the extent of ignoring threats to taxpayers created by donor projects or activities.

When donors are in receipt of substantial taxpayer subsidies then their party donations can be regarded as taxpayer money laundered through an external group. If political parties perceive that donations increase according to subsidies provided, then higher subsidies will be seen to lead to higher donations. Therefore our system teaches political parties that there is a direct connection between supporting large donors and getting into power, and that subsidy increases are ‘good’ for the party.

With a party revenue system that works this way, it’s easy to see how the activities of corporates drift out of taxpayer control, and why politicians try to obscure taxpayers’ powerlessness with diversions and excuses. The politicians see their actions as ‘pragmatic’ or ‘realistic’ while taxpayers would see them as a betrayal of democracy and dishonest.

Given all of this, it’s easy to see how a corporation can become a net tax receiver and how such corporates can gain more say about how taxes are deployed than those who actually pay the taxes.

These party donation systems lead inexorably to:

• Large parties dominate because they can attract large donations
• Taxpayers being ignored or marginalised when their needs conflict with donor desires
• PAYE taxpayers subsidising large, cashed up corporates
• A tax system organised to favour particular industries
• Ignoring environmental and other damage created by donor activities
• Small parties being able to get the funding to get into government
• Honesty and ethical behaviour giving way to ‘pragmatism’

In this way, ‘good at politics’ has come to mean ‘satisfying donors needs while still gaining electoral support’. This translates out to ‘being able to articulate a plausible network of deceptions that conceal what’s really going on’.

In this light, John Howard can be seen as a man who ended up with so much baggage that he could no longer meet voter requirements.

A few stories from the media illustrate the points.

‘Political donations ‘part of doing business’ in NSW’ was reported by ABC recently (1) and revealed that property developers paid hundreds of thousands of dollars in donations to the NSW Labor party.

Another report (2) reveals that the NSW auditor is investigating money ‘laundering’ where $700,000 provided by the state government to the TWU was quickly returned to Labor party election candidates. Four Corners fleshed out some details of the NSW situation (3) in a more comprehensive report. Labor has been reported give profits priority, for example ‘Qld government puts profits before people in lead case’ (4) shows how lead poisoning in children was apparently ignored by authorities in Mount Isa.

When coupled with Australia’s defamation laws, which are infamous for protecting the guilty (real evidence is no defence in defamation suits) (5), our feeble whistleblower protection (6), the ability to launder tax money through external groups and the opacity of party donations, all these conspire to place taxpayers at risk of being cheated wholesale by their own governments.

Polity quality

The clear implication of this system is that to be successful, politicians must give a sincere impression of caring for voters, be able to persuade voters that the results of covert funding deals are ‘good’, and be able to keep a straight face while trotting all this stuff out. Simply put, our politicians need to be, or become, plausible hypocrites in order to survive and prosper in the major parties.

It’s clear that any person who stays long term in our major parties is likely to be both venal and compromised. Ethical and/or moral people are likely to be repelled by the ‘political realities’ of the big parties, and are also unlikely to be welcome in a system that requires politicians to argue for deals done in the backroom while publicly maintaining that the deal is in the interests of the taxpayer.

Hence ethical and honest operators will flow to smaller parties that are unlikely to ever get into power because they’ll never get the funding to mount a competitive campaign.

In short, Australia’s system institutionalises corruption. (corruption is any condition in which a system is caused to work against its own purposes, goals or survival).

Electoral liabilities and assets

A outcome of our political system is to take taxpayer monies and resources and deliver them to corporate (and union?) interests, while plausibly describing the action as good for taxpayers. The political party carries out focus groups and research designed to help state some message that will appeal to voters – e.g. ‘jobs’ and ‘economy’. If saying it once doesn’t work, they can always say the word 3 times for triple the impact.

Howard crippled working family budgets by cracking a 10% GST on nearly everything while the Labor states did nothing to deliver compensating reductions. Put a different way, federal and state governments colluded to increase their income at the expense of taxpayers.

With huge new costs created by government charges (e.g. tertiary education, health care, power, water, rate increases) lower income households have their diminishing budgets stretched beyond limit. Households who want to buy essentials, like petrol and food, are faced with further price increases that force them into more and more debt.

The high overall tax/charges burden is a major factor pushing people into debt with its new load of interest payments. In addition, the costs created by increasing government charges and sweeping service reductions is biting deeper into discretionary budgets.

Big bikkies

Howard’s $3.5 billion in concessions (e.g. see Get Up’s biscuits campaign), subsidies and so on to the fossil fuel, automotive, airline and forestry industry in 2007 represented around $175 for each and every person in Australia.

Could working families put that money to better use?

If we distributed just that $3.5 bn to the bottom 20% of income earners, they’d get $875 per person. Families would get $1800 per year or more.

Would that get more electoral support than giving it to corporates? Would it represent a ‘fairer go’? Is it more socially inclusive?

To create useful governance change we need to review how our governments should serve taxpayers. Actual services need to be amalgamated around taxpayer (client) requirements instead of around backroom deals. Public service incentives should be focussed on outcomes for taxpayers, while priorities should be organised around taxpayer valued services.

In Australia, the taxpayer pays for the design and building of a car park, then pays to operate it then must pay again to use it. This is a spiral of ever increasing costs. More government – more costs – higher taxes – increased hardship – increased debt – smaller household budgets etc.

Unless our polity starts to get serious about real change, we’re going to be overwhelmed by problems like fuel prices, food availability, drought and climate change. We won’t be able to respond because backroom deals have removed our governments’ flexibility to engage in real change.

Someone asked this question: “Is it possible that the Tasmanian Premier was complicit in a plot to benefit one industry by duping taxpayers and decision makers into accepting a mill that could create severe damage?”

I think it’s a pretty easy question to answer.

When the system is corrupt, the people will follow.

Watch this space.

Mike Bolan
Mike is a complex systems consultant, change facilitator and executive and management coach.

(1) http://www.abc.net.au/news/stories/2008/04/14/2215623.htm
(2) http://www.abc.net.au/news/stories/2008/04/11/2214101.htm?section=justin
(3) http://www.abc.net.au/4corners/content/2008/s2214216.htm
(4) http://www.abc.net.au/news/stories/2008/04/14/2215622.htm
(5) http://www.uow.edu.au/arts/sts/bmartin/dissent/documents/defamation.html
(6) http://www.uow.edu.au/arts/sts/bmartin/pubs/03utslr.html

Mike Bolan

The high overall tax/charges burden is a major factor pushing people into debt with its new load of interest payments. In addition, the costs created by increasing government charges and sweeping service reductions is biting deeper into discretionary budgets.