Should political donations from industries which sell harmful products, and then lobby governments vigorously to give them favourable regulation, be banned?
It’s a common scene in Australian politics, indeed worldwide. A major political party holds a fundraising event. Industry representatives and their lobbyists pay an exaggerated amount – say, $10,000 a table – to sit and eat for an hour. They’re not there for the food. Also at the table are ministers or shadow ministers and their chief advisers. Compliments, cards and contacts are exchanged.
Everyone present knows that substantial sums of money have changed hands – but no-one needs to mention the ugly specifics. The politicians and advisers may even find the work distasteful, but they know that their future jobs depend on the constant flow of money into their party HQ to pay for election campaigns.
It’s not that any business has just paid $10k for a specific policy decision – oh, of course not, that would be corrupt! It’s more subtle than that. It’s about creating a background sense of obligation from the politicians and their team to these industry lobbyists. They will call, and meet, again – often. Often the influence of lobbyists takes the form not so much of asking for tangible public gifts, but of repeatedly blocking proposed public-interest regulation relating to health and safety.
In 2018 the independent Grattan Institute identified something interesting about industry donations, lobbying and meetings with ministers. The donor businesses weren’t spread evenly across all of Australia’s business sectors. It was the ‘highly regulated’ sectors, those with the most to gain or lose commercially from policy decisions, paying the most to try to influence those decisions.
Helping out political-donor industries with favourable regulatory decisions is not inherently ‘good for the economy’ overall. In fact, the Grattan Institute’s conclusion on the economics of this culture was blunt:
“Organised attempts to influence policy can create windfall gains for some, at the expense of others. Economists call this ‘rent-seeking’: when businesses try to influence government decisions to boost their wealth but not wealth overall.” (2018 report, p.8-9)
Governments are meant to protect community wellbeing. But the regulatory distortions these industries ‘purchase’ from governments can seriously harm the public’s health.
The list of business sectors which the Grattan report identifies as ‘highly regulated’ include sectors of particular concern in relation to public health, such as tobacco, alcohol, food, mining-resource and gambling. Two decades of reports published by federal, state and territory electoral commissions confirm these sectors as big political donors. (The published reports are notoriously difficult to aggregate and analyze, but that’s another story altogether).
The tobacco industry, perhaps more than any other commercial business sector worldwide, engages in conduct that justifies governments in imposing regulation in the interests of the public health and wellbeing. The tobacco sector is directly responsible for the single greatest burden of harm to humanity, measured in economic terms, exceeding the impacts of other burdens including obesity, alcoholism, and even ‘armed violence, war and terrorism’.
(From McKinsey Global Institute, Overcoming Obesity, an Initial Economic Analysis, 2014)
In the course of decades of opposing public health regulation of smoking manufacture and distribution, the industry has accordingly been one of the most active of all business sectors worldwide in political lobbying, granting donations to political parties and candidates, spending on political advertising, and engaging in actual bribery and corruption.
Tobacco industry donations to political parties have accordingly been highly controversial, and have increasingly come to be seen as unacceptably damaging to political parties which receive them. In Australia, the Labor Party voluntarily ceased accepting tobacco industry donations from the 2004-05 reporting year, and the Liberal Party did likewise from the 2014-15 year onwards. However the work of the tobacco and associated ‘vaping’ sectors can still be seen in the recent trend for Coalition backbench MPs (and some others) to work to forestall regulation of newly introduced vaping products, many of which contain nicotine.
The alcohol industry, together with the business sectors engaging in the retail sale of alcohol, are also major lobbyists and significant political donors. The alcohol regulatory landscape is characterised by continual efforts by these sectors to prevent improvements in public health policy and regulation, and indeed to influence governments to allow an even less regulated marketplace for the sale of unhealthy products to vulnerable consumers. Just last week alcohol lobbyists worked feverishly to prevent pregnancy warning labels on alcohol containers from being improved, as an independent assessment had recommended. Policy debates over alcohol issues forms one of PHAA’s more active areas of interaction with state and territory governments and parliaments, as demonstrated by our submission history on this subject.
Another industry of high public health concern is the gambling sector, which is responsible for a very serious burden of harm in terms of financial loss, family breakdown, and loss of mental health and wellbeing, particularly impacting on low-income households. Recent cases of gambling industry influence to prevent public health measures include the opposition to the Gillard Government reform policy in 2010-12, and the influence seen at the last Tasmanian state election in 2018. There is also a present debate over the terms of a ‘reopening’ of gaming machine operation as COVID-19 restrictions ease, which raises questions not only of communicable disease transmission to customers and staff in gaming venues, but also of the underlying health and social risks of gaming machines themselves.
The pharmaceuticals sector is one of the largest of all political influencers worldwide. In Australia the sector has relatively less visible impact than in other nations, due to the existence of our national process for Commonwealth Government subsidisation of pharmaceuticals, and the independent processes of expert consideration of any changes in Pharmaceutical Benefits Scheme (PBS) listed drugs. Lobbying or influence-wielding to affect PBS decisions on specific drugs is relatively difficult for business compared to their influence activities in many other nations.
It should be noted that the products of the pharmaceutical industry – unlike the tobacco, alcohol and gambling industries – contribute to improved health outcomes overall. Nonetheless, so large is the PBS system’s expenditure that many key policy and budgetary decisions are referred to Cabinet and Budget processes for final decision, opening up the potential for political influence to have a major impact. So great is the potential industry profit from favourable policy decisions that the pressure upon federal government decision-makers will remain very great, making this another industry where prohibiting all financial relations with political parties is appropriate.
State parliaments – led by NSW and Queensland – have started in the last few years to ban some highly-regulated sectors from making political donations. But at the federal level, Parliament has so far failed to act, and indeed proposed government changes to existing legislation would actually immunise federal political party operations from the newer state laws.
But there is support for reform in Parliament: independents, the Greens and Labor are supporting stronger disclosure laws, and the Greens have proposed banning donations from several ‘harmful regulated sectors. With multiple parliamentary committee inquiries starting to happen, this debate will play out over the next year or so.
Malcolm Baalman is a Senior Policy Officer at PHAA with a diverse public policy background covering parliamentary and electoral matters, health, transport and infrastructure, and law.