Is Political Funding a Curse for Liberal Democracies? Perspectives from USA, Australia & Canada
Political funding during elections has invoked divided opinions across the spectrum of ideologies for a considerable period now. Additionally, it has also been long debated among accountability forums that political funding through interest or identity groups may cast a shadow on the implementation of a good governance model, and ultimately could even hamper the prospects of citizen’s interests being served.
Despite the nature of this debate being inconclusive, it can’t be ignored that political funding does enable the citizens to realize their interests in terms of policy and law-making, through electing the political candidates that best serve those interests. While I do not agree wholly to any extreme end of this debate, I would be arguing from a position where responsible regulations should exist to ensure free and fair elections, (reducing money in politics and serving of private crony interests) but that such regulations should not encroach upon individual liberty or abrogate free speech through absolute regulations over political funding and expenditures.
However, having a regulatory cap on the total amount of political funding (that can be made by a single individual) and shadow-banning identity group, such as property dealers, may lead to de-legitimization of certain community groups from taking part in the democratic process of representative democracy and henceforth advocating the interests of the citizens.
Existence of restrictive campaign finance laws may also muzzle the freedom of expression and liberty of an individual, the former of which finds a place as a matter of right in Constitutions of all the countries that we will be discussing here; namely US, Australia and Canada. While discussing broadly in terms of the judicial expositions on political funding and expenditures in the US, Australia and Canada, my argument would be based on three limbs;
a) The debate on the Court’s intervention in regulating electoral bonds discourse effectively rests on the proportional distribution between the rights of bond bearers as citizens and transparency in the electoral process.
b) Regulations to a certain extent do affect the elective process of democracy positively by reducing undue influence and corruption.
c) The logic of transparency on political funding also does raise a dilemma in terms of ethical notions such as ‘right to privacy’.
Pro-Publica Approach: The US Perspective
Even though there is no one-stop solution to the extent of the Court’s interference in the democratic setup, the United State Supreme Court (hereinafter ‘US SC’) has largely taken an approach against the execution of campaign regulations. In an earlier but landmark decision, the US SC in Buckley v. Valeo made it clear that the modern system of communication and access to information is based on expenditure and therefore a ceiling on expenditure would mean a bar on political speech. The Court indirectly rejected the implementation of an egalitarian model based on excessive regulation of campaign finance, which violated the First Amendment. Despite removing restrictions on political expenditures, the court agreed with the Federal Election Commission [hereinafter ‘FEC’] limits on individual contributions made to candidates. However, in practice, the difference between independent external expenditure on media communications made by third party interest groups and individual contributions made to candidates is like two sides of the same coin. As one way or the other, the contribution ultimately benefits the campaign of the candidate, the difference created by the US SC in practice remains largely skewed. In totality, the US SC favoured regulated contributions and deregulated expenditures, but never accepted absolute blockade on either campaign contributions or expenditures.
Later on, in Citizens United v. FEC, the court elaborated on the anti-corruption doctrine of regulation on individual contribution and held that ‘transparent’ disclosure requirements or regulations can ensure that no ‘moneyed in’ interests of corporations and private individuals are served. Alternatively, the Court was quick to rebuff any challenge to independent third party funding or expenditures and put a caveat that such transparent disclosure requirements must not raise a situation where personal reputation/property of donors is threatened.
It can thus be pointed out that putting mandatory disclosure requirements in absolute terms, as advocated in Austin v. Michigan Chamber of Commerce and Davis v. FES, (both of which were ruled out by Citizens United) casts doubt on the right of privacy of donor corporations and individuals. The European Human Rights Court in Case of Catt v. The United Kingdom has opined that ‘Political beliefs are an element of private life’.
US SC has not dealt with the interface of free speech and political beliefs yet, but in Brandenburg v. Ohio, US SC clearly stated that all inflammatory speech (political or not) will not be barred until and unless it can cause or has the imminent danger of unrest. Hence, it can be said to a certain extent that having absolute disclosure requirements in place can have delirious consequences on an individual’s privacy, which includes political beliefs of an individual.
In respect to FEC’s regulations on political funding and expenditures, the US Court of Appeals in Columbia has quite interestingly held in the case of FEC v. Int’l Funding Inst, that regulations serve ‘an important governmental interest [ ] in reserving the value of the contributor list to the political committee that creates it’.
Even though regulations can’t be abolished altogether, they must be framed in a fashion that guarantees non-encroachment on an individual’s privacy under normal circumstances.
Canadian Restrictions: Message of the Oakes Test
Through its decision in the case of Harper v. Canada, the Supreme Court of Canada adopted the model similar to the one advocated by the US SC in the case of McConnell v. FEC, which later got rejected in the Citizen Interest case. The only difference seems to be that the Canadian SC took an ‘informed-voter’ model to decide in favour of regulations over free speech while the US Courts adopted an ‘empowered citizen’ model in pre-Citizen cases including McConnell to decide in favour of regulations over free speech. The rationale for the Harper court to take up this informed voter model was based on the two-prong proportionality test of an earlier decision of the Court in R v. Oakes, which simply states that firstly ‘a given overriding charter must be sufficiently important to warrant a fundamentally protected right’ and secondly ‘such charter must not be arbitrary, should not impair citizen rights and lastly serve the objective desired proportionally’. This approach of the Court towards extensive regulation on political funding serves as a direct violation and chilling of citizens’ right to freedom of speech. Quite interestingly, Harper’s approach also has the potential of affecting voting patterns due to inadequate communication of matters of public interest to the citizens and consequentially undermining political parties’ agenda of serving citizen’s interests (a serious violation of representative democracy). CJ McLachlin in his dissenting opinion found this approach of the majority Court to be intrusive of the liberal outlook and stated that ‘spending limits imposed a ‘‘virtual ban’’ on citizens who wished to participate in the political deliberation during the election period’. On the point of disclosures and right to privacy, the Court in B.C. Information v. British Columbia held that the requirement of registration for maintaining records of funds to be a valid insertion and said, ‘increasing transparency, openness, and public accountability in the electoral process and thus promoting an informed electorate — is pressing and substantial, and the requirement is rationally connected to this objective’. Although, it can’t be outrightly denied that such measures put the right to privacy of donors and political funders in Canada under shallow waters, in the name of transparency.
Australian Mudwar: The Story after Lange
Australia adopted a similar approach to Canada throughout the litigations in Lange v ABC, Unions NSW v. New South Wales, McCloy v NSW and lastly Spence v Queensland. The Courts in the earlier case of Lange accepted the implied freedom of political communication but adopted an approach called the legitimate ends of curbing political speech for ensuring transparency, accountability and reduced corruption. In the latter of these cases, especially in Spencer and McCloy, the Court accepted that a legitimate muzzle on political speech is required to ensure egalitarian participation of citizen interests in the representative democracy.
Although this analogy stands in parity with what we call the equality approach or the empowered citizen model or the talked about informed voter model, it does indicate a sustainable approach to categorize the legitimate ends of a representative democracy to muzzle guaranteed free speech. J. Nettle in McCloy dissented and stated that campaign funding regulations cast a burden on free speech and declared the limitation ‘as discriminatory, which lacked a rational connection to the prevention of bribery and corruption or ensuring transparency’.
The only Judgment which does not digress the right to free speech (important for a free flow of information and communicative democracy) and maintains reasonable regulations was Unions NSW v. NSW, wherein it was held that political speech is limited by legitimate ends (From Lange) of transparency, but the EFED regulations in question before the Court were just a general prohibition on every sort of political donation and did not serve the objective of limiting corruption and undue influence’. The Unions NSW perfectly elaborated on the point that how a balance between reasonable regulations and free speech can work together to ensure accountable and fair elections
A free and fair election is a legitimate end of representative democracy. With the rise of money politics and power consolidation, it becomes impending that certain measures are undertaken to ensure the objective of having a democratic election. Three different and distinct approach towards this issue has been taken by the Courts in the US, Australia and Canada respectively. In the US, we have free speech triumphing over anti-corruption and equalization of citizen’s collective interests. While in Australia and Canada, we have the Courts advocating for a pro-collective approach and equalization. Now, prioritizing free speech over collective interests, or vice versa may eventually be a worthless exercise, and hence a balanced approach alone can incentivize the stakeholders to eventually serve the interests of the citizens. Such a balance can be achieved by having minimal regulations in place (concerning funding and expenditures), and a viable ceiling on the total amount of funds that a campaign can collect (instead of ceiling limits on funding organizations).
The situation around the right to privacy is clear in Canada and USA with diversions, while Australia has not specifically deliberated on the limitations of political funding, registration requirement and right to privacy, all together. We have seen now that having disclosure and registration requirements in place within a democratic election can also affect the right to privacy. However, it can’t be denied, that any form of speech and expression is not absolute. Therefore disclosure and registration requirement cannot be completely ridden off.
Though a solution to achieve the desired transparency sought by disclosure requirements, without compromising on privacy, can be pursued through alternative means. These alternative measures include but are not limited to regulations on the total amount of contribution to a particular campaign and details of it, publicly accessible information on bond registrations, SUPER’PACS and data collation of political funding that excludes individual contributions (only those contributions that are modest and do not have the potential to critically sway elections).
 Similarly in NAACP v. Alabama, 357 U.S. 449 (1958) the court held that, ‘It is hardly a novel perception that compelled disclosure of affiliation with groups engaged in advocacy may constitute a restraint a freedom of association.’
 As per the Informed Voter analogy, ‘Spending limits are necessary to ensure that the right of all electors to be informed of all political positions was preserved if only wealthy citizens were permitted to dominate political advertising, the voter may not be adequately informed of all the parties’ views. The Parliament has the right to create laws that ensures that voters had equal participation in the electoral process’, See, Justice Stephen Goudge, The Top Five — 2004, https://ojen.ca/wp-content/uploads/The-Top-Five-Harper.pdf (Last Visited 13th June 2020).
 ‘The empowered citizen model has two components: first, every citizen must be included in the decision-making process (equal presence); and second, every citizen must have the equal right to influence the decision-making process by which she is governed (equal influence)’, See Dawood, Y., Democracy, power, and the Supreme Court: Campaign finance reform in comparative context, 4(2) International Journal of Constitutional Law 269–293 (2006).
 Gabrielle Giroday, Campaign financing case from B.C. important to consider in Ontario election, Accessed at https://www.canadianlawyermag.com/news/general/campaign-financing-case-from-b.c.-important-to-consider-in-ontario-election/275063.