A long overdue step in the right direction

A system of state funding may go some distance towards addressing an apparently institutionalised backscratching culture between the political and commercial classes.

The White Paper on Party Financing, launched yesterday, has had what must rank among the longest gestation periods of any local law.

Discussions on how to regulate this sector have been ongoing for well over 20 years. A proposed law was in fact the subject of the Galdes Commission in 1995, but the original proposals (albeit not too dissimilar from the latest version) were shot down before they even had a chance to germinate.

The same issue has resurfaced constantly ever since: fuelled by endless revelations of how large-scale commercial interests were financing both major parties in an unregulated and non-transparent manner.

Matters arguably reached a head when former PN secretary Joe Saliba admitted that construction magnate Nazzareno Vassallo was a party donor, after having attended a cruise on board his private yacht, the princess Charlene, in 2008.

An exercise conducted by this newspaper immediately afterwards confirmed that both parties were in receipt of various cash donations and other 'favours' from industrialists: Charles Polidano had built Super One's roof for free, while a company owned by Zaren Vassallo had also issued a Lm5,000 donation to the PL, among others.

Viewed in this context, this week's White Paper is certainly a historic and long overdue occasion, and as such one welcomes the apparent consensus already reached on the issue. This marks the first concrete step, after decades of gingerly testing the waters, towards a law which regulates the most notoriously unregulated bodies under Maltese law.

But it is not the only reason to regulate this sector. It has variously been demonstrated - not least by the last election - that big businesses tend to back a winning horse, and donate more to the party more likely to come into power (and therefore be in a position to repay in kind).

This creates an automatic non-level playing field, in an electoral scenario which also features smaller parties who have no such realistic likelihood of ever singlehandedly wielding the reins of power.

How far the law will go in addressing these issues remains to be seen. At present the details stipulated by the proposed law include mandatory registration of all donations above 10,000, as well as a ban on donations exceeding 50,000 over the course of a calendar year. The law will also raise the current expenditure limit on personal political campaigns to a more realistic level, given the constantly increasing expenses involved in campaigning.

Alternattiva Demokratika has already argued that the threshold for illegal donations is too high, and that the law in its present form will not therefore remove the chief source of the current imbalance. As things stand bigger parties will not be starved of donations by big businesses: over a five year span, one individual can donate up to €250,000, while this figure can be augmented if one considers the possibility of multiple donations through spouse, children, etc.

There may be practical considerations also. The Electoral Commission is to be given powers to investigate and ensure that political parties abide by the new law. This entails the need for considerable investment in human resources, as well as a possible overhaul of the Commission's legal framework.

One immediate problem is that the members of the Electoral Commission are appointed by the two major parties in parliament, while other parties are not represented at all. Clearly this cannot remain the set-up, as the members of a Commission nominated by political parties cannot be expected to investigate the parties which nominated them. The conflict of interest is overwhelming, and will almost certainly dent the Commission's credibility.

This could be addressed simply by changing the system whereby the Commission is appointed, or by investing the authority in a separate entity altogether. Ideally this is a role that should be played by an independent Parliamentary body - but this requires that parliament function as an autonomous institution, which is not the case today.

Either way, parties' accounts should be submitted annually to this body and audited independently. These accounts, including names of donors, should be published.

Elsewhere, one notes that the new law does not mention the possibility of state-financing of political parties, as is the case in several other European countries. Surveys suggest that this is an immensely unpopular idea in Malta; but if the purpose is to ward off corruption and ensure a level playing field, an official programme of state funding may be an option worth considering.

There are plenty of foreign models to consider. The German system allocates funds on the basis of the parties' performance at general, European and local elections; and, separately, by the level of contributions they receive from private persons.

German law also stipulates that the level of state funding given to each political party may not exceed the total annual revenue raised by the party itself.

Given the existing widespread suspicion that all Maltese governments are 'indebted' to their donors as a result of secret donations and agreements - with inevitable repercussions on perceptions of corruption and nepotism - a system of state funding may go some distance towards addressing an apparently institutionalised backscratching culture between the political and commercial classes.

This alone may well be worth the investment of state funds.

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