Money makes the world of politics go around and, as recent scandals afflicting both major political parties have shown, keeping it clean isn’t easy. Our series on Australia’s system of political finance examines its regulation, operation and possible reforms.

Attorney-General George Brandis recently said that federal public administration in Australia had been:

… remarkably free of corruption.

In the narrow sense, Brandis is absolutely right. The purchase of policy in Australia is really, really difficult: Australian politicians and civil servants do not accept bribes.

International surveys bear this out. Australia may have slipped a little in Transparency International’s recent rankings, but it’s still near the top. And only very big changes in those numbers are likely to be both statistically and substantively significant.

Corruption is the abuse of the political system. Debates about corruption in Australia occur at cross-purposes as commentators disagree on what is an abuse of the political system.

In recent decades, scholars have preferred narrow legalistic definitions of corruption. However, restricting the ambit of corruption exposes a disconnect between legal standards and popular norms, and between the view of the political and business elite and the rest of society.

Australia’s political finance system is corrupt – but not because of bribery, or indeed any substantial quid pro quo. Here’s why.

Why donate, if not to influence?

By the standards of other rich democracies, Australia’s two major political parties are highly dependent on contributions from business. If all this money isn’t buying policy, what’s going on?

On the Liberal Party side, much of it is still ideological. It gets a lot of business money, whether it’s in government or not. These contributors are not trying to gain special access to the system – they believe in free markets and feel flush enough to spend a little money on the general business climate.

Some business donors are naïve. They think donations are legal bribery, but soon find out that politicians like elected office and will run away from anybody trying to make a direct connection between policy and political funding.

Savvy people know that the political finance system is not built on discrete exchanges like bribery. Reciprocal exchanges of money for future special consideration are the dominant rationale for business donations to Australian politics.

The political reciprocation is unstated, uncertain and unlikely to be simultaneous with the financial contribution. Business money says, softly and subtly but insistently, that, in exchange for small but certain financial benefits, contributing businesses expect to receive special consideration when lobbying.

Regular donations, even small ones, cannot help but oblige a politician to the donor. The biggest donations are small in relation to the value of public decisions to businesses.

Sure, even through reciprocal exchange the chances of getting a decision that would not otherwise be taken are still pretty slim. Nonetheless, any real increase in the chances of winning big is worth it.

Still an abuse

The system of reciprocal exchange is an abuse of the political system, because it insinuates private interests where only the public interest should be considered. It is corrupt because government can end up producing private goods instead of public goods.

But this is not bribery. There is no quid pro quo. There is no direct connection and no price on political decisions.

A legalistic definition of corruption protects this corrupt system by exonerating reciprocal exchanges as uncorrupt.

It’s not just the definition that protects this type of corruption; it is the nature of the exchange. It is difficult to deny that reciprocal exchanges exist, but it’s more difficult to identify any particular reciprocal exchange.

Australians should be outraged at much of what is exposed by corruption commissions and investigative journalism, but they can rest easy that bribery is not widespread in their country. Nonetheless, Australia is exposed to the corrupting influence of business, perhaps more than in any other rich democracy except the US.

Opening up foundations that mask the identities of donors and their links to parties and politicians and maintaining vigilance against bribery will help. Taking business money out of politics would help a lot more.

Catch up on other articles in the series here.