National Assembly votes to increase secrecy, decrease accountability in political funding
The Political Funding Act (PFA) regulates the private funding of politics in South Africa. Despite its shortcomings, for the past four years, it has contributed to a more open and transparent political environment. By providing access to information about who funds political parties and independent candidates, it has limited the ability of private interests to influence our politics, enhanced transparency, and empowered voters.
On Tuesday, the National Assembly (NA) considered a report from the Portfolio Committee on Home Affairs (PC) on the PFA’s disclosure threshold and upper donation limit. These two limits are central to the law, and whether they are lowered, maintained, or increased has a material impact on the law’s effectiveness and strength.
The NA voted in favour of watering down the law’s effectiveness by increasing secrecy and decreasing accountability in the private funding of politics. Apart from MKP, ATM, Al Jamah-ah, and BOSA, all parties adopted the report to increase the annual disclosure threshold from R100k to R200k, and the annual upper donation limit from R15m to R30m. If signed into law by the President, this will mean that parties will be able to accept secret donations in higher amounts, up to R200k, and a single donor can use their financial muscle to donate up to R30m a year to a party and may make donations within this limit to as many parties as they choose.
As we wrote here, when the PC adopted this same report last month, the process laid bare that power and money trump principle.
Irrational and inexplicable
No one denies that running a political party requires significant funds. Developing the two limits is not an exact science, and there is always a level of subjectivity involved. Across the globe, countries regulate private funding in many different ways, and disclosure thresholds and upper limits vary widely.
However, when decisions such as these have enormous implications for our democracy, they need to be rational, explicable and fit for the context. This is where the PC, and now the NA, have exposed their political expedience, serving party and donor interests over the people of South Africa and the Constitution. There may be an argument that these limits are acceptable for the South African context. The problem is that the entire process is predicated on an irrational foundation, which everyone in the proverbial room is entirely aware of.
Members of Parliament (MPs) from the parties that voted in favour of the report went to great lengths to explain that doubling the limits strikes a necessary balance between transparency, accountability, the financial realities of running a political party, and the privacy of donors. They waxed lyrical about their commitment to transparency and the importance of ensuring private interests do not trump public policy, while concurrently supporting, without evidence, the decision to double the limits.
Last year, when the PC initiated this process, the Parliamentary Budget Office (PBO) conducted research and established that there was no basis on which the original limits of R100k and R15m were arrived at. Instead of taking the time to do the actual work of developing limits that are fit for South Africa, as the PBO suggested, the PC instead decided to accept an irrational foundation and then build on that. As a result of this intentional misstep, the original limits became the basis from which amendments to the limits were proposed and debated, tainting the entire process with irrationality. To make matters worse, the PC introduced yet more irrationality into the process when it chose an arbitrary method by which to increase the original limits. Instead of adjusting for inflation, which would at least have added a veneer of rationality to the process, the PC resolved simply to double the limits.
Tellingly, at a meeting in March on this matter, before the PC adopted the report, the DA’s Adrian Roos raised the issue that there was no rationale for doubling the limits. The ANC’s Faith Muthambi replied that ‘we’ll be able to justify’. But no new justifications or evidence have been presented, and now the NA has made itself complicit in this irrational process.
Misrepresentation of the Process
On Monday, the PC Chairperson, Mosa Chabane, began by explaining to the NA that the approach adopted by the PC was based on inflation. He said, ‘the committee used an inflation-adjusted recalculation of the threshold, premised on the assumption that the initial threshold figures were deemed reasonable.’ But this is simply untrue.
As the PBO wrote in its report, adjusting for inflation, the upper limit for 2024 would be around R21m, not R30m. For the disclosure threshold, they recommended increasing the threshold to R122k, not R200k. They wrote in their report that ‘[w]ithout understanding the original rationale, it is hard to say if either figure is truly suitable’.
The PBO also concluded that ‘[t]he analysis of international benchmarks shows that South Africa as a middle-income country is an outlier with [a] R15 million upper limit. In essence, this upper limit is more than that of some of the higher income nations…’ and further that, ‘[t]he international benchmarks analysis shows that it would be difficult to achieve some of the [PFA’s] objectives if Parliament is to set high (sic) than the current upper limit (R15 million + inflation) given the South African socioeconomic context’.
Most parties and members in the PC and Parliament will no doubt frame this as a successful political balancing act, but the entire process is flawed, and all that stems from it is fruit of the poisoned tree.
Other important issues raised
It was regrettably a foregone conclusion that the NA would adopt the report, but there were several other significant issues relating to party funding raised during the meeting, highlighting the complexity of this issue. These included the formula for public funding allocations; the State’s inability to properly fund political parties; the power of the President to determine the two limits; compliance with the law; and the capacity of the IEC to enforce the law.
All these are important matters, but perhaps most relevant is the issue of state funding. An ANC MP spoke about their party’s position that parties should be fully funded by the State. It is rather ironic then that instead of advocating for greater support from the public purse, to make parties less reliant on donors, the decision is to further entrench private interests in our politics. That the ANC, together with other parties in the GNU, voted yesterday to pass a budget that sees no increase in the public funding granted to political parties only deepens the irony of this comment. For MPs to justify their support for doubling the limits by referencing the allegedly exorbitant costs of running a political party, only to vote in favour of a budget that denies them increased public funding, arguably reveals where their true motives lie: ensuring reduced public scrutiny of who their financial backers are.
Next Steps
Secrecy in political funding lays the foundation for political corruption and influence peddling. This is true around the world, and South Africa has recent, first-hand experience of its devastating impact. For now, the limits remain unchanged. It is the President who has the legal power to make their final determination and until then, the R100k and R15m limits remain in place. MVC will urge President Ramaphosa to reject the report from the NA and return it to Parliament for remedying on the basis that it was arrived at irrationally and is therefore unconstitutional.
MVC is also awaiting judgment in our matter in the Western Cape High Court that was heard in February this year, in which we challenge various aspects of the PFA. These include the irrationality of the two limits and the power of the President to have the final say in setting the limits. If needed, we will embark on further litigation to ensure the law is constitutional.
Submitted by Joel Bregman, MVC Project Lead on Money in Politics
