Hey, big spenders! Time to regulate campaign financing

In 1964, the Beatles famously sang: ‘Money can’t buy me love.’ But in 2022, the Commission for Standards in Public Life concluded that the same commodity might be able to buy you something even more ‘precious’ – and universally coveted – than a mere human emotion.

Power. Or as the Commission put it, in its recent report on ‘Spending by Candidates in General Elections’: “It is fair to say that in Malta there is growing concern about the influence of money on politics, and how such influence can distort public policy and undermine democracy.”

Part of this concern arises even from the candidates’ declarations at the last election. Of the 69 names on the ballot sheet, the 10 highest spenders – all Labour candidates, bar one: the PN’s Joe Giglio – declared between €30,000 and €9,000 in expenses, on two districts.

This is admittedly less (if only just) than the maximum allowed expenditure of ‘€20,000 per district’; but it is infinitely more than the much larger contingent that spent ‘less than €5,000’… and the disparity becomes astronomical, when compared to the lowest spender on the list: PN candidate Eve Borg Bonello, who presented a costed declaration of just €500. [Not counting Prime Minister Robert Abela and Opposition leader Bernard Grech: whose campaign expenses were paid by their party].

A breakdown of the figures also seems to reveal a direct correlation between electoral spending, and electoral success: for both parties, the average expenditure of successful candidates totals around 30% more, than the costs borne by unsuccessful ones.

Moreover, the same dynamic appears to function at party level, too. On average, Labour’s successful candidates spent €15,000 apiece; almost three times the €5,290 spent by their Nationalist counterparts; and 15 times the average of ‘€900-€1,300’ spent by (unsuccessful) candidates of smaller parties, such as ADPD.

The equation might not work out to 100% accuracy: but the same disparity is evident also in those parties’ electoral performance.

Undue influence

But there may be more than just ‘unfair competition’ at stake here. The Standards Commission also notes that:

• Prospective candidates can seek to raise money from donors, but this would mean incurring obligations to third parties that could compromise their ability to promote particular causes or principles.
• If candidates are compelled to become dependent on third parties in order to gain election to Parliament, this would give commercial interests undue political influence. This is of particular concern with respect to MPs who are made ministers.

To be fair, such concerns are arguably universal – as attested by the stringent campaign spending regulations that exist in other European jurisdictions (and elsewhere). The situation in Malta, however, seems to be exacerbated by a number of additional factors.

While regulations do exist to control excessive electoral spending, these are either too vague, or too loophole-ridden, to be effective in practice. So much so, that the Commission observes: “It is fair to say that, at present, campaign spending by individual candidates in general elections is unregulated. The official spending limit of €20,000 per district is poorly enforced and, in any case, it applies only to spending during a relatively brief period.”

Other shortcomings identified by the report include that – while the law covers not just the amount of money spent by individual candidates on their campaign; but also “food, drink, entertainment or provision [by third parties]” - these restrictions are only enforceable for the duration of the election campaign itself.

In the Commission’s words: “there is nothing to prevent candidates from giving gifts to voters before the start of the official election campaign.”

Perhaps unsurprisingly, it is a loophole that was much abused during the last election. “A number of incidents highlight the inadequacy of the law. In one case, in September 2020, one candidate (a parliamentary secretary at the time) presented elderly persons in care homes with a roly-poly each, with a printed message with the word “Kuraġġ” (courage) and his name and title attached […] Another candidate at the time was reported to have given gifts of bags of oranges, with a picture of herself, to elderly persons living in a residential care home […] These cases gave rise to controversy, but they fell outside the scope of the General Elections Act.”

Even when such abuses take place in the course of an electoral campaign, they often go unnoticed, or unpunished. “In another case, only a few days before the 2022 election, another candidate was alleged to have gifted voters in his constituency with fuel vouchers, sent to their addresses together with a campaign leaflet. There have been no subsequent media reports indicating that this case was investigated by the authorities.”

All this, and more, leads the Standards Commission to ask “whether there should be a cap on campaign spending by candidates throughout the electoral cycle, that is from one election to another regardless of when the official campaign starts”; and also, “how to enforce such a cap effectively, in terms of how candidates should report their expenditure and to whom they should report it.”

Arnold Cassola, Ralph Cassar and Eve Borg Bonello

Non-level playing field

For smaller parties struggling to compete with their larger counterparts, none of this is particularly ‘new’. ADPD’s Ralph Cassar notes that his party – and he himself – has been trying to draw public attention to the same issue for decades.

But he also stresses that the problem goes beyond mere financial disparity alone. “To be frank, I expect candidates to spend a couple of thousand euros [in an election campaign]. No candidate of ours spent more than around €1,300. Some spent much less. As for myself, I spent around €900 in all for both districts (7 and 11) I contested. As you can imagine the highest costs are printing and distribution of just one leaflet. You have to get you name out there; and social media, attractive as it may be, is simply not enough.”

The real issue, however, involves “donations in kind - from marquees to expensive receptions – which are not declared anywhere. What are the donors expecting in return? I think the answer is in the direct orders they get for setting up lighting, stages, marquees and what not for government events. So I am not surprised that Labour candidates – and some candidates in particular – spent the most. God knows the real value of the ‘services rendered’. It’s simply a transaction […] You probably remember the days when the Nationalists were the favourites – and their spending on campaigns, outstripped Labour’s by far.”

As for what can be done about the problem, Cassar simply quotes a recent OECD report: “The PL and PN, as parliamentary parties are vastly better resourced than the smaller parties, possessing significant business interests including real estate and media outlets, resulting in an imbalance in campaign funding available to the various parties; [this] emphasized the need for introducing adequately regulated and transparent public funding system, in line with the international standards.”

For Cassar, this amounts to “a clear indictment of PL/PN companies as money laundering machines. In democratic countries with high standards, political parties are not allowed to own private companies. Ownership of private companies opens the doors wide for hiding financing of the party propaganda machine […]. One and NET are campaigning entities, disguised as companies to circumvent the law. Not to mention taxpayer ‘loans’ to PL and PN companies – unpaid VAT, unpaid utility bills, unpaid national insurance contributions – these are all taxpayer ‘loans’ to prop up PL and PN. I was under the impression that we are supposed to have higher standards than Zimbabwe or North Korea here!”

State censorship

In similar vein, former ADPD Chairman – now independent candidate – Arnold Cassola concurs that ‘money’ should not be the only measure of campaign expenditure.

“Money is all well and good; obviously it would be helpful if smaller parties had access to more funding. But what really counts, when it comes to getting your point across to the electorate, is access to the media.”

It is here, Cassola argues, that the real advantage lies for the two larger parties. “Not only do they both have private media of their own – which are permitted to continue operating, even though they are both manifestly bankrupt – but they are also given regular coverage on State media, at all times of the year; while smaller parties are offered a mere 30 minutes; and even then, only as part of the BA electoral broadcasts, during the campaign itself.”

Effectively, this translates into a situation whereby the two parties are given free publicity, all year round, at the expense of the tax-payer; while the rest are relegated to just half an hour, once every five years.

“We are effectively banished from State TV and radio,” Cassola concludes; a situation he claims has actually grown worse, in recent years.

“Since the last election, I have issued 55 press releases. Now: I don’t expect them all to be given the same importance by all the media. I understand that the media have their own priorities, and so on. But while the independent media do report on at least part of what I issue, the State Broadcaster PBS has never, not even once, reported even a fraction of it. And this, in spite of the fact that PBS is publicly funded to the tune of €60 million a year; and it also has a Constitutional obligation to ensure impartiality and fairness, in its political reporting.”

Turning to the money side of the equation, Cassola echoes a point repeatedly stressed throughout the Commission’s report. “If you ask me, the biggest discrepancy by far is not ‘how much was spent’; it’s that candidates only have to declare what they spent for the 33-day period of the actual campaign. In the 2019 MEP election, for instance, Labour candidate Josianne Cutajar only declared €47,042 [just short of the maximum of €50,000]… but that didn’t include all the tens of thousands she had spent on promotional material, in the months and years before the campaign. The fact that one of these items was a banner on the façade of the Quaint Hotel in Nadur, leads me to believe that one of her sponsors must have been [construction magnate] Joseph Portelli. Either way, to me it is ridiculous that the law only covers the 33-day period of a campaign… and ignores everything that’s spent for the rest of the four-and-a-half-years.”

Nonetheless, the question remains: is it time – as the Standards Commission suggests – to reform the current legislation? And if so, how?

As the lowest-spending candidate by far, the PN’s Eve Borg Bonello is perhaps ideally-placed to answer it. The first part is easy enough: “Yes; because as things stand, it is definitely not a level playing field: especially when one considers that most of the high-spending candidates had months and years preparing and campaigning on the ground; in comparison to candidates allowed to contest at the last second - like myself, only having had a month-long campaign.”

The second part of the question, however, would have to entail a much farther-reaching reform. “The problem lies here: what kind of spending limits can be imposed, especially on those who declare their candidacy in the last 60 days, while spending months campaigning unofficially? How could it be controlled, without changing to a party-list system?”

However, Borg Bonello also argues that a party-list system – as exists in most other European democracies – “would not work in the Maltese system, which is centred around the candidate.”

“In the American system, funds are audited by an agency and the government pays the candidate matching the amount of the funds collected, which I think applies more to our Westminster [Parliamentary] model. In the Maltese system, a candidate can collect all the funding they like, but are limited to €20,000 per district. Like everything else, all systems have their benefits and flaws, but my question is this: isn’t voluntary fundraising, in terms of donating to a candidate, a sort of a democratic freedom in itself, a form of freedom of expression? Also, shouldn’t we have full-time MPs (and less of them), with a decent salary? A campaign doesn’t end when getting elected; politicians are re-elected depending on their work as an MP. And as things stand, opposition MPs have extremely limited resources...”

Nonetheless, she concurs with Ralph Cassar, Arnold Cassola and the Standards Commissioner, in calling for more transparency in the campaign expenditure process:

“Ironically enough, most donors tend to offer donations to those candidates who typically don’t really need it: already established personalities or people with huge potential, that donors see as most likely to get elected. In my case, I was never offered donations as no one really thought I had a shot: especially after only being allowed to contest six months after submitting a declaration of interest in contesting, leaving me with only 40 days to get to parliament. I guess the world works in funny ways… that’s another reason why I believe in fully audited and transparent campaign funding and lobbying rules, so everyone knows who’s paying who, and what.”