The murky business of political donations by the big banks

The Australian Electoral Commission has just released its 2014-15 financial disclosure returns, which reveal that in the last two years Australia’s big four banks have donated $1.36 million to the major political political parties.

A closer analysis of the report reveals:

• There appears to be an inverse relationship between bank performance and the amount donated to political parties. The best-performing bank, the Commonwealth Bank, donated $232,000 over the past two years. Meanwhile ANZ and National Australia Bank, the two worst-performing banks, donated $405,000 and $355,000 respectively.
• Perhaps unsurprisingly the big banks favour the Coalition over the Australian Labor Party (64% to 36%). However, there is a substantial difference between CBA, which is more even-handed with a 55:45% split between donations to the parties, compared with NAB’s lopsided 73:27% split.
• The two Melbourne-based banks, ANZ and NAB, happen to be the biggest supporters of the Liberal National Party.
• Between 2013-14 and 2014-15 the banks increased their donations to the major political parties by 16%.

Full details of political donations can be found on the AEC website but the following table summarises the position of the big banks.

These figures raise a number of questions which the banks, shareholders and regulators may consider including:

• Should banks, or any other company, union or individual be permitted to donate shareholders’ funds to political parties?
• Should there be a cap on political donations?
• Does it make a difference if the donor is a public rather than private company or individual?
• Should shareholders have a say in this like they do with executive remuneration?
• What returns do donors expect and actually receive from these investments?
• How and by whom are these returns measured and reported?

Neil Slonim is a business banking advisor and commentator and is thefounder of theBankDoctor.org, a not-for-profit online resource centre helping SMEs deal with the challenges of funding a small business.