Heavyweight political parties pig out on the money pie

It took more than a month for the treasury and the Independent Electoral Commission to add up just how much public money is flowing into the private banks of political parties from various sources. And when they found out, this was pretty much all the information that they could provide.

The answer is R1.09-billion. A year. And it’s rising at a rate of about 10% a year.

The ANC is probably receiving more than R600-million a year, not from private donors, the Guptas or state-owned enterprises but from the public. And it’s all legal. For now.

As the Constitutional Court has pointed out, political parties are an integral part of modern South Africa’s democracy and so the public investment makes constitutional sense, not least because section 236 of the Constitution requires public funding of political parties.

They incur significant expenditure going about a task without which we would have no democracy at all and smaller parties especially cannot rely on wealthy private donors to fill their pockets.

But it is also a highly controversial subject: Is it a wise and justifiable investment in public resources, particularly at a time when the national fiscus is under great pressure?

Moreover, there is uncertainty about where as much as R949-million of the total public spend on political parties is ending up and how it is being spent. This is according to evidence that emerged during the recent parliamentary ad hoc committee hearings on party political funding. A draft Bill, covering private and public funding, was published by the committee on September 15.

Political parties receive public money in three forms. The first is from the Represented Political Party Fund (RPPF), created by the Public Funding of Represented Political Parties Act of 1997. The second two are allocations by the National Assembly and the provincial legislatures to fulfil the constitutional requirement to “enable the party and its leader to perform their functions … effectively.”

There are huge problems with all three.

Although the RPPF accounts for the smallest percentage of the funds, it is arguably the most significant, for two reasons. The first is that, unlike the other two sources, these funds are made available to parties for a broader range of activities, including campaigning, a vital party activity, which falls out of the scope of the funding that parties receive from the national and provincial legislatures.

The second reason is that, unlike the funding allocated by the national and provincial legislatures, we know exactly where it is going and how it is being spent. And the results are shocking.

Section 236 of the Constitution states: “To enhance multi-party democracy, national legislation must provide for the funding of political parties participating in national and provincial legislatures on an equitable and proportional basis.”

Therefore, the Constitution envisages a balance between the principles of proportionality and equity in the formula for the allocation of these funds, but the determination of that formula is not specified. The regulations ostensibly agreed to in 1997 by the (then) biggest parties, the ANC and the National Party, provide that 90% of the funds are allocated proportionally and just 10% on the basis of equity.

So why did Parliament decide that the principle of proportionality should so heavily outweigh the principle of equity when the Constitution provides no hint that either of these principles should be favoured?

Freedom Front Plus (FF+) MP Dr Corné Mulder, an experienced parliamentarian who has been a forerunner in bringing this particular problem to light for many years, says that the 90/10 split was agreed to even earlier, during the 1994 negotiations for the new Constitution, and was the “product of a deal” between ANC MP Pieter Hendriks and National Party MP Con Botha to keep the bulk of the funding for the two largest parties, the latter operating under the mistaken belief they would remain a major party in the constitutional era.

The original rationale is clearly obsolete, but the more pressing question is whether the formula is constitutional at all. Because the 90/10 split was enacted to fulfil a constitutional provision, it must fulfil that — to “enhance multi-party democracy” — to pass constitutional muster.

But the current formula does not do that; in fact, it does the opposite. The 90/10 split hugely favours the larger parties at the expense of smaller parties. For example, the ANC received R75 660 653 from this allocation in 2016 but the African People’s Convention and Pan Africanist Congress, which are both represented in the National Assembly, received a meagre R138 138 each. The Congress of the People (or Cope), the FF+ and the United Democratic Movement, which are all well-established parties in Parliament, each received less than R2-million — about R73-million less than the ANC.

It is a classic case of the “rich get richer while the poor get poorer”.

Does the “equitable” element correct the balance? Our new research suggests that the answer is a resounding no. The formula for the equitable allocation is complicated but the net result is that the equitable allocation isn’t equitable at all. (See “Some are more equal than others” and “How do the formulas work?”)

Parties receive additional funding to function effectively in the national and provincial legislatures. In terms of section 57 of the Constitution, political parties in the National Assembly will receive R414-million for this during the 2017-2018 financial year and, in terms of section 116 of the Constitution, for the same period, they will receive an additional R535-million for their activities in provincial legislatures.

One problem with these sections is that there is no provision for an equitable allocation and it is being split proportionally.

But the most pressing issue is that the legislation that was enacted to give effect to these sections, the Financial Management of Parliament and Provincial Legislatures Act of 2009, requires regulations to be issued to provide for the allocation of these funds and the purposes for which they may be spent, but these regulations are lacking.

This led to an alarming revelation during the treasury’s submission to the ad hoc committee: apparently it is the practice of some provincial legislatures to allocate each party a lump sum, which they can spend as they wish.

This is clearly incompatible with the purpose of sections 57 and 116. This funding is aimed at assisting parties in their parliamentary duties only. Such activities may include travel costs, administrative costs and office rentals. But the lack of regulations and disclosure provisions make it almost impossible to track how this money is allocated and whether it is being spent on its constitutional purpose.

So, the bottom line is this: R1.09-billion is being given to political parties from the public purse. It is allocated in a manner that strongly favours the larger parties, cripples the smaller ones and does the exact opposite of what it’s supposed to do, which is to enhance multiparty democracy. Furthermore, about 85% of this money is being allocated in a manner that is essentially untraceable and clearly unconstitutional.

The current parliamentary reform process, which will also bring much-needed reform to private donations to political parties, has the opportunity to take the requisite steps to address these issues.

This is essential for the future legitimacy of political party funding. The public is unlikely to stomach the current system of public funding unless both it and private funding are subject to far greater levels of legally enforceable transparency and accountability. Why should the public fund political parties in the dark?


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