Chapter 5:
Findings
This Chapter is dedicated to the findings of the interviews conducted with party-funding experts from political parties, party-aligned foundations and/or electoral commissions in the countries evaluated in this study. The findings are in relation to the answers provided to the questions posed in terms of the questionnaire as outlined in the preceding Chapter, which is aimed at gaining an understanding of the various dimensions of party funding in said jurisdictions.
5.1 The public party-funding regime of Germany
Party funding from the public purse in Germany has two dimensions. On the one hand, public funds are transferred directly to parties, be it to the party entities themselves or to support their representatives in the legislatures. On the other hand, significant public funds are transferred to party-aligned foundations.
5.1.1 Public funding of German political parties
5.1.1.1 Restrictions of private donations to political parties
Whilst there is no upper limit as to what an individual or entity may donate to a political party, the donation has to be declared to the President of the Bundestag if it exceeds €50,000 in a particular year, and if it exceeds €10,000 in a particular year, it needs to be published in the party’s financial statements (Nietan, 2022). The limits are aggregated from across the whole country, all levels of government and all structures of the party (Öhm, 2022). That said, there are a number of legal restrictions conclusively articulated in Article 25 of the Political Parties Act. The restrictions are that:
Donations of more than €1,000 in cash may not be accepted.
The acceptance of donations from political foundations, corporations, associations of persons and estates which, according to the statutes, the foundation business or the other constitution and according to the actual management, exclusively and directly serve charitable, benevolent or ecclesiastical purposes (sections 51 to 68 of the Tax Code) is inadmissible.
Excluded from the right of political parties to accept donations are also donations from parliamentary parties and groups and from parliamentary groups of municipal councils (local assemblies).
The acceptance of donations from outside the area of application of this law, that is, outside the Federal Republic, is also inadmissible unless:
the donations are from the assets of a German within the meaning of the Basic Law, of a citizen of the European Union or of a business enterprise, of which more than 50 per cent of the shares are owned by Germans within the meaning of the Basic Law, or by a citizen of the European Union, or whose head office is in a member state of the European Union
the donation is from a person from national minorities in their ancestral homeland, which are made to them from states bordering the Federal Republic of Germany and in which members of their ethnicity live
the donation made by a foreigner does not exceed €1,000.
(Nietan, 2022)
Furthermore, donations from the following sources are inadmissible:
Donations made to professional associations with the understanding that they will be passed on to a political party
Donations from companies that are wholly or partly owned, managed or operated by the public sector, if the direct participation of the public sector exceeds 25 per cent
Individual donations exceeding €500 where the donors cannot be identified, or if it is recognisable that the donation is being forwarded from an unnamed third party
Donations granted to the party in expectation of, or in return for, a certain economic or political advantage
Donations raised by a third party in return for a fee to be paid by the party which exceeds 25 per cent of the value of the raised donation.
(Nietan, 2022)
5.1.1.2 The various forms of public funding that German parties are entitled to
Direct party funding
The party is entitled to partial state funding. This is governed by Article 18, Part G. According to this provision, parties receive funds as partial financing of the activities generally incumbent upon them under the Basic Law. The benchmarks for the distribution of state funds are the success a party achieves with voters in European, federal (Bundestag) and state (Landtag) elections, the total amount of its membership dues and mandate holder contributions, and the volume of donations from individuals it received. In 2020, all parties together received a total amount of €197,482,200 (Nietan, 2022).
Directly to elected representatives in addition to salaries
The elected representative, for example, a member of the Bundestag, is entitled to "compensation”. This is governed by Section 48(3) of the Law on the Legal Relationships of Members of the German Bundestag (Members of Parliament – AbgG). According to this, members of Parliament are entitled to appropriate compensation that guarantees their independence. The amount of the compensation must correspond to the significance of the MP's special office and the responsibility and burden associated with it. In addition, it must also take into account the rank accorded to the mandate in the constitutional structure (Nietan, 2022).
The compensation paid to members of Parliament amounts to €10,323.29 per month. A tax-free expense allowance is added to the compensation as part of the so-called official allowance. This lump sum is adjusted annually on 1 January to the cost of living and is currently €4,583.39 per month. They can also claim business travel expenses as well as associated expenses (Nietan, 2022).
Furthermore, members of the Bundestag receive employee allowances amounting to €23,205 per month (Nietan, 2022).
In 2020, all members of the Bundestag together received a total amount of €475,026,000, inclusive of their salaries and personal allowances. The amount in addition to their salaries and allowances – that is, the allowance to enable them to employ staff to assist them – amounted to €166,519,080 for 2022. This is calculated by taking the number of members of Parliament, which is currently 598 (Deutscher Bundestag, N.d.), multiplied by the monthly allowance (€23,205), multiplied by twelve to calculate the annual total.
To the parliamentary groups in the Parliament
The parliamentary groups in Parliament are entitled to cash and non-cash benefits. This is governed by Section 50 of the Parliamentary Groups Act (AbgG). According to this Act, parliamentary groups are entitled to cash and non-cash benefits from the federal budget in order to fulfil their duties. The specific amount of money made available for the financing of parliamentary groups in the federal budget thus results exclusively from the federal budget. In 2020, all parliamentary groups in the Bundestag together received a total amount of €119,369,000 (Nietan, 2022).
Reimbursement for election expenses
There is no direct claim for reimbursement of election expenses (Nietan, 2022).
Other public funding
Apart from partial state funding according to Section 18 of Part G, parties are generally not directly entitled to other forms of public funding (Nietan, 2022).
5.1.1.3 Incentives to encourage individuals/corporates to make donations to political parties
In terms of Article 34(g) of the Income Tax Act, donations to political parties are deductible from taxable income up to a total of €3,300 for singles, and up to €6,600 for married couples (Nietan, 2022). Furthermore, individuals may deduct fifty percent of their party membership contributions from their taxable income (Öhm, 2022).
5.1.1.4 Indirect public funding
During election campaigns, political parties may run election advertising on public television and radio, free of charge. Private stations may only charge parties at cost price (Nietan, 2022).
In terms of Section 68 of the Interstate Media Treaty, parties must be granted appropriate broadcasting time during elections for the German Bundestag. In return, they are reimbursed for their prime costs when at least one state list has been approved for them. Furthermore, parties and other political associations shall be entitled to appropriate broadcasting time during their participation in the elections of members from the Federal Republic of Germany for the European Parliament, in return for reimbursement of the cost price, if at least one election proposal has been approved for them (Nietan, 2022).
Section 11 of the Zweites Deutsches Fernsehen (ZDF) State Treaty (ZDF-StV) stipulates that parties may run election advertising free of charge on the stations of ZDF during election campaigns. The same is regulated for the stations of the First German Television (ARD) in the state broadcasting laws (Nietan, 2022).
It is difficult to objectively determine the value of such free and subsidised media (Nietan, 2022).
5.1.1.5 Private versus public funding of political parties ratio
According to Nietan (2022), private funding, which includes membership fees and contributions from trade unions, forms the bulk of the parties’ funding, but public funding is also a significant portion of funding for the parties.
5.1.1.6 Quantifiable public funding to support political parties
The public funding for the political parties at a national level in Germany for 2022 amounted to at least €483,4 million, made up as follows:
(Nietan, 2022)
The above calculation is conservative, in that, in addition to the aforementioned, needs to be added the indirect support to parties, for example, the free and subsidised media advertising during campaigns, which is significant, but difficult to objectively estimate.
5.1.2 Funding to party-aligned political foundations
In addition to the public funding of political parties, the democratic dispensation of Germany is strengthened through the public funding of party-aligned political foundations. The purpose of the funding is to promote the development of plurality of political participation in the democratic dispensation (Öhm, 2022).
At the federal level, each party that has been represented in the Bundestag for at least two periods, is entitled to nominate a political foundation to receive public funding, which is determined and administered by the Bundestag. It forms part of the national budget and appears as line items in various ministries. Funds are allocated to the various foundations on the basis of the proportional strength in the Bundestag of their ideologically aligned political parties. The core funding of the politically aligned foundations is included in the budget of the Ministry of the Interior, whilst further project funding is included in the budgets of the Ministries of Economic Cooperation and Development, Education and Research, and Foreign Affairs (Öhm, 2022).
Political foundations may use the funding for:
Civic education
Scholarships
Hosting of party archives
Research
International cooperation
Whilst the use of the funds is quite flexible, it must fit within the parameters of the Bundestag’s special provisions for the funding of political foundations and may not be used for party campaigning. Furthermore, whilst political representatives may not participate in their political party capacity, they may do so as experts in the activities of the foundations, but they need to maintain a strict arm’s length three months prior to an election, during which period they may not cooperate with political parties in any form or manner. Furthermore, they may not directly fund any foreign political party or trade union (Öhm, 2022).
That said, there are significant benefits for political parties and the democratic dispensation as a whole. Parties benefit in that the foundations serve as think-tanks that develop ideas, policies and legislative proposals from their own ideological point of view, provide civic education and training in which party members and public representatives may participate as active citizens, and they create ideology-linked international networks, all of which would have fallen to the parties in the absence of such foundations. And as already stated, the democratic dispensation is strengthened through the promotion of democratic pluralism (Öhm, 2022).
The public funding for the political foundations in Germany for 2022 amounted to €451 million, made up as follows:
*Conservative estimate. Allocation is in fact higher, but also includes allocations to non-political organisations.
(Öhm, 2022)
5.1.3 Germany–South Africa Purchasing Power Parity (PPP)
5.1.3.1 PPP in relation to direct public funding to political parties
The equivalent purchasing power of €483,400,000 allocated to the German political parties at a USD 2021 PPP factor of 0.741488 (OECD, N.d.) equates to USD 651,932,331. In turn, at a USD:ZAR 2021 purchasing power parity factor of 7.168097 (OECD, N.d.) it equates to R4,673,114,184.
(Allocation in German euro ÷ DEU:USD PPP factor) x USD:ZAR PPP factor
That is: (€483,400,000 ÷ 0.741488) x 7.168097
651,932,331 x 7.168097
= ZAR 4,673,114,184
5.1.3.2 PPP in relation to funding to politically aligned foundations
The equivalent purchasing power of €451 million allocated to the German political party aligned foundations at a USD 2021 PPP factor of 0.741488 equates to USD 608,236,411. In turn, at a USD:ZAR 2021 purchasing power parity factor of 7.168097 (OECD, N.d.) it equates to R4,359,897,594.
(Allocation in German euro ÷ DEU:USD PPP factor) x USD:ZAR PPP factor
That is: (€451,000,000 ÷ 0.741488) x 7.168097
608,236,411 x 7.168097
= ZAR 4,359,897,594
5.1.3.3 PPP in relation to the funding of the German party-political dispensation as a whole
The combined value of public funds allocated directly to political parties and to politically aligned foundations in Germany currently amounts to €934,4 million per annum.
At South African PPP, it amounts to around R9,033,011,778.
5.1.3.4 Public annual-spend per person on political parties and foundations
Given that the German population older than 15 years – the age at which political awareness starts manifesting – as of 2021 was around 72,390,000 million people, (Statista, 2022b), it means that the public purse funds political parties at the national level and their politically aligned foundations to an amount of around R125 per person per annum. That is around R65 per person to the political parties and around R60 per person per annum to the political foundations. These figures are derived through the simple calculation of dividing the total spends from the public purse at South African PPP by the total population of Germany.
5.2 The public party-funding regime of Sweden
Party funding in Sweden also has two dimensions. The first being funding directly to the party, and the second to party-aligned foundations.
5.2.1 Public funding of Swedish political parties
5.2.1.1 Restrictions of donations to political parties
There are no restrictions on private funding to political parties in Sweden, except for the fact that donations may not be made anonymously. Any donation to a political party needs to be declared and the party, in turn, has to declare such donation to the authorities (Jonsson, 2022).
5.2.1.2 The various forms of public funding that Swedish political parties are entitled to
In terms of public funding, all monies go directly to the party, either to the party headquarters or to the party groups within the Parliament. The total amount of this direct public funding contribution to the political parties in Sweden amounts to around SEK 400 million (Jonsson, 2022).
In terms of determining the allocations to the various parties, around twenty-five percent of the total allocation is allocated equally to the parties represented in the national Parliament, whilst the remaining seventy-five percent is allocated proportionally based on the parties’ percentage share of the total number of MPs in the national Parliament (Jonsson, 2022).
No public funding is made available to Members of Parliament (MPs) to, for example, assist them in running constituency offices, or to support their constituency work. The rationale for this, is that in Sweden voters vote for parties on a proportional representation basis and not on a constituency basis. Of course, parties are free to make allocations to MPs to set up offices and organise constituency activities. In such event, however, the allocation is made out of the party resources and does not constitute an additional allocation from the state (Jonsson, 2022).
The only other source of public funding to the political parties is a limited contribution towards defraying election expenses, which elections are normally held every four years. In total, this amounts to around only SEK10 million (Jonsson, 2022).
The Swedish public funding of political parties is therefore a very simple system, which they consider important to ensure transparency as to the amount of public funds being channelled to political parties. Since there is a single identifiable source, there is no ambiguity or need to research and compile a list of contributions from a multitude of state entities (Jonsson, 2022).
5.2.1.3 Incentives to encourage individuals/corporations to make donations to political parties
Entities making donations to political parties in Sweden may, in terms of the party-funding legislation, make the donations without being subjected to paying donations tax. On the flipside, political parties need also not pay donations tax on donations received from any entity (Jonsson, 2022).
5.2.1.4 Indirect public funding
Given the simplicity of the Swedish public funding system, there are no sources of indirect public funding. For example, no free time is given on the public broadcaster platforms. If parties wish to advertise, they will pay normal commercial rates. This does, however, not preclude broadcasters to host normal actuality and news programmes in which political parties are free to participate (Jonsson, 2022).
5.2.1.5 Private funding versus public funding of political parties ratio
Generally speaking, ninety percent of party funding comprises public funding, and only ten percent comprises private funding. There are two exceptions, namely the Social Democratic Party (SDP) and the Centre Party. The SDP receives considerable funding from dividends they receive from companies that they own, including a major lottery company. And the Centre Party receives income from their capital investments. Some years ago, they sold newspaper companies that they owned, from which sale they generated considerable income, which they converted into capital investments (Jonsson, 2022).
The SDP receives around twenty-nine percent of their income from their company investments and around only one percent from private individuals and/or entities, and seventy percent from public funding. The Centre Party also receives around seventy percent from public funding and around thirty percent from their capital investments (Jonsson, 2022).
The SDP also receives some contributions from the trade unions, which in the last year amounted to some SEK 8 million (Jonsson, 2022).
Thus, in summary, the bulk of party funding to political parties in Sweden is public funding, without which, parties would not be able to function effectively.
5.2.1.6 Quantifiable funding to support political parties
The public funding for the political parties at a national level in Sweden for 2022 amounted to at least SEK 400 million.
In addition to the aforementioned, is a limited amount of around SEK 10 million as a contribution towards off-setting election expenses, held every four years. Thus, over a four-year period it would amount to around SEK 2,5 million. For the purposes of this study, given the limited nature of the income, it is not taken into consideration when undertaking the comparative study.
5.2.2 Funding to party-aligned political foundations
As in Germany, Sweden also has politically aligned foundations. But in contrast to the German foundations, who have both a domestic and international focus, in Sweden they are tasked with mainly international solidarity and advocacy. They play a very limited role in Swedish politics and policy development. They work globally for democracy, human rights, peace and social justice, and support sister parties and organisations in official development assistance (ODA) countries (Sundström, 2022).
Unlike Germany, there is no annual funding mechanism for the foundations. The Swedish foundations apply to the Swedish International Development Cooperation Agency (Sida) for project funding and for the funding of communication activities (Sundström, 2022).
5.2.2.1 Quantifiable funding to support political foundations
Whilst funding varies from year to year, the total amount of funding is in the region of SEK 100 million (Sundström, 2022).
5.2.3 Sweden–South Africa Purchasing Power Parity (PPP)
5.2.3.1 PPP in relation to direct public funding to political parties
The equivalent purchasing power of SEK 400 million allocated to the Swedish political parties at a USD 2021 PPP factor of 8.708853 (OECD, N.d.) equates to USD 45,930,273. In turn, at a USD:ZAR 2021 purchasing power parity factor of 7.168097 (OECD, N.d.) it equates to R329,232,656.
(Allocation in Swedish krona ÷ SEK:USD PPP factor) x USD:ZAR PPP factor
That is: (SEK 400,000,000 ÷ 8.708853) x 7.168097
45,930,273 x 7.168097
= ZAR 329,232,656
5.2.3.2 PPP in relation to funding to politically aligned foundations
The equivalent purchasing power of SEK 100 million allocated to the Swedish political party aligned foundations at a USD 2021 PPP factor of 8.708853 equates to USD 11,482,568. In turn, at a USD:ZAR 2021 purchasing power parity factor of 7.168097 (OECD, N.d.) it equates to R82,308,164.
(Allocation in Swedish krona ÷ SEK:USD PPP factor) x USD:ZAR PPP factor
That is: (SEK 100,000,000 ÷ 8.708853) x 7.168097
11,482,568 x 7.168097
= ZAR 82,308,164
5.2.3.3 PPP in relation to the funding of the Swedish party-political dispensation as a whole
The combined value of public funds allocated directly to political parties and to politically aligned foundations in Sweden currently amounts to SEK 500 million per annum.
At South African PPP it amounts to around R411,540,820.
5.2.3.4 Public annual-spend per person on political parties and foundations
Given that the Swedish population as of 2021 was 10,517,669 (Statista, 2022c), of which 8,589,000 are older than fifteen (Statista, 2022c), it means that the public purse funds political parties at the national level and their politically aligned foundations to an amount of around R48 per person per annum. That is, around R38 per person to the political parties and around R10 per person per annum to the political foundations. These figures are derived through the simple calculation of dividing the total spends from the public purse at South African PPP by the total population of Sweden.
5.3 The public party-funding regime of the Netherlands
5.3.1 Public funding of Swedish political parties
5.3.1.1 Restrictions of donations to political parties
A new law called the “Financing of Political Parties Act” processed by the Ministry of the Interior came into effect on 1 January 2023. The new law has stricter provisions in terms of transparency measures but will not impact the quantum of public funding to the political parties materially (Bartelsman, 2022).
In the Netherlands system there is a lot of focus on transparency. Any private donation exceeding €4,500 has to be registered with the Kiesraad. As from 1 January 2023 this has been reduced to €1000. The Kiesraad then publish the list of donations annually online. For natural persons the name and city and amount are published, but for entities the name of the entity, the full address and amount is published (Bartelsman, 2022).
There is a limit with regard to anonymous donations. Currently, no anonymous donation exceeding €1,000 may be accepted. Should an anonymous donation be received that exceeds €1000, the amount exceeding €1000 has to be transferred by the party to the Ministry of the Interior. This has been reduced to €250 as from 1 January 2023 (Bartelsman, 2022).
With effect from 1 January 2023, the upper threshold limit for donations from any person or entity is €100,000 per annum (Bartelsman, 2022).
Any donation above €10,000 has to be registered with the Ministry of the Interior within three working days of its receipt (Bartelsman, 2022).
And as from 1 January 2023 no donation may be received from outside of the Netherlands, except from Dutch citizens living abroad. In other words, only Dutch citizens and/or entities may make donations to the political parties registered in the Netherlands (Bartelsman, 2022).
5.3.1.2 The various forms of public funding that the Netherlands political parties are entitled to
An annual subsidy, adjusted annually for inflation, is made available to political parties that have at least one member elected to either the Upper or Lower House of Parliament; and the party needs to have a registered party membership of at least 1000.
The quantum per party is determined based on three criteria:
There is a base amount that is divided equally between qualifying parties. The current basic grant is €316,823 per annum per party, with one or more seats in either the House of Representatives or the Senate.
An additional amount is divided pro rata amongst the parties based on the number of representatives in Parliament. They receive €93,574 per annum per seat that a political party has.
And yet a further amount that is divided pro rata based on the number of registered party members – “For each member a political party has, they receive an amount that equals €3,412,190 divided by the total number of members of all parties”.
With the new law that has come into effect in January 2023, the aforementioned amounts have been reduced to €263,823 for the basic grant, €80,694 per seat and €2,966,317 for the membership subsidy (Bartelsman, 2022).
The total quantum of the subsidy, inclusive of the core funding and the funding to the institutes/youth formations, currently amounts to €27,646,000 million per annum in total (Bartelsman, 2022).
The aforementioned funding is paid over directly to the political parties.
In addition, there is funding made available to the groups within Parliament, for which an amount of €41,649,000 is set aside by the Parliament. This is intended to fund the work of the parties’ elected representatives to carry out their parliamentary duties in Parliament (Bartelsman, 2022).
There are no election spending caps for political parties in the Netherlands (Bartelsman, 2022).
5.3.1.3 Incentives to encourage individuals/corporations to make donations to political parties
There are incentives made available to individuals and entities, provided that the parties are registered as public benefit foundations. Parties are free to decide if they want this status or not. In such case, donations may be deducted from one’s income taxes (Bartelsman, 2022).
5.3.1.4 Indirect public funding
Free advertising slots are made available on the public broadcasters, not only during election periods, but throughout the political parties’ term of office. The number of slots is divided equally amongst all parties, but the order of running the adverts is determined through the drawing of lots (Bartelsman, 2022).
The Ministry of Education, Culture and Science decides on what the total amount of hours to be dedicated for these purposes will be. Additional hours are made available during election campaigns for the House of Representatives and the European Union.
For 2022, 53 hours and 50 minutes were made available for radio broadcasts and 12 hours and 45 minutes for television broadcasts. In addition to the 12 hours and 45 minutes on television, there is a further 12 hours and 45 minutes set aside for recurring broadcasts. During elections, each participating party is assigned 20 minutes of radio broadcasts and 18 minutes of television broadcasts.
There is no reimbursement for election expenses (Bartelsman, 2022).
5.3.1.5 Private funding versus public funding of political parties ratio
The exact split is not readily available, but in a 2014 exercise conducted by the Kiesraad to determine the dependency of political parties on public funding, the ratio was found to be around 35:65 percent public to private funding. This has changed over time. It is now estimated that the ratio is around 50:50, and with the rules becoming more stringent, it is anticipated that the parties will trend towards a higher reliance on public funding (Bartelsman, 2022).
5.3.1.6 Quantifiable funding to support political parties
The public funding for the political parties at a national level in the Netherlands for 2022 amounted to at least €69,295 million, made up as follows:
5.3.2 Public funding to political foundations
The Netherlands believe that in a democracy it is important for political parties to gain new members (through their youth organisations), and to develop their policies (through their political science institutes). It is also deemed important, due to globalisation, to maintain and build connections with likeminded political parties in other countries. Thus, public funds are allocated to institutes established by the parties for these purposes (Bartelsman, 2022).
The political party itself submits a request for public funding to the Democracy Department of the Ministry of the Interior. As part of their application, they would have to indicate whether or not they have a youth organisation, political science institute and/or an institute for international activities. Should they fulfil the admissibility criteria for these institutions, the money will be given to the political party itself, which then has to give it to respective institutions. This money cannot be used by the political party for other means. These funds are included in the €27,646,000 alluded to in paragraph 5.3.1.2. above.
The following amounts are currently allocated:
Each party with a political science institute receives a basic grant of €136,262 and an additional amount of €14,006 per seat.
Each party with a youth organisation receives an amount per seat that equals €546,224 divided by the total number of seats of the parties with a youth organisation.
They also receive an amount for each member of the youth organisation that equals €546,224 divided by the total amount of members of youth organisations. But a youth organisation needs to have at least 100 members between the ages of 14 and 27 years who pay a yearly contribution.
Each party with an institute for international activities receives an amount that equals €698,628 divided by the total number of parties that have an institute for international activities. Additionally, they receive an amount per seat that equals €1,005,343 divided by the total number of seats of political parties with an institute for international activities.
As from January 2023, the new division is:
Youth organisations will receive a basic grant of €214,344 divided by the number of youth organisations. They will receive an amount per seat that equals €696,618 divided by the total number of seats of political parties with a youth organisation. For each member, the youth organisations receive an amount that equals €160,758 divided by the total number of members of the youth organisations.
For the political science institutes the basic grant will change to €195,849, and the amount per seat will change to €20,372.
(Bartelsman, 2022)
5.3.3 The Netherlands–South Africa Purchasing Power Parity (PPP)
5.3.3.1 PPP in relation to direct public funding to political parties
The equivalent purchasing power of €69,295,000 allocated to the Netherlands political parties at a USD 2021 PPP factor of 0.770 (OECD, N.d.) equates to USD 89,993,506. In turn, at a USD:ZAR 2021 purchasing power parity factor of 7.168097 (OECD, N.d.) it equates to R645,082,184.
(Allocation in euro ÷ Netherlands euro:USD PPP factor) x USD:ZAR PPP factor
That is: (€69,295,000 ÷ 0.770) x 7.168097
89,993,506 x 7.168097
= ZAR 645,082,184
5.3.3.2 Public annual-spend per person on political parties and foundations
Given that the Netherlands population as of 2021 was 17,48 million (Statista, 2022d), of which 84,45 percent – that is, 14,761,860 – are older than fifteen (Statista, 2022d), it means that the public purse funds political parties at the national level and their politically aligned foundations to an amount of around R43,70 per person per annum.
5.4 The public party-funding regime of South Africa
Party funding to political parties in South Africa is made via the Independent Electoral Commission and from the budget of Parliament. There is no public funding made available to party-aligned political foundations.
5.4.1 Public funding of South African political parties
The restrictions and conditions attached to both private and public funding to political parties in South Africa has been fully covered in the Legislative Review (Chapter 3) of this paper.
In terms of the public funding, all monies go directly to the party, either to the party headquarters via the Independent Electoral Commission or to the party groups within the Parliament.
The total amount of this direct public funding to the political parties as administered by the Independent Electoral Commission amounts to R342,077 million (RSA, 2022).
No public funding is made available directly to Members of Parliament (MPs) to, for example, assist them in running constituency offices, or to support their constituency work. But funds are made available to parties represented in Parliament in three forms:
To fund constituency offices and constituency work, an amount of R372,131,088
To assist party leaders in Parliament to run their offices, an amount of R12,425,832
To the party groups represented in Parliament for them to carry out their parliamentary work, an amount of R127, 312,728.
That is a total amount of R511,869,648 (Parliament, 2022).
There are no provisions in South African law for the state to make a contribution towards the defraying of party election expenses (Anonymous, 2022).
5.4.2 Indirect public funding
Political parties participating in national and/or municipal elections benefit from free public election broadcasts (PEBs). The public broadcasters are compelled to offer parties free advertising time on their programmes during the official election period. Private and community broadcasters may also offer PEBs, but must then comply with the regulations as set out by the Independent Communications Authority of South Africa (ICASA). The benefit only extends to the time slots and not to the production costs of the advertisements (RSA, 2014).
Broadcast Service Licensees (BSLs) that broadcast PEBs must make available, “every day, throughout the election broadcast period, ten (10) time-slots of fifty (50) seconds each” for the broadcast of PEBs (RSA, 2019b).
The formula for airtime allocation in respect of PEBs is:
There is a basic allocation (25%) of slots allocated to all parties contesting seats in the National Assembly.
Fifteen percent (15%) of slots to be allocated to all parties based on the current seats in the National Assembly.
A further fifteen percent (15%) of slots allocated to all parties based on current seats in the Provincial Legislature pro rata.
Fifteen percent (15%) of slots to be allocated according to the number of candidates fielded by parties in the National Assembly list.
Fifteen percent (15%) of slots to be allocated according to the number of candidates fielded by parties in the National Assembly regional list.
Fifteen percent (15%) of slots to be allocated according to the number of provincial legislature candidates fielded by parties throughout the country.
(RSA, 2014)
5.4.3 Private funding versus public funding of political parties ratio
In an interview with a political party financing expert, the expert suggested that South African political parties are still largely dependent on private sources of funding. The ratio of private to public funding has, however, materially declined post the introduction of the PFPP Act. Whilst the ratio used to be around two-thirds to one-third, it has narrowed to around sixty percent to forty percent (Anonymous, 2022).
5.4.4 Quantifiable funding to support political parties
The public funding for the political parties at a national level in South Africa for 2022 amounted to R853,946,648 million, made up as follows:
5.4.5 Public annual-spend per person on political parties
Given that the South African population as of 2022 was around 60,6 million (Statista, 2022a), of which 43,587,000 are older than fifteen (Statista, 2022a), it means that the public purse funds political parties at the national level to an amount of around R19,59 per person per annum.
Chapter 6:
Discussion of findings
The findings of this study suggest that the South African democracy, as it pertains to the funding of political parties, is substantially inadequate for them to perform their constitutional obligations.
In reaching this conclusion, three factors were considered:
The amount of public funds allocated to the political parties
The interplay between political parties and politically aligned foundations
The impact of the private funding of political parties’ transparency regulations on the funding of political parties.
But first, a note on why it is important to ensure that political parties are enabled and capacitated to function effectively.
It is recognised that public trust in political parties around the world has declined. On average, in 2021, only four out of ten citizens trust their governments (OECD, N.d.). For South Africa, it is equally bleak. In an IPSOS survey undertaken on behalf of the Inclusive Society Institute in 2022 (ISI, 2022), it was found that there was extremely low trust in South African political parties. The indexed trust score, for example, was only 8 for the ANC, -28 for the DA and -23 for the EFF. This is in large measure due to citizens not experiencing democratic dividends that have sufficiently improved their lives, and government ineptness and corruption that have undermined development and progress. To generalise their view, democracy serves only the political elite.
Given these sentiments, it is safe to assume that taxpayers are reluctant to throw public money to political parties and will be even more reluctant to usher in a more favourable dispensation. Which makes the findings of this study particularly difficult to promote.
But public distrust and reluctance needs to be weighed against the greater damage that will be caused to democracy and societal progress, should the political parties not be able to effectively carry out their constitutional functions. Consider:
The quality of legislation when political parties do not have the means to properly evaluate their impact on society, their constitutionality, and even whether it is fiscally affordable. This often leads to bad legislation, poor governance, and fiscal stress.
The effectiveness of political parties to hold government leaders to account, because they do not have the means to investigate, and test decisions, or to legally challenge unlawful and unconstitutional measures. There are ample examples around the world where democracies have slid into totalitarianism because parties have, due to insufficient means, been incapable of mounting effective challenges.
The widening gap between public representatives and their voters due to them not being able to properly service their constituents. For them to do so requires offices, staff, and administrative and logistical support, all of which require means.
The feeding of populist rhetoric and the promotion of ‘pie-in-the-sky’ policy proposals emerging from party policy development processes, when parties do not have the means to empirically research, interrogate, cost and consult their proposals. This is most probably the single most important contributor to the notion of politicians making empty promises, which, in turn, feeds distrust in democracy and the political dispensation.
The difficulty to effectively participate in the ‘battle of ideas’ when parties do not have the means to communicate the policy proposals and views. To do so requires a media presence, advertising and effective campaigning, all of which will come to nought in the absence of funds. And then the electorate ask why there are no credible alternatives, whilst viable alternatives could very well be available, but not communicated.
It is with these considerations in mind, that the public policymakers need to, in the author’s view, be bold and withstand any public critique of improvements to the South African public funding of political parties’ dispensation. Any reasonable and informed citizen should understand the difficulties for the range of political parties to deliver an effective political programme on a combined mere R19,59 per person per annum budget, which is the current reality.
And then there is the question of corruption and political trickery through the misappropriation of state resources, and the use of sometimes dubious private funding. The popular argument goes somewhere along the lines of ‘private money and politics should not mix’. But how is politics practiced when there is no money.
This study has again underlined, in the interest of clean governance, the need for transparency in the private funding of political parties. But the reality is that transparency comes at a cost, since it leads to less private funding in the democratic dispensation. And thus, to avoid the collapse of parties and the democratic dispensation, the resultant vacuum of private funding needs to be offset with public funding.
The general rule is that when transparency regulations are low, it can be expected that private donations will be easier to obtain, and therefore public funding can be less generous. But the inverse also holds true. When transparency regulations are strict, private donations to the political parties will dry up, and therefore, in order to ensure effective party participation in the political order, equitable public funding needs to be made available.
In South Africa, this study reveals, the introduction of welcome strict rules related to the public declaration of private funding of political parties, was not accompanied by the requisite compensatory fiscal adjustment to the public funds to be made available to the political parties, to enable them to effectively perform their duties.
6.1 Comparative analysis: The amount of public funds allocated to the political parties in selected jurisdictions
In this section, a comparison is made as to the public funds that are made available to fund the democratic dispensation in the four jurisdictions that form part of this study. In the first table hereunder, the amounts budgeted from the public purse in 2022 are shown, and in the second table, what it equates to per person per annum. All currencies have been converted from their local denomination to South African rand and are reflected at purchasing power parity.
From the above breakdowns, one can draw a clear conclusion that the South African political party public funding regime is inadequate when compared to the other jurisdictions. This statement is made against the backdrop of all the jurisdictions being, in the main, dependent on public funding.
Whilst it could have been argued that South Africa prior to the introduction of the PFPP Act could endure minimum public funding, in that they were receiving generous private funding, the introduction of the Act has changed the playing field. South African parties are currently heavily dependent on public funding, which funding is, unquestionably, insufficient.
When considering the amounts allocated directly to the parties (not including the independent foundations), South African parties receive a mere third of those in Germany, and around half of those in Sweden and the Netherlands. This is reflected at purchasing power parity, therefore comparing apples with apples.
In addition to the public funds made available to the political parties, it is a well-established convention to fund politically aligned foundations as well. In Germany and Sweden these foundations, whilst politically aligned, are independent and autonomous, and thus the public funding is made to them directly. In the Netherlands there is a symbiotic relationship between the party and the foundations, and thus their funding is made through the parties.
Germany has a particularly generous public funding regime for the political foundations. For South Africa to follow suit would be acutely aspirational and, in the author’s view, not realistic within the current environment.
That said, the functioning of the politically aligned foundations seems to be an intricate part of the holistic operation of the party-political environment, since they play an enormously important role in the development of public policy and facilitate, in large measure, the ‘battle of ideas’, so important in any well-functioning modern democracy. It appears to be a glaring omission within the South African political scene.
Furthermore, the foundations play an crucial role in establishing and maintaining inter-party liaison and cooperation between themselves and likeminded parties internationally. This is important given globalisation and the pivotal role of multilateral institutions. For parties to promulgate and explain their policy positions within the international community, requires from them to connect and coordinate globally. This too, is a glaring omission within the South African party-political environment.
Chapter 7:
Conclusions and recommendations
This study into whether the South African political parties are adequately funded to carry out their constitutional mandate has revealed that there is indeed an urgent need for the policymakers to re-assess the funding of democracy in South Africa. One cannot expect quality participation within the democratic machinery, if the resources to enable and capacitate such is insufficient. The author also suggests that it is fair to conclude that the introduction of the PFPP Act has materially impacted the parties’ ability to attract funding.
Coupled with an inadequate response by Treasury to significantly increase the public funding of political parties, the vibrancy and efficiency of South Africa’s democratic dispensation is threatened. Political parties form the bedrock of any democracy, and if they are not able to function effectively, society must accept that the quality of democracy will be undermined.
What has become clear through this study is that when transparency rules relating to the disclosure of funders of political parties is increased, a decline in such donations to parties is inevitable. There is a clear linkage between transparency rules on the one hand, and the private funding of political parties on the other.
It is apparent from the country studies contained in this research, that the common truth appears to be that when transparency rules are increased, they should be accompanied by a concomitant increase in public funding.
This has not been the case in South Africa. The legislature has introduced stringent disclosure rules that rank amongst the strictest in the world, yet the public funding of parties has not significantly changed since pre-introduction of the PFPP Act. This is an obvious deficiency that requires urgent attention by the policymakers.
7.1 Conclusions
Five general conclusions are drawn from the study:
Democracy comes with a price tag, and it is not cheap. As with anything, if it is not properly funded, society will have to lower its expectations as to what their democracy will deliver. The carrying out of electoral and civic awareness campaigns, proper policy research, international cooperation, connectivity with the electorate, etcetera, are all crucial for a well-functioning and people-orientated democratic dispensation. If parties are underfunded, they will not be able to meet the legitimate expectation of the citizenry.
There is a trade-off to be made between competing budget interests. For example, between public services, such as social benefits, and the funding of democracy. But both are equally important. The quality of public services depends on the quality of public representation, and the quality of public representation depends on a fair share of the budget. An underfunded democracy will inevitably result in mediocre party performance within the democratic dispensation.
The tension between the executive arm of government and the legislature is deepened when political parties are not adequately equipped to carry out their oversight role, since under-capacitated political parties cannot be expected to compete on an equal footing to the executive, who have considerable means at their disposal.
When examining the adequacy of public funding, it needs to be considered in a holistic fashion. One has to weigh the total contribution to parties, direct and indirect, from the public purse. That is, both to parties as institutions, and to empower parties within the legislature. But also, to external structures, such as think-tanks and foundations that feed the democratic policy contestation. This is an important feature of the European dispensation considered in this study, but which is blatantly absent within the South African dispensation.
Benchmarking against the jurisdictions that form the baseline study of this research would suggest that the South African democracy, insofar as it relates to the public financing of political parties, is materially underfunded.
7.2 Recommendations
The author ventures three recommendations for public policymakers to ponder:
Treasury should materially increase its contribution to the Represented Political Party Fund (RPPF) administered by the Independent Electoral Commission, to more realistic levels. Failure to do so will undoubtedly result in the weakening of political parties at the expense of a well-functioning democracy.
It is common cause that the policy development processes of political parties and their international work, amongst others, are not adequately catered for in the South African dispensation. Policymakers should consider the introduction of such politically aligned think-tanks/foundations in order to strengthen the empirical underpinning of the policy discourse in the country. This is a crucial deficiency in the South African system. The promotion and introduction of ill-informed national policy can prove disastrous for socio-economic stability and fiscal sustainability. These dangers are heightened when political role-players propagate irrational and untested policy ideas. Political think-tanks can play an important role to moderate the national policy dialogue. Whilst it is apparent that South Africa cannot afford as generous a dispensation as that of Germany, funding along similar lines to that in the Netherlands and Sweden is achievable.
The PFPP Act should not serve to discourage private funding to political parties. Political parties are important to democracy and a culture of contributing to the political dispensation should be encouraged. To this end, it may be prudent for the South African Revenue Service to – as seems a feature in many mature democracies – introduce incentives to encourage such contributions, through, for example, allowing for the exemption of donations taxes on donations to political parties and/or the tax deductibility thereof.
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This report has been published by the Inclusive Society Institute
The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals.
Email: info@inclusivesociety.org.za
Phone: +27 (0) 21 201 1589
Web: www.inclusivesociety.org.za
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