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Parties and Campaign Financing: for the Moment

Parties and Campaign Financing: for the Moment, it’s Only Comedy

There's a general understanding that Hungarian party and campaign financing is in great need of an overhaul. As the law on this matter can only be amended by two thirds in parliament, the opposition and government should agree on a solution. Since there is a mutual lack of trust towards each other from the two sides of the political spectrum, the analysis provided by the Perspective Institute suggests that solution may only be expected from the new parliament to be formed after the elections of spring 2010.

Although, Hungarian party and campaign financing is in great need of an overhaul, there is hardly going to be a breakthrough in this issue in the remaining term of the current parliament. Since the law on this matter can only be amended by two thirds, the opposition and government should agree on a solution. However, the atmosphere of trust has been missing since 2006: none of the two sides of the political spectrum believes the other one has honest intentions. It is likely that only the next parliament will be able to create real reform.

All parties are aware that the current campaign and party financing system is outdated, so, they all want to reform it – still, there hasn’t been any change since 2006. This is despite the fact that there have been plenty of concepts, talks and letters of intent in the past four years. In 2007, the Eotvos Karoly Public Policy Institute and the Perspective Institute organized a five-party consultation whose final declaration fell through in the last moment, just before the signing ceremony.

The governing parties blamed the opposition and vice versa. That was followed by a campaign financing relay: civil organizations called attention to a grey zone worth an estimated HUF 10 billion in which politics are too close to business life. Later, two organizations, Transparency International and the Freedom House took the helm to lead civilians demanding a change. Later, the governing Socialists (MSZP) and the largest opposition party Fidesz both put forward their own draft laws, while the civilians made their own proposal to Parliament based on the common points of the parties’ motion.

The gist of the governing side’s concept is that during the campaign (during at least 72 days, before the elections), the maximum amount that can legally be spent on one candidate on average should be raised as it is clear that today, it is impossible to conduct a campaign from the HUF one million per candidate set back in 1997.

On the other hand, Fidesz would like to reform the structure of campaign expenditure, thus keeping to the clearly unreal spending cap. Similarly to the French model, the opposition party would like free airtime for political parties participating in the elections on public service television and a ban on costly campaign advertising on commercial television.

Surprisingly enough, the parties concerned more or less agree on what other measures are necessary. Such issues include the introduction of the campaign account (in order to make revenue and expenditure transparent), the reduction of the duration of the campaign and strengthening the supervisory powers of the State Audit Office (SAO). So, the debate is on details of less importance. Still, no decision has been reached so far, and is not likely to be reached during the term of the current parliament as the most fundamental condition of the reform is missing: mutual trust.

Party and campaign rules can only be changed with a two-thirds majority, which means that given the current parliamentary balance of power, no decision can be made without both of the two major parties, MSZP and Fidesz. An agreement between them can be ruled out as they both lack the necessary confidence in each other. The governing side believes Fidesz wants to veto all their reform measures, while the opposition party is of the view that the governing party does not want an agreement but rather wishes to use this topic for enhancing its public image.

However, it would be a mistake to believe that it is only the parties of the government or the opposition that are responsible for the current situation in campaign financing. On one hand, corruption, the informal economy and bribe-money are present in all sectors, and it is unlikely that the operation of the political parties and their election expenditure happen to be the areas where a clear situation could be created. On the other, institutions that function according to the current rules do not really fill the role intended for them. However, no matter how perfect a legislative text is if the spirit of the law does not apply.

The State Audit Office, which regularly examines the financial management of political parties receiving public funding, for example, has been especially passive during the past decade, and with a few exceptions, has always approved the parties' balance sheet. Although, the SAO's independence is ensured (its president was elected with a two-thirds majority of parliament in 1997 for 12 years), the prestigious organization escaped criticism. The SAO made this by being aware of all of legality, since the parties classify their campaign expenditure above the ceiling as "operating costs" - against the spirit of the law, but true to the letter. It tells a lot about the planned campaign reform that it would not eliminate this accounting practice. The proposal only focuses on campaign financing and does not deal with party financing.

In this situation, it is unlikely that the 2010 elections would take place according to the new campaign rules. Parties have not really applied self-restriction. However, the next parliament, elected under the current rules, will be in need of doing something. The election system and the issue of the transformation of parliament are expected to be on the agenda, thus, the rules of campaign financing cannot be left untouched, either. Therefore, the real issue here is not whether there would be campaign. financing reform until 2010, but rather what reform will be after 2010. Can a new government majority create a win-win situation, exercise self-restraint (the current opposition Fidesz repeatedly criticizes government-funded public information campaigns that they believe strengthen the ruling force’s political messages), and to extend transparency?

Still, the current fight is not in vain. With their continued initiatives, civil organizations have raised awareness of the problem in society and this could be the first step towards a solution.

The Perspective Institute

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