Business,Politics and Money in Australia: Testing Economic,Political and Ideological Explanations

The flow of business money to political parties is a vital issue for Australian democracy. Nonetheless, there has been no systematic study of why Australian businesses contribute to political parties and why they contribute more to one party than to others. I exploit Australian Electoral Commission data on payments to parties by 450 large businesses over 7 years at the Commonwealth and State levels. Economic characteristics (income and sector) are important to understanding which businesses make political contributions. However, they are little help in understanding how businesses distribute their cash. This is best interpreted as an interaction of ideological bias and political pragmatism. If Labor has the political advantage businesses tend to split contributions evenly between the ALP and the Coalition. If the Coalition has the political advantage businesses overwhelmingly target their contributions on the Liberal and National parties.