Alp Cash Crisis Forces Poll Rethink

The Age

Wednesday January 18, 1995

SHANE GREEN

An emerging financial crisis has forced the Labor Party in Victoria to consider an unprecedented pitch to business for cash to pay for its next election campaign.

The state branch is carrying a debt of more than $500,000, and has watched its finances steadily eroded by dwindling revenue from trade unions a principal source of income.

It has also been caught in an environment of increasingly restricted access to bank loans, a traditional source of election funding it has normally repaid from donations.

Under an alternative plan, the party would operate a modest overdraft and attempt to pay for the campaign by donations in advance, drawn largely from the corporate sector. The election is due by October next year.

The state ALP has raised funds in the business community before, but this latest effort would result in the party placing a much greater emphasis on wooing the corporate dollar.

Labor spent $3 million on its successful 1988 campaign, most of which was recouped by donations after the election. It spent $1.5 million on its losing 1992 campaign. To fund a campaign with only basic television advertising, the ALP would have to spend at least the same amount.

The change of approach has still to be endorsed by the party, but seems certain to be adopted, mainly because Labor has little alternative.

The lack of access to bank finance is partly due to more cautious lending policies adopted since the last recession, and partly the decline in the value of ALP properties against which overdrafts are secured.

It also reflects the underlying financial problems of the Victorian ALP, which has been seriously hit in recent years by the decline in affiliation fees paid by unions, in line with the decline in union membership.

According to the Australian Bureau of Statistics, union membership in Victoria has fallen by 204,000 to 724,000 over the past five years.

In the 12 months to last June, the drop was 46,000 the biggest fall in the country.

About three quarters of the state's unions are affiliated with the ALP, paying an annual fee of $2 a member. On this estimate, the Victorian branch has lost about $300,000 in income in the past five years.

The ALP state secretary, Mr John Lenders, declined last night to discuss the party's financial position, or its funding strategy.

``Our accounts are public, we make them public at our conference . .

. It's an internal matter. No comment."

The October accounts show an overdraft of $505,423, which is believed to have grown. Some party sources say the branch is losing $2000 a week.

The financial problems have forced the branch to look at the cost of its operations, with the possibility of a reduction in the number of organisers or not replacing staff when they leave. The option of selling the party's offices in Carlton has been floated, but has not received any support.

Labor's chances of success of raising election funds in the corporate sector are problematic. The Liberal Party, which substantially outspends Labor in state campaigns, will receive strong backing from business, and Liberal sources say the party's finances are extremely well-placed.

The chief executive of the Victorian Employers Chamber of Commerce and Industry, Mr David Edwards, yesterday cast doubt on whether Victorian business would support Labor financially. (VECCI does not contribute to political parties, although some of its members do).

He said laws on disclosure of funding and the economic conditions had made business less inclined to give to parties.

``As far as the state ALP is concerned, obviously there's strong support for the pro-business policies of State Government . . . and the ALP is yet to convince business that its better able to manage its relationship with trade unions. It's certainly going to have those difficulties."