Editorial | State financing of political parties

Bernard Grech has publicly admitted the Nationalist Party has a debt mountain of €32 million and is losing tens of thousands every month from its media company.

He posited this as an existential threat for the party and went as far as contemplating the sale of party clubs to solve the problem. Grech also hinted at decisions that may have to be taken concerning the party headquarters in Pietà and the media company owned by the PN.

He has said that the financial problems the PN is facing have not only conditioned how the party portrays itself and conveys its message, but at times has also conditioned the political message itself.

Grech said the party had to solve its debt problems before it can become an effective tool for doing politics.

Finding the solutions is not going to be easy. Leaders who came before Grech tried to cut the debt, even issued a private loan scheme to restructure pending loans, and yet they failed despite cutting costs in the media company.

The PN faces financial ruin and this is a worrying predicament for democracy.

A party that is heavily indebted and financially crippled becomes more vulnerable to blackmail by people with deep pockets and malign thoughts.

It is within this context that the words of Chamber of Commerce President Marisa Xuereb ring loud when she called on political parties to be more transparent and sustainable with their finances.

The PN’s massive debt did not happen overnight and is the result of years of mismanagement and grandiose dreams that saddled the party with expenses it could not afford. An act of contrition is the very least the party should show before it starts to tackle the problem.

But financial problems do not only impact the PN. The Labour Party also has its own financial woes with media reports suggesting that the party’s TV and radio station, ONE, has debts running into €10 million.

Both parties owe utility billing company ARMS millions and have similar arrears with the tax authorities.

Political parties are an essential part of participatory democracy and when they fail to administer their own house well it only breeds disdain and dejection from voters.

Admittedly, political parties have many more constraints than normal businesses when trying to raise funds to function well. They need money to attract talent and reach out to voters but in raising that capital they also have to be careful of ethical and political pitfalls.

Donations remain the primary source of income but unless these are regulated tightly they risk leaving the party beholden to big business.

The spirit of the party financing law was already breached when the PN issued its private loan scheme – ċedoli – since donors remained anonymous.

One solution to cut the dependence of parties on big business money is to have state financing of political parties based on their electoral performance.

This will not go down well with taxpayers but if we want a healthy democracy, we require healthy and professional political parties with no strings attached to anonymous donors or big business.

But any such scheme to support political parties must apply to all those who contest general elections (and satisfy some form of threshold criteria) and be accompanied by rigorous transparency rules.

No public funds should go to finance the companies that belong to the parties and this can only be achieved by fencing off commercial operations. The financial aid must go to the political party to develop policy, and employ and train people.

In this way parties can survive and democracy is safeguarded.