Dastyari shows foreign political donation ban needed

Sometimes a little money can go a long way. The sum of $1670 seems inconsequential at first, like those rocks and reefs whose ownership is disputed by China and its neighbours in the South China Sea.

Yet when a Chinese business agreed to pay that amount to cover Labor Senator Sam Dastyari's personal travel debt, it presumably did not expect the effect would be so profound.

The worthy venture of building an Australia-China relationship of mutual trust and respect has been harmed. Imagine how Beijing would react if entities linked to a powerful foreign government were paying travel and legal bills for rising stars in the Chinese polity.

This could be the moment when the expensive tapestry of China's "soft power" influence in Australia - across politics, business, media, universities and a divided Chinese-Australian community - begins to unravel. At the very least, these activities will now be subject to greater scrutiny.

But there has been even more unintended bang for the buck. For a bargain sum, the donor, Zhu Minshen's aptly named Top Education Institute, has given all Australian voters what educators these days call "a teachable moment".

It is a priceless lesson in the vulnerability of Australian democracy to foreign influence in a contested Asia.

The government and thankfully robust reporting from The Australian Financial Review has been quick to uncover the senator's extraordinary remarks in support of China's position on the South China Sea disputes that directly contradict his own party, Australia's allies and most of China's Asian neighbours.

China is desperate to prevent international solidarity against its construction of islands and armed bases in the South China Sea. Pressure has intensified since the Permanent Court of Arbitration in The Hague found the basis of China's more expansive claims illegal under international law. As the Financial Review reported, Dastyari was held up as a key international supporter by the Communist Party's People's Daily newspaper the day after that ruling.

Thankfully, the $1670 lesson has come early enough in the story of Chinese involvement in Australia's domestic affairs for something to be done. The government and the Labor opposition face a public clamour to ban foreign political donations.

Until that happens, the Greens - who already refuse foreign cash - find themselves in the unfamiliar armour of the national interest and national security.

If the Coalition and Labor electoral machines really can't function without millions of dollars from interests linked to an authoritarian foreign power, then Australian democracy is in trouble.

Right now, Australia stands out as one of the few countries in the Asia-Pacific - or among developed democracies worldwide - that allow significant foreign funding of political parties. It is hard to believe six-figure donations from corporates linked to the Chinese Communist Party are gestures of admiration for our electoral system.

Beijing wants to neutralise Canberra's opposition to Chinese strategic moves in Asia. China seeks to weaken our vital security alliance with the United States and dissuade Australia from offering even moral support to Asian countries, such as Japan, when their interests clash with China's.

Alternately, if Chinese political largesse is meant merely as "protection money" paid to "bandits", as property developer Huang Xiangmo characterised it in the Chinese press last week - well, that is hardly reassuring.

Foreign funding may not buy real sway over decision-makers. Huang is reported to have openly bemoaned that it doesn't. But the mere possibility that it could be seen that way is the heart of the problem.

Perception is critical. What is at stake is national credibility, and therefore our ability to advance our national interests.

Voices seeking to distance Australia from its American ally argue that a more independent foreign policy would boost our credibility in Asia. They are right. Independence - sovereignty in national decision-making - is precisely what is at stake with the unchecked growth of Chinese Communist Party activity in Australia's domestic affairs.

Australia's credibility as a serious player in Asia will hardly be helped by any impression it has become deferential to China, or that this has been purchased through Chinese money in our politics.

After all, the rise of Asia is hardly all about China. Australia's geography and partnerships place us in a multipolar Indo-Pacific, not some 21st century rerun of an ancient Chinese tributary system.

Mutual respect and co-operation between Australia and China matters. Relations with India, Japan, Indonesia, Singapore, Malaysia, Vietnam, the Philippines and South Korea, among others, matter too. Those countries are becoming more wary of Chinese power and look for support in numbers from the US, Australia and others with stakes in a rules-based order. Moreover, Australia will have trouble being taken seriously in advocating governance, stability and law in our neighbourhood of south-east Asia or the south Pacific when our politicians look less rule-bound than theirs.

Of course, concerns about Chinese Communist Party interference in Australia go far beyond political cash.

These stretch from reported large-scale cyber espionage and infiltration of Chinese community groups, through to paid channels of influence in universities and the media, to questions of long-term risk around infrastructure investments.

The most intense disquiet about interference in Australian domestic affairs comes from within this country's diverse Chinese community, as affirmed through their outrage at recent attempts to stage concerts venerating Mao Zedong. That gives the lie to cheap claims that security concerns about Chinese influence are driven by racism.

Business should worry, too. As the ABC's Four Corners program recently underscored, reports of Chinese cyber intrusions go beyond breaches of Australian government networks, and reach directly to the business community, including theft of intellectual property.

This threatens Australia's chances of competitive advantage in the cyber age, and weakens our ability to build a diversified economy that can engage with Asia beyond the mining and dining booms. By all means Australian business should seek opportunities with China, but with new sensitivity to geopolitical risk, strategic sustainability and economic coercion - eyes open and cyber back doors firmly closed.

One day Australia may thank the senator and the Top Education Institute as accidental catalysts for a new balance and realism in China policy. A first step would be to ban foreign political donations, as Labor has previously proposed.

There is a rare opportunity now for consensus on this much-needed reform, in the interests of national security, credibility and self-respect.

Professor Rory Medcalf is head of the National Security College at the Australian National University and a nonresident fellow at the Lowy Institute for International Policy.