It’s happening again. A passing exchange of pleasantries between Lucinda and Michael in a coffee shop is enough to make a news splash on the likely formation of a new political party. Irish politics has seen it all many times before. The history of the creation of new parties is interesting and colourful though few of them have survived, the political establishment having closed ranks against them.

Clann na Poblachta and the Progressive Democrats did better than most. The Clann was a people’s movement in the 1940s with a mighty slogan, “Put us in to Get them Out”. They did enough to get Dev out and win 10 Dáil seats but in time he outwitted them and they faded.

Similarly, in the 1980s, the PDs were born with a wind of popular support behind them. They lasted somewhat longer than the Clann but were eventually smothered by the political establishment. The chances of a new party today replicating the limited success of the PDs or Clann are slim indeed.

If you're not in, you can't win
Launching a party is easier said than done. The first major obstacle is funding.

Political funding in Ireland has a lot in common with an airport first-class lounge. Once you get in you can eat and drink all you want. The problem is getting through the door.

Any new party trying to access funding will find that the route to the loot is legislatively double-locked. The first lock excludes the new organisation from political party funding, the second from political party fundraising. To the uninitiated, funding and fundraising might sound synonymous, but they are not. Political funding is a grant system through which taxpayers fund elected politicians. Political fundraising is what politicians or parties raise themselves from other sources. Political funding is significant money and very attractive to politicians. Properly used it keeps the political ship steady as well as discouraging political graft.

It is, however, of no value to those enthusiastic and visionary citizens seeking resources to stand for election. Funding becomes available only after a successful election. This is a problem that would face any newly established political party. First it would have to get elected and inside the political tent; then it would qualify for funding. This is arguably an inequity which blocks participation and access.

At this point the frustrated neophyte may well say: “Okay, so no political funding. So what? We’ll fundraise for ourselves!” Sadly, the establishment will always outthink the enthusiast.

Political fundraising sounds easy. Let us say the new party has a number of benefactors with deep pockets ready to sign substantial cheques. This is where the second lock, the legislation on political donations, clicks in.

Deep pockets won't help
That legislation, whose purpose is to ensure transparency and accountability, is generally reasonable and necessary – except for the rule which deals with the upper limit of contributions. This is the rock on which a new party could founder when it discovers that deep pockets are no huge advantage since the legislation restricts to €2,500 the amount any single supporter or benefactor can contribute in any one year. During the recent Seanad referendum this rule almost put us in the No campaign out of the game.

At first glance €2,500 seems a substantial amount – until it is contextualised. As an example, any new party would be going toe to toe against the €4.5 million grant of taxpayers' money legitimately received by the Fine Gael party last year. If it were to try to match that itself it would need to convince almost 2,000 Irish citizens to cough up €2,500 each. Good luck with that.

“ Ah,” but the informed citizen may object, “the same legislation prohibits the use of political funding to fight election campaigns so the established party and the new party will be on a level playing field.”

Technically yes; in reality no. Let us follow the money. We’ll start with the State funding grant which is lodged in the general party accounts. That money funds a comprehensive party structure, paying the market rate to employ bundles of apparatchiks, advisers, organisers, spin doctors, speechwriters and political gurus. It is used to develop and support a vast national electoral machine.

That taxpayer-funded structure develops and increases membership. It also has the highly qualified personnel necessary to plan and run all sorts of raffles, auctions, collections, golf classics etc to raise money. That money is separate from the general accounts and is stored in the party war chest. Come election time, it is the fundraised money that is used to pay for the advertising, the buses, the leaflets and the hundreds of thousands of posters. All this is legal and allowable.

The State grants are used to fund an organisation that then develops a separate and powerful war chest. The party can truthfully claim not to be using taxpayers’ money to fund election campaigns.

It is all a little reminiscent of the drugs baron who says to the Criminal Assets Bureau: “Listen, you’ve no call to take my penthouse. Not a penny of the drugs money was used to purchase the penthouse. No, the drugs money was used to buy the casino. It was honest casino profits that bought the penthouse.”

That’s the story. State grants build the party structure, the structure builds the war chest and the war chest builds the election campaign. Whether this is to be construed as legal money-laundering or just political sleight of hand is debatable, but whichever it is the effect is the same.

What were intended as measures to reduce the political influence of the wealthy and make politics more accessible have had the unintended consequence of constructing a protective cordon around the established political parties, giving them an unfair advantage over any emerging parties. This inequity ensures that any new political party will face near insurmountable funding challenges. The legislation must be amended.

Joe O’Toole is a former senator and former president of the Irish Congress of Trade Unions