Special minister of state Don Farrell described Labor’s major bill to reconfigure campaign finance — released yesterday — as a “comprehensive” “once in a generation” reform. On the latter, he was being restrained: it’s actually forty-one years since the Hawke government’s ground-breaking modernisation of the national electoral rules.
The new legislation can be assessed using three lines of inquiry. What is proposed and is it principled? What partisan politics hang over the reform? And what is the process from here, including mooted court challenges?
But let’s lead with some conclusions. First, the bill certainly ticks key in-principle boxes. By setting donation limits and campaign spending caps at unnecessarily high levels, though, it lacks any ambition to reduce major party spending to more modest levels.
Second, the independents and some minor parties are crying foul, and anyone from outside the parliamentary parties who might want a say in the process might agree. The government wants to push the bill through parliament in the coming fortnight, the final sitting weeks before the Christmas recess. As for a High Court review, it is unlikely to consider any challenge for some time yet: the key reforms don’t kick in until mid 2026.
As it exists, Australia’s national political finance system is decidedly laissez-faire. Despite decades of criticism, it lags behind most comparable democracies, including our own states and territories.
It imposes no limits on donations, other than from “foreign” entities. It doesn’t cap spending. Donations are disclosed up to eighteen months after the event, are set high ($16,900 a year to any one political actor) and aren’t hard to avoid. To deal with those problems, Labor’s bill finally places some monetary limits on donations, caps election spending and imposes a timelier system of disclosure.
The bill is entitled the Electoral Legislation Amendment (Electoral Reform) Bill 2024 — tautological, perhaps, but at least there’s no sloganeering going on. It follows on from joint parliamentary committee recommendations in favour of limits and caps, and from bills sponsored by the likes of teal independent Kate Chaney and senators Pocock, Lambie, Thorpe and Waters under the snazzier “Fair and Transparent Elections” title. All these bills share the aim of achieving regular, if not truly “real time,” disclosure of donations of $1000 per year or more.
Almost everyone agrees that more disclosure is a good thing (so long as the threshold isn’t so low that it chills small contributions to outré parties or from ordinary public servants). An annual $1000 or a weekly $20 is within the reach of many, although not most, people who might care to support an electoral cause or associate with a party. It is clearly below the level at which a contribution might conceivably buy influence.
But giving what remains of the investigatory media more data to rummage around in is not, in itself, much of a leap forward. Instead, the heavy work of enhancing faith in party democracy and promoting equality in elections needs to be done by limits and caps.
The headline the government wants us to focus on is that donations for federal election purposes will be limited to $20,000 per year. For a registered party, that includes $20,000 for each of its MPs and candidates. That’s about four times the figure in Victoria’s legislation — or more accurately about sixteen times, as that state’s limit covers its whole four-year term.
Above all, the donation limits apply only to money intended or directed into federal electioneering. The bill makes no attempt to limit support for, say, litigation or the administration of a party’s national division (although some states place such a limit on state divisions).
On top of that, parties can register their six state and territory divisions separately — and they do, because campaigns, though coordinated nationally, are run out of those divisions and their federal campaign accounts. Thus, a nationwide party can comprise up to nine of the bill’s “registered parties.” The limit on how much one donor can inject into a party’s overall campaign each year, then, is closer to $180,000.
Volunteer labour or services are understandably excluded from these limits. More contentiously, union affiliation fees to Labor are not covered either.
Drilling down, we find that the structure of the donation limits is labyrinthine. The $20,000 limit resets immediately after a general election. So, in one year out of three, you can donate twice and the party can stash that away. And you can donate that amount for each and every House of Representatives by-election.
You can also spread a series of yearly $20,000 donations across various electioneering lobby groups, including associated entities such as those unions affiliated to Labor. This provision risks a move towards the problem that now plagues the United States, where money moves less to parties accountable through the media and parliament and more to opaque “third parties.”
As a partial salve, the bill puts an overall yearly ceiling of $640,000 on the amount a single donor can spread around multiple entities. It also limits to $100,000 per year the amount a single donor can spread around federal candidates or parties within a single state or territory. Both of these extra limits also serve to inhibit a well-to-do entity’s funding of multiple independent candidates.
As for a cap on election spending, the bill proposes a headline figure of $90 million per party taken as a whole. It also caps spending by any single lobby group at $11.25 million in any one year. Spending at a by-election is capped on top of that.
Nested within that $90 million is a limit of $800,000 for any one marginal-seat campaign, or $100,000 for a lobby group in a particular electorate. The government hasn’t revealed how it calculated these caps, but the party cap seems to sit just below the average splurge of Clive Palmer’s United Australia Party over the past two national campaigns.
By comparison, Britain’s cap on national election spending this year was barely £35 million per party. Admittedly, it has long banned broadcast advertising in politics, preferring free airtime. Allowing for population differences, however, the Australian cap will be three times Britain’s. A cap is welcome; this one certainly isn’t frugal.
Apart from donation disclosure, donation limits and spending caps, a fourth pillar of any political finance system is some measure of public funding. Australia has long had a simple system for reimbursing a few dollars per vote to parties or candidates that win 4 per cent or more voter support.
Sometimes dubbed “clean money,” the stated purpose of this public funding is to reduce reliance on big donors. Without donation limits or spending caps, this nirvana hasn’t eventuated in Australia. Instead, public funding has helped minor parties like the Greens and One Nation to build capacity. (Neither party appeals to mainstream business donors, partly because their policies don’t match liberal economics but mainly because smaller parties almost never get to wield governmental power.)
The value of your “1” vote will now ramp up to $5. Effectively that’s $10 per elector, as you get both a House and Senate vote. The amount will be indexed for inflation. You can spoil your ballots, of course, but for obvious reasons no party or candidate wants that.
Unless you are an accountant, your eyes probably glazed over at even the summary detail above. When it comes to the partisan politics of the reform, things become inherently more interesting.
Clive Palmer immediately declared he would challenge the legislation in the High Court. Well, he would say that. The government is crowing that its bill will rein in the excesses of billionaire-funded campaigns just like his. And Palmer’s party has but one lone senator to argue its case in parliament.
As noted above, almost everyone agrees that, in an online era, sizeable donations should be declared regularly. (Heck, New York managed that even before the birth of the internet.) The Coalition thinks $1000 per year is too low. Some may also quibble that the proposed system of declaring donations within twenty-one days of the end of each month is not truly “real time.” On the other hand, the bill also provides for weekly disclosure during campaign periods.
Also as noted, none of the existing players are going to quibble about increased public funding. Some even want to reduce the 4 per cent threshold. The bill also includes new money, earmarked for administrative assistance, to the tune of $30,000 per year for each House member and $15,000 per year for each party senator and independent MP.
The real dissension, voiced most obviously by teal independents, is that the proposed limits and caps are being set to suit the major parties rather than newcomers. This point has some force. Candidates for established parties benefit from nationwide media attention as well as parties’ generic campaigning. An independent will be limited to spending the same amount as a party’s marginal-seat campaign. The obvious solution, pioneered in New South Wales, is to give independent candidates a higher electorate spending cap than a party.
A similar tweak that would make independents happier would be to increase their level of public funding. South Australia pays at a higher rate for the first 10 per cent of vote share won. New South Wales pays more for votes to parties that can only field small slates of candidates. These measures compensate for the fact that parties standing candidates across large numbers of seats, plus the Senate, hoover up the bulk of public funding.
Overall, though, I don’t fully buy the teals’ complaints. True, new movements can be kickstarted with “sugar daddy” donors. That doesn’t make the practice desirable. They want to be “local independents” while also being able to share benefactors and informally caucus once elected. (Such caucusing is no bad thing: parties help our system function more predictably and rationally.) These reforms will certainly test the model for funding big teal campaigns.
Taken as a whole, the bill does feel like a behind-the-scenes compromise between Labor and the Coalition. The upside of such bipartisanship is that the reform is likely to be stable over time. The downside is that other parties and MPs will, with some justification, yell “stitch up.” Labor and the Coalition don’t operate as a cartel in Australia, but a variety of institutional factors give them a cushion even as their reliable vote share falls steadily from over 90 per cent to barely two-thirds of the electorate.
Lastly, what of the process of institutional scrutiny and review? If the Coalition goes along with the minister’s desire to hurriedly enact the bill within the next couple of weeks then independent scrutiny will be almost non-existent.
The bill itself is 221 pages, and the accompanying “explanatory memorandum” is no more user-friendly at 179 pages. Length need not indicate complexity, but the devil — or angel — of regulation is in the detail. This is doubly so when you are boasting of a “comprehensive” reform, in which each part must ideally integrate. The minister’s desired timetable gives precious little time for scrutiny.
This means no effective input beyond the consultation that has already happened behind closed doors in Canberra. Besides being an oddly undemocratic process for a democratic reform, the bill’s long and intricate drafting undoubtedly raises risks of unintended consequences or oversights.
One such query is whether the bill deals fully with the existing problem of corporations avoiding disclosure by “joining” major party “business forums” or “networks” for six-figure sums. The bill might close that loophole by extending the definition of “gift” to payments to “attend, or otherwise obtain a benefit from a fundraising function or venture.” If not, then any donation limits are pointless. And even with that loophole closed, a party can set up such a forum as an “associated entity” and the money can be channelled back through contributions by that entity to party administration.
Above all, the key reforms will not commence until mid-2026. That is a shame, though some delay is understandable given the looming 2025 election. A reform of this size requires plenty of lead time, for education by and resourcing of the Australian Electoral Commission. But rushing through complex legislation will only add fuel to claims that it is the product of deals between government and opposition.
Finally, is any of the bill likely to raise the ire of the seven judicial oracles on the High Court of Australia? Mr Palmer, notoriously, lists litigation as one of his hobbies in his Who’s Who entry. Just as notoriously, he is yet to win a High Court case.
With only a few exceptions, the Australian Constitution left the law of politics to parliament. That is, to the political process itself. Over the past thirty years, though, the High Court has dealt itself into the game: first by discovering a “freedom of political communication” immanent within the structure of the Constitution, and then, more recently, by also finding an “equality of opportunity to participate in the exercise of political sovereignty” within the Constitution.
These are fine values in theory. But no one is sure where “freedom” ends and “equality” begins. Nor even if equality means equality between parties and candidates or between parties and lobby groups as well.
Mr Palmer might argue that, in self-inseminating a party he controls, he poses no risk to integrity in the way donating big money to a governing party would. But the idea that a billionaire can set up a party and outspend all other parties patently fails even a modest equality test. He can console himself that a rich person — or genuine lobby group — will still be able to spend up to $11.25 million in each year on election-style campaigning.
The teal independents might file their own court challenge arguing that the playing field is unjustifiably tilted against new entrants. As noted above, the legislation should be tweaked to compensate for the general advantages and economies of scale that larger parties have. Overall, however, increased public funding and some caps on spending are better for smaller parties and new players than the current model.
We are unlikely to hear from the High Court any time soon. Even constitutional matters are subject to a prudential approach. Courts don’t jump in to hear cases without having litigants with clearly affected interests and a fact scenario to ensure the court is not responding only to abstractions. A 2026 by-election may be the first chance to test the law in the High Court.
In short, by postponing the commencement date of the reforms, the government is also allowing the High Court to delay hearing any case until it is “ripe.” In the meantime, the reforms are ripe for public debate. If only the parties let the Senate have the time needed to allow that debate to occur. •
