No limits on political donations, but more and more public funding

Canberra Circus Act

Circus gymnasts in front of Old Parliament House in 2000. Photo: Heide Smith

by Graeme Orr

May 28, 2013

Australia has a lax campaign finance regime by western world standards.  At national level there are no limits on donations and no limits on expenditure.  Instead, we have a 30 year old system where the parties are fed public money – currently around $2.50 per vote – in return for disclosing larger donations – currently for donors worth around $12 000 pa.

Today, news arrives of a government bill to increase public funding and lower the donation disclosure level.   Public funding will rise $1 per vote, ostensibly to defray party administrative rather than campaign costs.  Donations totalling over $5000pa will have to be disclosed.

The proposal is a hashed compromise.   Some will say it reeks of a major party cartel.    Actually, minor parties will benefit too, provided they can poll above 4% in enough seats.  (In some ways minor parties need stable funding more than the majors, since corporate money cares little for them).

The cost of this is unclear.   The current $2.50 is actually $5 per voter, as we have votes for both houses of parliament.  If the $1 increase takes funding to $3.50 per vote or $7 per voter, then funding for the next term will potentially rise from ~ $65.5m to ~ $92m.   But if it’s $1 per year per elector, the potential cost rises to $105m.

It is not the public cost that is the problem, but the lost opportunity to rein in donations or campaign expenditure.  The proposal is more meat for the parties, without any healthy offsets.  No broccoli (limits on donations) or brussel sprouts (limits on campaigning).

The point of public funding should be that the money is ‘clean’.   The point of all but small private donations is either to buy favour, or to use wealth to tilt the scales of political equality and debate.

So we risk the worst of both worlds.  Without ‘supply-side’ limits on big donors or ‘demand side’ caps on campaign costs, the hunger of parties to out-compete each other will barely abate.  But the downside of public funding, the tendency for parties to centralise further and rely less on grass-roots assistance, will exacerbate.

Labor will cop flak for increasing the cost to taxpayers.  Cynics will see it as a lunge for cash to support the party in its coming wilderness years.   This is a free-kick to the Coalition on a financial as well as political level.  Polls suggest the conservative parties will outperform Labor by at least 10%.  That will mean an extra $9m to them compared to $6m to Labor.

Historically, Labor has driven electoral reform, often in tandem with other progressive parties.  The current dynamic, however, is for conservative parties to act as a brake on such reform or, as in NSW and Queensland, to take up the wheel.

We’ve waited over a decade for root-n-branch reform of national political finance rules.   Numerous inquiries lapsed during the Howard years.   As part of her key to power, the Gillard government agreed with the Greens and Independents to drive some immediate reform, like  slashing the level at which donations had to be publicly disclosed, to $1000.

Labor also had some ideas left over from the Rudd prime ministership:  bans on donations sourced with overseas money, a reduction of the level of tax deductibility of donations to parties or candidates.

But these fairly modest reforms met a brick wall in the Senate.   The government managed to fulfil a promise to finally hold a parliamentary inquiry on more ambitious reform.   That generated a report in late 2011.  Unfortunately, it was a damp squib, as the major parties nationally couldn’t agree on capping donations or campaign expenditure.

In contrast, much of eastern Australia has enacted donation and campaign limits for state level politics.  Tri-partisan negotiations underway in South Australia may adopt similar reform.

This is not to say state laws have the balance perfect.  NSW Greens worked with the O’Farrell Liberal government to further tighten the screws, including banning all donations from organisations.   This has angered Labor, and unions are mounting a High Court challenge.

But it does show impetus for electoral and party finance reform exists. It is just bubbling in the state cauldrons rather than at national level.


Extract from ‘Still not happy, John! Defending our democracy’ (Penguin, 2007, pp 328-332

The Australian Electoral Commission has two vital roles in our democracy: to manage the electoral rolls and conduct our elections, and to enforce our donor disclosure laws.

In a Webdiary piece during the Honest Politics Trust scandal, Australia’s most experienced electoral law expert, Graeme Orr of Queensland’s Griffith University, described the democratic purpose of the latter role:

‘Disclosure laws are meant to provide two related types of transparency. One, to inform interested voters about “who supports who” (on the assumption that this in itself provides clues about the real intentions/ideologies of political actors); and two, to allow the media, in particular, to shine light on possible “quid pro quo” corruption of political actors.’

The AEC was converted from a government department to an independent statutory watchdog in 1983 when the Parliament gave it responsibility for upholding new laws requiring the disclosure of large donations to political parties. Before 1983 Big Media and Big Business financed political parties in secret. Compulsory disclosure was a trade-off for the introduction of public funding for election campaigns, under which all candidates polling more than 4 per cent of the votes in the seats they stood for would be paid a certain sum per vote.

The Labor government that introduced the public funding laws argued they would reduce the parties’ dependence on private funding, both directly through the compensating public subsidy and indirectly due to the scrutiny of donations. The two Big Parties would in future be able to count on a guaranteed base ‘public income’ to fund their campaigns, and so the private fundraising pressure, with all its associated ‘temptations’, would be eased.

Twenty Years later it still sounds like a damned Good Argument. In a system such as ours there’s always scope for wealthy businesses and individuals to use their economic power to gain disproportionate political influence, and thus subvert democracy’s bedrock promise: that each citizen shares equally in political power. It’s an insidious anti-democratic threat that can be hard to avoid.

The then special minister of state Kim Beazley, who stewarded the 1983 reforms, said the new laws would minimise that threat: ‘There is no greater duty upon the representatives of the people in a democratic society than the duty to ensure that they serve all members of that society equally. This duty requires government which is free of corruption and undue influence.’

As it turned out, our politicians, as usual, just wanted to eat our public cake and gobble every other private one they could get their hands on.

Since 1983 the Big Parties have used taxpayer money to secure their financial bases while massively increasing the corporate donations they collect. After the 1984 election 60 per cent of the Big Parties’ revenue came from the new, vote-based public subsidy. After the 2001 election – by which time Labor and Liberal were together ‘earning’ around $38 million in taxpayer reimbursement – this had fallen to 20 per cent.

Far from spurning private dough since 1983, the Big Par- ties have gone berserk: a rich voter can now buy superior access to political heavyweights – framers of policy, national executives, ministers, prime ministers – in all kinds of ways. Special lunches and dinners, expensive ‘forums’, one-on-one meetings and inside briefings – parties even get Big Money to sponsor their annual national conferences. La Trobe University’s Joo-Cheong Tham, a leading electoral law expert, argues that we citizens should be under no illusion about these arrangements: ‘Such sale clearly involves undue influence of politicians, because access to and influence on political power are secured through the payment of money.’

The stranglehold that large corporations now have on our government-forming parties – the Big Money, Big Party nexus – is tightening, and it isn’t confined to the conservative side. Since 1999–2000 corporate donations have outstripped those from both wealthy individuals and big unions, with results that would almost be funny if they weren’t so sad. A conservation group in Byron Bay recently called for donations to help it campaign against a major development – not to fund a demo or knock up some flyers, but with a view to offering money to NSW Premier Bob Carr to listen to its point of view, just as the developer, Becton, had done!

At the ALP’s 2004 national conference in Sydney – Mark Latham the headline speaker – a cool $11,000 would have bought you a ‘Platinum Table of 9’ complete with its own ‘senior Labor representative’, plus a ‘full-page advertisement in the evening’s program’. All this while you and I pay these people every time we vote for them.

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  1. .@ISupportJG, without cap on private donations, they go up too=corruption potential unchanged. Read my book extract

  2. John Faulkner spot on. LibLab deal for more public money shameful. Unjustifiable unless cap on private donations.

  3. The $1 figure is for the next 3 year parliament or 33c a year. Dreyfus did explain it in detail.

  4. Let’s fund something other than spin. #auspol

  5. @latingle, I hate big party politicians on days like this.

  6. Swan says more public funding to stop political corruption, A total lie – private donations limitless!

  7. @MargaretSimons, agree. Try + @ryansheales

  8. @domknight public funding deal did nothing to cap private donations, so no public interest @johnbirmingham

  9. .@MikeSeccombe, public funding doesn’t slow private donations w/o cap on privates. That’s the big lie of LibLab deal

  10. .@broomstick33 public funding reduces private donations only if a cap total private donations to qualify for PF.

  11. .@mumbletwits, I favour public funding too, but not if it tops up limitless private funding, See my book extract in

  12. .@broomstick33, I summarise the history of public funding and the joke LibLab made of it in my book. Extract in

  13. .@Sascha_Charlie, my book extract on how LibLab escalated private funding after they got public funding in

  14. @cscviews, calling it as a I see
    it – always have & always will. My views on PF longstanding- see book extract in

  15. .@Drag0nista Labor began public funding on promise to clean up politics. LibLab escalated corporate donations! #ICAC

  16. No limits on political donations, but more & more public funding #auspol time to stop this waste of money via @NoFibs