June 23, 2023

Issues and policies

Donation reform here at last?

By Zacharias Szumer
Kate Chaney, wearing an oatmeal-coloured jacket and a mint-green shirt, stands against a background showing the green benches of the House of Representatives. She is wearing a neutral expression.

Member for Curtin Kate Chaney during Question Time, June 20, 2023. Chaney is the sole teal member of the Joint Standing Committee on Electoral Matters. Image © Lukas Coch / AAP Images

Caps on campaign spending and political donations may finally be addressed, following a new report

As far as financial largesse in Australian politics goes, nothing quite rivals Clive Palmer’s injections to his big yellow political vehicle, the United Australia Party.  Ahead of the 2022 election, Palmer’s mining company donated $117 million to the party, breaking his previous record of $84 million in the lead-up to 2019. In both these elections, but especially 2022, Palmer didn’t exactly get the best political return on his investment. The teal movement, on the other hand, put a collective $10 million to far more effective use kneecapping the Liberal Party in its former heartland.

The teals may have spent less than Palmer to win all those blue-ribbon seats, but it’s unclear exactly how their campaign funding compares, on a per-seat basis, to that of the Coalition. Though one Liberal MP who lost his seat in 2022 called the teals’ electoral spending “immoral”. However, it’s not as if the Liberal Party couldn’t have pre-emptively acted on the risk of financially well-armed challengers. As electoral law expert Professor Graeme Orr recently pointed out, the Liberal Party “could have swallowed its economically libertarian instincts at any time in its three terms in government” and legislated caps on donations to political parties or campaign spending. Surprising exactly no one, however, the Liberals kept the big-money-to-politics pipeline open and flowing.

At the federal level, the financial rules of Australia’s electoral system have largely remained unchanged since the Hawke years: public funding for parties or candidates that win more than 4 per cent of the vote, and freedom for parties to accept unlimited domestic donations as long as they are disclosed. However, in recent years, nearly all Australian states have tightened those rules, and some have limited how much money can be donated to a political party or candidate, or how much money can be spent on political campaigns.

While Labor isn’t a stranger to large corporate donations, the party has long expressed a far greater willingness to change the rules than its opponents. Some will remember failed plans for electoral reforms in the Rudd and Gillard era. Well, such dreams aren’t dead. Several months after winning power in May 2022, Labor was again talking up plans for electoral reform. This week, an interim report by the Joint Standing Committee on Electoral Matters (JSCEM) has moved such reforms one step closer to reality.   

The JSCEM report recommends real-time disclosure and lowering the threshold to $1000 – roughly the figure it was before Howard jacked it up to $10,000 and indexing upwards every year. At present, donations under $15,200 don’t have to be publicly disclosed, and donations above that threshold are only made public about eight months after the end of a financial year. The committee also recommends that the government introduce both donation and spending caps, although it didn’t suggest any precise amounts.

Democracy and transparency advocates have been crying out for some of these changes for decades. Because of the federated structure of political parties – and the fact that disclosure thresholds apply to each registered political entity, not to parties as a whole – it’s possible to anonymously donate well over $100,000 to a party or candidate. A donor simply gives a figure below $15,000 to every state and territory branch of a party, in addition to the federal branch. Donors to independents such as Zali Steggall have also used a variation of this trick. According to data from Climate 200, when splitting between no fewer than 83 entities – including federal and state divisions and associated entities – it is possible and legal for an individual to anonymously donate more than $1 million dollars to the Coalition per year.

In a sense, disclosure is the low-hanging fruit of electoral reform, but the report’s recommendations for donation and spending caps is significant. In an ever-escalating promotional arms-race, spending caps lower demand for the kind of big donations needed to run campaigns, so implementing both makes them mutually fortifying. Spending caps are also easier to police; it’s easy to hide a donation. It’s harder – not to mention self-defeating – to hide a campaign advertisement. Another recommendation – to expand the definition of a “gift” – is also welcome. A great amount of money flows unaccounted for into the political system because it’s not given as a cash donation but a $5000 ticket to a fundraising dinner or a $150,000-per-year subscription to a party’s “business forum”.

The JSCEM report has also recommended setting spending caps higher for independent candidates, given that they have less support than party candidates. This will go some way to appeasing teal independents, who have bemoaned state  rules that they see as privileging the major parties. It’s perhaps no coincidence that teal candidates did far better in the 2022 federal election than they did in recent NSW and Victorian state elections, where rules denied them access to a comparable financial war chest. Victoria, for example, limits donations to just over $4000 every four years, but doesn’t impose any caps on campaign expenditures. While incumbents can use public funding or party resources to boost their profile, independent challengers are unable to accept the kind of large donations that could finance a billboard or television ad. “[I]f you wanted to design a system that entrenched the duopoly, this would be it”, teal financial backer Simon Holmes à Court has said of Victoria’s system.

As a result, Holmes à Court’s fundraising body, Climate 200, has warned that parliament should “consider reforms to political donation and expenditure caps with great care”. Speaking in the House on Monday, JSCEM’s sole teal, Kate Chaney, echoed that warning, saying that caps sound good but “may backfire”. Nonetheless, to the degree that Chaney’s position can be seen as a summation of her fellow teals, she has clearly indicated that they’re willing to work with Labor on the reforms. And why wouldn’t they? While the government has a lower-house majority, all the teals can really do, parliamentarily speaking, is put forward their concerns and hope that Labor plays nice.

Fortunately for them, Labor may be in a consultative mood. “Electoral reform should always be consultative and bipartisan,” Special Minister of State Don Farrell said in a statement following the release of the report. The teals and other crossbenchers will be hoping that, in practice, that doesn’t just mean being consultative and bipartisan with the Coalition. Until this week, the Coalition had stayed largely quiet on the issue, even as off-the-record parliamentary types from within government backgrounded journalists about the “major overhaul” that was looming to “keep big money out of politics”. To some other off-the-record parliamentary types, this silence was an indication that the Coalition was open to a more amicable collaboration with Labor on the reforms. That may seem less likely now that the Coalition is saying it’ll fight the proposed reforms “tooth and nail”. But of course they’re saying that – they have to put up a bit of a fight. The real question is how much skin those teeth and nails can strip before they’re willing to come around.

While the Coalition has said it would meet Labor somewhere in the middle on disclosure issues, Labor will have a tougher time selling them on donation and spending caps – at least as proposed. The Coalition’s dissenting report “strongly reject[s]” any special treatment – such as higher caps – for independent candidates and castigates the report’s recommendation for union affiliation fees to escape donation laws, calling it a “financial gerrymander”. But this doesn’t mean the Liberal Party will be totally unmoveable on this issue. The Liberals may be “softening towards expenditure caps”, Orr told The Monthly, “as they felt outspent by teal candidates in 2022”. The Liberals will “want any spending limits to be set low for lobby groups like unions, and to limit independents to the same amount a party can spend in a marginal seat, despite parties benefitting from their nationwide branding,” he added. The teals will no doubt fight that demand, should Labor consider accommodating it.

Labor may want bipartisanship, but it doesn’t have to win over the Liberals to pass legislation. Getting the Greens on side, however, will depend on how moveable either side is to something the Greens have long fought for: a ban on donations from industries such as the fossil-fuel sector, gambling, banking, defence and pharmaceuticals. It’s not as if banning donations from certain industries is beyond the pale politically; NSW, for instance, bans donations from property developers and tobacco, liquor and gambling businesses. However, such a ban would take big chunks out of Labor’s donor base and publicly transmit an opprobrium for certain industries that the party may be uncomfortable with. The degree to which the Greens will budge on any of this is unclear. In the party’s additional comments in the JSCEM report, it pledged that it would “not accept partial reforms that leave loopholes and backdoors for hidden and dirty money”. Greens Senate leader Larissa Waters also told The Monthly that the party would “continue to use our balance of power in the Senate” and that “any reforms must be delivered as a whole, not piecemeal”. If the Greens do press Labor on this demand, they’ll at least find some support from the teals. Chaney has also called on the government to copy NSW’s ban on donations from tobacco, liquor and gambling, although she makes no mention of that state’s ban on property developer donations or the Greens’ call for a ban on fossil-fuel industry donations.

Of course, statements about fighting “tooth and nail” or not accepting “partial reforms” are just opening bids – projections of a steely resolve that can surely soften in the furnace of negotiation. It also remains to be seen how firmly Labor will stick to the recommendations in the JSCEM report. While any committee report reflects the will of the governing party to some degree, it isn’t a government policy document, and Labor may choose to abandon certain recommendations to win over the Coalition. Advocates of reform will be hoping that the Albanese government doesn’t sacrifice too much ambition for bipartisanship. Electoral reform under Rudd and Gillard arguably collapsed because Labor spent years courting the Coalition and, when that failed, tried a last-minute gambit with the Greens. Reform advocates will be hoping that – in the wake of the federal teal and Green waves, and with the Coalition on the back foot – conditions today are more conducive to change.

Zacharias Szumer

Zacharias Szumer is a Melbourne-based writer whose work appears in OverlandJacobin and elsewhere.

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