Last hurrah for the big spenders? Inside Labor’s campaign reform balancing act

After parliamentary question time on September 12 last year, a delegation of teal MPs and Senate kingmaker David Pocock met Special Minister of State Don Farrell in his office. On their mind was campaign finance reform they feared could kill off the independent disruptors.

Climate 200 founder Simon Holmes a Court, an influential funder of the teal movement, had travelled to Canberra to meet with Farrell months earlier, forcefully putting his view that Labor’s planned caps on election spending and donations could block the progress of independents who need to raise big money to compete with the major parties.

After talking to Farrell, some of the teal MPs were taken aback.

Independent senator David Pocock, Special Minister of State Don Farrell and mining magnate Clive Palmer.Credit: Fairfax Media

“He said the Westminster system provides for a two-party operation: government and opposition. We all sat there and looked at each other and said, ‘No, it doesn’t. Look at the Greens, look at the Democrats, look at us’,” one attendee who asked to remain anonymous to discuss the private meeting said.

Another added: “His whole vibe was pretty much: ‘We don’t mind the current group of teals, but we wouldn’t want many more of you because you could make life hard for Labor’.”

The first-termers’ fear, which may prove unfounded, is that Farrell will shore up the dominance of the major parties, even at a time when the Coalition and Labor’s historically low primary votes have raised questions about their ability to form governing majorities.

Taking Farrell and Labor at their word, the push to strip big money out of politics is aimed squarely at the likes of conservative mining magnate Clive Palmer. When Palmer spent $60 million on his United Australia Party in 2019 and failed to win a single seat, he said his outlay was “worth it” to keep then-Labor leader Bill Shorten out of office. The one-time federal MP is mulling a High Court challenge to the upcoming donation laws.

The election reform package, the first details of which were reported in this masthead this week, is backed by transparency and anti-corruption groups and would emulate rules in Canada and parts of Europe. It would create a step change in how campaigns are funded, and politicians engage in politics.

Total donations and other income to political parties for 2022–23 – which wasn’t even an election year – were about a quarter of a billion dollars. Any cap on donations, which are currently unlimited, would need to be partly offset by more taxpayer funding to run election campaigns.

Politicians’ diaries are full of events attended by major donors. Just last month, Prime Minister Anthony Albanese spent a Thursday night at Sydney’s Fullerton Hotel with his cabinet to meet corporate figures paying thousands a head. Two days later, he travelled to Melbourne for a food and beverage industry event at Visy boss Anthony Pratt’s mansion, featuring a performance by singer Katy Perry.

These events may become a thing of the past. Pratt would still have the self-described “superpower” of being rich but would be limited in the amount he could donate.

But the teals, Greens and Coalition all have issues with Labor’s proposal, about which more detail will be released in the coming months.

The teals, who attracted $13 million from the Climate 200 funding vehicle at the last election, support cleaning up election funding but worry about a low donation cap.

They share the Greens’ worry about a proposed limit on how much each party can spend in a single seat. Whereas the major parties must spend across dozens of target seats nationally, the Greens will pour huge sums into just a handful of mostly Labor-held electorates.

Losing a seat or two to the Greens at each election would diminish Labor as a governing force in the same way the teals have the Coalition, which lost previously safe urban seats to six teal women at the 2022 poll.

Labor’s national secretary Paul Erickson hammered home the risk posed by the Greens in an address in November to true believers: “As a party, we must take the challenge from the Greens as seriously as we take the Liberals.”

The Coalition is worried Labor will slash corporate donations but still allow them from trade unions. The government will introduce measures to capture unions and other third-party campaigners in the cap, but it is unclear how the legislation will deal with party-affiliation fees paid by unions.

For conservatives, the Victorian experience is instructive. Donations in that state are capped at $4700 per election cycle. After the Victorian Liberal Party’s last election loss in 2022, federal frontbencher Dan Tehan echoed the views of Liberals who perceived the rules as Labor-friendly.

“We cannot stand by and let the same thing happen again [at a federal level],” he said.

Senior Coalition sources, speaking on the condition of anonymity to discuss private thinking, said the opposition would be willing to deal with Labor on its proposal as long as it believed unions were not given a sweetheart deal.

“The protection of the two-party system is, at the end of the day, in both our interests, even if we will quibble about other parts of this package,” one Liberal source said.

Some observers had expected Labor to pass its electoral reforms in time for the election due before May 2025. But this masthead revealed the rules would not be operational until the following election.

As well as giving the electoral commission time to prepare, this delay was aimed at heading off a Coalition scare campaign suggesting Labor was rigging the election rules midterm to benefit itself.

Farrell, an old-school dealmaker respected across the parliament, wants to secure bipartisanship for the changes.

The size of the cap on donations will be key. As reported this week, he knows a prohibitively low cap such as Victoria’s will give weight to a court challenge based on a potential impingement of the implied right to freedom of political communication. A limit in the tens of thousands may still be too low.

Pocock, whose upper house vote will be key if the Coalition refuses to negotiate, says: “We stand ready to vote for measures that clean up politics, but I’m concerned about a stitch-up between the majors that entrenches the major parties and incumbency.”

Other measures that will form part of the package include real-time disclosure of donations and a lower threshold at which a person can anonymously donate. The crossbench supports these changes.

The difficulty of striking political bargains on campaign finance can’t be underestimated. Former Labor senator John Faulkner tried and failed as minister during the Rudd government, a point of regret for the Labor elder.

In a 2014 speech, he said public perceptions of undue influence “can be as damaging to democracy as undue influence itself” because they “undermine confidence in our processes of government, making it difficult to untangle the motivation behind policy decisions. Electors are left wondering if decisions have been made on their merits”.

A government survey of attitudes towards democracy released this week found that about 50 per cent of respondents believed corruption was widespread in institutions. The survey, conducted last year by the Australian Public Service Commission’s trust and transparency unit, found 53 per cent felt Australia’s democracy was on the right track while nearly half disagreed or had no view.

Labor also wants to ban election lies through so-called “truth in advertising” laws, similar to those in South Australia and the ACT.

Its 2019 election review found it was hurt by a Coalition claim that Labor would introduce a “death tax”, which then-treasurer Josh Frydenberg said was “not out of the question” because the idea had previously been favoured by Labor MP Andrew Leigh and some unions, despite Labor’s repeated denials.

Labor’s truth law would be narrowly defined and administered by a new unit in the electoral commission. It would create powers to compel the removal of demonstrable falsehoods rather than seeking to rein in opinionated or contested claims.

Last year, a government bill to clamp down on social misinformation raised concerns about the potential effect on free speech, with some Coalition MPs claiming it would make the Australian Communications and Media Authority an Orwellian “Ministry of Truth”.

Labor has gone back to the drawing board on the misinformation bill. The Voice to parliament debate, meanwhile, highlighted the difficulties of fact-checking contested claims. “Gosh. Imagine if these laws had been passed in time for the Voice referendum,” a leading Yes campaigner said on social media platform X this week.

Hours after this masthead reported on the truth-in-advertising proposal this week, a Coalition backbencher said, unprompted, via text message: “Ministry of Truth to get bigger!!”

On Wednesday night, conservative presenter and columnist Andrew Bolt criticised the proposed changes in a Sky News interview with Nationals MP Barnaby Joyce.

“I am against this plan to ban political lies,” Bolt said, “because I do not trust our political class and our bureaucrats to know the difference between a real lie and an unpopular truth.”

The case is strong for removing the influence of lies and billionaires from politics. However, achieving consensus and avoiding unintended consequences is less straightforward.

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