As teals attended drinks with Albanese, Dutton and Labor struck election overhaul

The major parties have agreed to strip big money out of Australian politics in an election funding overhaul that will lower donation caps and force more contributions to be disclosed but infuriate independent MPs who were having drinks with the prime minister when the deal was done.

The pact, set to become law on Wednesday or Thursday, was sealed on Tuesday evening as the teal MPs who see the reforms as locking in the major parties’ dominance were at an event with Anthony Albanese as he hosted independent MPs at his Canberra residence.

Independents MPs were dealt out of the negotiations after they opposed most of the bill. Credit: Dominic Lorrimer

The government delayed the legislation in November after the Opposition Leader Peter Dutton and the Coalition held out on key details, prompting concessions in the bill from Labor to crack down on the escalating amount of money in Australian politics.

Labor agreed to a Coalition demand to raise the amount MPs and parties can receive from one source from $20,000 to $50,000, according to sources on both sides who could not speak publicly.

Special Minister of State Don Farrell, who has been leading the negotiations for the government, has also agreed to increase the threshold for donations to be disclosed from a proposed $1000 to $5000. The current threshold is $17,000.

The proposed laws would let peak groups such as the Australian Council of Trade Unions and the Business Council of Australia take in more money from affiliated unions and companies for elections, though their spending would remain capped. That overcame one of the final sticking points in the talks between the major parties.

Teal independents, who have received millions in funding from the Climate 200 organisation, will not win any of their demands after the group, led by Curtin MP Kate Chaney, did not support the government’s proposals on spending and donation caps.

The teals wanted to proceed only with transparency elements of the proposal, and Farrell has previously accused the teals of hypocrisy for criticising other parties’ integrity while opposing laws to take big money out of politics.

Chaney and her independent colleagues, who claim the proposed rules are designed to hinder independents who rely on donations to gain recognition against major party candidates with national campaign budgets, were at an event at The Lodge on Tuesday evening.

Climate 200 has been running about $15,000 worth of online ads targeting viewers in Canberra during parliament this fortnight, saying: “Dutton has struck a dodgy deal with the government that will MASSIVELY advantage Labor”.

It is the first time independent MPs have specifically been invited to The Lodge since the 2022 election, as Albanese faces the prospect of a hung parliament where Labor could be forced to rely on the crossbench’s support to form a minority government.

Farrell has spent much of the term trying to win support for the sweeping overhaul of electoral financing that will mean the next poll due by May will be the last at which wealthy political backers, such as mining magnate Clive Palmer and climate campaigner Simon Holmes a Court’s crowdfunding group, can donate an unlimited amount to politicians. Previous attempts to change electoral funding rules, including one by the Gillard government, were dashed after failing to gain bipartisan support.

The rules will not apply to the upcoming election, but will be in effect for the one after and include a national $90 million cap per party for election spending, state caps for senate campaigns, and an $800,000 cap per candidate in an individual seat, much lower than the millions spent by Liberals and teals in their contests at the last election.

Labor-linked unions and conservative groups such as Advance will also face caps. Groups like Climate 200 will still be allowed to bundle donations but they must follow the contribution caps.

To offset the gap in funding from private sources, taxpayer funding for political parties will grow from about $3.50 per vote to about $5.

Albanese said on Wednesday morning that the scale of money in Australian politics “defies our democracy”.

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