Major overhaul looms to keep big money out of politics

Federal election campaigns would be radically reshaped under sweeping campaign finance reforms that would cap political donations and how much parties could spend, in a move that lays the groundwork for the Albanese government to remove big money from politics before the next national vote.

A high-powered committee tasked by Special Minister of State Don Farrell to probe election funding laws will imminently recommend caps on political donations and how much a candidate can spend in an individual electorate, as well as laws banning false information in political advertisements.

Sources say Special Minister of State Don Farrell would consider imposing caps.Credit: Alex Ellinghausen

The government and Farrell broadly support the committee’s recommendations, said three sources briefed on a yet-to-be-published interim report, who spoke anonymously due to confidentiality rules. The sources said Farrell would consider imposing the caps.

In a further sign of Labor’s intentions, the party’s new draft national platform states it will work towards reducing reliance on donations and support an expanded public funding system for elections. This means taxpayers would foot more of the cost of running elections in exchange for figures such as mining magnate Clive Palmer being prevented from spending huge sums on electoral contests.

“Labor will strengthen and enhance the integrity of Australia’s electoral system through campaign financing reform and by removing barriers to participation in democratic processes for all Australians,” says the document, which helps inform federal Labor’s policies.

The interim report by the joint standing committee on electoral matters is unlikely to call for precise dollar figures to attach to campaign finance caps. Instead, it will give in-principle support for changes, paving the way for the government to accept and adopt them ahead of the next election, due to be held in or before 2025.

Climate 200’s Simon Holmes a Court was in Canberra last month lobbying MPs on the potential effect donation caps could have on independents without the advantages of incumbency.

The climate activist told the inquiry in November that “the only way challengers can climb over the incumbents’ wall is a donor-funded ladder”, which underscored the risk to Labor of weakening well-financed teal independents in the seats they contest against Liberals.

Holmes a Court’s concerns were echoed by the left-wing Australia Institute, which said in a recent report that limits on donations could entrench the dominance of major parties.

​​“Sitting parliamentarians rarely lose elections. This is at least in part because of the enormous financial advantages of incumbency, including offices, staff, travel and communications budgets,” the think tank’s Bill Browne said.

But the Centre for Public Integrity, a leading transparency organisation, said the committee needed to push for a major overhaul including a cap on donations.

“This inquiry represents the first opportunity in more than 15 years to get big money out of federal politics. The Commonwealth has allowed wealth to buy access and wield undue influence for too long, and we strongly support efforts to level the playing field and restore public trust via enhanced transparency, donations caps, and expenditure caps,” the centre’s research director, Catherine Williams, said.

States including NSW ($6700 a year) and Victoria ($4000 over four years) already limit the amount a person or business can donate to a political party. NSW ($226,000 for a lower house seat) also restricts how much can be spent by a candidate in an electorate.

None of these rules apply at a federal level, where an unlimited amount can be donated and spent.

Labor has already signalled support for truth in advertising laws – which would ban false campaign messaging – and expenditure caps, and lowering the donation disclosure threshold to $1000 as well as publishing donation details in real-time.

The government hopes to reform the electoral system in a bipartisan way. However, some Liberals worry that reducing the influence of donations would enhance the role of third-party outfits such as unions, which conservatives believe would rig the system in Labor’s favour.

Political donations have steadily risen in Australia and the two major parties collected more than $100 million each before last year’s election.

Palmer saturated the country with advertising before last year’s poll, spending $117 million on campaigning for his United Australia Party. Climate 200 and Atlassian co-founders Mike Cannon-Brookes and Scott Farquhar, who both donated to Climate 200, were in the top seven donors.

Clive Palmer spent $117 million on United Australia Party campaigning before the 2022 federal election.

The chair of the joint standing committee, Labor’s Kate Thwaites, said she was prohibited from commenting before the report was published.

Farrell said he would study the interim report’s recommendations and pursue potential legislative changes after the committee delivered a final report.

The Coalition’s shadow special minister of state, Jane Hume, said: “Labor has suggested a raft of changes that they’d like to make that range from donations reform, giving foreign citizens the vote and increasing the size of parliament. We will wait to consider these matters through that proper committee inquiry.”

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