Big money to be taken out of politics in radical electoral overhaul

Billionaires such as Clive Palmer and Mike Cannon-Brookes will have their influence on politics dramatically curtailed as Labor moves to remove big-money donations in the biggest shake-up to Australian election rules in a generation.

The Albanese government will shortly begin briefing MPs on its plans to limit the amount donated to parties and candidates, in a move that will prove controversial among Coalition, Greens and independent MPs. In its legislation, the government will also seek to limit the amount spent in each electorate.

New legislation will reduce the amount of money people and companies can donate to political parties.Credit: Alex Ellinghausen

But the rules will not apply until after the next election as Labor gives the Australian Electoral Commission time to administer the overhaul and seeks to avoid opposition claims it is trying to game the system to win a second term.

Under the proposed changes, an individual, company or third-party group who could currently contribute an unlimited amount to a campaign would be banned from giving huge sums to parties, according to senior government sources.

Those sources, speaking anonymously because legislation has not yet been finalised, said the government had not landed on a precise figure for the cap but it is likely to be in the tens of thousands of dollars.

Introducing such a cap would mean donations such as the $117 million Palmer gave to the United Australia Party and the $1.2 million Cannon-Brookes gave to Climate 200 before the last election would no longer be allowed. At the last election, UAP ran candidates in every electorate and won a single Senate seat, while six new Climate 200-backed independents were elected to the lower house, along with one senator and the re-election of four MPs.

Billionaires such as Clive Palmer and Mike Cannon-Brookes will have their influence on politics dramatically curtailed under Labor’s plans.Credit: Matt Dennien, Louis Trerise

However, the cap would still likely be much higher than the cap that exists in states such as Victoria where donations must be smaller than $4320 per election cycle because Special Minister of State Don Farrell is concerned it could lead to a High Court challenge based on its potential impingement on the implied right to freedom of political communication.

In a separate measure, Labor will also limit the amount of money permitted to be spent in each electorate, preventing the type of multimillion-dollar race seen in Kooyong between former treasurer Josh Frydenberg and teal independent Monique Ryan in 2022.

To fund election spending on things like advertising and pamphlets, more taxpayer funding, tied to how many votes a party won, is expected to flow to party headquarters.

The changes – which Labor and many civil society groups believe will improve transparency in politics and mirror similar changes in Canada and parts of Europe – are set to prompt intense debate with parties that believe the new laws might make it harder for them to win elections.

A spokesperson for Farrell declined to comment on the changes.

However, in an interview last year, Farrell made it clear the Labor Party was still scarred by the influence of conservative mining magnate Clive Palmer on the 2019 election, which Labor lost.

Despite failing to win a seat, Palmer said the expenditure had been “worth it” to keep then-Labor leader Bill Shorten out of office.

“I don’t think there’s any doubt at all that the reason Bill Shorten didn’t win the 2019 election was the more than $100 million that Clive Palmer spent on that election,” Farrell said in October.

“These people are not necessarily after political influence in the sense of having people in parliament. What they’re after is the result, and getting a favourable result, and I just don’t think Australians want a situation where one individual can spend so much money to get a successful electoral result.”

The government will also introduce measures to capture unions and other third-party campaigners in the cap, but it is not yet clear how the legislation would deal with party-affiliation fees paid by unions which are spent on administrative costs – such as holding conferences – and unrelated to elections.

Farrell will seek bipartisan support for the changes but the Coalition, Greens and independent MPs have previously flagged concerns.

In its response to the committee report that backed donation caps last year, Coalition MPs said such a move “would rig an expenditure system in [Labor’s] favour” if unions were not also captured by the donation caps.

Teal independent MPs and the Greens have also accused Labor of cutting the legs out from underneath smaller parties and independents. They argue capping spending in individual seats could hurt groups like the Greens which target a handful of seats with a lot of money as opposed to the major parties with a larger group of target seats.

Curtin MP Kate Chaney, who is the leading teal MP on electoral reform, said Labor’s capping of spending and donations “can’t be used to entrench the two-party system”.

“We need to make sure that any caps treat different funding structures fairly and in a way that maintains political competition – whether candidates receive donations from companies, unions, crowdfunding intermediaries or individual citizens,” she said.

Greens Senate leader Larissa Waters, whose party aims to spend big in a few inner-city Labor seats, said: “The Greens would welcome real electoral reform but are very suspicious that the two big parties will gang up to rig the system to benefit themselves and lock out smaller parties and new entrants.”

A spokeswoman for Farrell’s opposition counterpart, Jane Hume, said she would wait to see the government’s proposed bill.

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