No billionaire should be free to sink Titanic money into politics

The spectre of a single billionaire has shaped years of national argument over political donations because of the justified concern about one man – mining magnate Clive Palmer – flooding an election campaign with a tidal wave of cash.

Palmer is easy to dismiss because he gained such a paltry result from the $117 million he poured into his United Australia Party before the last election, buying him a solitary seat in the Senate. But his huge spending, and the sheer scale of his advertising blitz, set a template for any rich-lister who wants to sway an election result.

Illustration: Simon Letch

Labor is convinced that Palmer cost it power at the 2019 election and hurt it at the 2022 election. Winning a seat, in other words, was not the only measure of his influence, and nobody can be sure how he might try to shift the next election. So the Palmer experiment is not over, especially because other wealthy Australians might one day tweak the template to buy a better outcome.

That is why caps on campaign spending must be on the agenda when the federal government reveals its looming changes to political donations. There are many parts to this new policy, ranging from real-time disclosure of donations to the regulation of truth in advertising, but nothing matters as much as managing the volume of cash.

Crucially, the changes would not take effect until the election after next. The new plan would not stop any donors who have plans for the election due in early 2025.

The debate could easily turn into a battle of the billionaires because the wealthy know how to get their way in Canberra. Australia’s richest person, Gina Rinehart, just gained $1.1 billion in federal help for her lithium projects. Andrew Forrest, the country’s biggest investor in wind turbines, has a strong interest in federal policy on renewable energy. Atlassian co-founder Mike Cannon-Brookes has backed the Climate 200 movement to help elect independent MPs at the expense of the Liberals.

None of these wealthy Australians are copying Palmer. Rinehart gave the Liberals $150,000 last year, while Cannon-Brookes gave Climate 200 about $1.5 million to help its election campaign. Another donor, packaging boss Anthony Pratt, gave Labor and the Coalition about $2 million each before the last election. Forrest does not donate.

The point is that any of them can copy Palmer if they choose. All it takes is money. And they have no shortage of that.

There is a reasonable argument against tight caps on spending. Placing an arbitrary limit on campaign advertising flouts the principle of free speech, so this can be a totemic issue for many on the Liberal side of politics. Palmer is ready to challenge any federal changes on this point in the High Court.

Another argument is financial. The lower the limit on donations, the greater the demand for public funding for political parties and candidates. The Australian Electoral Commission paid $75.9 million to those who contested the last election, equivalent to about $3.29 per vote, and this might have to rise if private donors are turned away.

But there is another principle at stake: one vote, one value. Mammoth spending by a single wealthy donor can easily swamp other views. A few big donors can use money to amplify their voices, so their votes have more value.

The Special Minister of State, Don Farrell, is cagey about the timing of the electoral reform, but he promises legislation this year. “It’s clear that our system needs to be protected, including from billionaires who try to influence our elections,” he says.

What is the right limit for donations? My colleague Paul Sakkal reported this week it could be as low as tens of thousands of dollars. That looks too low.

The problem with a low cap is that it risks hurting the challengers who disrupt politics. The “teal” independents, for instance, needed up to $2 million in every seat to run effective campaigns against the major parties. They could not do that without Climate 200, the campaign group led by Simon Holmes à Court with donors like Cannon-Brookes.

Holmes à Court has assembled a phalanx of critics to oppose tight caps. He points to all the benefits the incumbent parties receive: public election funding, allowances for printing and communication, salaries for advisers, and so on. This means outsiders have to fight harder, and raise more money, to challenge the system.

Recent history shows these are real concerns. The Victorian government applies a donations cap of $4670 over a four-year election cycle, but the major parties have ways around this. State independent MPs lost their seats after this regime began. In NSW, the spending cap is averaged across all electorates and therefore constrains independent campaigners who target a few key seats.

While the crossbench MPs want to limit big donors, they worry that Farrell will do a deal with the Liberals to help the major parties and make things harder for independents.

“Caps seem like a great idea in theory, but it’s pretty hard to come up with a model that doesn’t allow parties to massively outspend challengers,” says Kate Chaney, the independent MP for Curtin in Western Australia. She has a warning for voters about a deal between Labor and the Liberals: “That would be like Coles and Woolies writing the laws on supermarket competition.”

Even so, it is untenable for the wealthy donors at Climate 200 to line up with Palmer – or anywhere near him – by opposing caps. While some Australians might prefer Cannon-Brookes for investing in renewable energy rather than Palmer for investing in a replica Titanic, this is not about whether voters like one billionaire or another. It is about preventing any billionaire buying an outcome.

“Properly designed spending caps are essential for fair elections,” says Joo-Cheong Tham, a professor at Melbourne Law School and a director of the Centre for Public Integrity. “They prevent big spending – especially by dominant parties and candidates – distorting election outcomes. They also help prevent corruption by reducing pressure on fundraising and reliance on wealthy donors.”

Transparency International Australia, the Australian Democracy Network and the Human Rights Law Centre support limits on donations and campaign spending, but they all say the changes have to be fair between political movements.

The looming changes appear, at this point, to be overwhelmingly positive. More donations would have to be revealed and the disclosures would come in real time, a vast improvement on the paper-based system at the Australian Electoral Commission today.

Choosing the right level for the donation and spending caps, however, will be fiercely contested in parliament. But the caps will have to be applied in some form to save future elections from the distortion that comes from massive money. And to help Palmer spend his money instead on the Titanic.

David Crowe is chief political correspondent.