Jail time for donors who breach new political spending rules

People who try to sidestep rules attempting to cut big money out of politics could be hit with jail time and big fines, under a proposed once-in-a-generation shake-up of Australia’s election system set to dominate parliamentary debate in the final months of the year.

Senior Labor sources revealed to this masthead that final details were being worked through on a wholesale revamp of the Electoral Act. If successful, the legislation would take effect during the next term of parliament, to allow the Electoral Commission and political parties to prepare for the changes.

Special Minister of State Don Farrell is leading the government’s sweeping reforms to electoral laws.Credit: Alex Ellinghausen

After months of briefings with independents and opposition MPs wary of changes that might disadvantage them, Special Minister of State Don Farrell will next week begin revealing to MPs the specifics of a bill he intends to introduce in September, a month’s delay from the government’s previously indicated timeline.

This masthead revealed in March that the move to block billionaires from buying election outcomes would involve a cap on the amount a candidate can receive, likely in the tens of thousands per year and a limit on how much a party can spend in an individual seat.

The sources, who asked not to be named so they could discuss plans that remain confidential, said a seat-by-seat spending cap would be set at under $1 million.

That spending cap is much higher than what major parties are believed to spend on individual seats but is well below what many “teal” independent MPs, backed by Climate 200, spent to enter parliament.

Sydney MP Allegra Spender and Melbourne MP Monique Ryan each spent $2.1 million to win Wentworth and Kooyong, while Goldstein MP Zoe Daniel spent $1.6 million. Major parties also spent big in those seats to match them.

Due to the murky reporting of campaign finance in Australia, the amount the major parties spend on target seats is unknown. Analysis of electoral returns shows that over the last electoral cycle total receipts – which take in all donations and public funding nationally – for Labor Party entities was $241 million and for the Coalition was $272 million.

The electorate cap may also frustrate the Greens, who target mostly Labor-held electorates and run candidates in fewer seats compared with the major parties, but tip huge money into each contest.

The new laws would give the AEC the power to impose fines and possibly criminal charges to ensure the system was not gamed by donors moving money around to other individuals to effectively donate on their behalf.

An increase in public funding for MPs is also part of the package of reforms while donations of more than $1000 would have to be reported immediately, rather than up to 18 months after an election.

Unions will also be captured by the new caps on spending and donations. They may still be able to contribute to Labor head offices as long as that money was spent on administration rather than campaigning.

One of the reasons the bill has taken longer than expected to draft is that the government has been assessing legal advice on how to avoid a High Court challenge to the laws on the basis that curtailing spending could impinge on the implied right to freedom of political communication.

The government is considering novel approaches to the donation cap to strengthen its legal argument in a court case expected to be brought by billionaire Clive Palmer.

Teal candidates in Victoria are challenging state-based donation laws, and the community independents movement might do the same with the federal laws if they are too prohibitive.

The Albanese government faces a tough road to secure consensus in the parliament on the contentious and legally complex donations reforms.

The sources said that Farrell is determined to strike at least a bipartisan deal with the Coalition to ensure that the reforms survive beyond the life of the current Labor government. The Coalition and Labor have not yet agreed on a deal.

He is also seeking support from the Greens and the crossbenchers in the lower house and the Senate but is prepared to proceed without their support if a compromise cannot be reached.

In 2013, former prime minister Julia Gillard reached a deal with then-opposition leader Tony Abbott that would have handed millions in additional public funding to the major parties, before the plan was scuttled.

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