How we can level the playing field on political donations

Continuing his trend of exposing the weaknesses of Australia’s democracy, Clive Palmer recently announced that his United Australia Party will run the most expensive campaign in Australian history at this year’s election, surpassing the $80 million it spent in 2019.

While it is hardly news that our weak federal political finance laws are in desperate need of an overhaul, this blatant threat to attempt to buy the outcome of the country’s forthcoming election should provide ample impetus for our parliamentarians to finally take action.

Clive Palmer announces United Australia Party candidates – including himself – for the federal election.Credit: Zach Hope

In the lead-up to election 2022, one key measure of the robustness of contenders’ integrity platforms is their commitment to serious political finance reform. This means the imposition of caps on electoral expenditure and donations, a strengthened disclosure regime, enhanced public funding, and an Australian Electoral Commission that is appropriately resourced and empowered to enforce a bolstered framework.

The United Kingdom, New Zealand and Canada, and nearly all Australian states and territories (Victoria and WA are the outliers) currently impose caps on electoral expenditure, with some only capping expenditure by parties and candidates and others also targeting associated entities and third parties.

Expenditure caps exist for good reason: as Lord Bingham of Cornhill, former Lord Chief Justice of England and Wales warned, if political parties’ ability to access media is proportionate to their resources, elections are little more than auctions.

As well as creating an environment where parties with more resources can communicate more frequently and with more members of the electorate than their less well-resourced rivals, uncapped electoral expenditure incentivises candidates and parties to compete for donations that enable them to outspend their opponents, potentially rendering them captive to private interests.

Uncapped electoral expenditure incentivises candidates and parties to compete for donations.Credit: Louie Douvis

Serious political finance reform also means the imposition of caps on donations, a substantially reduced disclosure threshold, and the aggregation of donations for both capping and disclosure purposes. Again, the Commonwealth’s laws in respect of these matters are weaker than those of other Australian jurisdictions. Donations are uncapped and only those over $14,500 need to be disclosed, with the lack of an aggregation requirement meaning that donors can avoid the disclosure regime by making multiple donations of $14,499 to different branches.

Then there’s the matter of the unduly narrow definition of “donation” under the Commonwealth Electoral Act, which excludes income from things like party fundraisers and corporate sponsorship of business forums and needs to be broadened. Transparency would be further promoted by real-time disclosure of donations, as well as quarterly reports providing categorisation and aggregates of donations.

Implementation of these reforms would necessitate the proper public funding of election campaigns. All Australian states and territories provide for public funding of election campaigns, with the exception of the Northern Territory (where the Electoral Commission has recommended that public funding be introduced) and Tasmania (where a bill introducing public funding is currently before the Parliament).

Currently, the Commonwealth’s paltry level of public funding is higher only than that of Western Australia, and is insufficient to achieve the purposes of reducing reliance on private donors and democratising elections by aiding less well-resourced parties and candidates to communicate with the electorate.

Public funding should be increased to cover approximately half of campaign spending, with the level of funding available tied to levels of donation and expenditure caps and indexed annually.

For an improved regulatory framework to have a chance of achieving its objectives, it is imperative that the Australian Electoral Commission – one of the country’s primary accountability institutions – is appropriately resourced and empowered to enforce the framework effectively.

This multitude of reforms is aimed at achieving one objective: levelling the playing field. In its 2015 McCloy decision – which upheld the constitutionality of NSW laws capping political donations, banning donations by property developers, and restricting indirect campaign contributions – a majority of the High Court observed that “Equality of opportunity to participate in the exercise of political sovereignty is an aspect of the representative democracy guaranteed by our Constitution”.

It might be tempting to become complacent, in a country where democracy seems to work fairly well, for most of us, most of the time (at least when we compare ourselves with the rest of the world). But complacency is a luxury we can ill-afford.

As we head towards election 2022 we must ask ourselves what kind of democracy we want: one that can be bought by those with the deepest pockets, or one where, through appropriate regulation, equality of participation is protected.

Dr Catherine Williams is research director at the Centre for Public Integrity. Han Aulby is executive director at the Centre for Public Integrity.

Dr Catherine Williams’ book, Keeping them Honest: the case for a genuine National Integrity Commission and other vital democratic reforms, co-authored with Stephen Charles AO QC (and published by Scribe) is due out in March 2022.

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