Political financing

A situation in which citizens believe elections can be bought or that there is some quid pro quo for helping a candidate win must be seen as seriously damaging to the proper functioning of a democratic government. A corrupt member of parliament can be voted out of office if elections are free and fair. But if there is a loss of trust in the election process, then the whole system of representative government is weakened.

NSW ICAC, Dec 2014 report on the influence of political donations

The current problem 

Australia’s federal electoral system has few constraints on donations and a weak disclosure regime.

• There are no caps on campaign expenditure.
• Competition between the major parties is driving up spending on elections, funded largely by donations from individuals, associations (including unions) and other organisations (including corporations) that have a vested interest in the outcomes of those decisions.
• Donations under $13,500 can be made anonymously and donors have 20 weeks after end of financial year to disclose them which means voters are not fully informed before they case their vote
• State electoral financing rules vary enormously.

The current regime has resulted in an ‘arms race’ of election campaign spending and the assumption seems to be that the greater the expenditure, the more likely the electoral success. This competition to raise increasing amounts of money for elections places Australia at great risk of corruption and undue influence.

In 2018 political donations over $1,000 from foreign entities and individuals were banned. Other than this there has been no substantial change to Australia’s Federal political funding and disclosure regime despite recommendations made to several parliamentary inquiries into these issues.

The reforms that are needed 

• Caps of ~$1,000 on donations from individuals and all organisations, disclosed in continuous real time (1-2 days)
• Limits placed on election expenditure for candidates, political parties, associated entities and third party entities
• Significant penalties applied to breaching electoral laws
• A uniform political donations regime across Australia
• An independent public inquiry chaired by a former judge, appointed by a parliamentary committee, to identify best practice and the regime for public funding including the 4% of the vote threshold that applies.

Funding received by political parties

All parties

$62.7m

$188.8m

$156.1m

$207.4m

$154m

The Senate Select Committee into the Political Influence of Donations report noted the issues raised with the AEC in public commentary:

• • the timeliness of annual and election disclosure by political parties and other participants in the electoral process;
  • the value of the disclosure threshold;
  • the clarity of definitions relating to disclosure, such as what constitutes a ‘gift’;
  • the lack of harmonisation between state and territory disclosure schemes;
  • the definition of associated entities and 3rd parties under the Electoral Act
  • the practice of ‘donation splitting’ by political parties; and
  • the sanctions and penalties for incomplete or non-disclosure.

How we compare with other jurisdictions

With 15.468m eligible voters and $450m estimated to have been spent on election campaigns in Australia, it means that around $29 was spent on each voter. Canada, NZ and the UK have caps on election spending and this results in expenditure for each eligible voter of:

• • $5 in the 2015 Canadian election
  • $2.83 in the 2014 NZ election
  • 85 pence in the 2015 UK election