Donation caps needed to make federal elections fairer

The huge sums spent by political parties on last year’s federal election once again highlight the risks that big money poses to Australian democracy.

The parties spent $418 million in the lead-up to the May 2022 election, according to data released on Wednesday by the Australian Electoral Commission.

Some expenditure on political campaigning is a normal part of holding fair and free elections. Political parties have to be able to get the message out.

Labor won in 2022 even though it was outspent by the Coalition ($116 million to $132 million) but the tally was much closer if the Greens and teal independents are added to the anti-Coalition side of the ledger.

The rising cost of campaigning raises the risk that the party that wins will not be the one with the best ideas but the one with the richest donors.

More controls on campaign financing are needed to stop a few big donors from using their donations to gain special access to politicians and exert excessive influence over policies.

The rules are currently much weaker at the federal level than in NSW and most other states.

Unlike the states, there is no federal cap on donations by individuals.

Billionaire Clive Palmer threw $117 million at his United Australia Party. While his campaign was a joke and only secured one Senate seat, his advertising drowned out other voices and skewed the debate.

A few other billionaires such as cardboard box king Anthony Pratt and mining magnate Gina Rinehart made huge donations to the Liberal Party, while trade unions made big donations to the ALP.

To even the playing field, anti-corruption groups such as The Centre For Public Integrity have called for caps on donations by individuals and corporates similar to the $6700 that applies in NSW.

Alternative arrangements would be needed for donations by membership-funded groups such as unions and business forums.

Another huge problem with federal campaign law is the lack of transparency.

The AEC has only released data for the last election eight months after votes were cast.

The federal government should follow the lead of several states that have introduced systems of “real time” disclosure under which parties must disclose donations during election campaigns within three weeks in NSW and within a day in Queensland.

In an age of electronic transfers and spreadsheets, this is technically very feasible.

The federal threshold for disclosure of campaign donations, currently $15,200, is far too high and allows many donors to avoid all scrutiny. It should be lowered to the level of $1000 in NSW and most other states.

Political parties can arbitrage the weakness in federal laws to avoid state restrictions. Donations can be made to federal parties and then at arm’s length channelled back to their affiliated state-based parties. Property developers and tobacco companies can still donate at federal level, even though they are banned in NSW.

Special Minister of State Don Farrell said last July that the Albanese government was committed to implementing campaign finance reforms.

The ALP election platform advocated limiting the level of federal campaign expenditure, through the introduction of spending caps, which already operate in NSW and Queensland.

These spending caps could put a stop to the fund-raising arms race between political parties.

If our political system is to maintain the public’s trust, elections should be a contest of ideas rather than chequebooks.

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