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The biggest electoral reforms in 40 years have been criticised as a plot to entrench the two-party system, which would deliver millions in extra funding to Labor and the Coalition. By Jason Koutsoukis.
‘That’s the f--king point’: Labor donor reforms explained
After a glass or two of wine at a party in Adelaide last year, Don Farrell recounted a meeting with Simon Holmes à Court.
Farrell told a small group how the Climate 200 convenor had approached him to complain that his proposed changes to election donation laws would entrench the two-party system and lock out challengers. “I mean,” Farrell quipped, “that’s the fucking point!”
Whether or not the affable Labor senator would own that bit of repartee – he declined to comment for this story – he has made clear his intent to strengthen the two-party system elsewhere.
At a meeting with crossbench MPs earlier this year to discuss the proposed reforms, Victorian independent Helen Haines asked Farrell directly if the legislation, which is now before the parliament, was just a mechanism to lock in the two-party system.
“Well, that’s how the Westminster system works,” replied Farrell.
And when quizzed at a November 15 press conference, he said: “What these changes will do is take big money out of Australian politics. It will strengthen our democracy. The Westminster system has served Australia federally very well for the last 125 years.”
The man who parliamentary colleagues have dubbed the “Donfather” – such is the power of the numbers he controls as head of Labor’s “small states” Right faction – has kept his word.
Released last week after months of negotiations and an exhaustive parliamentary inquiry into the conduct of the 2022 federal election, the bill appears to have the broad support of the Coalition. It has, however, attracted strong opposition from a majority of crossbench MPs who argue that the legislation is rushed and flawed, and disproportionately benefits major parties and incumbents while disadvantaging independents and challengers.
Focused on six key proposals, the Electoral Legislation Amendment bill proposes reducing the disclosure threshold for political donations from $16,900 to $1000 each calendar year. All donations would have to be declared within a month outside election periods, weekly once an election is called, and daily in the final week before polling day, with expanded disclosure requirements also including broader definitions of what constitutes a gift.
When it comes to campaign expenditures, the legislation proposes a $20,000 annual cap per donor to the same recipient, indexed annually. There would be caps of $90 million on federal expenditure for political parties, $800,000 on campaigns in each individual division or electorate, and $11.25 million on expenditure for significant third parties including trade unions and campaign groups such as Advance and Climate 200, with exemptions for campaign travel, translation services, campaign offices and how-to-vote materials.
Strengthened reporting and monitoring measures include mandated accounts to enable the Australian Electoral Commission to track all electoral donations and expenditures, and the introduction of annual returns that would require all candidates and parties to disclose gifts and expenditures within eight weeks after the end of each calendar year.
Public funding of elections would be increased to $5 per first-preference vote for parties and candidates receiving at least 4 per cent of the vote, with a new provision to allow advance payments to reduce reliance on private donations.
According to Farrell, Labor’s reforms will cap campaign spending, restrict big donors and “stop the arms race of donation drives and endless fundraising”.
“Politicians, parties and candidates will be restricted on how much they can receive from any individual per year. Big donors will be restricted on how much they can donate and all participants in the elections will be limited on how much they can spend on advertising and campaigning,” Farrell said.
“We are increasing transparency with accelerated reporting of donations, real-time reporting during elections, and a lower donation disclosure threshold to shine a spotlight on more of the money in politics.”
The Australian Electoral Commission would also be able to apply compliance audits and penalties.
“We know that this reform will face some challenges, but of course, if it was easy, somebody else would have done it already. We’re not shying away from the chance to protect our democracy and I’m asking all of my colleagues across the parliament to support this passage in coming weeks,” said Farrell.
Farrell has consulted with the cross bench on the bill over the past 12 months, but has attracted strong criticism from teal independents and several others for a lack of detail on its contents, and attempting to suppress competition. Western Australian MP Kate Chaney, who sat on the Joint Standing Committee on Electoral Matters inquiry into the 2022 election, has described the legislation as a cynical move by the major parties.
“It’s outrageous that the government and the opposition are rushing this through the parliament with no scrutiny, despite saying it’s the biggest change to our electoral system in 40 years,” Chaney told parliament on Tuesday. “... the Centre for Public Integrity, the Australia Institute, Transparency International Australia and Australian Democracy Network have put out a joint statement saying that they’re united in the view that the government’s proposed bill should not proceed in its current form other than the donation transparency part.”
Chaney takes issue with administrative allowances of $30,000 per MP and $15,000 per senator, each year, which she says would disproportionately benefit the major parties. She argues that the $800,000 spending cap for each electorate or division doesn’t take into account the advantages enjoyed by incumbents, who have additional resources such as offices, staff and vehicles included in the cap.
“There is no relationship between this extra funding and the actual increase in administrative tasks. It’s clearly designed to get the Coalition on board. It translates to $17 million in extra taxpayer funding in each term, three quarters of which goes to the major parties,” Chaney tells The Saturday Paper.
“There is not, as anyone in business knows, a linear relationship between the number of people and an overhead like administration. The ALP currently has four people to meet the admin needs of 104 parliamentarians. It does not need another $6 million a year to do that.”
Independents including ACT Senator David Pocock also criticised the $90 million national expenditure cap as inadequate, as it would allow strategic overspending in marginal seats.
Advertising that simply urged voters to vote for the party and not an individual candidate would be considered exempt for the $800,000 divisional spending cap. A party can also share expenses across divisions.
“For example,” Pocock tells The Saturday Paper, “in the ACT, if Labor runs ads that have all of the candidates and sitting members’ names, they get to split that between the different campaigns in the ACT, so they can essentially run, you know, four times more ads as an independent candidate that can only put their own name on their own advertisement.”
Senator Pocock is also puzzled by the government’s haste in trying to pass the bill into law by the end of next week, the last parliamentary sitting week of the year.
“Their argument about the urgency makes no sense, because on the one hand they’re saying it’s the biggest reform in 40 years. And it’s complex. It’s a big bill – over 200 pages,” says Pocock. “On the other hand, they’re saying it needs no Senate scrutiny, that it’s so urgent that it must go through in two weeks, but we are still reading the bill.”
“A lot of this stuff sounds good, but it’s only when you start to unpack the detail and ask, ‘How will this work? What’s the unintended consequence?’ ” he says.
“So I think at the end of the day, Don Farrell has come up with something that he thinks or knows is palatable for the Coalition and entrenches incumbency … for someone who is now an incumbent, like me, this probably works, because you have got to raise less money, and then spend less money. But this isn’t about me. I want other communities to be able to compete.”
Not all the independents opposed the legislation, however.
Rebekha Sharkie, who has represented the South Australian electorate of Mayo since 2016, says that while she acknowledges its imperfections, she supports the bill, praising the lower donation disclosure threshold and improved reporting requirements. She welcomes a new system that will track all election-related expenditure and gifts, and limits on campaign expenditure. She hopes that will make it more difficult for wealthy individuals such as Clive Palmer with his United Australia Party to distort elections.
“My first election cost me roughly $40,000 to run,” says Sharkie. “Contrast this to the politics of the United States, where the recent election cost a staggering $15.9 billion.
“Increasingly, we are seeing a larger spend on campaigns across parties and individual candidates in Australia. In the last election we saw several candidates from major parties and independents spending more than $2 million on their campaigns.
“The United Australia Party spent more in a single year than any political party in Australian political history,” Sharkie adds. “Our democracy must not devolve to a financial arms race that favours the size of the campaign wallet over the quality of the candidate. Australians should not be dissuaded or precluded from participation as a consequence of financial barriers to entry. At the least, Australians must be able to be aware of the sources of the parties’ and candidates’ funding before they cast their ballots.”
Clancy Moore, chief executive of Transparency International Australia, warned that many changes proposed in the legislation required careful consideration.
“The transparency provisions are very strong, including ‘real time’ disclosures of donations on a monthly basis, and then more frequently around election campaigns, and lowering the disclosure threshold to $1000,” Moore says. “But the bill contains the most comprehensive changes in a generation and some potential gigantic loopholes, so requires proper scrutiny, consultation and an in-built statutory review.”
Some of the potential loopholes, added Moore, include the exemptions for what constitutes a gift, the $90 million major party expenditure cap, the $11 million expenditure cap for associated entities such as the ACTU or Advance, and the $30,000 administration fund for each MP.
“We strongly support capping donations from wealthy individuals and big business and spending during election campaigns in order to reduce the corrupting risk of big money,” says Moore. “However, international experience shows that caps must be carefully calibrated to ensure that they don’t entrench the power of incumbents and disadvantage independents and minority groups that are under-represented in parliament.”
With analysis by The Australia Institute suggesting that the proposed $90 million expenditure cap would affect the Liberal Party more than the Labor Party, it remains to be seen whether the Coalition will vote with the government to pass the bill by the end of next week.
“I think we’ll end up supporting it, but a lot of backbenchers still have concerns about how all this will work, so I expect there is still a fair bit of negotiation to go,” one senior Liberal MP says.
Liberal Senator Jane Hume, who has been leading Coalition negotiations with Senator Farrell, tells The Saturday Paper that from her point of view, talks with the government were progressing relatively smoothly.
“Unlike some others in this place, I have always found Minister Farrell to walk the walk when it comes to professionalism and courtesy in his consultations.”
This article was first published in the print edition of The Saturday Paper on November 23, 2024 as "‘That’s the f---king point’: Labor donor reforms explained".
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