Caps on political donations to keep ‘big money’ out of elections

Amid a clamour by integrity experts for an overhaul of political fundraising, the inquiry was set up after mining magnate Clive Palmer donated a record $117 million to his United Australia Party (for the return of one senator), while businessman Simon Holmes à Court’s Climate 200 group of donors gave $13 million to the pro-climate change action and integrity candidates.

Climate 200’s cash helped 11 MPs and senators win their seats as part of the “teal wave” that swept federal parliament at the May 2022 election and cost the Liberal Party some of its blue ribbons seats, with then treasurer Josh Frydenberg the biggest scalp.

Currently donors can give an unlimited amount of money for federal elections but the committee report said donation caps would reduce the potential for “big money to have undue influence”.

It also said spending caps should be introduced for electioneering and to compensate for the reduction of donations, and public funding that candidates receive if they exceed 4 per cent of the vote should be increased.

“There is evidence that the significant rise during the spending of elections is leading to an arms race, where whoever has the deepest pockets wins,” the committee’s report said.

The report did not nominate a figure for the donation and spending caps.

It recommended that donation limits apply to all parties, candidates, associated entities and third parties and they be aggregated across candidates and parties to stop donation splitting. Caps would be set on a per annum basis.

While unions would be captured by the donations cap, the money they give to the Labor Party through affiliation fees would be excluded from calculating the caps. Party membership fees, subscriptions and levies would also be excluded.

Spending caps could be applied at both the electorate and national level. They would be higher for independent candidates because “they generally have less existing structural support” than major party candidates.

Teal MP Kate Chaney said in her comments that a one-size-fits-all limit would “embed major parties”, who would be able to shift money from unwinnable seats, could advertise nationally and enjoyed incumbency and infrastructure.

“The difference between spending caps for independents/minor parties and spending caps for major parties must be significant enough to address these advantages,” she said.

The Coalition said it was opposed to both types of caps, saying excluding union affiliation fees created a “partisan approach” to electoral reform, while it opposed treating independents differently to major party candidates.

“A spending cap that fails to take into account Labor’s union-funded campaign machine is nothing short of a financial gerrymander,” the Coalition’s dissenting report said.

The Coalition said truth in political advertising laws would amount to censorship. “Elections and election campaigns are and should remain a marketplace of ideas”.

The committee also recommended lowering the threshold for disclosing political donations to $1000 and requiring parties to disclose their donations in “real time” rather than months afterwards.

The Human Rights Law Centre said the changes would help level the playing field at election time but warned of unintended consequences for charities and not-for-profit groups, which would face curbs on fundraising for advocacy on issues such as environmental protection.