Negotiations over how much Australians can donate to political candidates have forced Labor to shelve reforms aimed at getting big money out of politics, unless it's the Liberal or Labor party being funnelled those funds.
The Albanese government had proposed an annual $20,000 individual donation limit to a party’s state or federal branch and lowering the threshold at which donations are publicly declared to $1000. Some sources state the coalition was pushing to increase the individual donation limit to $40,000 and the reporting threshold to $5000.
Labor wants to ease how the caps affect the war chests that advocacy and peak bodies build from member fees. The Liberals were holding out due to changes making it easier for trade union councils and civil society peak bodies to run campaigns.
Special Minister of State Don Farrell, spearheading the federal government’s electoral legislation, was hoping to have the laws ticked off on Thursday with bipartisan support.
While a deal with the coalition was close, negotiations broke down on Wednesday night, November 27, ending chance of the laws passing before the end of the federal parliamentary term.
Negotiations will continue over the summer until parliament resumes in February.
Finance Minister Katy Gallagher is pushing to have the reforms passed by the federal election, which is due by late May.
The changes will not come into effect until mid-2026, but Labor argued they need to be passed as soon as possible to give parties and the Australian Electoral Commission time to adapt to the laws.
The new rules would have added about $18 million to the two parties by giving Labor and Liberal and other successful candidates and parties $5 per (first preference) vote instead of $3.
A $90 million federal spending cap for political parties and $11 million limit for special interest groups such as unions and fundraising group Climate 200 have been opposed by those arguing donations should not be capped as it goes against free-speech principles.
An $800,000 candidate spending cap for each electorate will also be imposed on candidates under the proposed changes.
Millionaires spending an unchecked amount of money at elections was “subverting our democratic process”, Opposition Leader Peter Dutton said.
However, the Liberal financial structure has a lot of its money coming from wealthy individuals including through financial "clubs" like Kooyong 200.
Like Labor, most of these donations would still have been allowed under new rules provided they were split up among branches and spaced out over time. Kooyong 200 and similar clubs could either have been absorbed into the Liberal party or could have donated in much the same way as a union branch.
The Cormack Foundation and Vapold, two Liberal financial vehicles that provided a combined $5.5 million, could still have done so if the party nominated them as its own under the new rules.
But the bill in its current form was not something the opposition could support, Mr Dutton said on Thursday.
The Coalition also has concerns about the $1,000 disclosure rule, which it argued would expose small businesses and individuals to harassment from activists.
Crossbenchers have argued that how the changes are structured, and the proposed increase in public money that goes to parties per vote, stacks the odds against them.
An overarching federal war chest parties can use to target key seats with broad advertising not captured in the $800,000 cap could also handicap independents and grassroots movements, they stated.
Independent MP Kylea Tink called for the government to split their reforms and pass broadly supportive sections including lowering the donation disclosure threshold and having real-time reporting requirements.
Labor has ruled out splitting the package.
Parties being able to move cash around to sandbag at-risk seats on top of candidate expenditure while independents and minor parties only had $800,000 was “a crass attempt” to lock out competition, she said.
Speaking on Thursday on the impasse between the major parties Greens Senate leader and democracy spokesperson Senator Larissa Waters said:
“We've seen the big party stitch up on electoral funding reform crumble today.
“The Greens were ready to pass the transparency aspects of this legislation having long campaigned to get the influence of big money out of politics.
“We want more transparency so the public can see who's paying for what outcome, who's paying to try to seek influence.
“With the deal reportedly dead between the two big parties who were very ready to scratch each other's back, the onus is now on the government to come and talk to the Greens and the crossbench about genuine electoral reform.
“Frankly, the government should have been talking more earnestly with us all along. However, it's pretty clear that they will now need to do that.
“We will continue to fight to clean up democracy so that it works for people, not just large political donors.
“We will always fight to make sure that corporate donors and fossil fuel companies and weapons manufacturers can't buy the policy outcomes that suit them ahead of the interests of the Australian public.
“We are very keen to continue to try to work on improving our democracy, and we could have passed those transparency measures today. There is theoretically still time, although there's a lot on the agenda.
“But we need to make sure that those other funding reforms were not simply a stitch up for the two big parties, and that is certainly what they looked to be.
“We need an inquiry into those provisions, or failing that, the government can go back to the drawing board and come and talk in an appropriately open fashion with the Greens and the crossbench.
“Then we can actually get reforms that will kick big money out of politics and protect democracy for the people, not just the two big parties.
A Senate Inquiry into the bill, to scrutinise the hundreds of pages long bill released just a week ago, has been called for by the Greens, crossbenchers, and those outside of parliament.
Mackellar MP Dr. Sophie Scamps said on November 15:
''Today we learned that Labor and the Coalition have joined forces to do a back room deal on our democracy. A deal that has the potential not to strengthen our democracy, but to weaken it as it will make it harder for new entrants and independents to be elected. A deal that has been struck between the major parties, without proper consultation and without proper process.
The crossbench and I have been calling non-stop this term for reform of political finance laws to build in far greater transparency and ensure that our democracy can’t be bought or unduly influenced by wealthy individuals or corporations. To that end I fully support the Private Members Bill of Curtin Independent MP Kate Chaney – which implements transparency measures and caps donations to 2% of public funding.
In contrast, the Government’s proposed caps on donations and spending are structured in a way that will make it harder for new entrants, independents and minor parties to be competitive and to be elected. Why? Because the major parties are worried. Over the last couple of decades, the vote for major parties has been trending steadily downwards with over one third of votes last election going to candidates outside the major parties. This frightens the current duopoly and is viewed as a threat to their stranglehold on power.
A democracy should be a contest of ideas, and greater diversity in parliament means more robust debate, fresh perspectives and more eyes holding the government to account.
This is our democracy. Any change to it should be open and transparently prosecuted.
Instead, the Government and Opposition have come to an agreement in secret and are pushing to rush the legislation through in 2 weeks without adequate consultation. At a minimum, a Bill with implications this far-reaching should have been released in exposure draft form, with a period for public consultation, and then put through proper parliamentary scrutiny with a Senate inquiry.
Australians should be very suspicious indeed, when Labor and the Coalition – who have been incapable of agreeing on virtually anything in this term of Parliament – have miraculously managed to agree on reforms to avert their own decline.''
Greens Senate leader and democracy spokesperson Senator Larissa Waters said:
“Today in the Senate the government and the opposition teamed up against the entire crossbench to block an inquiry into the electoral reform bills. This is bad for democracy.
“There are some straightforward transparency measures in this bill, like lowering the disclosure threshold to $1,000 and real-time disclosure, which we have long called for.
“The Greens are ready to pass transparency measures.
“However, we want an inquiry to ensure that the proposed funding reforms to get big money out of politics don’t entrench the two party system and make it harder for diversity and new entrants.
“It is the job of the Senate to scrutinise proposed legislation and that is what we have called for today.
“Any reform which limits donations to anyone who challenges Liberal and Labor, while protecting the establishment parties' sources of income, will be seen for what it is - a complete stitch up, undermining our democracy, and the public’s expectation of fair play.
“Both the big parties continue to accept huge sums of money from dirty industries like coal and gas with a track record of trying to buy favourable policy outcomes.
More in: What's dodgy about the Australian political donations reforms?; the Electoral Legislation Amendment (Electoral Reform) Bill 2024
Michelle Grattan, Professorial Fellow, University of Canberra, provides another insight into the electoral rforms.
