Explainer
An opportunity to make our elections more truthful, transparent and fair
The background
In November 2023, a parliamentary committee released a set of recommendations for reforming how our federal elections work.
If applied properly in legislation, these reforms could be a once-in-a-generation chance to expose hidden money in our political system, address corrupting corporate donations, and tackle dangerous misinformation once and for all.
However, the devil will be in the detail. If done poorly, the government could enact legislation that might exacerbate our electoral system’s uneven playing field.
For reforms to be robust and effective they must:
Reforms should expose secret donations
Dark Money
Much of the private money in our political system is not disclosed to the public due to our weak disclosure laws.
Over the past two decades Australia’s major political parties have received more than one billion dollars in income that can’t be traced to a source. In the year leading up to the 2022 federal election alone, this “dark money” reached a record breaking $119,385,655.¹
At a federal level, donations to political parties only have to be declared if they are above $16,300.² On top of that, the donations data that we do get to know about is only released to the public once a year.
Closing loopholes
Under our current laws, “gifts” to politicians above the threshold must be disclosed.
Unfortunately, under the Commonwealth Electoral Act, the definition of “gift” is very narrow. The definition does not include contributions for access to decision-makers like:
(a) fundraising tickets to events for the purpose of meeting politicians; and
(b) membership subscriptions to political parties’ business forums, which entitles members to meet with politicians.
Membership fees and tickets to events
One way industries get around needing to report political donations is by disguising them as expensive membership fees, subscriptions and event tickets. For example, public information about membership fees for the major parties’ business forums is hard to come by, but we do know that in 2017 they were priced at $110,000 for platinum membership, $55,000 for the gold tier and $25,000 for silver.³
Memberships give industry representatives a literal seat at the table and allow industries to financially support politicians without leaving an obvious paper trail that ties them to a specific political party.
In some cases, companies use membership payments as their primary way to give funds to parties, leaving no trace of donations in their reporting. For instance, Macquarie Group, an Australian financial services group worth over $45B, said that it ‘provides financial support to the Government and Opposition, primarily through paid attendance at events and membership of Government and Opposition business forums’ and that only a small percentage of its contributions are made through direct cash donations.
Definition of “gift” and “other receipts”
Income that does not meet the ” gift ” definition is categorised as “other receipts”. Dr Lindy Edwards, a political academic, says that a significant number of donation-like payments are mixed in with legitimate ‘other receipts’, which makes navigating and analysing the payments almost impossible. This undermines donation transparency and stifles the ability for public scrutiny of who is funding our politicians.⁴
Additionally, if a cap on donations is introduced, these cash-for-access payments won’t be considered as part of any limits unless the definition of gift is broadened – expanding the impact of this loophole.
We call on the Albanese government to close loopholes and broaden the definition of “gift”so that cash-for-access payments are considered donations and treated as such.
Reforms should stop politicians being able to lie in political advertising
In recent years, people have become increasingly subjected to exaggerated and conspiratorial content. This has contributed to the polarisation and fragmentation of communities on issues like the 2020 bushfires, the pandemic and the Voice referendum.
It’s no different when it comes to election advertising, where political candidates and representatives are allowed to say almost anything they like without recourse. It is not uncommon to come across ads that misrepresent facts and mislead voters . Not only does this diminish the quality of public debate around election time, but it also reduces public trust in politicians and democracy.
Currently, political advertising guidelines have two simple requirements: ads must be from an authorised source, and ads can’t mislead voters on the actual election process (like how to fill out your ballot paper). But that’s as far as the rules go. This means that lying in political ads is perfectly legal. Candidates and representatives have exploited this leniency to run damaging scare campaigns with misleading information about their political rivals.
Misleading advertising scare campaigns
In the lead-up to the 2016 federal election, Labor ran ‘Mediscare’ – a series of ads claiming the Coalition would privatise Medicare if elected, despite Fact Check being unable to find any evidence.⁵
In 2019, the shoe was on the other foot. Through misleading advertising, the Coalition sparked rumours that Labor would enforce a tax on inheritance or ‘death tax’ if they won office, even though it was not part of their policy platform.⁶
In 2022, Pauline Hanson released a video that depicted Anthony Albanese and Penny Wong scheming to cheat the upcoming election, despite there being no evidence of this. The video made baseless claims that previous elections had been rigged due to postal votes being lodged by deceased Australians and the occurrence of individuals being able to vote multiple times.⁷
A Liberal Party campaign truck. Sydney Morning Herald, 2019
Truth in political advertising laws
We need to limit dangerous misinformation with strong truth in political advertising laws that penalise political parties and candidates that lie in their advertising. South Australia has enforced truth in political advertising for almost 40 years, proving its feasibility.⁸
Like South Australia’s legislation, we need a model that strikes a balance between cracking down on lies in advertising without impeding political discourse and free speech.
We call on the Albanese government to limit dangerous misinformation with strong, fair truth in political advertising laws, with penalties for those who break them.
Reforms that cap donations or spending must ensure political parties can’t rig the system in their favour
Political donations and election spending
Currently, there is no limit to how much money an organisation or individual can donate to a political party. Parties and candidates can also spend as much as they like on election campaigns that try to win our votes.
We know that to level the playing field in our democracy, we need to stop the endless streams of corporate money that are free to flow into our political system. However, it’s important that any limits on donations and spending ensure political parties can’t rig the system in their favour.
The risk of entrenching incumbency and locking out new entrants
As things stand, once you are elected into our federal parliament you have a much greater chance of being re-elected compared to a candidate who is competing and who isn’t already in office. There’s a range of reasons behind this, and if laws limiting political donations and electoral spending overlook these advantages, they could make our system less fair by making it difficult for new candidates to be elected.
Public funding and resource distribution
Public funding for elections is allotted based on previous election results, and so it isn’t available to new challengers. Sitting members seeking reelection have a guaranteed, steady income from the public purse. Following the 2022 federal election, candidates who received over 4% of the primary vote were entitled to $2.91 per vote for future campaigns.
Another advantage built into the current system is that political parties that run multiple candidates – especially large political parties – can raise public money from votes in safe seats and spend it in marginal ones. Independents lack this flexibility since they only receive public funding from the votes they receive within their own seat. By pooling funds in marginal electorates where major party candidates are running against an independent, parties can massively outspend their opponent.
Incumbent candidates also receive a significant amount of publicly funded resources, such as communications budgets, office space, staff. It is estimated that an already elected member has approximately $1 million worth of resources that a challenger does not.⁹ To keep things fair for new candidates and independents, sitting members should use publicly-funded resources to help them do their job as MPs rather than trying to secure re-election.
The Victorian model: Nominated entities
In some cases, like in Victoria, major parties get around the donation limit because they are allowed to select one ‘nominated entity’ that can continue to make unlimited donations to the party. These nominated entities are usually organisations that make money through investments. Victorian Labor’s nominated entity is called Labor Services and Holdings. For the Liberal Party, it is the Cormack Foundation, and for the Nationals it’s Pilliwinks Pty Ltd.¹⁰
This is a form of income that independents can’t access, leading to an uneven playing field. Any donation cap must be designed to stop parties from circumventing the donation cap through slush funds that maintain a flow of income.
If any new laws are passed to limit donations and spending, they must be designed in a way that ensures political parties can’t rig the system in their favour.
¹OurDemocracy, “AEC Donations Data Drop 2021/22”, https://www.ourdemocracy.com.au/aec-donations-data-summary/
²https://www.aec.gov.au/Parties_and_Representatives/financial_disclosure/guides/donors/files/donors-2022-23.pdf
³https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Political_Influence_of_Donations/PoliticalDonations/Report_1/section?id=committees%2Freportsen%2F024147%2F25779
⁴https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Political_Influence_of_Donations/PoliticalDonations/Report_1/section?id=committees%2freportsen%2f024147%2f25780
⁵https://www.abc.net.au/news/2022-05-19/fact-check-mediscare-labor-election-scare-alert/101076352
⁶https://www.abc.net.au/news/2022-04-13/fact-check-labor-death-tax-election-scare-alert/100982062
⁷https://www.theguardian.com/australia-news/video/2022/may/10/factcheck-are-pauline-hansons-claims-of-voter-in-australian-elections-true-video
⁸https://australiainstitute.org.au/post/overwhelming-support-for-truth-in-political-advertising-laws-following-referendum/
⁹Elizabeth Morison, Bill Browne, “Advantages of Incumbency: Sitting politicians receive millions in public funding that support re-election”, The Australia Institute, Discussion Paper (June 2023).
¹⁰https://www.theage.com.au/national/victoria/labor-s-campaign-funding-laws-build-100m-wall-to-keep-independents-out-20220908-p5bgim.html