Chapter 1 Introduction
This inquiry by the Joint Standing Committee on Electoral Matters (the
committee) into options to improve the funding of political parties and
election campaigns follows a series of committee inquiries into Australia’s
political financing arrangements.
In its First Report in 1983, the Joint Select Committee on
Electoral Reform (JSCER), a predecessor of the current committee, stated
In Australia it is known that all the political parties have
drawn attention to the high cost of elections and to their financial
difficulties. In addition, there has been public disquiet about the influence
of large donors or would-be donors...
Evidence to the committee for this inquiry suggests that these issues remain
significant almost thirty years later.
In 1984, public funding of election campaigns and laws governing the disclosure
of political donations and electoral expenditure were introduced in Australia.
This new system contained many of the recommendations made by the JSCER in its
1983 report, which also led to major electoral reforms in Australia outside the
arena of political financing arrangements.
The Electoral Reform Green
Paper—Donations, Funding and Expenditure (first Green
Paper) outlined the three main approaches taken internationally for regulating
donations and expenditure:
(a) no regulation;
disclosure of financial transactions, but without regulation in the form of
limits, caps or bans; and
of receipts, expenditure and debt in concert with disclosure requirements.
Australia’s system of regulation of political
financing is currently based on the second approach, with the disclosure of
political donations and expenditure by political parties, Independent
candidates, donors, third parties and associated entities, aimed at providing
transparency of the movement of money in the political system, without imposing
limitations on, for example, the amounts that can be spent and received.
On 11 May 2011 the Senate referred to the Joint Standing Committee on
Electoral Matters an inquiry into options to improve the system for the funding
of political parties and election campaigns. In particular, the committee was
to examine: issues arising out of the Government’s Electoral Reform Green
Paper—Donations, Funding and Expenditure; the role of third parties in the
electoral process; the transparency and accountability of the funding regime;
limiting the escalating costs of elections; relevant measures at the state and
territory level; and relevant international practices.
The committee was aware from the outset that much work had already been
done on the reasons for which advocates for change feel reform is necessary and
the range of options available for regulating political financing arrangements.
On 25 May 2011 the Special Minister of State, the Hon Gary Gray AO MP,
wrote to ascertain the views of the Joint Standing Committee on Electoral
Matters on Senator Bob Brown’s proposed amendment
to the Commonwealth Electoral Act 1918, to make it unlawful for
political parties to accept donations from manufacturers or wholesalers of
tobacco products, or their agents. The committee resolved to examine this
matter as part of the wider inquiry into the funding of political parties and
On 13 May 2011 the Chair of the committee, Mr Daryl Melham MP, announced
the inquiry. It was advertised nationally in The Australian newspaper on
18 May 2011, inviting members of the public to make submissions.
The committee also wrote to all Members and Senators and Senators-elect,
state premiers and territory chief ministers, the Australian Electoral
Commission, registered major political parties and relevant academics and
During the course of the inquiry the committee received 37 written
submissions (Appendix A). The committee received additional oral evidence at 7
public hearings in Canberra, Sydney and Melbourne (Appendix B). The submissions
and transcripts of evidence from the public hearings are available on the
committee’s website at: www.aph.gov.au/em.
A number of submissions made to the committee’s inquiry into the conduct
of the 2010 federal election and matters related thereto also covered relevant
political funding matters. The standard review of
the 2010 federal election commenced in November 2010 and was well underway
before this inquiry into political funding was referred. At its public hearings
on 4 and 30 March, and 13 and 18 April 2011 for its previous inquiry, the
committee also received evidence relevant to this inquiry into political
On 21 September 2011 the Senate granted the committee an extension of its
reporting date until 1 December 2011. A further extension was granted until 12
Australia’s current political financing regulatory scheme involves a
focus on transparency of funding sources and the movement of money between
political actors. In this report, the committee examined the effectiveness of
existing arrangements and options to improve the current system.
The committee also considered the desirability of a shift to a more
detailed funding and disclosure model involving limitations on the receipt of
funds and expenditure. The committee discussed the issues that need to be
considered if such a regulatory shift is to be undertaken.
Chapter 2 covers key developments in political funding arrangements in
Australia and recent moves to improve transparency and accountability in political
funding and disclosure, including the government’s electoral reform green paper
process, relevant legislation and activities by the committee. The chapter also
briefly noted relevant state and international reforms, which include a broader
approach to regulation of political financing.
Chapters 3 to 9 each focus on a specific aspect of the political financing
arrangements; private funding, expenditure, public funding, third parties and
compliance. Each chapter contains an outline of the current arrangements, concerns
about and challenges of this system, possible options for reform, committee
conclusions, and where appropriate, recommendations to improve the funding of
political parties and election campaigns.
Due to the complexity of private funding arrangements and reform
options, the discussion of these issues have been separated into two chapters.
Chapter 3 focuses on sources of private funding, and disclosure and reporting
requirements. Chapter 4 explores options for reform to private funding arrangements,
including caps, bans on types of donors, and limits on donations.
Chapter 5 covers political and campaign expenditure and options to
improve the current regulatory system and to increase the regulation of
Public funding is discussed in Chapter 6. The chapter covers the
background to the public funding scheme and the current arrangements. It then
discusses options for increasing the fairness of the public funding system.
The role of third parties in the political and election processes is
considered in Chapter 7, including their functions as donors and campaigners,
how they are defined, and their reporting obligations as compared with
political parties. The definition of associated entities is also discussed.
Chapter 8 considers the challenging issue of compliance with funding and
disclosure schemes. The more complex the scheme the greater challenges it may
pose to compliance with, and enforcement of, funding, expenditure and
Chapter 9 focuses on the relationship between state or territory and
federal political financing arrangements, and considers whether greater
harmonisation between the different levels in possible.
Chapter 10 contains other relevant issues not covered in the earlier