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Politics and Public Administration
The Australian federal political funding and disclosure
system has two main components:
- a disclosure scheme including annual disclosure of total
receipts, total payments, total debts and donations above the disclosure
$13,500, indexed annually) for parties and associated
entities, annual returns for donors and third party campaigners, and
election disclosures for candidates, which are made public, and
- a public funding scheme where parties and candidates are paid an
amount per vote (currently
268.332 cents, indexed annually) when they receive over four per cent of
the primary vote in their electorate.
The modern Australian federal funding and disclosure system,
including the requirement for political parties to declare political donations,
legislated in 1983 as an amendment to the Commonwealth
Electoral Act 1918 (CEA). These provisions, now contained in Part
XX of the CEA, have evolved somewhat over time, although the basic
operation of the system has remained similar.
The funding and disclosure provisions were introduced by the
Hawke Labor Government in response to the September 1983 First
Report of the Joint Select Committee on Electoral Reform (JSCER), the
forerunner to the current Joint Standing
Committee on Electoral Matters (JSCEM).
The JSCER’s First Report, and the changes to the CEA
that resulted from that report, largely created the modern federal electoral
environment. Reforms included:
- the creation of the Australian
Electoral Commission (AEC) as an independent statutory agency
- making the process of re-drawing electoral boundaries independent
of the government of the day
requiring the registration of political parties
the introduction of public funding for political parties and
- the introduction of a disclosure scheme for political donations
(‘gifts’ in the CEA).
The public funding scheme, originally 60 cents per vote for
House of Representatives candidates and 30 cents for Senate candidates, was only to the
amount of electoral expenditure incurred. That is, it was a reimbursement
for the amount the candidate or party spent on their election campaign, up to a
The disclosure regime was explicitly linked to the provision
of public funding to political parties. In the Second
Reading Speech for the 1983 Bill, the Special Minster of State stated:
An essential corollary of public funding is disclosure. They
are two sides of the same coin. Unless there is disclosure the whole point of
public funding is destroyed. The legislation lays down that donations for
Federal election purposes of $200 or more to a candidate and $1000 to a party
be disclosed and the donor identified. Radio stations, television stations,
printers and newspapers are required to report electoral expenditure to the
Electoral Commission. These organisations must identify the source of the
funds. Anonymous donations above the set limits cannot be accepted by
candidates or parties.
As initially implemented, the amendments to the CEA
required disclosure of all donations over $1,000 to parties or $200 to
candidates (the ‘disclosure threshold’) within 15 weeks after an election.
In 1995 the CEA was
amended by the Keating Labor Government to remove the requirement for
parties to disclose details of their political expenditure, so that only total
expenditure, income and debts was reported. The amendment also raised the disclosure
threshold to $1,500, and required annual reporting by donors. The changes also
increased public funding to $1.50 for each House of Representatives and Senate
first preference vote and removed the link between public funding and electoral
expenditure incurred by the candidate or party, meaning that public funding
would now be paid at the maximum rate based on the vote received.
In 2006 the CEA was
amended by the Howard Coalition Government to increase the disclosure
threshold to $10,000, indexed to CPI, and to require organisations or
individuals incurring political expenditure over the threshold to submit an
annual return to the AEC. This amendment also abolished the requirements for
broadcasters and publishers to lodge disclosure returns.
The funding and disclosure system has undergone no substantial
changes since 2006, other than annual CPI increases in the amount of public
funding per vote and the disclosure threshold.
Recent reform efforts at the
Prior to its Inquiry
into the 2016 Federal Election, the JSCEM last considered the issue of
disclosure of political donations under the Gillard Labor Government in 2011.
Some of the recommendations
of the Committee’s 2011 Report included:
- reducing the disclosure thresholds on donations to $1,000
- amending the definition of ‘gift’ in the CEA to include
- requiring political parties to aggregate donations of any value,
not just values that exceed the disclosure threshold, making enforcement and
identifying discrepancies more efficient and
implementing detailed disclosure of expenditure by political
parties and associated entities.
members of the Committee issued a Dissenting Report arguing against
reducing the disclosure threshold or amending the definition of ‘gift’ to
incorporate other fundraising activities.
Prior to this, in 2008 the
Rudd Labor Government produced the Electoral Reform
Green Paper: Donations, Funding and Expenditure and flagged its
intention to reform the funding and disclosure system. Labor subsequently
introduced several pieces of legislation to reform the funding and disclosure
system, none of which passed Parliament. The
Commonwealth Electoral Amendment (Political Donations and Other Measures) Bill
2008 sought to reduce the disclosure threshold to $1,000 and would have
banned donations of ‘foreign property’, but was not passed by the Parliament. A
subsequent bill, the Commonwealth
Electoral Amendment (Political Donations and Other Measures) Bill 2009, lapsed
at the end of the 42nd Parliament.
The 2009 Bill was essentially reintroduced in the 43rd
Parliament as the Commonwealth
Electoral Amendment (Political Donations and Other Measures) Bill 2010, which lapsed in the Senate at the end of the 43rd
Parliament. A similar bill, the Commonwealth
Electoral Amendment (Donations Reform and Transparency Bill) 2016, was
introduced by Labor into the Senate in November 2016, and in the House of
Representatives in February 2017 as the Commonwealth
Electoral Amendment (Donation Reform and Transparency) Bill 2017. As of
June 2017 both of these bills are currently before the Parliament, as is a similar
Bill introduced into the Senate by the Greens.
In 2013 there was reportedly
an agreement between the ALP and the Coalition to reduce the disclosure
threshold to $5,000 and introduce additional public funding to parties. This
would have been the Government’s
response to the 2011 JSCEM report. After negative reactions from the public
(and some parliamentarians), it
was abandoned. There have been no subsequent attempts to change the
disclosure threshold by the Government.
During its 2016 federal election inquiry the JSCEM released
Report recommending banning foreign donations, including a ban on foreign
donations to third parties engaged in political campaigning. The
recommendations were not unanimous, with dissenting reports from Senator
and the Greens.
No legislation has been introduced by the Government to implement these
Constitutional restrictions on
regulating political donations
While the Australian
Constitution says little directly about political funding and
disclosure, a number of High Court cases in recent years have affected the
scope of the system. The main points from the most relevant High Court cases
are as outlined below.
News and ACTV
- There is an implied freedom of political communication, as it is
a necessary part of a system of responsible government.
- A blanket prohibition on political TV and radio advertisements
during elections was found invalid as it unjustifiably infringed the freedom.
- The implied freedom of political communication is limited to what
is needed for the operation of our system of government, as provided by the Constitution.
- The test is whether a law burdens the freedom, and if so is it
reasonably appropriate and adapted, or proportionate, to serve a legitimate
From Unions NSW
- A NSW provision that banned political donations from anyone other
than an individual on the electoral roll was found to be invalid because it
restricted political communication and was not reasonably and appropriately
adapted to achieving a legitimate aim such as preventing corruption or undue
- A provision that aggregated the electoral advertising expenditure
caps of parties and their affiliate organisations was similarly found invalid.
- Bans in NSW on donations from specified ‘prohibited donors’,
particularly property developers; bans on indirect campaign contributions; and
caps on donations were all found to be valid as they were proportional to the
legitimate purpose of preventing corruption and undue influence.
- Affirmed that any provision that potentially infringes the
implied freedom of political communication is valid if it serves a legitimate
purpose in doing so and is proportional, or reasonably appropriate and adapted,
to that legitimate purpose.
While subsequent cases such as Lange and McCloy
have expanded upon the test for determining if an infringement of the implied
freedom of communication is valid or not, there has been no specific ruling on
advertising bans since the ban struck down in ACTV in 1992.
In ACTV, as summarised in McCloy:
The constitutional vice identified by Mason CJ was that the
regulatory regime severely restricted freedom of speech by favouring the
established political parties and their candidates. It also excluded from the
electoral process action groups who wished to present their views to the
community without putting forward candidates.
Notably, ACTV concerned a blanket ban on
advertising during elections, combined with a requirement to give free time to
established parties. A lesser curtailment of advertising could, possibly, be
seen to be valid if it was a proportionate response to a legitimate purpose,
but it would be up to the court to consider the approach on the facts of the
For example, in an early post-ACTV case, Muldowney v
South Australia (1996) 186 CLR 352, the High Court found that South
Australian provisions prohibiting the advocacy of any non-prescribed method of
voting were valid because the curtailment of the freedom caused by the
provisions was appropriate and adapted to the purpose of enhancing the
democratic processes. Similarly, in McCloy, the general cap on donations
was also seen as a proportionate response to the purpose of preventing
corruption and undue influence.
In McCloy the High Court found that NSW legislation
imposing a general cap on all donations was valid as a legitimate means of
pursuing the objective of removing the risk and perception of corruption and
undue influence. In Unions NSW, the Court found that a provision that
aggregated the electoral advertising expenditure caps of parties and their
affiliate organisations was invalid as it was not reasonably and appropriately
adapted to achieving a legitimate aim such as preventing corruption or undue
influence. The High Court also found in Unions NSW that a provision banning
political donations from anyone other than an individual on the electoral roll
In reaching this conclusion in Unions NSW, the High
Court affirmed the role that organisations as well as individuals play in
democratic communication, so any attempt to restrict donations from
organisations, without a rational connection to a legitimate purpose (such as
evidence of corruption) may be problematic. Responding to a 2016 statement from
the Prime Minister envisaging restricting donations to persons on the electoral
roll, Professor Anne Twomey commented
that suggestion would not be legal.
The High Court has held that corporations and unions and
other bodies that are subject to laws do also have a role in political
communication and influencing that through donations.
Therefore you couldn't do that, that's the one thing we can
be sure about.
Labor and the Coalition have shown no inclination to
include donation caps in their donation reform proposals, however the Senate
agreed to a motion in June 2017 that included a call for a cap on domestic
Bans on foreign political donations
According to the Political
Finance Database of the International Institute for Democracy and Electoral
Assistance (International IDEA), Australia is one of the few countries where
donations from foreign interests to political parties or candidates is not
prohibited. In defining ’foreign interests’, International IDEA includes entities
that ‘contribute directly or indirectly [and who] are governments,
corporations, organizations or individuals who are not citizens; that do not
reside in the country or have a large share of foreign ownership.’
Of comparable English-speaking democracies, only New Zealand
allows overseas donations to parties, however such donations are capped at $NZ
1,500. While a number of European countries do not prohibit donations to
parties from foreign interests, at least some, such as Germany, Spain and
Switzerland, do have some restrictions on such donations. Allowing donations
from foreign interests to candidates is slightly more common internationally,
but again when comparable English speaking democracies are considered, only New
Zealand also allows such donations (again with a cap of $NZ 1,500).
Similarly to donation caps, following McCloy, bans on
foreign political donations are potentially constitutionally acceptable
provided that the High Court can be persuaded that such a ban is valid as a proportional
means of pursuing a legitimate objective such as removing the risk and
perception of corruption and undue influence. Given that ASIO has warned
Australian political parties on the risk
of taking donations from certain foreign donors, it seems possible that an
argument relating to a risk of corruption and undue influence could be made in
Donations, disclosure and public funding do not exist in a
policy vacuum, but rather interact with the political and campaign environment.
A healthy democracy depends on active public political debate, and in most
modern democracies this is carried out via the media. In Australia political
advertising, particularly on television, likely makes up a significant
proportion of the cost of an election campaign, although the true cost is not
There is no accurate information on the costs of federal
election campaigns in Australia, or how those costs are broken down. The CEA
only requires parties to declare their total expenditure for each year—specific
election costs are not separated out. It is therefore impossible to calculate
exactly how much advertising campaigns cost in relation to the overall election
costs, although the Liberal Party and Labor were estimated to have spent $6.9m
and $4.9m respectively on advertising in traditional media in the eight
weeks of the 2016 election campaign.
In 1992 in the ACTV case the High Court struck down
the amendments to the Broadcasting Act
1942 put in place by the Hawke Labor Government’s Political
Broadcasts and Political Disclosures Act 1991,which would have banned
paid political advertising during election campaigns in Australia and required
broadcasters to grant free time to political parties. The High Court stated
that the Constitution
contained an implied right to political communication and that the
restrictions would have impinged upon those rights.
As such, there is little prospect of reducing the cost of
Australian election campaigns via the route taken in the UK and New Zealand by
banning political advertising on television and substituting it with free
broadcast time. While it is likely that the costs of campaigns will continue
to increase over time, online campaigns, such as Labor’s 2016 campaign on
Medicare, are considerably
cheaper than television campaigns.
In the absence of a way to contain the major costs of
election campaigns, the money must come from somewhere—and under the current
system this will inevitably be some combination of public funding and
On the basis of the 2015–2016 annual
returns, the major political parties in Australia reported the following total
receipts and expenses. Not all of the receipts will be donations and not all of
the expenses will be election-related, but the figures give some indication of
the scale of the amounts involved:
||Total amount received
|Liberals and Nationals
|Liberal Democratic Party
|Nick Xenophon Team
|Katter's Australian Party
|Pauline Hanson's One Nation
|Derryn Hinch's Justice Party
|Jacqui Lambie Network
Source: Compiled by the Parliamentary Library from AEC data
According to the AEC, a total of
$62,778,275.03 of public funding was paid to parties and candidates as a
result of the 2016 federal election (paid at a rate of 262.784 cents per House
of Representatives and Senate vote). Seventy-five per cent of this
($47,394,840.57) was paid to the Labor and Liberal parties. In Australian
elections, public funding, even at almost $63 million for the 2016 federal
election, currently only contributes a small proportion of the total
expenditure in an election year. The exact composition of the remainder is
unknown, but will come largely from donations.
Assuming that the cost of elections is not going to decrease
substantially, the main policy options in Australia for election finance reform
would seem to relate to public funding and donation disclosure. These approaches
have been attempted recently in relation to federal elections, but no changes
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