Issue
Money in politics has the potential to be a corrupting
influence. Donors to political parties and candidates may expect favours in
return for financial support or policy decisions that advance their interests.
Big spending participants can also drown out smaller players and new entrants,
potentially undermining democracy. The Australian response has generally been
transparency – requiring disclosure of funding sources to political entities
within certain timeframes, coupled with a level of public funding. The laws
regulating money in politics are highly complex and often controversial.
Key points
- The
federal funding and disclosure scheme aims to reduce the influence of private
money and level the playing field.
- Political
entities and donors are required to publicly disclose donations above a
threshold through submitting annual returns.
- Reforms
commencing 1 July 2026 will lower the disclosure threshold, expedite
disclosure of donations, introduce donation and spending caps, and increase
the public funding rate.
- The
reforms are controversial due to anticipated inequities between established
political parties, and emerging parties and independents.
Context
In 1984 the federal government amended the Commonwealth
Electoral Act 1918 (Electoral Act) to introduce a public election
funding and disclosure scheme. In his second reading speech, Special Minister
of State Kim Beazley MP declared:
The sky-rocketing costs of modern
election campaigns have threatened to create a situation where the national
government can be delivered to the party with the best bagman. It is essential
for public confidence in the political process that no suggestion of favours
returned for large donations can be sustained. However, it is not only the
potential for corruption in the financing of multimillion dollar campaigns that
should be a matter for concern. A serious imbalance in campaign funding
threatens the health of democracy.
There were two main components to the scheme, described by
Beazley as ‘two sides of the same coin’:
- public
funding of election campaigns
- disclosure
of donations and electoral expenditure.
Reforms
In recent years, there have been growing calls to strengthen
the scheme to improve transparency and integrity and reduce the influence of
big money. The Joint Standing Committee on Electoral Matters (JSCEM), in its interim
report on the conduct of the 2022 federal election (JSCEM Report),
recommended a range of reforms. The Greens have been advocating for a lower
disclosure threshold, donation and spending caps, and bans on certain donors,
for at
least a decade. Most recently in the previous Parliament, several
independents and minor parties sponsored private
members or senators bills proposing electoral finance reform.
In February 2025, the Parliament passed (with opposition
support) the Electoral
Legislation Amendment (Electoral Reform) Act 2025 (Electoral Reform Act),
implementing many of the JSCEM recommendations. The major changes to the
funding and disclosure system commence on 1 July 2026 (so did not impact the
2025 federal election).
When introducing the amendments, Patrick
Gorman MP said:
This bill seek[s] to remove the
influence of big money in politics, ensuring that our electoral system remains
a system we can all trust—trust that election results are not unfairly skewed
by 'big money'; trust that elections are a contest of ideas, not bank balances;
trust that we know who is funding election campaigns with more information
about campaign financing provided before voting day.
Despite support for general electoral reform, the bill was criticised
as a ‘stitch-up’ between the major parties. This specifically related to
the different treatment of established political parties versus independents
and new entrants. For example, analysis
by The Australia Institute found the bill was not consistent with principles
of fair political finance. In response, independent parliamentarians such
as Helen Haines have further committed to push for additional reform in the
48th Parliament.
However, the criticism was not universal. Professor
Joo-Cheong Tham commented that despite deficiencies, the bill provided
democratic improvements in the lower disclosure threshold, near-real time
disclosure, donations and spending caps (although too high) and a strong public
funding regime.
Public election funding
Public funding for election campaigns serves several key
purposes including:
- reducing
the influence of private money, including wealthy donors and special interest
groups, on the electoral process
- attempting
to level the playing field, by allowing new entrants with genuine electoral
support to compete more effectively.
Currently, registered political parties, candidates and
groups who receive at least 4% of first preference votes are eligible to have
their campaign expenditure reimbursed (ss 293-295 of the Electoral Act).
Claims for more than $12,528 (as indexed) must demonstrate their electoral
expenditure (s 298 of the Electoral Act)
and the amount reimbursed is the lesser
of the calculated per vote entitlement or their total expenditure. This
prevents parties and candidates from profiting from public funding.
Paying public funding on a per vote basis means that each
voter effectively has the power to determine where they want the public money
to go. In this way political parties and candidates receive funding
proportionate to their level of electoral support (subject to the 4%
threshold).
The current rate
for election funding to 31 December 2025 is $3.427 per eligible vote. The
Electoral Reform Act increased this to $5 per vote (indexed) from 1 July 2026.
It also introduced a new type of public funding called administrative
assistance funding, payable quarterly to political parties and
parliamentarians. However,
critics suggest this funding will benefit incumbents, creating another
barrier to new entrants.
Donations
The disclosure
part of the scheme is intended to increase the transparency of the
financing of political participants. Currently, the scheme includes:
- disclosure
of political donations above an indexed threshold ($17,300
for 2025–2026)
- published
disclosure returns concerning donations, receipts, payments and debts
- prohibition
on foreign donations.
Details of donations and funding of political parties and
other entities for the previous financial year are published on the Transparency Register each
February. The register is public and often a source of media reports on
political donations. The AEC can investigate
possible breaches of financial disclosure laws, and undertakes a program of compliance
reviews.
The latest reforms lower the disclosure threshold to $5,000
(indexed) and introduce expedited (sometimes referred to as ‘real-time’) disclosure
of donations. This will require donations to be disclosed each month, with even
shorter time frames during an election period (7 days) or the week before and
after an election (24 hours).
Another new component is annual donation caps,
limiting how much a donor can give to a candidate, party or entity to $50,000.
Donors will also be limited to overall donations of 32 times the annual cap
($1.6 million) and caps per state and territory of 5 times the annual cap
($250,000).
However, the
Australia Institute has noted that registered branches of political parties
operate separately, so political parties with multiple registered branches can
receive multiple times the donation cap (p. 8). For example, a party with a
federal branch plus a branch in every state and (mainland) territory could
receive 9 times the donation cap per donor per calendar year. Furthermore, the
donation cap applies per calendar year but resets after an election, so
established parties and parliamentarians can receive donations up to the cap 4
times during an electoral cycle. Conversely, independent candidates and new
parties, who may only start fundraising in the year of an election, are limited
to receiving the cap only once (pp. 6-7).
Registration of political entities
Alongside registered political parties, candidates, members
and senators, Part XX of the Electoral Act
defines different
political entities and their disclosure obligations:
- Significant
third parties are individuals or entities that exceed $250,000 in a
financial year, or at least one-third of their revenue, in electoral
expenditure or have fundraising as their dominant purpose. These can include
advocacy or campaigning groups.
- Third
parties are individuals or entities that incur a certain level of electoral
expenditure but do not exceed the significant third-party expenditure amount, for
example some charities which support a cause.
- Associated
entities are organisations that meet certain established criteria including
that it is controlled by or operating to benefit a political party, such as a
foundation established as a fundraising vehicle for a party.
- Donors
who are making gifts to political actors above the disclosure threshold are
also required to lodge returns detailing their contributions.
The 2025 reforms introduced:
- a
new category of entity: ‘nominated entities’. These are a sub-category of
associated entities; however any donations from a nominated entity to its
registered political party are not counted in the donation cap. Independents
cannot have nominated entities.
- a
new definition of peak
representative bodies, which can accept subscription or affiliation fees up
to 4 times the annual gift cap (equal to $200,000). Peak bodies may also be a
significant third party, third party or associated entity.
- a
requirement for entities to use Commonwealth campaign accounts for all
donations and expenditure to allow enhanced AEC oversight.
Expenditure caps
The Electoral Reform Act introduced annual expenditure caps,
limiting political parties to spending $90 million on federal electoral
expenditure, including a cap of $800,000 for each electoral division.
Independent candidates are limited to spending $800,000, and electoral
expenditure for capped entities (such as third parties) will be limited to
$11.25 million (including $100,000 per division). Spending caps for Senate
elections have a separate formula and differ for each state and territory.
These new provisions
have also been criticised as providing major parties with comparative
spending advantages. Specifically, the new rules allow a party to spend over
the divisional cap in targeted close contests, as long as their advertising
only mentions the party and not the certain candidate (pp. 14–15).
Further reforms
Policies aspiring for transparency and integrity in
elections may go beyond financing of campaigns. Options for further reforms in
the field of electoral integrity and transparency include:
Truth in political advertising laws
Truth in political advertising was Recommendation 11 of the
JSCEM Report.
The Government introduced the Electoral
Legislation Amendment (Electoral Communications) Bill 2024 however, it was
not progressed in the last Parliament. The Independent MP Zali Steggall also
introduced two private
members bills on the issue, saying
‘[w]e have laws to protect consumers from misleading advertising, but it’s
perfectly legal to lie in a political advertisement.’ Truth in political
advertising laws already exist in South
Australia and the Australian
Capital Territory.
Ban on certain donors
Donations could be prohibited from certain donors with
direct vested interests to reduce actual or perceived conflict of interest. The
federal scheme already bans foreign donations (s 302F(2) of the Electoral
Act) to prevent foreign actors seeking to influence Australian elections.
Most state
and territory governments prohibit donations from certain categories of
donor (for example property developers) whose interests may be directly
impacted by government policies. The
Greens support banning donations from ‘industries with a track record of
seeking political influence’, and have previously introduced the Commonwealth
Electoral Amendment (Banning Dirty Donations) Bill 2022, which sought to
ban donations from ‘the fossil fuel industry, property developers, the tobacco
industry, the banking industry, liquor and gambling businesses, pharmaceutical
companies and representative organisations for these industries’. The
Australia Institute has suggested banning donations from organisations that
receive government contracts.
Lobbying reforms
Many groups and individuals have advocated for reforming the
way lobbying activities are regulated, including the Human Rights
Law Centre, the Centre
for Public Integrity, the Grattan
Institute, and Associate
Professor Yee-Fui Ng. In addition David
Pocock and Monique
Ryan have previously introduced private senators and members bills calling
for enhanced regulation.