Political funding in Australia

Political funding in Australia deals with political donations, public funding and other forms of funding received by politician or political party in Australia to pay for an election campaign.

In Australia, the majority of political donations come in the form of donations from corporations, which go towards the funding of the parties' election advertising campaigns. Donations and affiliation fees from trade unions also play a big role, and to a lesser extent donations from individuals. Donations occasionally take the form of non-cash donations, referred to as gifts-in-kind.

The Australian Electoral Commission regulates donations to political parties, and publishes a yearly list of political donors. Donors can sometimes hide their identities behind associated entities.

Corporate political donations

Between the years 1995–1998, corporations donated $29 million to Australian political parties. The largest corporate donor during this period was Westpac. By the year 2002–2003, the amount of corporate funding to Australian political parties had risen to $69.4 million. In 2004–2005, the Labor Party raised $64.8 million from both the corporate sector and public funding, while the Liberal Party raised over $66 million. Most of the large corporate donors conduct business in an area greatly affected by government policy, or are likely to benefit from government contracts.

Corporate fundraising

In Australia, there is a growing trend for MPs to become directly involved in the corporate fundraising efforts of their parties. Ministers and staff are encouraged to engage with donors and business supporters, with the aim of raising cash for their political parties. It is known for business leaders to pay $1400 to get near a federal minister.

When political parties lodge their return to the AEC, they are not forced to divulge the identities of corporations attending party fundraising events. This allows companies to deny they are political donors.

Trade union political funding

The Australian Labor Party is the main beneficiary of trade union affiliation fees, special levies and donations. The Labor Party received $49.68 million from trade unions in 2004/05. Critics have accused the unions of buying seats at ALP state conferences. In 2001/02, money from trade unions amounted to 11.85% of the Labor Party's income.

Public funding for political parties

In 1984, the Labor Hawke Government introduced public funding for political parties, with the intention that it would reduce the parties' reliance on corporate donations. To be eligible for public funding a political party needs to be registered with the Australian Electoral Commission under the Commonwealth Electoral Act 1918. A candidate or Senate group is eligible for election funding if they obtain at least 4% of the first preference vote in the division or the state or territory they contested. The amount payable is calculated by multiplying the number of first preference (i.e., primary) votes received by the rate of payment applicable at the time. The rate is indexed every six months in line with increases in the Consumer Price Index. At the time of the 1984 election the rate was 61.2 cents for the House of Representatives and 30.6 cents for the Senate. That amount was based on the cost of a standard 30¢ postage stamp per elector per year. By the 1996 election, the rate was set at $1.58 per vote for both Houses. At 1 January 2014 the rate was $2.52 per vote.

As a result of the 2013 election, political parties and candidates received $58.1 million in election funding. The Liberal Party received $23.9 million in public funds, as part of the Coalition total of $27.2 million, while the Labor Party received $20.8 million, but all parties and candidates who received over 4% primary vote received election funding. The payment rate was $2.49 per first preference vote. When public funding was introduced in 1984, the amount paid was $12 million. For the 1996 election, the total public funding had increased to $32.2 million, and was $41.9 million for the 2004 election.

Disclosure of political funding

In May 2006, the Howard Government increased the disclosure threshold for political donations from $1,500 to $10,000. In announcing the laws, the government said it will result in a "fairer" and "more competitive" electoral system, however, failed to discuss how the changes achieved these goals. Critics of the change claimed the new law would increase the chances of corruption, by making political donations harder to track, and by making conflicts of interest harder to detect. The change allowed corporations to secretly donate up to $90,000 spread across the national and the eight state/territory branches of political parties without public disclosure of that funding.

The Commonwealth Parliamentary Library estimated this disclosure change will increase the number of non-disclosed political donations from 25% to 36%.

Since 2006, the threshold has increased two or three hundred dollars each year (adjusted for inflation) so that by 2014 the threshold was $12,400, and up to $111,600 can be received by political parties from each donor (spread across the national and state/territory branches) without a need for disclosure.

Tax deductibility

Until the 2006 changes $100 of political donations could be claimed as a tax deduction for income tax purposes. In 2006 the deductible amount was increased to $1,500.

Associated entities

Despite the Australian Electoral Commission publishing a yearly list of political donors, it is often difficult to ascertain who made the donation, as political parties sometimes use associated entities as front organisations to hide the source of the donations.

Front organisations such as the Cormack Foundation and John Curtin House Limited provide individuals and corporations with a means of passing funds to the major parties anonymously. Under the current electoral act, these organisations are not required to disclose where the donations came from. Associated entities have become huge political donors in Australia, in 2003–2004 donating $72.6 million to political parties.

Criticism of political donations

The Australian Shareholders Association has called for political donating to end, arguing that the donations are a gift and a form of bribery.

Former Qantas chief, John Menadue, said:

"Corporate donations are a major threat to our political and democratic system, whether it be state governments fawning before property developers, the Prime Minister providing ethanol subsidies to a party donor, or the immigration minister using his visa clientele to tap into ethnic money."

Political researchers Sally Young and Joo-Cheong Tham from the Australian National University concluded:

"There is inadequate transparency of funding. Moreover, there is a grave risk of corruption as undue influence due to corporate contributions and the sale of political access."

Some critics say Australia should follow the example of the United Kingdom, where corporate donors must disclose their political donations in the company's annual report to shareholders.

Other critics have called for limits to cap the amount that corporations and unions can donate to political parties, similar to the $5000 personal donation limit in Canada, with a virtual ban on union and corporate donations. Some point to the success New Zealand has had, limiting the amount of money that political parties can spend on their election campaigns.

In January 2008, New South Wales Opposition Leader Barry O'Farrell demanded political donations be limited to $30,000 per candidate, and a cap of $250,000 on what a corporation or union can donate to a political party. Describing the NSW government of Morris Iemma, O'Farrell said: "This is a Government where many people are of the view donations buy influence and decisions. That's why we need to take action to clean up the system."

Under a proposal launched by Shadow Federal Treasurer Malcolm Turnbull in January 2008, only individuals who are Australian citizens or on the Electoral Roll would be eligible to donate to political parties, and must declare the money came from their own funds. Turnbull said that the democratic system was not working properly when there is such a disparity between the amount of political donations a government can raise compared to the opposition.

State political donations

New South Wales

The New South Wales government is the seventh biggest advertiser in Australia, ahead of McDonald's and Coca-Cola.

On 30 October 2006, former Prime Minister Paul Keating called for an end to political donations from property developers. He said that in NSW, property developers were sending a "wall of money" towards the planning minister.

In September 2007, the Independent Commission Against Corruption cited political donations as a risk for corruption. The ICAC recommended that the state premier make changes to the Election Funding Act to force property developers to publicly disclose any donations made to the minister for planning, or the minister's political party. The ICAC also recommended that local government councillors step aside from any development applications involving political donors.

On 27 June 2007, the New South Wales Legislative Council established a committee to investigate electoral and political party funding. Critics have said the inquiry will be a toothless tiger, due to it being stacked with government-friendly members.

On 14 September 2011, a radical bill was tabled by Premier Barry O'Farrell which would ban any donations from corporations, unions or other organisations; only individuals would be permitted to donate, up to a cap of one thousand dollars. The bill was passed on 16 February 2012.

Victoria

In Victoria during the year 2001–2002, the Victorian Labor Party received $7.2 million in political donations, with trade unions, gaming companies and property developers on the list of donors. In the same year, the Victorian Liberals received $11.3 million in political funding, including $3.8 million in public funding.

Former Victorian premier, John Cain, presented a speech on political donors:

"All of them want access and, some would say, favours. We seem to have accepted this situation provided that the donation, the giver and receiver are known; that is, that disclosure is the key.

"But the driver is hunger for money by the parties. Despite public funding in the Commonwealth and some states, this hunger explains the drive only in part. Donors want the parties (and so, governments) to be beholden to them and to be preferred over their business competitors. It is a neat, cosy arrangement. It grows more blatant.

"The parties in Australia now openly call for donations that provide access at rates of $10,000 to the Prime Minister or premier. It costs less to get to see a minister.

"Parties are like football clubs – no matter how much money they get, they will spend it and then want more."

Former Victorian auditor-general Ches Baragwanath said it is naive to believe that political donors don't expect favours in return for their money.

See also

• Campaign finance
• Political finance
• Political party funding
• Party subsidies

Country-specific (International):

• Party funding in Austria
• Federal political financing in Canada
• Party finance in Germany
• Political funding in Ireland
• Party funding in Israel
• Political funding in Japan
• Party funding in the Netherlands
• Political funding in New Zealand
• Party finance in Sweden
• Political funding in the United Kingdom
• Campaign finance in the United States

Other sources

Colin A. Hughes: Fifty years of campaign finance study in Australia, Democratic Audit of Australia, Discussion Paper no. 35 of December 2006 (http://democratic.audit.anu.edu.au)

Iain McMenamin: Business, Politics and Money in Australia: Testing Economic, Political and Ideological Explanations, Working Papers in International Studies, no. 4 of 2008, Centre for International Studies, Dublin City University (http://www.dcu.ie)

Graeme Orr: The Law of Politics. Elections, Parties and Money in Australia, Sydney: Federation Press, 2010.

Iain McMenamin: If Money Talks, What Does It Say? Corruption and Business Financing of Political Parties, Oxford: Oxford University Press, 2013.

External links

• http://www.idea.int/political-finance/country.cfm?id=15
• http://www.idea.int/publications/funding-of-political-parties-and-election-campaigns/upload/foppec-p8.pdf