Donation and electoral spending caps could pass parliament as early as this fortnight, with Labor confident the Coalition will help it block campaigns of the size run by Clive Palmer at the national level and teal independents at the local level.
But the bill, to be introduced next week, could spark outrage from independents, emerging and minor parties, with plans to increase public funding of elections from $3.35 a vote to $5.
The centrepiece of the bill is spending caps of: $90m for a federal political campaign; $800,000 for an individual electorate; and separate caps for each state and territory based on their size. Groups not running in elections will be limited to spending $11m on a federal campaign.
Caps of that size will prevent campaigns on the scale of the more than $120m spent by Clive Palmer’s United Australia party in 2022 and those of six successful teal independents at the same election, who each raised more than $1m.
The plan, to be announced on Friday by the special minister of state, Don Farrell, is believed to have in-principle support from the opposition, setting the stage for introduction next week – and passage in the final sitting week of parliament for commencement in July 2026, after the 2025 election.
However, the bill is yet to go through Coalition party room.
A law for truth in political advertising will be introduced at the same time, but will require Senate crossbench support as it lacks Coalition backing.
Labor proposes to cap spending and donations on a calendar year basis, with totals reset in the new year or after a federal election, and the level of caps indexed once per cycle after the election.
Receipt of donations or gifts from an individual donor will be capped at $20,000 a candidate for independents or per state division for political parties.
Donors will be prevented from giving an aggregate of 30 times the gift cap (initially $600,000), with separate limits in each state and territory.
Donations to bodies such as major party business forums will be captured, although union affiliation fees to Labor will not count towards the cap.
The impact on funding aggregators such as Climate 200 is unclear, with suggestions that genuine pass-through of smaller individual donations may still be allowed.
The bill will also include Labor’s promised reforms for a $1,000 donation disclosure threshold, and real-time disclosure every month, down to every week during an election campaign and every day in the week before and after election day.
In addition to candidates receiving $5 per vote, parties and independents will receive $30,000 per MP and $15,000 per senator each in administrative funding, to comply with the more onerous disclosure requirements.
The regime includes penalties for breaches, which will apply from 2027, anti-avoidance provisions and increased compliance powers for the Australian Electoral Commission. Parties will be required to keep new federal campaign accounts to more easily track spending.
Farrell said that “years of inquiries and evidence from multiple elections, show us that the biggest weakness to our electoral system is big money influencing our political system”.
“This significant package of reforms have been drafted to tackle big money in our electoral system and protect our democracy into the future,” he said.
Guardian Australia first revealed in July 2022 that the newly elected Albanese government intended to legislate electoral spending caps, as part of an ambitious policy suite not canvassed before the election.
Spending and donations caps were backed by the joint standing committee on electoral matters in June 2023, but legislation has been more than two years in the making with Farrell keen to strike the balance between knocking big money out of politics and designing laws that can withstand challenge.
In March, Palmer accused Labor of attempting to “silence the diversity of ideas in this country”, foreshadowing a likely high court challenge on the basis the caps breach the implied freedom of political communication.
The high court has struck down more restrictive caps legislated in New South Wales by the Coalition government, while teal independents in Victoria have also threatened to challenge its campaign finance laws.
In October 2023, the Greens leader, Adam Bandt, warned against “donation caps for challengers, [and] increased funding for incumbents”, which he said ran the risk of being a form of “collusion” designed to entrench major parties.
Independents have proposed their own set of reforms in a bill including a cap on donations of $1.5m but without spending caps.
In response, Farrell charged the independents with hypocrisy for “saying to us that they agree with banning big money, just not theirs”.
