Jack Lang was fond of saying that you should always put your money on self-interest. But when it comes to campaign finance laws, politicians use public money, not their own, to back their self-interest in preserving their own power.
The current bill before the Australian parliament about campaign finance is a mixed bag of worthy reforms, political manipulation and the overfunding of political parties at taxpayer expense. Aspects of it are also vulnerable to constitutional challenge.
On the good side, the bill undertakes important reforms. It will strengthen donation disclosures by lowering the disclosure threshold to donations of $1,000 and requiring more timely disclosure. This will help the public to see who is funding political parties and judge whether that is having an impact on party policies.
It will also restrict the financial arms race between parties at election time by capping electoral expenditure. This will reduce the need for candidates and parties to raise war chests of money through donations. It will also grant the beleaguered public some relief from being bombarded by an excess of election advertisements.
Most significantly, the bill will impose caps on political donations. The point is to reduce both the risk and perception of undue influence and corruption arising from political donors receiving access to and practical support from those they have helped win government.
In New South Wales, donation caps were introduced at the level of $5,000 because the $5,000 of a billionaire is worth exactly the same as the $5,000 from the fish and chip shop owner, and neither can buy influence with that amount.
It is therefore remarkable that the commonwealth government, in imposing caps on donations, set them so high that it undoes their aim. The bill imposes a $20,000 cap in total for all donations by a single donor to a political party or its candidates in a state or territory. While on the high side, it does not seem excessive at first glance. But if you look closer, the numbers start to build. A rich donor can make a $20,000 donation to a party or one of its candidates in each of six states, two territories and to the federal branch of the party. That means they can donate $180,000. And they can do this annually.
Then, in an act of sneakiness, when an election is held, the cap resets so that there are two capped periods in that year. That mounts up to $720,000 over three years. This doesn’t include the other donations that our rich donor can make to entities associated with their favoured party and friendly third-party campaigners. There is an overall annual cap of $640,000 for the political donations our donor can make in a year.
So how is this taking the money out of politics and the risk of undue influence? While a donation of $5,000 is unlikely to buy influence, donations over $100,000, on an annual basis, certainly could do so.
This is significant, because when the high court assesses whether campaign finance laws breach the constitutionally implied freedom of political communication, it examines what the legitimate purpose of the law is and whether the law is reasonably appropriate and adapted to achieve it. Pity the poor solicitor general who has to argue before the high court that this law is for the purpose of preventing the risk or perception of undue influence and is reasonably appropriate and adapted to achieving it, given the level of the caps imposed.
The other constitutional problem that can doom such a law is if it is skewed to favour incumbent politicians over independents and new parties seeking election. In the very first case about the implied freedom of political communication, the high court struck down a law which banned paid political advertising on radio and television, while granting free advertising to political parties, allocated in accordance with their proportion of first-preference votes at the previous election. Ten percent of airtime was allocated to new and independent candidates. This was not enough to save it.
Justice Michael McHugh observed that one cannot seek to justify a law as levelling the playing field if it “favours the sitting members and their political parties at the expense of the views of those who do not hold political power”. The same can be said of the current bill. Expenditure rules seem to favour parties and much of the public funding is calculated by reference to success at the previous election or focused upon funding parties, rather than independents.
The level of public funding, particularly in relation to the “administration” of parties, appears to be excessive and unjustified. Yet we are to have no committee inquiry to investigate any of these issues. The Albanese government, having reached an agreement with the opposition, seems unwilling to have its bill scrutinised or to countenance amendments. It looks likely that the high court will end up doing the job instead.
Anne Twomey is a professor emerita at the University of Sydney
