Electoral finance Archive


NSW electoral funding changes

In recent weeks, the news has been dominated by stories about the desire of the NSW Liberal Party to reform the state electoral funding system in New South Wales – supposedly to reduce the influence of private donations. Today, Mike Baird announced new legislation to change the electoral funding system in the lead-up to March’s state election.

The media reporting has focused on tougher sanctions, and a supposed increase in the proportion of election spending that will be publicly-funded.

But it’s missed a major story – about how the public funding regime will substantially favour the major parties over smaller parties, giving major parties 55% more public funding per vote, and possibly locking out some smaller parties out of getting any public funding at all.

Under the proposed changes, funding will again be based on how many votes you receive (unlike in 2011), but this funding will be disproportionately weighted towards the major parties. Substantially more funding will be provided to a party that wins seats in the Legislative Assembly.

On my reading of the law, a major party that wins 32% of the vote in both houses would be entitled to spend $9.3 million, and receive back the same amount, effectively funding their entire campaign.

Smaller parties would be entitled to spend more than they would be entitled to receive in funding, but if they spend less than they are entitled to receive, they will receive less funding. This effectively provides certainty to the major parties while denying it to smaller parties. I may be wrong on that point – this law is quite a mess.

There is in particular a huge amount of uncertainty for the Greens, who could be entitled to approximately $3 million or $2 million based on the result in two inner-city seats.

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Keneally’s grab for cash

The NSW Labor government is currently using the cover of supposed “campaign finance reform” to rig the public funding system to give more money to major parties and radically cut the funding to smaller parties.

Last Tuesday, Keneally announced that she would be proposing campaign funding reform legislation before the impending state election. While the details were vague, they included a cap on donations of $5000 and a cap on spending of $100,000 per electorate. Pretty weak, but a step in the right direction.

Hidden in her plans was a vague reference to plans for a “tiered” funding system.

A Sydney  Morning Herald article on Saturday revealed that this plan is to fund a proportion of each’s candidate’s expenditure, with a greater proportion for candidates receiving a higher vote. This scheme would massively increase funding  to major parties, while slashing it for smaller parties, and forcing political parties, particularly smaller parties, to rely on even more donations to supplement the limited public funding.

In addition, it’s now been revealed that the Keneally government also plans to introduce a new scheme for funding of administrative party activities outside of election periods.

In New South Wales we currently have the “Political Education Fund”, which gives funding to all parliamentary parties for non-election work outside of election periods, based on the number of Legislative Assembly votes received at the last election. While it is meant to be spent on ‘political education’, all parties use much of their funding for general costs of running a party outside of campaigns.

The new administrative scheme would be based on the number of Members of Parliament each party has elected. It doesn’t need to be said that this would also massively assist the major parties, due to the current electoral system disadvantaging smaller parties by locking them out of the Legislative Assembly. It doesn’t seem clear to my why a party with more Members of Parliament, with all the extra resources that provides, needs a disproportionately greater amount of public funding to run their party.

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Money money money

The issue of political donations and electoral funding has come to the fore again this week, with Queensland Premier Anna Bligh calling for a ban on political donations in the wake of criticisms of her government from anti-corruption figure Tony Fitzgerald.

A call was similarly issued by NSW Premier Morris Iemma last year and quickly forgotten once his party turfed him out last September.

The issue has also been raised in the context of the package of election reforms proposed by the Rudd government, which included a lowering of the threshold for the disclosure of donations from approximately $11,000 to $1000.

The loudest campaigners on the issue have been the Greens, particularly the Greens NSW, who have stricter donations policies than other Greens state parties, and have pushed the issue strongly in NSW politics. In particular, Lee Rhiannon and the website democracy4sale have put the issue in the public spotlight.

Today online campaign group GetUp launched a campaign with some similar features to the policy the Greens have been pushing for years.

However, there are a few problems with the position GetUp is pushing that would undermine any reform and make it largely toothless. It seems like GetUp took the Greens policy and tore out anything that would might inconvencience them. It’s blatant hypocrisy.

GetUp’s policy is probably right when it comes to the issue of donations to political parties (which, despite the debate recently, is only one element of electoral funding reform). They propose a ban on donations from corporations and unions, and a cap on donations from individuals of $1000. This is the best option. It removes the influence of rich individuals and corporate interests, while allowing small donations to continue. It’s exactly the same policy as the Greens, and the system used in Canada.

The policy pushed by Bligh and Iemma, a complete ban on donations, would be disastrous for democracy. In a system where the only external funding to a political party comes from the state, it becomes impossible for new parties to arise, and sets the current 2 1/2 party system in stone. It gives a massive advantage, also, to parties with investments that they can draw on. Both major parties own properties from which they receive rent, having built up these investments using donations from previous eras, yet they would continue to reap the benefit long into the future.

But any system that is limited to capping donations to political parties is doomed to fail. Money is like water, it finds every crack and crevice. If you ban companies from donating to political parties, it is easy for them to give money to a third party to do the same campaigning. It’s no minor issue -it will definitely happen. You only need to look at the ‘Swift Boat’ style organisations who campaign in every US election campaign beyond the reach of campaign finance laws that already ban corporate donations and cap individual donations to candidates.

GetUp have completely ignored this issue, apart from a vague comment tucked away on a PDF posted on their campaign page. It’s blatant hypocrisy to demand restrictions on funding to political parties while wanting to avoid any regulation themselves. How are we supposed to take them seriously?

GetUp has also dodged the hard policy decisions by ignoring the capping of campaign spending. Electoral funding is a matter of supply and demand. Donation caps restrict the supply of money, but it’s actually much easier to fix the problem by restricting supply. By capping election spending, you stop the continuous arms race, making it easier for independents and minor parties. It also removes much of the incentive for the corruption of our political process by removing the need for parties to raise large sums of money.

Tim Gartrell, who was ALP National Secretary at the 2007 election, has come out in favour of restricting spending, and says:

Spending limits must be part of the answer – no party is going to allow itself to be outgunned in an election campaign. Campaign Directors will always try to equal or better the other side and in Australia that means a donation arms race to fuel campaign advertising. Any solution has to deal with this escalation or otherwise it won’t remove the pressure for funds. This means a limit on campaign spending. This could be applied to both the political parties and third parties (who might be subject to a lesser limit). Another scheme might ban TV advertising but allow an expansion of party allocated broadcasts (as operates in the UK).

Of course, any spending cap must include third parties involved in election campaigning. It would be absurd if the ALP had its funding restricting while the unions, Greenpeace and GetUp are free to spend a fortune on election campaigning.