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.
Under the current electoral funding scheme, any political party that wins at least 4% of the vote in either the Legislative Assembly or the Legislative Council is entitled to public funding. In addition, public funding is allocated to candidates in individual electorates who poll over 4% of the vote in each seat. Once a party or a candidate passes the 4% threshold, funding is allocated without any consideration of how much of the vote that party or candidate received. If you receive 5% or 50%, you are entitled to just as much public funding.
This scheme means that parties that have more money to spend (and are willing to spend more money that they will not receive back in public funding) can gain more public funding and effectively expand the size of their campaign, while those with less money in the bank will spend less, and thus get less public funding.
(At the bottom of this post, I explain a bit more about how the current public funding system works in New South Wales, but prepare to be confused).
Every other Australian jurisdiction that provides public funding gives it out on the basis of a dollar-per-vote model. Some jurisdictions simply give out the money, others use the dollar-per-vote model as a maximum to be provided based on spending receipts. New South Wales state elections up until 2010 followed the latter model: you are entitled to funding for a particular amount based on your vote in a particular Legislative Assembly district or in the Legislative Council, but must demonstrate you spent the money to receive funding.
The proposed legislation returns to the dollar-per-vote model, but hands out substantially more money per vote to larger political parties, in a way that will favour the major parties.
Under the proposed legislation, political parties would be split into two categories:
- Parties that win at least 4% of the vote in either house, and win at least one Legislative Assembly seat, will receive $4 per vote for each Legislative Assembly vote, and $3 per vote for each Legislative Council vote.
- Parties that win at least 4% of the vote in either house, and don’t win any Legislative Assembly seats, will receive $4.50 per vote for each Legislative Council vote, and nothing for the Legislative Assembly vote.
Assuming that most parties receive a similar vote for each house, this effectively means that parties that win seats in the Legislative Assembly will win $7 per vote, and parties that only win seats in the Legislative Council will win $4.50 per vote – 55% more per vote for parties that win lower house seats.
The only parties confident of winning lower house seats are Labor, Liberal and National.
While the Greens won their first seat in the NSW Legislative Assembly in 2011, and have a good chance of winning up to two seats in 2015, there is no guarantee of winning those seats. On the basis of the Greens vote last time, the party would be entitled to just over $3 million in funding if they win Balmain or Newtown, and just over $2 million if they don’t win either seat. Since funding is only provided based on reimbursement, the Greens would have to risk spending up to $1 million in funds that may not be reimbursed in order to possibly qualify for the higher amount.
It’s hard to compare the funding situation for 2011 to this proposed model, because the models are so different. The Greens and the CDP were both entitled to receive huge amounts of public funding, but only if they spent up to the cap.
It’s more useful to look at the amount of public funding provided in 2007. Bear in mind that the ALP polled much higher in 2007, so that explains why the public funding was skewed more to Labor compared to a projection of the proposed new model on 2011 votes.
|Party||2007 entitlement||2007 funding||2011 entitlement||2011 funding||Proposed|
|Greens (1+ MLAs)||$1,131,623||$1,131,623||$9,525,000||$1,711,525||$3,067,951|
|Greens (0 MLAs)||$1,131,623||$1,131,623||$9,525,000||$1,711,525||$2,039,063|
|Independents and others||$337,346||$352,349||$3,682,500||$1,080,982||$1,362,256|
I have used the 2011 entitlements that the EFA listed, but it seems likely that the actual cap in entitlements was slightly over $8 million, which would slightly reduce the theoretical entitlement pool.
Compared to 2011, the theoretical funds that could be available has dropped substantially, but the actual funds that will be given out will slightly increase.
There’s a few other points to make based on this table:
- The CDP and the Greens do get an increase in funding, but a relatively small increase, and will get a lot less than what they theoretically could have gotten, but it will be easier to receive.
- The difference between the Greens winning a seat in the lower house and not is massive – over $1 million in funding. What does this do to the election campaign?
- The Coalition vote will drop, and Labor’s vote will rise, so they will probably both receive the $9.3 million. They would have both received $9.3 million if you model off the 2007 vote.
- According to my reading of the law, Labor and the Coalition will actually receive all of their funding back up to the $9.3 million cap. So while small parties will receive a certain amount of funding back, they will not know how much in advance, and if they underestimate their vote they will receive less than their entitlement.
How the current system works
Under the current system, public funding is based on how much you spend. For a party that runs in at least eleven seats, and polls over 4% in either house, they are entitled to public funding equivalent to:
- 100% of their spending for the first 10% of the spending cap, and
- 75% of their spending for the next 80% of the spending cap, and
- 50% of their spending for the final 10% of the spending cap.
The same concept applies to funding for individual candidates, and for parties that run in 10 or less seats but win 4% of the Legislative Council vote. If you’re confused, you’re not alone.