Election Finance Law: Recent Developments and Proposals for Reform

Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion.

Briefing Paper No.08/2007 by Gareth Griffith and Talina Drabsch

Since 2001 the NSW Parliamentary Library has published two papers on election finance
law- Election Finance Law: Public Funding, Donations and Expenditure by Rachel
Callinan, Briefing Paper No 15/2001 and Election Finance Law: An Update by Talina
Drabsch, Briefing Paper No 13/2005. This current publication seeks only to cover those
developments and proposals for reform which have emerged since the earlier papers were
released. For reference, however, a summary of the position in NSW is included.
Comparative tables are also set out under the following headings:
• models of public funding for election campaigns;
• disclosure donation regimes;
• donor prohibitions;
• limits on campaign expenditure; and
• third party campaign expenditure prohibitions.
The debate in NSW: Issues relating to election finance were prominent in the lead up to the
NSW general election in March 2007. Several questions were asked about the source of
funding and its transparency. [2.1] The case for reform has been made on several occasions.
The Greens have campaigned on this issue for many years. In the lead up to the 2007
general election they ‘called for all major parties to disclose the names of donors and
amounts raised before the election, instead of waiting for Electoral Commission returns
next year’. Bans on donations from developers are also called for by the Greens. In 2003 the
Greens introduced the Developer Donations (Anti Corruption) Bill for this purpose. [2.2]
Following the 2007 NSW general election, two proposals for inquiries into election funding
have been proposed, one by the Leader of the Opposition in the Legislative Assembly, the
other by the Greens MLC Lee Rhiannon. In addition, the Premier has written to the Prime
Minister, calling for ‘urgent national reform’. [2.3]
Election finance law in NSW: The conduct of elections and the regulation of election
finance in NSW are governed by the Constitution Act 1902, the Parliamentary Electorates
and Elections Act 1912, and the Election Funding Act 1981. However, the most relevant
statute for the purposes of this paper is the Election Funding Act 1981, which introduced
the first statutory scheme to regulate election finance in Australia. The Act provides for the
public funding of Parliamentary election campaigns and requires the disclosure of certain
political contributions and electoral expenditure. [3.1]
The scheme under the Election Funding Act 1981 for the disclosure of electoral expenditure
incurred and campaign donations received by political parties and others applies to local
government elections. The major difference is that there is no public funding of registered
political parties or for the electoral expenses of candidates at the local government level.
[3.2]
Western Australia introduces public funding: In Western Australia the Electoral Reform
(Electoral Funding) Act 2006 came into effect on 27 October 2006. It introduces
amendments into Part VI of the Electoral Act 1907, providing for electoral funding of
political parties and candidates. [4.1]
The Commonwealth raises the threshold for donations: At the Commonwealth level in
Australia the Electoral and Referendum Amendment (Electoral Integrity and Other
Measures) Act 2006 covers a broad number of areas. In relation to election finance, the
most notable reforms concern amending the Commonwealth Electoral Act (s 305A) to
increase the declarable limit for disclosure of all political donations from $1,500 to amounts
‘above $10,000’. This threshold is to be indexed to the consumer price index (CPI) (s
305A). [4.2]
Canada imposes further restrictions and prohibitions on donations: In Canada reforms
were made to the donor prohibitions in December 2006, effectively introducing a limit of
$1,000 (down from $5,000 previously) on the amount an individual may contribute to a
party or candidate in a given year. Further, previously corporations and trade unions and
associations could contribute to individual candidates or electoral district associations (but
not to national political party organisations or candidates in the leadership contest for a
party). Such contributions were subject to an annual limit of $1,000. Since December 2006,
however, contributions of this kind have been banned altogether. These reforms were
introduced under Part One of the Federal Accountability Act, which was assented to on 12
December 2006, and which relevantly amends the Canada Elections Act. [4.3]
New Zealand: In New Zealand a uniform limit or cap on spending exists for individual
candidates and political parties. For individual candidates, the cap is $20,000. For political
parties, it is $1 million plus $20,000 for each electorate contested by the party. Thus, a party
contesting all 69 electorates may spend up to $2.38 million on its ‘election expenses’.
While this system may be seen as something of a model for reform in Australia, it is the
case that New Zealand’s 2005 general election campaign was not without controversy. [5.1]
United Kingdom: Election funding has also been the subject of controversy in the UK,
where two major inquiries have reported in recent months. Published in December 2006
was the report of the Select Committee on Constitutional Affairs, Party Funding: first
report of Session 2006-07. The Phillips report, Strengthening Democracy: Fair and
Sustainable Funding of Political Parties, was published on 15 March 2007. The three
points of the analytical triangle discussed by Phillips were: (a) the declining membership of
major political parties; (b) the long-term structural instability in the financing of political
parties in the UK; and (c) the increasing pressure on those same parties to spend more on
election campaigns, a demand that results in larger donations, which are themselves the
cause of public mistrust. The Phillips report also advocated an increase in the amount of
public funding for political parties. It recommended this should be by:
• a scheme where the amount of funding received by a political party is directly
linked to the votes received. Phillips proposed eligible parties should receive 50p
each year for every vote cast for them in the most recent general election, and 25p
for every vote cast for them in the most recent elections for the devolved
administrations in Scotland and Wales and for the European Parliament.
• a matched funding scheme where eligible parties would be invited to establish a
registered subscriber scheme, primarily using the Internet, through which any voter
could subscribe a minimum of �5 to support the party. Each subscription would be
matched with �5 of public funding. [5.2]

Last modified 09/05/2008 17:17:03 : Update this page