Campaign finance promises another brick in the wall

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“It’s a big step forward, but if you were going to design a system that entrenched the duopoly, this would be it,” Holmes a Court says. “It is almost impossible for an independent or a new party to break into Victorian politics. The new laws have effectively ordained Labor and the Coalition to be the two governing parties forever.”

So let’s follow the money.

The most commented on provision of the new laws is the public funding given to any party or independent MP who won more than 4 per cent of the vote in the last state election. Under an indexed formula, they are currently entitled to $6.33 for each lower house vote they received and $3.16 for each upper house vote.

Figures released by the Victorian Electoral Commission show that between the last state election and April this year, this provision brought $13.6 million into Labor’s campaign coffers, $10.8 million to the Coalition parties and $3.3 million to the Greens.

The next brick in the wall is more than $20 million in public funding to cover administrative expenses for sitting MPs. It is calculated on the number of upper and lower house seats held by parties and independents.

As the same suggests, the money cannot be used for political expenditure, but under Victoria’s laws the definition of political expenditure is so narrow that it allows many activities that are political in nature and essential to a successful election campaign: the operation of a political office, development of policy, remuneration of political staff. The ALP and Coalition parties have so far received more than $7 million each in administrative funding.

Next comes a special cut for the major parties: the exemption of nominated entities from the donation ceiling. Under Victoria’s electoral laws, any registered political party can appoint an organization to be its nominated entity. This allows the ALP and Liberal and National parties to continue to receive unlimited political donations from trusts that control legacy assets such as property and shareholdings.

Climate 200 spokesman Simon Holmes a Court says the new campaign finance laws entrench Australia's political duopoly.

Climate 200 spokesman Simon Holmes a Court says the new campaign finance laws entrench Australia’s political duopoly.Credit:Alex Ellinghausen

For Labor, its particular cash cow is an entity called Labor Services and Holdings. For the Left it is the Cormack Foundation. For the Nationals, it’s the James Barrie-sounding Pilliwinks Pty Ltd. These are the only three nominated entities listed by the Victorian Electoral Commission. In the year of the last state election, the Cormack Foundation donated $2.5 million to the Victorian branch of the Liberal Party and Labor Services and Holdings gave $3.1 million to the Victorian branch of the ALP.

Any new party can appoint a nominee entity, but here’s the catch: donations to a nominee entity are trapped under the cap that limits donations to $4320 in a given four-year election cycle. The practical effect of this is that unless you had these arrangements in place before the laws came in, it is almost impossible to set them up now. “Essentially, it’s too late for everyone else,” says Center for Public Integrity research director Catherine Williams.

The new laws also make a special allowance, outside the donation cap, for party membership and union affiliation fees, which contribute about $1.5 million a year to the Victorian Liberal Party and ALP respectively.

The last brick will be contested by the major parties, but it is an important part of the advantage they have under the Victorian regime.

Former ALP assistant state secretary Kos Samaras says voter and communications allowances are used to boost the re-election prospects of sitting MPs.

Former ALP assistant state secretary Kos Samaras says voter and communications allowances are used to boost the re-election prospects of sitting MPs.Credit:Wayne Taylor

Under pre-existing laws, all members of the legislature and councils receive a share of the electorate office and communications budget. Like funding administrative expenses, this money should not be used for political purposes, but as former ALP campaign strategist and current Blue Green pollster Kos Samaras explains, where possible the money is used to promote an MP’s re-election prospects.

“When I was a party official, a very important part of my job was to ensure that sitting MPs made full use of their communications budgets to promote the government, the work the MP did and, as a result, the MP’s brand,” he says. .


Holmes a Court describes it more bluntly: “It’s a publicly funded, profile-boosting budget that the challengers don’t benefit from.”

Once all those bricks are mortared together, any outsider besieging a seat in Parliament in November’s state election will have to scale a wall of $100 million in incumbent benefits.

“In terms of the influx of money, we have a public funding formula that rewards sitting parliamentarians and is tilted towards newcomer candidates,” said University of Melbourne campaign law professor Joo-Cheong Tham, an expert on money and politics. “Then we have the nominated unit exemption from the cap on political donations, which clearly benefits the major parties.”

Holmes a Court points out that while the public debate on campaign finance is focused on limiting donations, private donations now account for a small amount of the money flowing into Victorian politics. If you think of political funding as an iceberg, campaign donations are the tip. The rest of it—almost all of it provided by taxpayers—sits below the waterline.

Holmes a Court’s vested interest in challenging the fairness of Victoria’s electoral laws is obvious. When the independent MP for Kooyong, Monique Ryan, will file her first annual return with the Australian Electoral Commission later this year, is expected to reveal she spent close to $2 million to unseat Josh Frydenberg. About 35 cents of every campaign dollar came from the 11,200 donors of the Climate 200.

Holmes a Court has personally donated $4000 each to independent candidates in the state seats of Hawthorn and Kew – a donation matched by his wife Katrina – but admits the teal movement is struggling to build campaign structures within Victorian laws.

Independent candidate for the seat of Hawthorn Melissa Lowe.

Independent candidate for the seat of Hawthorn Melissa Lowe.Credit:Paul Jeffers

To find candidates to run in Hawthorn and Kew – traditional Liberal seats that overlap with the federal seat of Kooyong – the respective campaigns each booked a half-page ad, to run one under the other, in this newspaper. Although newspapers are notoriously skittish about advertising costs, the expense would have been close to $20,000.

To raise the money to pay for it, the campaigns went door to door and solicited small donations. “It was just going out and talking to as many people as we can and asking them if they’d chime in,” says Brent Hodgson, campaign director for the teal candidate for Hawthorn, Melissa Lowe. The difference in campaign spending so far can be seen on the streets of Hawthorn, where two months before Victoria goes to the polls, the billboards and campaign posters that sprung up well before the federal election are nowhere to be seen.


The short-lived Victorians Party, which had planned to field candidates in all lower and upper house seats, was deregistered this month after its main organizers could not see a way to raise the funds it would need for the campaign. “The cap is the killer,” says a source connected to the short-lived party. “We were willing to maybe fight it in court.”

Such a fight would involve considerable risk. Anyone who deliberately attempts to circumvent the campaign’s donation limits faces up to 10 years in prison.

Holmes a Court is not alone in asserting that the Victorian regime, although an improvement on the previous arrangements, is a protection racket for the status quo. Four years ago, the Greens voted together with Labor to pass the electoral law changes through the upper house. At the time, Greens leader Samantha Ratnam expressed concern about the “significant loophole” in the nominated entities. She has now strengthened her decision to scrap the provision after this election.

“The major parties have created a system that benefits them to the detriment of smaller parties and independents,” she said. The age. “To fix that, the nominee unit provisions, which let Labor and the Liberals keep a legacy base to fund their elections, must disappear and spending caps must be introduced.”

Reason The party’s MP Fiona Patten is also pushing for a cap on election spending. Under a review clause inserted into the laws by crossbench MPs, an expert panel appointed by the next government will examine the issue of spending caps within 12 months of the November 26 vote.

Joo-Cheong says three changes are needed: enforce a cap on election spending, remove the loophole for nominated entities, and expand the definition of political spending so that more money is caught under the donation cap.

Cause Party MP Fiona Patten.

Cause Party MP Fiona Patten.Credit:Justin McManus

The Liberal Party, which had originally supported the laws, voted against them in 2018. This was largely a political calculation, made by the Matthew Guy-led opposition, to keep Labour’s “red shirt” scandal surrounding the systematic abuse of electoral staff going until election day. When asked how the rules worked in practice, Liberal state director Sam McQuestin is phlegmatic: “Labour will always set the rules to suit themselves. Whether we like them or not, we will deal with the rules we have and make the most of them.”

In response to questions from The age, the Prime Minister declined to comment on whether the new laws tipped the playing field against new parties and independents or explain why the major parties should benefit from their nominated entity succession arrangements. A government spokesman said Victoria’s political donation laws were the toughest in the country and next year’s review would determine whether further changes were needed.

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