SA is banning political donations. Will it work?
SA is fighting sectional interests, but does the new legislation stack-up? An analysis.
South Australia is becoming the first Australian jurisdiction to outlaw donations to political parties in state elections from 2026 onwards, if current draft legislation passes.
This major development, regarded as radical even by the South Australian government, will see political parties manage their expenditure via public funds alongside rigid spending restrictions.
The current draft legislation aims to safeguard democracy against third party interests. However, it is unclear whether it will strengthen our democracy, or just empower third party interests further.
Background
Talk of banning political donations is not new. In the 2022 South Australian election, the Labor Party (then in opposition) promised in their manifesto to ban political donations from third parties to politicians to end money in politics.
“I don’t care if you’re a cigarette company or a shoe store. Whether you burn fossil fuels or you campaign against them. Whether you’re a business or you’re a trade union. Political donations are out.”
Peter Malinauskas in 2022
The manifesto also included electoral reforms such as the ban on corflutes in political advertising in elections.
Following the defeat of the Marshall Liberal government, the Malinauskas government has already stayed true to this commitment, passing laws to ban election corflutes in February with the bi-partisan support of the leader of the opposition David Speirs, a longtime proponent of those changes.
The announcement, made on the 13th of June, includes a series of other electoral reforms including:
1. Banning electoral donations to registered political parties and participants;
2. Cap on donations to newly registered political parties;
3. Expansion of the public funding model for political parties, including increased administrative funding;
4. An advanced payment scheme prior to elections;
5. Updated registration, nomination and definitions.
It is a criminal offence to breach the proposed laws with possible fines or jail time of up to 10 years.
The draft legislation is currently available for public consultation, with the government aiming to gain community support for the changes.
“We want money out of politics. We know this is not easy. These reforms may well face legal challenges. But we are determined to deliver them.”
Peter Malinauskas, Premier of South Australia
“Banning political donations will not be easy. Sectional interest groups and lobbyists will fight tooth and nail to keep the current system.”
Dan Cregan, Minister for State
How are candidates and parties affected?
The Electoral (Accountability and Integrity) Amendment Bill 2024, will change many aspects of campaigning for candidates and parties, including:
Candidates
Those interested in campaigning in 2026 under the proposed changes will have their spending capped to $100,000 during an electoral period. Those wishing to enter the House of Assembly will need to gather 100 nominations instead of 25, with the Legislative Council requirement increased from 250 to 500 nominations.
Those not associated with established parties, or entering politics for the first time will be entitled to receive donations up to $2,700, but must still obey the $100,000 cap.
Parties
Established political parties such as Labor, Liberal and the Greens will benefit from taxpayer funds which will cover their general administrative and advertising costs. They will still be entitled to collect membership fees, although they will be capped at $100 annually. They will also be entitled to a one-off payment of $200,000 prior to the 31st of August 2026.
Interestingly, despite the cash splash, parties will be restricted to spend only $4 million on campaigns, instead of the current $5 million threshold.
It is understood that public funding of political parties will require a significant increase to electoral costs, which could make South Australia’s elections one of the most expensive in Australia.
Reaction
While the laws themselves aim to end money in politics, they may actually risk increasing the level of money in the political process.
Professor Emerita Anne Twomey from the University of Sydney in an opinion piece flagged that the laws posed constitutional and merit risks which could hinder their success.
First, despite popular understanding, not all third parties and lobbyists are actually representatives of evil gas and oil industry interests. Most commonly they are represented by unions, environmental groups, indigenous organisations and disability advocates.
Third party groups have long influenced political processes for various reasons, however have many tools to achieve this. This includes their personal relationships with Members of Parliament, status, size of membership, political affiliation, but most notably, organising their own political activities.
Interestingly, third parties have been increasingly utilising independent campaigns that can target specific parties or representatives, often to greater persuasion and success.
During the 2022 South Australian election campaign, the Ambulance Employees Association (AEA) ran a $400,000 campaign against the former Marshall government over then-record breaking ramping. The Labor Party, while not necessarily managing the campaign, used their affiliation with the union for their own posters which coincidentally targeted ramping.
This third-party campaign, regardless of views, is regarded for bringing down the Marshall government.
“I’d like to see how the premier will address the risk that this will just transfer that money.”
John Gardner, Opposition Spokesperson
Other campaigns, such as the ‘Keeping the Country Running’ by the Coalition-aligned Australian Energy Producers, demonstrate the greater influence third parties have on politicians without necessarily donating to them.
Secondly, the laws may not be legal.
Australia’s federalism means any State law that conflicts with the Commonwealth Constitution are subject to ‘Commonwealth supremacy’ which instantly defeats them.
The High Court of Australia has held numerously that the Commonwealth Constitution has a series of implied rights regarding political communication which require a reasonable level of freedom in political campaigning.
In Australian Capital Televisions Case, the High Court struck down the validity of laws that banned political advertising as they posed an unacceptable risk of discriminating against newcomers to the political arena.
Essentially, any law regarding political campaigning that places any impairment on new entrants to politics that is not equally shared by established parties is unconstitutional.
Path Forwards
Despite the criticism of the laws, the proposed changes if successful will represent a significant step forward not just for South Australia’s democracy, but also for Australia broadly.
The Albanese Government has already pledged to implement similar changes with its truth in political advertising laws later this year.
While it can be easy to blame federalism for making electoral reform difficult, it does create the space for jurisdictions to experiment in preventing third party influence. If a state, such as South Australia can traverse this constitutional storm successfully while preventing floodgates of money into third party campaigns, they would be copied beyond South Australia.
Therefore, there is merit in testing these changes for the sake of our democracy, regardless of success or failure.