While the intention to reduce the influence of corporate political donations is welcome, the proposed legislation would disproportionately advantage incumbent parties, including enormous increases in public funding, much of which could be spent on election campaigning.

The Australia Institute’s submission to the government consultation into the Bill finds that:

• The Bill would triple existing public funding of political parties, increasing it by about $14 million per electoral cycle, even though in the 2022 election only about $3 million in expenditure came from private sources, including donations.
• Because this increase in public funding is based on the number of MPs a party has, most would go to the Labor and Liberal parties.
• Half of this increase in public funding could be used by political parties and sitting MPs to fund their future election campaigns.
• Existing political parties without parliamentary representation will have no way to raise money, being ineligible for most public funding and banned from accepting private funding.
• There are alternative public funding models, such as a Democracy Voucher system that would put the decision of who to fund back in the hands of South Australian voters and allow for a complete ban of political donations – unlike the partial ban in the Bill.
• There should be a full parliamentary inquiry undertaken to revise or replace the Bill.

“While the intention to reduce the influence of corporate political donations is welcome, there are significant concerns with this legislation,” said Bill Browne, Director of the Australia Institute’s Democracy & Accountability Program.

“Behind the proposed ban on most political donations is around $14 million in new taxpayer funding for political parties which would go overwhelmingly to the two major parties.

“If this legislation passes in its current form, election campaigns in South Australia could get more expensive – but with the public picking up most of the tab.

“At the same time, some minor parties would lose the little public funding they do receive and be stopped from raising private donations to make up the difference.

“Premier Malinauskas has acknowledged that there are serious democratic and constitutional concerns in relation to this draft legislation. The South Australian Parliament should test the robustness of this proposal through a parliamentary inquiry, at the very least.

“Like the changes to the ICAC that were rushed through the parliament in 2021, changes to electoral funding are complex and may have unintended and serious consequences. They should therefore be subject to significant scrutiny.

“The proposed legislation threatens political competition and puts up barriers to new entrants in future election campaigns.

“Major party candidates will be 100% taxpayer funded, up to $100,000 in each electorate, while new independent and minor party challengers will get, at most, $5,000.

“Instead of spending around $20 million per electoral cycle on poorly-targeted public funding, the Parliament could introduce a Democracy Voucher system that would give South Australian voters control over which parties and candidates receive public funding.”