Campaign finance laws are another brick in the wall

“It’s a great step forward, but if you wanted to design a system that would consolidate the duopoly, this would be it,” says Holmes a Court. “It’s almost impossible for an independent or new party to enter Victorian politics. The new laws have forever designated Labor and the Coalition as the two parties in government.”

So let’s follow the money.

The most-commented provision in the new laws is the public funding that will be made available to any party or independent MP who received more than 4 percent 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 receive and $3.16 for each upper house vote.

Figures released by the Victorian Electoral Commission show that between the last general election and April this year, this provision sent $13.6 million to Labour’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 funds to cover administrative costs, which will be made available to incumbent MPs. It is calculated based on the number of seats in the upper and lower houses held by parties and independents.

As the same suggests, the money cannot be used for political spending, but under Victorian law the definition of political spending is so narrow that it permits many activities that are inherently political and essential to a successful election campaign: leadership political office, development of politics, payment of political personnel. The ALP and coalition parties have each received more than $7 million in administrative funding to date.

Next comes a special regulation for the big parties: the exemption of nominated corporations from the donation limit. Under Victoria’s electoral laws, any registered political party may appoint an organization to be its nominated entity. This allows the ALP and the Liberal and National parties to continue receiving unlimited political donations from trusts that control legacy assets such as property and stock holdings.

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

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

For Labour, the particular cash cow is an entity called Labor Services and Holdings. For the Liberal Party, it’s the Cormack Foundation. For the Nationals, it’s Pilliwinks Pty Ltd., reminiscent of James Barrie. These are the only three nominated companies 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 donated $3.1 million to the Victorian branch of the ALP.

Any new party can appoint a nominating body, but here’s the rub: Donations to a nominating body fall under the cap, which caps donations at $4,320 in any given four-year election cycle. The practical implication of this is that it’s almost impossible to set them up now unless you had those arrangements in place before the laws went into effect. “Basically, it’s too late for everyone else,” says Catherine Williams, director of research at the Center for Public Integrity.

The new laws also provide a special regime for party membership and union membership dues outside of the donation cap, each contributing around $1.5 million a year to the Victorian Liberal Party and ALP.

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

Former ALP Deputy Secretary Kos Samaras says voter and communication allowances are being used to boost incumbent MPs' re-election prospects.

Former ALP Deputy Secretary Kos Samaras says voter and communication allowances are being used to boost incumbent MPs’ re-election prospects.Recognition:Wayne Taylor

Under existing laws, all members of the Legislative Assembly and Council receive a share of the budget for the polling station and communications. Like funding administrative expenses, this money should not be spent on political ends but, as explained by former ALP campaign strategist turned pollster Kos Samaras, the money should be used wherever possible to improve an MP’s chances of re-election.

“When I was a party official, a very important part of my job was to ensure that incumbent MPs were using their communication budgets to the full to promote the government, the MPs’ work and therefore the MPs’ brand,” he says.


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

When all of those building blocks are put together, any outsider who wants to besiege a seat in parliament in November’s state election will have to scale a wall of $100 million in incumbent benefits.

“In terms of money inflow, we have a public funding formula that rewards incumbent MPs and targets new candidates,” says Joo-Cheong Tham, professor of electoral law at the University of Melbourne and an expert on money and politics. “Then we have the nominee body exemption from the political donation cap, which clearly benefits the big parties.”

Holmes a Court points out that while the public debate on campaign funding focuses on limiting donations, private donations represent only a tiny fraction of the money going into Victorian politics. If you think of political funding as an iceberg, campaign donations are the pinnacle. The rest – almost all provided by taxpayers – is below the waterline.

Holmes a Court’s self-interest in challenging the fairness of Victoria’s electoral laws is evident. When Independent MP for Kooyong Monique Ryan files her first annual statement with the Australian Electoral Commission later this year, she is expected to reveal she spent nearly $2 million to oust Josh Frydenberg. About 35 cents of every campaign dollar raised came from Climate 200’s 11,200 donors.

Holmes a Court has personally donated $4,000 each to independent candidates in the Hawthorn and Kew state seats – a donation matched by his wife Katrina – but acknowledges the blue-green movement has a hard time breaking electoral structures within the Victorian build laws.

Independent candidate for the Hawthorn seat Melissa Lowe.

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

To find candidates for Hawthorn and Kew — traditional Liberal seats that overlap with Kooyong’s federal seat — each campaign booked a half-page ad to run one below the other in that newspaper. Though newspapers are notoriously reluctant to spend on advertising, the spend would have totaled nearly $20,000.

To raise the money, the campaigners went door to door asking for small donations. “It was just a matter of talking to as many people as possible and asking them if they would go along with it,” says Brent Hodgson, the campaign manager for Hawthorn blue-green candidate Melissa Lowe. The difference in past campaign spending can be seen on the streets of Hawthorn, where two months before Victoria goes to the polls, the billboards and campaign posters that mushroomed well before the general election are nowhere to be seen.


The short-lived Victorians Party, which had planned to field candidates for all seats in the House of Commons and Lords, was withdrawn this month after its main organizers failed to raise the funds needed to campaign. “The cap is the killer,” says a source connected to the short-lived party. “We were prepared to maybe fight that in court.”

Such a fight would involve significant risks. Anyone who intentionally attempts to circumvent the campaign’s donation limits faces 10 years in prison.

Holmes a Court is not alone in arguing that the Victorian regime, while an improvement on previous arrangements, is protection money for the status quo. Four years ago, the Greens voted with Labor to get the electoral law changes through the House of Lords. At the time, Green Party leader Samantha Ratnam expressed concern about the “significant gap” in nominated organizations. It has now reiterated its determination to scrap the provision after this election.

“The big parties have devised a system that benefits them to the detriment of smaller parties and independents,” she said Age. “To fix this, the nominating bodies provisions that allow Labor and the Liberals to maintain a legacy wealth base to fund their elections must be repealed and spending caps put in place.”

Reason MP Fiona Patten is also pushing for a cap on electoral spending. According to a review clause inserted into the law by Crossbench MPs, a panel of experts appointed by the next government will examine the issue of spending caps within 12 months of the Nov. 26 election.

According to Joo-Cheong, three changes are needed: enforcing a cap on electoral spending, removing the loophole for nominated entities, and expanding the definition of political spending to include more money under the donation cap.

Reason Party MP Fiona Patten.

Reason Party MP Fiona Patten.Recognition:Justin McManus

The Liberal Party, which initially backed the legislation, voted against it in 2018. This was largely a political calculus by the Matthew Guy-led opposition to keep Labour’s “red shirt” scandal of systematic abuse of polling staff going until election day. When asked how the rules work in practice, Liberal Party state director Sam McQuestin is phlegmatic: “Labour will always make the rules as it suits them. Whether we like them or not, we’re going to deal with the rules we have and make the best of them.”

In response to questions from Agethe prime minister declined to comment on whether the new laws tilted the playing field against new parties and independents, or why the big parties should benefit from their old arrangements with nominated organizations. A government spokesman said Victoria’s laws on political donations are the strictest in the country and next year’s review will decide whether further changes are needed.

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Joel McCord

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