How money is influencing Australian politics - Grattan Institute

Published by ABC Online, Thursday 7 November

This week the Australian Electoral Commission released details of donations raised by politicians running in the 2019 federal election.

The data release included the headline-grabbing $1.1 million in donations to independent Zali Steggall.

But this data relates only to a small number of candidates, mainly independents.

The figures will pale in comparison to the political party figures expected in the second round of donations disclosures due out in February, especially Clive Palmer’s rumoured $60 million contribution.

Nonetheless, the money flowing to independents at the 2019 election tells us five things about the role of money in Australian politics and the capacity of independents to be a force for change.

A successful independent campaign is costly

Breaking into Australia’s political duopoly, Labor and the Coalition, is not easy.

Brand recognition is a big barrier for candidates outside the major parties.

The new data shows that independent candidates at the 2019 election raised more than twice as much in donations as independents in the previous two elections, and three times as much on a per-candidate basis than 2016.

The two independents who won a seat for the first time, Zali Steggall and Helen Haines, both raised substantial amounts, with Ms Steggall’s total donations the highest for an independent in history.

It suggests that capacity to attract donations has become increasingly important to electoral success for independents.

Independents are less able to tap corporate and union dollars

Independents need to look beyond the deep pockets of Australian businesses and unions to fund their campaigns.

Businesses and unions almost exclusively support the major parties; they contributed about 70 per cent of declared donations to the Labor, Liberal and National parties at the 2016 election.

Unions are regular major donors to Labor, and many businesses are regular contributors to both sides, including the Australian Hotels Association, ANZ, Westfield, and Village Roadshow.

The “value proposition” of independent candidates is far less clear.

So perhaps it is not so surprising that individuals, including family members, feature more prominently than businesses or unions as donors to independents.

It helps to be an independent in a well off (and upset) electorate

With the big union and corporate dollars effectively off the table, if you want to do serious fundraising as an independent it helps to be among the well heeled.

Warringah, Kooyong and Wentworth, three of the richest electorates in the country, were also three of only four electorates where independent candidates raised more than $200,000 in donations.

The fourth was Indi, where Ms Haines raised more than $420,000 despite being in an electorate with incomes below the national average.

This is a rare example of a people-power campaign, with more than 1,000 donors contributing an average of just $420.

Big fundraising campaigns require more than well-off constituents.

Warringah was frustrated with its local member (Tony Abbott), Wentworth was unhappy that its previous local member (Malcolm Turnbull) was ousted as prime minister, and Indi resented being taken for granted as a previously safe conservative seat.

There’s money in promising climate action

Many independents ran on a platform of stronger climate action.

Climate200, a funding vehicle set up by renewable energy advocate Simon Holmes a Court, raised nearly $500,000 in the lead-up to the election from philanthropists including Mike Cannon-Brookes.

Climate200 was a big supporter of independents who advocated for climate action, including Oliver Yates (Kooyong, $145,000) and Kerryn Phelps (Wentworth, $47,500).

Holmes a Court wants to double his fundraising efforts for the next election to counterbalance vested interests opposed to climate action who remain some of the biggest donors to political parties, particularly the Coalition.

In the two years spanning the 2016 election, parties declared more than $3.8 million in donations from mining companies, more than 20 per cent of their declared corporate donations. This was in addition to more than $8 million in direct campaigning by the Minerals Council of Australia around the 2016 election, including on the “Coal, it’s an amazing thing” advertising blitz.

Independents are held to higher standards

Perhaps the most surprising thing to emerge from the latest donations data is that independents are held to higher standards of transparency than political parties.

The donations disclosures from independents are a full three months ahead of those from political parties, the information is more comprehensive, and it’s provided in a more usable format than disclosures from political parties.

Like political parties, independents are required to identify individual donations above the disclosure threshold of $13,800, but unlike political parties, they also have to report their total donations from all sources (above and below the threshold).

They are also required to aggregate multiple donations from a single source, preventing the practice of “donations splitting” where donors make multiple payments below the threshold, which the parties don’t need to disclose.

We can see that 30 per cent to 40 per cent of donations to the Steggall, Haines, and Phelps campaigns were from big donors (those contributing more than $13,800), and we can be confident that the remainder came from smaller donors.

By contrast, about 60 per cent of private funds flowing to the major parties at the 2016 election was from unknown sources, and there’s no way of knowing how much of this was small donors and how much was “donations splitting”.

The ultimate lesson

Money matters in politics. Two out of three independents elected at the 2019 federal election, Ms Steggall and Ms Haines, were the biggest fundraisers by both number of donations and value.

Unable to tap into corporate and union funding to any great extent, independents rely on a combination of well-off supporters, a motivated electorate, and outside agenda-based groups.

But all this of course is just the tip of the iceberg. The big dollars will hit the books in February.