Blue Sky Democracy, Part 12: Reworking public election funding

The idea of Democracy Dollars isn’t for everyone. I get it.

But for our fifth and final little idea, we’re going to look at a way to reduce the need for them in the first place — by increasing how much public election funding is available.

In 2015, the ACT chose to increase their public election funding to $8 per vote, up from $1 per vote in 2008. This new rate would then increase every six months by the consumer price index.

At the same time, they removed the existing $10,000 cap on donations.

While widely and justly condemned at the time, in practice (anecdotally) the removal of the cap did not change parties fundraising strategies nearly as much as the increase in public funding.

Later, in 2020, ACT adopted an expenditure cap of $42,750 per candidate, applied equally to parties, associated entities and third party campaigners, a testament to the change in political culture the increase had in just five years.

This is a lot more convoluted than just straight up banning political donations for electoral purposes like SA Labor plans to.

“For electoral purposes” is an important distinction too. Many people, especially party members, donate to parties for non-electoral purposes — anything from running an event or buying a BBQ or a marquee to funding IT systems projects. But an outright ban might be constitutionally challenging — running into implied freedom of political communications issues — and would struggle for longevity if the Coalition doesn’t come on board.

The ACT’s approach, while complicated, encourages compliance by political parties rather than trying to find new exploits or loopholes.

A higher public funding rate is essentially a trade-off to secure changes elsewhere.

MPs are understandably (if cynically) worried about their own re-election prospects and need an incentive to remove anything that gives them a leg-up.

A higher public election reimbursement rate is a very attractive trade for lower expenditure caps, and a higher public election discretionary funding rate would offset the increased administrative load on parties.

Most jurisdictions moved from lump sum returns (where parties would receive a full sum of their election funding to use at their discretion) to a reimbursement based model (where parties would only receive funding for expenditure they can prove is related to a campaign).

The reimbursement approach is harder to rort — with allegations of candidates and party administrators personally profiting off elections rather than reinvesting them in campaigns — but it also results in less investment by parties in sustainable internal governance.

The Australian Electoral Commission still pays “automatic payments” of roughly $10,000 to each candidate to contest an election and receives at least 4% of the first preference vote. This automatic payment isn’t tied to expenditure, but it isn’t strictly discretionary, since any claim above the automatic payment factors that amount in.

Therefore a mix of both lump sum and reimbursement payments is important to making sure elections are conducted fairly, on equal footing and with a view to improving political discourse, integrity and democratic engagement long-term.

Per vote funding aren’t the only public payments to political parties after an election.

Parties in some jurisdictions also receive administrative funding to help them pay for the costs of complying with electoral laws, improving party governance and building party capacity. Many receive ad hoc grants to address short-term compliance problems (like the Commonwealth’s 2018’s cybersecurity grants). Some provide policy development funding, either as an alternative to administrative funding for smaller extra-parliamentary parties or to parties to undertake research.

There’s an even more opaque layer of political funding: grants that go to associated entities. The Department of Finance manages the secretive “Grants in Aid” program, that funds think-tanks affiliated to each of the four biggest political parties. They also administer Australian Political Exchange Council grants to fund “future political leaders” to go on international junkets. They administer the Australian Political Parties for Democracy Program that ostensibly gets invested in building democratic institutions and political parties internationally, but seems to somehow end up funding student politicians to go campaign in elections in the US or UK. All these schemes are poorly understood, poorly publicised, only open to the biggest political parties, and utterly at the discretion of Government Ministers.

Rather than this convoluted system of reimbursements, I propose a reorientation.

Retaining the $100,000 per candidate per term expenditure cap I argued for before, I suggest modestly increasing the reimbursement rate from $2.91 per vote to $5.50 per vote (meaning a party that receives just under 20% of the vote in a seat would be eligible for the maximum reimbursement).

Then I suggest converting all existing supplemental payments into a single lump-sum payment each term at $0.40 per vote (with a floor that regardless of your vote share, an AEC registered party receives $4,500 per term).

In the interest of improving political discourse, I would retain a discretionary research allowance but open it up, permitting any AEC registered parties to direct funds to an affiliated research organisation at $0.10 per vote. This rounds nicely to public funding equivalent to $6.00 per vote — the same as Queensland adopted in 2021 but still short of the ACT’s generous $8.00.

This should, theoretically, reduce the need for political parties to chase big donations and avoid large-scale rorting and embezzlement by unscrupulous party administrators, while still equipping parties (especially smaller ones) with enough money to comply with administration requirements, hire staff, find office accommodation and do internal capacity building.

And that’s it.

I’ve left out heaps of important ideas — from designated seats for First Nations people to recall votes for unpopular politicians to an annual Democracy Day public holiday we line all our elections up on.

Hopefully this all jolts campaigners into thinking bigger about the way our political system works and break out of the little technical boxes we’re all backed into.