Grattan on Friday: Don Farrell has an electoral reform blueprint, but it could be a rough road to implementation

Don Farrell usually finds his way into the news cycle in relation to some or other trade issue. But Farrell, who’s special minister of state as well as trade minister, plans a throw of the dice soon that, if he can pull it off, would give him a place in the history books for driving a major reform of Australia’s federal electoral law.

The changes, long in the pipeline, would place caps on both donations and spending for federal elections, and include more timely disclosure of money flows.

But the far-reaching reforms, which Farrell aims to bring to parliament in the fortnight sitting starting August 12, would seem unlikely to be in place for the coming election, due by May next year.

The proposals are generally in line with the majority recommendations from the parliamentary Joint Standing Committee on Electoral Matters.

It’s been a tortuous process, much longer than Farrell initially hoped. Not only have negotiations with other players dragged on, but the danger of breaching the Constitution (which could invite a successful High Court challenge over restricting the implied freedom of communication) and even a shortage of parliamentary drafters have slowed progress.

How much of the reform package can be wrangled through parliament, and how long that might take can’t be predicted.

The reforms will include a minimalist “truth in advertising” measure, based on the model operating in South Australia. But that might fall by the wayside in the parliament. The Australian Electoral Commission, which has resisted being the designated cop-on-the-beat to adjudicate on truth, will be relieved if it doesn’t eventuate.

And Farrell won’t even try to increase the number of Australian Capital Territory and Northern Territory senators (current set at two each) because there is not enough support to do so.

For Farrell, the core issue is the caps to stop the explosion of spending and politicians having to devote so much energy to fund-raising.

Billionaire Clive Palmer’s massive spend on the last election has obsessed Labor, although for his $123 million outlay, his United Australia Party won only one Senate seat, secured by Ralph Babet in Victoria.

Farrell says:

Our system needs to be protected, including from billionaires who try to influence our elections. The focus of the reforms I will introduce into the parliament is to address the growing threat of big money in politics.

But his package would also protect “genuine political communications,” he insists.

All donations of $1,000 or more would have to be disclosed, and this would be a hard, non-indexed threshold. The present indexed threshold is more than $16,900.

There would be a cap on how much each donor could give, with figures still being finalised.

Farrell’s donation changes do not go nearly as far as those the South Australian Labor government has on the drawing board, which would ban all donations.

Under the three-tier proposal in the Farrell legislation, caps would be set for what parties could spend on their national campaigns, and at the state level (to cover campaigns for the Senate). There would also be caps for spending in a seat.

The key cap would be the seat one, and this is set to be somewhere under $1 million per candidate. Unsurprisingly, some of the “teals”, who were elected after expensive campaigns, are concerned about new players. (Monique Ryan and Allegra Spender both ran campaigns costing more than $2 million apiece.)

One effect of the caps would be to limit the extent to which a party could pour huge sums of money into a seat where it perceived the MP was under threat.

The legislation will likely include an increase in public funding, although the intention is to keep this increase relatively modest, based on the judgment that anything too large would go down poorly with the public.

Parties, however, would also get an amount for administrative costs. This would be a new thing, although they have previously received grants for specifics such as updating cyber-security.

There will be measures to try to catch some of the spending by “significant third parties”, for example, unions, advocacy groups such as Advance, and groups such as Climate 200, which financially backed a number of community candidates in 2022. But how these will operate remains unclear. This third party spending is a crucial issue and the devil will be in the detail.

Parties, candidates and other players in an election will have to have dedicated Commonwealth campaign accounts for all donations and spending, which will be subject to auditing by the Australian Electoral Commission.

There have long been calls for “real time” disclosure of donations. Under the proposed reforms, donations outside election periods would be disclosed within weeks. During campaigns, the time would be reduced down to weekly, then daily as polling day nears.

Farrell argues voters should be able to make up their own minds about donations via real-time disclosures, rather than bans being imposed on money from certain industries (for example, fossil fuel companies).

When it comes to electoral reform, players start from a position of self-interest. So while there have been extensive discussions with the opposition parties, the Greens, the teals and others, getting agreement – or, at least, agreement from some players on some aspects – is a huge ask.

The Liberals are staying publicly mum. Some of the teals, as newcomers and minnows compared to the major parties, are vocal.

Western Australian teal Kate Chaney, who has been at the forefront on electoral issues, says she wants to see real-time disclosure of donations above $1,000, a political advertising provision that protects voters from “lies”, and “a method for reducing money in politics that still allows new challengers”.

She has put forward a model to cap “mega donors” set as a proportion of public funding.

“My lens is whether the reforms prevent future competition,” she says. “I recognise people want less money in politics and people don’t want money to be influencing political decisions. But if private donations are replaced with public funding, it embeds incumbents, which is not good for a flourishing democracy.”

Goldstein teal Zoe Daniel remains “suspicious that the major parties will dress up their proposals as electoral reform when their real goal is self-interest, as has proved to be the case with recent changes in NSW and Victoria.

“In Victoria, under the guise of reform, the Andrews government built a $200 million barrier to protect the interests of the major parties and lock out independent candidates who were constrained at the last election by a cap on individual donations of $4,210,” Daniel says.

The package is expected to have a rough parliamentary road, not helped by its arrival so late in the term. It’s likely to see bits peeled off or dropped off during its journey. Given the timing, it is hard to see that much of it could be operational in time for a 2025 election – the AEC would require a period to gear up.

Farrell, who is overseas, will return to yet more haggling over his changes. A pragmatic numbers man of Labor’s right faction, he knows if he doesn’t get as many reforms as he can through during this parliament, there is a danger a re-elected Albanese government could be in minority, when negotiating electoral changes would become even more difficult.