Policy thinktanks The Centre for Public Integrity, Australian Democracy Network and The Australia Institute along with community services peak body the South Australian Council of Social Services (SACOSS) have criticised elements of the state government’s draft donations ban Bill that was released for consultation in June.

The ban, a Labor election promise and long-held policy ambition of Premier Peter Malinauskas, would outlaw all donations and gifts to parties, MPs, groups and candidates as well as loans (except those from financial institutions).

The government has proposed a more generous public funding model to compensate parties for the lost donations money.

The major parties would be eligible for around $700,000 in “operational funding” every half year, while the minor parties could access $47,000 half-yearly multiplied by their number of MPs in parliament.

Half of this public funding must be spent on “administrative” purposes, according to the draft legislation, while the remaining can be used for political/election purposes.

Sitting independent MPs will also be eligible for $15,000 in public funding every half year – equating to $120,000 per election cycle – with no requirement to spend this on administrative purposes.

The Labor Party would receive $5.6 million per four-year election cycle under this public funding model, while the Greens, which have two sitting MPs, would receive $376,000.

This would be on top of the existing per vote funding model, where political parties get $3.80 per first preference vote.

But the Centre for Public Integrity, a national thinktank with the self-described mission of eliminating “the undue influence of big money in politics”, argues the Bill is taking the wrong approach to banning donations.

“Fundamentally, the Bill appears to be based upon a flawed premise: that donations are ipso facto problematic and public funding is the panacea,” they submitted, adding that “appropriately regulated small donations by individual citizens can be a sign of a vibrant democracy”.

“The proposed public funding scheme appears likely to operate against emerging parties and candidates by substantially advantaging incumbents, and parties in particular – both in respect of dollar-per-vote funding arrangements, and in respect of operational funding.”

Newly-registered parties and non-sitting independent challengers are exempt from the donations ban and eligible to raise donations of up to $2700.

They would also be eligible to apply for advanced public funding from the Electoral Commission before they contest the election, worth around $5000 per endorsed candidate.

But the Centre for Public Integrity argues that these measures are “unlikely to be sufficient” to offset the advantage of incumbency, arguing that it will be harder for new entrants to compete on a spending basis with well-publicly funded major parties.

They calculate that a newly formed party endorsing one Lower House and two Upper House candidates would need to get 6927 individual donations of $50 to match a major party’s capacity to spend up to the proposed $100,000 per district spending cap.

SACOSS and the Australian Democracy Network (ADN) have submitted to the government that “under this model new entrants would spend significant time and resources to raise funds for their campaign, only to potentially be outspent anyway by a major political party that is fully publicly funded”.

“We find that the Bill would go some way towards reducing the influence of private wealth on the political system,” SACOSS and ADN said.

“However, these gains are overshadowed by the problems it creates with regards to an unfair playing field between different kinds of candidates.”

The Australia Institute, meanwhile, argued that the proposed regime would “ensure that incumbents would not be able to raise funds – but also that they would not need to do so”.

“New entrants, however, would have to spend more time fundraising than they otherwise would do because they cannot accept larger donations,” the left-leaning thinktank said.

Special Minister of State Dan Cregan, who has oversight of the donations ban, said the government is currently “consolidating” its response to the submissions “to ensure that any bill introduced to Parliament enhances democratic participation”.

“The legislation has been deliberately designed to ensure new entrants to the political process are not disadvantaged,” he said in a statement.

“As an independent MP, I’m particularly committed to ensuring this is a reform that doesn’t unfairly advantage major parties over smaller parties and independents.

Independent MP Dan Cregan on the government benches. Photo: Tony Lewis/InDaily

“Newly-registered political parties, parties without any sitting MPs and unendorsed candidates will be entitled to receive individual donations and will also be subject to a spending cap.”

Cregan also noted that under the existing per-vote public funding regime, the major parties already receive more funding “simply because they receive more votes”.

“The legislation proposes to reduce the existing spending cap for political parties as part of the new public funding model,” he said.

Upper House poised to challenge donations ban

The Legislative Council, home to South Australia’s minor parties, is set to debate the donations ban later this year. Photo: Wikimedia Commons

The donations ban could face a significant test in the Upper House where the Malinauskas Government does not have a majority to pass legislation.

Cregan said the government intends to bring legislation to parliament later this year.

The Liberal Party had a lukewarm response to the Bill when it was first announced in June and raised concerns that unions could freely run their own political campaigns under the draft legislation. InDaily contacted the Opposition for comment.

The Greens, who the government may need to get the legislation through parliament, are yet to form a position. Greens MLC Robert Simms said “all options are on the table” regarding potential amendments.

“I think the Premier should be commended for trying to take action on this issue. Big money has had a corrosive impact on our democracy,” he said.

“Whether or not this bill has struck the right balance remains to be seen.

“We are still working through our position but I am aware of the position of the Australia Institute and the Centre for Public Integrity.”

SA-Best MLC Connie Bonaros and her former party colleague Frank Pangallo are unconvinced by the legislation as it stands while One Nation MLC Sarah Game said she was yet to receive a briefing from the government.

Pangallo called for the Bill to be referred to a parliamentary inquiry.

“I’m on the fence with a leg dangling on either side,” he said.

“Minor parties and independents will be greatly disadvantaged and be the big losers, perhaps face extinction.”

Bonaros said she could “see the short-term appeal for existing parties” but “I can’t see, long term, the benefits”.

“I certainly can’t see that without some major changes how it’s going to work for independents and minor parties who are trying their level best to get into politics,” she said.