The NSW Coalition government introduced a bill this week to improve the previous Labor government’s electoral funding reforms that came into effect at the beginning of the year. Contributions finally will be allowed only from individuals who are on the Australian electoral roll — a measure various academics, health groups and the NSW Greens have campaigned for throughout the past decade.

This to a big win for democracy as it removes vast sums of money flowing into the parties’ coffers from many vested interests and foreign firms.

The NSW ALP will no longer be able to received affiliation fees from unions.  This will cost the party millions of dollars between now and the next election.

While the unions will complain, many union members will applaud.  A frequent complaint from these members is “we are very annoyed when our union gives our fees to the ALP without our consent or even a vote of members”.

However, this move by the conservatives may well backfire on the Coalition.

The NSW ALP will now have to rely on its grassroots members to contribute to the party and run its campaigns.  The power of the “faceless men of Sussex Street” will be diminished, and the proposed reforms by such party elder statesmen as John Faulkner and Rodney Cavalier may ultimately be implemented.  This can only lead to a more democratic and competitive Labor Party.

The O’Farrell government also plans to allow all third parties except unions to continue spending up to $1.05 million on their issue-based campaigns during NSW elections.

There are two major problems with this measure.  First, it keeps in place the previous government’s outrageously high expenditure levels for these organisations.

The Canadian system of electoral funding is the model for  the NSW Labor and Coalition governments’ new schemes.  Yet, in Canada the limit for third parties was set at $150,000 linked to inflation for expenditure on their campaigns throughout the entire country.  The nationwide spending limit for these organisations in the May 2011 Canadian election was a little over $188,000.  This sharply contrasts to the $1.05 million allowed in NSW.

Secondly, the O’Farrell government will allow expensive campaigns to be run by such organisations as the Property Council of Australia and the Australian Christian Lobby while denying the representatives of nurses, teachers, fire fighters and other workers the same right.  This is clearly undemocratic and may be overturned by the courts.

There is a further potential problem with the new law that must be addressed by the NSW government.

At a recent workshop at the University of Melbourne Law School, I discovered a major loophole in the current NSW law governing electoral expenditure caps in individual electorates.

Without a legal requirement for parties to disclose all expenditure in individual electorates, it could be difficult and perhaps impossible to ascertain if a party has breached its electorate expenditure cap.  In order for it to be adequately monitored, there must be reporting of party expenditure by each electorate..

According to The Sydney Morning Herald three former NSW MPs have submitted complaints to the NSW Electoral Funding Authority that their opponents exceeded the expenditure caps by very large amounts.  It is unclear if such claims can be adequately investigated.

After reviewing the O’Farrell government’s amended law, it appears that this loophole has not been closed.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey