Politics Questions

Donations in Australian Federal Politics – oil for the gears of the machine.

How much money is donated to political parties in Australia every year?

Take a moment to contemplate a guess.

$5 million? $10 million? $50 million?

In 2018, Australian (federal) political parties disclosed that they received $319 million in donations from various organisations and members of the public.

An average of $184 million per year was donated between 2016-18. Over the last 10 years, the average is $132 million per year and over the last 21 years, it has averaged approximately $100 million per year.

The scale of the donations is significant. Between 1998 and 2018 exactly $2,182,746,422 in political donations have been disclosed to the Australian Electoral Commission (A.E.C.) by the various political parties.

All that money… two key questions?

Where does this money come from?

Where does this money go?

These questions provide a framework to understand many of the forces which influence Australian federal politics.

The donations come from a variety of sources i.e. individuals, groups, organisations, businesses, unions, etc. Examining the sources of donations is a task for another day. For now, let’s have a quick look at where all these donations flow to.

It takes money to have a party

The donations go to registered political parties – a much more concise list of entities for quick and easy analysis.

Of the $2+ billion, Labor disclosed the largest amount with $937 million (43% of all donations).

The Liberal Party of Australia disclosed $823 million (38%).

The National Party of Australia disclosed $126 million in donations (6%).

The Australian Greens disclosed $102 million (5%) and other minor parties have disclosed $53 million (2%).

In four reporting years between 2013-18, Clive Palmer’s parties disclosed $131m, corresponding to 6% of the total political donations over the last 21 years.

Winning seats in Parliaments

Compare the view of donations with the view of seats won by the various parties in federal elections

Note: numbers of seats won only includes general elections. By-elections not included in numbers.

Party% donations% seats
Labor43%42%
Liberal38%43%
Palmer6%0.2%
National6%8%
Greens5%3%
Minor / Independent2%4%
Distribution of total donations and total seats won in federal elections

There is little doubt that money is used to influence elections, but were you aware of the scale of the amounts “donated”? 

And isn’t it interesting just how closely correlated donations are to winning seats in Parliament? Over a 21 year reporting period, the numbers correlate within a 2% margin – the notable exceptions being the Liberal Party outperforming their donations by approx 5%, and Palmer under performing by approx 5%. However, it’s not a stretch to say that it was the Liberal Party that was the main beneficiary of Palmer’s contributions to elections.

Oversight and Accountability

Given the quantifiable relationship between money and the outcomes of elections, it’s in the public interest to have clear oversight and accountability in relation to political donations. 

Yet neither Labor nor Liberal Government have ever felt compelled to ensure that all the required oversight into this area is provided. That was true up until Clive Palmer gave Labor reason to believe that uncapped donations might pose a risk to them.

There have been calls for a Federal Independent Commission Against Corruption (ICAC) which have fallen on deaf ears in both houses of federal parliament.

There have been numerous cases of undocumented donations across all the major parties so it’s not surprising that neither Liberal, nor Labor, are keen on oversight into the realm of political donations given they account for approximately 90% of the amounts disclosed. 

And the amounts which are disclosed to the A.E.C. are not the entirety of funds received. The parties receive more than they disclose, sometimes for justifiable reasons and purposes, and sometimes for nefarious reasons and purposes.

Why do “we” donate to political parties?

What are the core reasons for giving donations in the first place? 

Answer vary depending on who you ask, but I assert there are two main reasons why people give donate money to causes:

  • An External Driver – to achieve a desired external outcome
  • An Internal Driver – to experience a desired internal state of being

We can deceive ourselves into believing that our intentions, and donations, are focused on achieving outcomes, or we can acknowledge the old adage “there is no such thing as a selfless act” and recognise that there is also a strong internal driver in the mix too.

When we, as individuals, donate money to a cause or organisation, we do it for both of those reasons – the external outcome and the internal experience.

When I give money to someone on the street, part of me is doing it so the person can buy whatever temporary comfort they currently seek, and part of me wants to experience the positive feelings which come from a charitable act. 

For that fleeting moment in the day, a small “donation” buys me that feeling, buys them some food/drink/drugs/hugs and yet at the same time, I know that I will see the same person, in the same place, again tomorrow and the pattern will repeat.

Achieving a desired external outcome is often more difficult. What even is the desired outcome in the above scenario? Help the person get off the streets? Direct them to social services? Stop and have a chat? It’s often easier to give some money and postpone the external outcome for another day. But in the meantime, it’s hardly a bad thing to give someone some money – they feel good, you feel good, and nothing lasts forever so make the most of now.

Why do “they” donate to political parties?

The example situation of giving money on the street is presented to contrast with how corporations and organisations choose to donate.

Corporations and organisations are less likely to make donations to purchase the temporary experience of a desired internal state. They are much more likely to focus on achieving outcomes aligned with their chartered objectives.

So what are the core desired external outcomes?

Very simply, it is to influence the success, or failure, of legislation passing in the two Houses of Parliament. That’s it.

Corporations and organisations are seeking an external outcome related to the decisions in Parliament which effect their core objectives.

Money is “donated” to political parties but these donations can also be accurately described as an “investment” in a certain outcome of the election campaign.

Political parties use the money to finance their operations, contest elections and win favour among voters.

Voters decide who wins seats.

Seats decide who forms Government.

Parliaments propose policy but ultimately the parties of Government decide to pass or reject certain legislation.

Just as investments have differing time frames and rates of return, the same applies to political donations.

And just as investments go through cycles, it’s the same with donations. Every three years in perfect synchronisation with elections, the amount of donations received and disclosed increases considerably.

It’s becoming an arms race where parties can’t afford to slow down for fear of being left behind. The two major parties are dependent on donations to fight a war of attrition, resorting to mass media advertising campaigns designed around basic three word slogans intended to push the buttons of undecided voters.

Trickle-down donation economics

Election campaigns are also a boon for many media organisations. Money is spent on advertising at local, state and federal level via the same media organisations we task with holding politicians accountable. Much has been written about the misaligned incentives here, and it’s always worth remembering that (most) media organisations are businesses seeking to sell advertising.

The billions of dollars of donations also make their way into a range of other businesses in the orbit of political parties: printers, events, merchandise, equipment, staffing, facilities, etc. More interesting cycles of inter-dependency and inter-personal relationships to explore another time.

Alas, these wars have casualties, including important issues which get swept aside by both parties as not being suitable to bring to an election. Elections in Australia are won with narrow commitments and focused messaging, as opposed to promises of sweeping reforms. As such, parties aspiring for Government tend to make themselves small targets where possible.

Conclusions or insights to take away?

There isn’t really anything insightful about this information as presented. It’s a general comment on the state of affairs as they currently sit.

Money can be a corrupting influence in politics. As such, it’s important to understand where the money comes from and where it goes.

The two major parties are the main beneficiaries of donations and are incentivised to prevent reform in this area which would impact their revenue streams. Between them, they wholly control the parliamentary agenda so it’s not surprising there has been little progress in this area.

Donations to political parties influence elections, but just how much they influence is a deeper question which the Grattan Institute have written about.

More oversight and accountability

The charts in this document were created in Excel using the .csv data at the AEC Transparency Register. This is a great resource to access the data but we also need to ensure that this information is accessible and easy to navigate for people.

This requires the development of portals/websites/dashboards/etc so that people can see the data in a format which helps them understand the inner workings the political machine.

Public data (data which is created or curated by taxpayer-funded organisations), should be accessible as via APIs (Application Programming Interfaces). This will assist with developing the required tools for citizens who are seeking to be active participants in the processes of accountability and governance in their communities and society at-large.

The Price to Break Through?

With the duopoly receiving almost $400m in donations in the past 3 years, the barrier to entry in federal politics is now so high, without the bankroll of a billionaire, one has to wonder how smaller parties can compete?