Victoria’s tough new laws on political donations could be national game changer

September 18, 2017 Alistair Nicholas 0 Comments


Exactly one year ago, at the height of the political donations scandal involving Chinese businessmen and Labor Senator Sam Dastyari, we asked whether companies reap a “return on investment” for political donations. But the question mig

ht be about to become redundant as Victoria pushes forward with reform of political donations in the State, and with other states and federal parliaments likely to follow suit.

Indeed, the Andrews Labor Government today announced it would introduce what will become “the strictest and most transparent political donation laws in Australia”. The Premier’s announcement said the Victorian Government’s proposed amendment to the State’s Electoral Act would

  • Cap donations at $4,000 over a term of parliament, “completely eliminating large donations to political parties, associated entities, and third party campaigners”;
  • Reduce the disclosure limit to $1,000 (from the current $13,200) per financial year;
  • Ban foreign donations; and,
  • Real-time reporting of political donations by the Victorian Electoral Commission rather than just annually.

The Victorian Government intends to push these changes through parliament ahead of the next State election, due by November 2018. The proposed changes have been broadly welcomed by the State Opposition and therefore are likely to sail through parliament.

It will be worthwhile watching the Victorian legislation to see what other changes might also be made to the Electoral Act. And, of course, it will be worth watching to see whether the federal and other state parliaments follow suit with similar changes to their regimes governing political donations.

We usually advise our clients against making direct political donations, especially if they hope to influence policy or legislative changes, or win government contracts. The simple truth is that making a donation to the party in Government can often backfire as the party will not want to be seen to have done something favourable for a major donor.

In our view political donations are not necessary to achieve policy or legislative outcomes or to win contracts. Government ministers have responsibility to consult with all parties on policy and legislative changes. If a company has a good case to make it will be heard whether or not a donation has been made. Strategies, powerful messaging and a compelling story or solution to a problem faced by government are far more important tools for success in government advocacy than are political donations.

By Alistair Nicholas, Executive Vice President – Director, Special Projects.