Australia’s new election spending rules will cap the money flowing into campaigns. But the proposed limits may leave established parties with ample room to spend while making it harder for newcomers to reach voters.

The way political parties and candidates can spend during federal elections is set to change next year. Australians will finally get much better visibility of political donations. For the first time, there will also be a ceiling on money in federal elections.

This ceiling matters because in political campaigns, there’s a strong electoral incentive to outspend your opponents. This can help get your messages to more voters if you can raise the money to do so. This ‘arms race’ pushes too much money into Australian politics and creates fertile conditions for wealthy interests to have too much say and sway.

So getting the ceiling right is central to reducing the influence of money in politics. But how much money do political parties need to communicate with voters? And how much is too much?

A new Grattan Institute policy brief estimates what a better ceiling would look like.

The ceiling is set too high

Electoral expenditure caps set limits on how much political parties and other players can spend on campaigning.

Well-designed caps can reduce the influence of money in politics by reducing political parties’ incentives to fundraise because they can’t spend more than the cap. They can also reduce parties’ dependency on major donors because individual donors become more replaceable.

Reducing the incentive to fundraise........

© Pearls and Irritations