Labor poised to cap donations and spending after key report released

A powerful parliamentary committee has recommended the Albanese government legislate political donation and spending caps, and truth-in-political advertising laws.

Labor, the Greens, and independents Kate Chaney and David Pocock backed the ambitious suite of electoral reforms with some qualifications, but the opposition accused the government of attempting to “financially gerrymander” an advantage for Labor and unions.

The Albanese government still has a difficult road ahead determining the level of spending and donation caps, with warnings from the crossbench not to block political newcomers.

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The joint standing committee on electoral matters interim report on the 2022 election recommended lowering the disclosure threshold for donations to $1,000 and real-time disclosure, two policies Labor promised before the election.

The special minister of state, Don Farrell, told ABC News that these two measures were “key to transparency”, suggesting that these and caps on donations and spending “are perfectly capable of being dealt with in our first term”.

Related: Ten donors gave 77% of total political donations in lead-up to last Australian election

In July 2022, Guardian Australia revealed that the Albanese government intended to legislate spending caps and truth-in-political advertising, two reforms that were backed by the committee, chaired by Labor MP Kate Thwaites.

But the committee sidestepped difficult questions about the amount of the cap on donations and spending.

Instead, it said they should be “based at a level that is consistent with objectives including: reducing the potential for big money to have undue influence on elections, increasing transparency, recognising the additional hurdles to entry faced by independents or new entrants, and maintaining the implied right of freedom of political communication, as well as participation in elections”.

The government should also consider whether the caps would apply “to all parties, candidates, and associated entities … [be] set on a per annum basis, [be] aggregated across candidates and parties, and [provide] for an appropriate exclusion for party membership fees, subscriptions, levies and affiliation fees”.

It recommended that “donation caps and expenditure caps apply to third parties and associated entities”.

The inquiry also called for “a new system of increased public funding for parties and candidates, recognising the impact changes a reformed system will have on private funding in elections”.

Currently, federal electoral law only bans advertising and statements that mislead voters about the process of voting, with no laws prohibiting other false statements.

The committee proposed truth-in-political advertising laws, with a new division within the Australian Electoral Commission to administer them.

Tabling the report, Thwaites told the lower house that voters had to be “confident that our political system and our politicians are accessible to all and not just to those capable of making very large donations”.

Liberal MP, James Stevens, said the opposition was “concerned” that the reforms amount to “gerrymandering a financial benefit to the one union movement” and the Labor party, and vowed to resist it “tooth and nail”.

In a dissenting report, the Coalition members said they oppose spending and donation caps, warning that a spending cap would “rig an expenditure system” in Labor’s favour, due to the support of affiliated trade unions.

The Coalition members called for the AEC to gain powers to judge that groups of independent candidates are in fact political parties, claiming that teal independents are “wrong” to claim they are not a party.

Related: Australia’s political parties received $90m in dark money from donors during election year

Despite pushback from the Liberal party, the government could seek to legislate the reforms with Greens and crossbench support, including senator Pocock, who provided qualified support for political donation and spending caps.

The Climate 200 fundraising body which supported Pocock and teal independent MPs has raised concerns that spending caps could disadvantage political aspirants who don’t enjoy advantages of incumbency.

The independent MP, Kate Chaney, who agreed with the majority report, said that the “devil will be in the detail” in determining the level of caps, warning they should not become a “barrier to entry”.

In her additional comments, Chaney said donations caps should be “significantly higher” than state caps, and donations from related companies and associated entities must be aggregated.

Pocock backed those principles, warning that “badly designed spending caps will entrench advantages of incumbency and the existence of party machinery”.

In his additional comments, Pocock called to “increase the baseline level of representation for the ACT and NT in the Senate to as close to half the representation of states as possible”, a move which would increase the number of senators for each territory from two to six.