Australia’s Campaign Finance Laws Face Their ‘citizens United’ Moment

CANBERRA — Those who want to take big money out of politics rarely agree on how much, and whose money, should be left to fight elections.

In February 2025 Australia’s two major parties, Labor and the Liberal-National Coalition, combined to pass campaign finance laws capping donations, increasing public funding of elections and limiting electoral expenditure.

Coming after the breakthrough success of independents at the 2022 election, who won six city seats in Sydney, Perth and Melbourne from the Liberals, the change was viewed skeptically — as a means to block cashed-up insurgents further disrupting Australian politics by winning seats off the ruling Labor Party.

Former independent parliamentarians Zoe Daniel and Rex Patrick challenged the laws in the High Court of Australia, claiming they breached the freedom of political communication implied in the Australian Constitution.

Finance stats prove unfairness: Independents

Revelations in court documents reviewed by POLITICO demonstrate the impact the laws will have on campaigns when they apply from 2027.

Labor spent AU$1.3 million in each of two seats, in their successful effort to defeat two Brisbane-based Greens members of parliament — campaigns that would not have been possible under the new AU$800,000 per-seat spending cap.

Other elements of the new funding system — particularly increased public funding for each vote a party receives — would see an extra 25 million Australian dollars funneled to the Labor and Liberal parties.

Independents seized on the fact Labor would have received an extra $15.4 million and the Liberals an extra $9.4 million for their campaigns, as caps could be largely evaded by splitting donations between federal and state branches and the parties’ coffers would boosted by public funding of more than AU$5 a vote.

Daniel and Patrick told POLITICO in a joint statement that “voters would be astonished to discover just how much of their money would line the pockets of the major parties as a result of their electoral funding stitchup.”

“Labor claims these laws get big money out of politics,” they said. “These figures show quite the opposite. The major parties' massive taxpayer funded windfall far outstrips the money they are likely to lose in donations.”

Independents are also concerned that a $90 million national spending cap allows political parties to spend far more than $800,000 in any individual seat.

Of Australia’s 150 House of Representatives seats, only an average of 17 seats change hands at each federal election. While more seats may be in play, the majority of funding will typically be directed to fewer than 50 seats, and virtually none to Senate campaigns.

In such scenarios, independents fear the major parties will use accounting tricks to spend well over AU$1 million per marginal seat.

Holes in the law could be filled

A similar challenge against Victorian election laws resulted in the High Court in April striking them down. The parliament responded by passing less restrictive donation caps.

The Victorian government lost, in-part, because it conceded unequal treatment of the major parties and other registered political parties depending when they were registered.

Daniel, Patrick and the Commonwealth are yet to agree on the facts of their case. That will delay hearings until 2027, and is a sign that the Commonwealth defense is playing hardball.

If the High Court case is successful and any invalid sections cannot be severed from the law, then spending and donation caps would be totally invalid, raising the spectre of an Australian version of the 2010 Citizens United States Supreme Court case, which upended former campaign finance limits by stating that unlimited spending is protected as free speech under the First Amendment.

In Australia, donations have already been pouring in to the right-wing nationalist One Nation, including mining billionaire Gina Rinehart gifting a plane. Rinehart also bought an AU$8 million inner-city Brisbane office building for the party to use as its headquarters.

Paul Ferris, the interim chief executive of progressive advocacy organization GetUp, said there are “legitimate concerns about the details of these new laws, and the way Labor and the Coalition have provided loopholes in the legislation to let the major parties spend millions while capping the spending of other actors.”

"But nobody should mistake that as an argument against limits on big money in politics. When Australia's richest woman can donate millions and even a private plane to a sitting member of parliament, it's clear our donation laws are in urgent need of reform."

An analysis by fundraising group Climate 200, which supported numerous independents into parliament, found that third-party campaign groups including the right-wing Advance Australia, spent more than AU$1 million in contests including Kooyong and Goldstein in Victoria, Curtin in Western Australia, and Bradfield in New South Wales.

But independents who voted against the campaign finance laws stand by their vote, including MP Monique Ryan and former Labor senator Fatima Payman who said Daniel and Patrick “are on the side of democracy in their High Court fight.”

“If the reforms are found to be invalid, Parliament should replace them with fair ones, but the legacy parties will probably just keep forcing unfair laws through the Senate until the High Court affirms them.”

Matthew Sheahan, executive director of the conservative advocacy group Advance, said the laws “restrict political communication” and constitute “a protection racket for the major parties.”

“They don’t care, because they’ve made taxpayers fill the hole in their budgets.”

If you can’t beat them — join them

One alternative approach, adopted by former independent MPs Zali Steggall and Allegra Spender, is to create a party: Community Strong Australia.

Steggall told POLITICO it “enshrines the best bits of being an independent, my free vote and responsiveness to my community” with the benefits of being a party, reducing duplication and allowing her to build a movement, including to contest Senate seats.

Campaign finance laws were “a collateral aspect not the primary reason” for forming the party, Steggall said. “I’d already gone to three elections and overwhelmingly I was asked at every one: ‘who do I vote for in the Senate?’ I was conscious of needing to double impact for Warringah voters, to have a voice in both houses.”

But Steggall said the reforms did “create a structural disadvantage to independents compared to parties, through spending caps” which allow parties to help their candidates get elected under “a larger national cap.”

Steggall said the laws allow parties to “preserve their accumulated war chest” but are unfair because “nobody else can build one up.” She noted Rinehart’s donations came ahead of the new regime beginning in 2027.

Special Minister of State Don Farrell said that “Labor secured world-leading reforms to limit big money in our elections and restrict the billionaires seeking to influence our democracy.”

“From the moment I committed to these reforms, those who want to continue accepting big money have fought us every step of the way. The government is, and will continue to, defend these reforms to strengthen our democracy before the court.”