Not surprisingly, these dark corners of Victoria’s politics have proved fertile ground for controversy. The Age in particular has repeatedly highlighted the weaknesses of the Victoria’s political finance laws – from revelations almost a decade ago of the Brumby Labor government’s plan for a special coal allocation to a generous donor, through to last year’s infamous lobster dinner involving Opposition leader Matthew Guy and an alleged mafia boss, which was organised by a party activist who promised to raise tens of thousands of dollars for the Liberals. The cascade of revelations through the years of dubious dealings between politicians and donors has fed a growing distrust in politicians and their fundraising. Last month, after years of hand-wringing on both sides of politics, the Andrews Labor government finally proposed a circuit breaker.

‘No more short cuts’ The Electoral Legislation Reform Bill 2018 was said by the government to be the strictest and most transparent donation laws in Australia. It included a total ban on foreign donations, a cap of $4000 over four years for all donors, and the requirement for real time disclosure for all donations over $1000. Loading “I understand that the community is mindful every day of the failings of politicians and will look to any example where they think politicians have taken short cuts, done the wrong thing,’’ special minister of state Gavin Jennings told The Age this week. “I want to get to get to a situation where that is not the case, where people no longer have those anxieties and we start to rebuild trust, which is a very difficult thing to do.”

The Coalition initially promised to support it, but Matthew Guy’s opposition subsequently withdrew that backing, and the bill now hangs in the balance in the upper house. Its passage into law, or not, is now in the unlikely hands of two unseasoned upper house MPs from the Shooters, Fishers and Farmers party. No-one, not even the government, argues the bill is perfect. It is a document of compromise drafted to appeal to parties and politicians across the political spectrum. However, players from across the political spectrum, including Liberals, acknowledge the donations bill is a dramatic reworking of the current laissez-faire political finance regime. But is it good enough? Is it a meaningful reform of Victoria’s political finance laws deserving of the backing of our MPs?

Controversies There is wide support in particular for the big transparency improvements included in the bill, including that all donations of more than $1000 be publicly disclosed in real time by the Victorian Electoral Commission (realistically about one month after donations are made). Under current rules (the John Howard-era national legislation applies in the absence of a state law) only donations of more than $13,500 in a financial year must be disclosed. Such is the paucity of the current regime that voters can wait almost two years before a donation is made public on the Australian Electoral Commission’s opaque website. Under this bill, all donations of value will have to be made public in Victoria for the first time.

More contentious is the proposal to cap all donations at $1000 ($4000 over four years) whether from individuals, companies, unions or lobby groups. This would give Victoria the lowest donation cap in the country. Such a strict cap should ensure that developers and builders, bankers, the alcohol industry - those who rely on state government decisions and who are the big donors - no longer use money for political leverage. The donations simply are not big enough to be influential. Labor, the Greens, and even, until recently, the Liberals, supported the cap. Opponents included libertarian advocates including the right wing think tank, the Institute of Public Affairs and the Reason Party’s upper house MP, Fiona Patten. The IPA has warned of a constitutional challenge to the donation cap on the grounds of freedom of political expression, although it has not speculated on who might make such a challenge. Reason Party leader, Fiona Patten. Credit:Melissa Davis

Also controversial is the bill’s exemption of affiliation fees, which allows trade unions to continue tipping millions of dollars a year into the ALP. Union donations to Labor however – they also amount to millions of dollars – will be capped like other donations. After its change of heart over the bill this month, the Coalition highlighted the favourable treatment of unions as a key reason for its opposition. "From the very start of this process it was clear that Daniel Andrews wanted to limit some donations to his political opponents but allow the unions to continue to financially support the Labor Party with affiliation fees that would remain uncapped," said shadow special minister of state, Ryan Smith. Liberal shadow minister Ryan Smith. Credit:Eddie Jim

But other critics also point to another part of the bill – the new nominated entity category – which is clearly intended to favour the Liberal party and allow it to continue to receive funding from investment vehicle, the Cormack Foundation, which will be unaffected by the donations cap. Sidelining the cross bench Leading political finance expert Melbourne Law School’s Joo-Cheong Tham, noted that the special carve out for unions and the Cormack Foundation pointed to the bill being unfairly drafted to favour the major parties. After it was tabled last month, Tham pointed to these and other shortcomings, including a failure to cap political expenditure, to call for Labor to return to the drawing board.

Minor parties including Fiona Patten’s Reason Party and the Shooters, Fishermen and Farmers also declared themselves opposed, in large part because of it favoured the major parties. But when the Coalition party room decided to withdraw support for the bill almost two weeks ago, the government was forced to turn to the minor parties for numbers. After hurried negotiations the government has agreed to key amendments. Among them is to give the minor parties “special administrative payments” which amount to a substantial financial boost. The government has also a promised to review the system after the 2022 election, including a consideration of a cap on political spending. Tham has reviewed his position in light of the amendments. “On balance I would support the bill if the government amendments go ahead. The big open question is whether the proposed review is a rigorous and able to lead to improvements, including caps on electoral expenditure.’' No longer cross

Fiona Patten had opposed the bill, largely because it was drafted with the Liberals as bipartisan partners, at the expense of small parties and independents. But working with the Shooters party, she has helped win concessions including a substantial administrative payment, assistance with voting for vision impaired citizens, and Labor’s commitment to look at expenditure caps. She says the concessions have made the bill a much better and fairer document. “I think transparency is the right formula,’’ says Patten. "If we know the politicians are receiving money from the liquor industry then we view their decisions on liquor and gaming through that lens. Sunlight is what we need.’’ It’s a view shared by another major beneficiary of the increase in public funding per vote and the new administrative payments, the Greens, who will likely enjoy a $2 million boost to their state coffers, more than doubling the party’s current income. Like the Shooters and Patten, the Greens have been important in negotiations with Labor, especially since the the Coalition withdrew its support.

Greens leader Samantha Ratnam told The Age that she still had concerns including the lack of spending caps, no limits on union affiliation fees, and the nominated entity provisions. Greens leader Samantha Ratnam. Credit:Luis Ascui “But by and large the bill is good. Hopefully we’re on the cusp of seeing significant transformation in terms of how our democracy operates.’’ With the Greens and Patten, Labor now only needs to lock in the support of two Shooters MPs to overcome the Coalition, and other conservatives on the cross bench, who have opposed the bill from the outset. Like Patten the Shooters initially opposed the bill. But with the promise of substantial administrative funding for minor parties, the Shooters now look set to back the bill in the crucial upper house vote next month.

“I was broadly supportive of concept of removing corporate influence but the original legislation was not fair to minor parties at all,’’ says key Shooters MP, Jeff Bourman who has now flagged his party’s likely support for the bill when it returns to the upper house next month. It is a situation that leaves the Coalition looking like the odd man out and allowing Labor to claim the moral high ground on probity and integrity ahead of the November election. Coalition, the unwilling Why the Opposition withdraw support after months of discussions with the government remains unclear. The official position from shadow special minister for state Ryan Ryan Smith, is that the Coalition received legal advice that caused a rethink, especially around the favourable treatment of trade unions, and the questions around freedom of political speech implied in the strict donations limits.

But asked to provide the advice and the name of the lawyers Smith refused. There appears to be divide in the Opposition ranks about the decision to withdraw support. Liberal MPs and party insiders say some MPs were concerned that the bill would centralise fund-raising in head office, sparking fears that those who are out of favour with the party’s surging hard-right faction would be starved of campaign cash. Others point to genuine concerns about the exemption of union affiliation and restrictions to free speech. However, as The Age reveals today, by pulling support for the bill, the opposition loses concessions offered by Labor in return for its support, including the retention of existing, advantageous, arrangements for postal voting. Labor and the Coalition will also lose some administrative funding through concessions made by Labor to the minor parties to secure their support for the bill. There is little doubt that some senior Liberals, including shadow special minister for state Ryan Smith, were keen to back the bill through the parliament. He had negotiated for months with minister Jennings and it is clear they shared a detailed understanding of the legislation, and it pros and cons for both parties.

When asked to explain the Coalition’s change of heart, it is notable that Smith first thanked his Labor colleagues for their efforts: ''While I appreciate the goodwill shown to us by some members of the government during discussions on this matter ultimately it came down to a question of trust in the Labor leader. Daniel Andrews has given no one a reason to trust him.” But Labor strategists believe the bigger question of trust will hang over Guy, a politician dogged by controversy when it comes to political fundraising. For Fiona Patten, the Labor bill is a rare opportunity for serious reform of Victoria’s governance that should not be missed. She says she will back the bill, despite its remaining warts. “I still think the bill is far too generous to the major parties. But my mantra is ‘don’t let the perfect get in the way of the good’.” Got a tip? Get in touch on this secure, encrypted contact form.