Guide: What is the current situation with party funding?

Party funding refers to the means by which political parties finance their activities. At the moment, parties are funded through several means including partial state funding, membership fees, single donations and assistance in kind. State funding, through means of Short Money and Cranbourne Money for opposition parties and assistance in kind, is a major source of funding for parties. In kind services provided by the state include party television broadcasting and mailshots of election addresses.

What is the current situation with party funding?

With the current state of party funding, we face a situation where the public are suspicious of politicians and they perceive politics to be full of sleaze and corruption. The present system is structured so that political parties are becoming increasingly dependent on rich donors who have the power in influence a single election outcome with their donations. Due to the Single Member District system of voting currently used, it is not valuable for parties to gain only a few votes in a constituency. This means that in marginal constituencies where parties consider seats to be unwinnable, parties will not campaign locally and marginal constituencies are being increasingly ignored. Additionally, party funding is now overshadowed by controversies from the past several years, for example the ‘Cash for Honours’ scandal.

What is the problem?

The main problems with the current system for party funding are:

  • It creates a dependency between political parties and high value donors.

  • It creates the perception of sleaze in politics.

  • Political campaigning becomes increasingly centralised.

Membership of political parties is decreasing yet parties are spending more each year on election campaigns. This results in political parties becoming increasingly dependent on rich donors. The effect is rich party donors have a great deal of influence and donations by a small number of people can influence the outcome of an election.

The perception of sleaze in politics arises from the expectation that private donations lead to compensation for the donor so they view the system as having elements of corruption, reducing public faith in the government. Political parties perform important services to civil society such as providing alternative policy options and developing policy ideas and should be valued for that contribution. In a democracy, the public should be able to trust the government as their elected representatives to serve public needs, however perception of sleaze and corruption limits this.

Due to the decline in party membership, marginal constituencies without local party activists are not given the opportunity to engage with politicians personally. This reduces the likelihood of the public turning out to vote. Political parties are unwilling to expend resources on seats that they feel are unwinnable for the party. However, it is important for participation and democracy that voters are given the chance to engage with their representatives and actively participate.