How the parties cash in

Helen Clark has pointed to electoral funding in Australia, where it is accepted that taxpayers should contribute. Picture / Greg Bowker

It took Pauline Hanson - who else? - to make Australians wonder about the funding of their elections. Until her prosecution and jailing on charges of electoral fraud, that were subsequently quashed, it was something that barely touched the consciousness of the nation.

And in the three years since the drama of the former One Nation Party leader's trial and imprisonment, the complex legal tapestry of financing federal and state elections has largely returned to the arcane realm of political theorists, party treasurers and regulators.

There will undoubtedly be some flurries in the coming 12 months or so as Australia gears up for another federal election, with possibly a squall or two during the present Queensland state poll.

But these will mostly rage around whether the Government is using public funds for its own advertising or for genuine campaigns to make Australians aware of key policies and programmes.

These are fine lines to draw, and as Hanson's prosecution and later release demonstrated, they are legal minefields. Yet there is no debate that taxpayers should help to fund election campaigns, in the belief that the democratic process is strengthened by the ability of political parties to adequately articulate their policies..

Hanson's funding in the first place was an illustration of public funding as democracy in action. If you have enough people supporting you - as One Nation did in its first big sweep of the Queensland elections - the state will support you in return.

Hanson was jailed because 500 One Nation supporters named as members in the registration of the party in Queensland in 1997 were deemed by the court not to be fully paid members, as required by law. She and co-founder David Ettridge had therefore fraudulently obtained A$500,000 ($595,000) in public funding paid to One Nation as a result of the party winning 11 seats in the 1998 state election.

Ultimately, the Queensland Court of Appeal quashed the convictions, holding that the prosecution was flawed. Hanson and Ettridge were released. Neither was there any question over the almost A$200,000 paid to Hanson by the Australian Electoral Commission after the 2004 election, which she unsuccessfully contested.

That was a big year for taxpayer handouts - A$41.9 million in all, most divided between the two big parties. The Liberals received A$17.9 million, Labor A$16.7 million, with A$3.3 million to the Greens, A$2.9 million to the Nationals, and the remainder divided between 21 other parties and individual candidates.

These payments were made by the Australian Electoral Commission, which runs federal elections, on the principle that voters have the right to be clearly presented with alternative views and policies.

The AEC also ensures that donations to parties - the other major source of election funding - are fully disclosed to reduce the potential influence of big money on the political process.

Federal electoral laws tend to shape those of the states, especially since in the overlapping world of Australian federation they apply to state and territory branches of federally registered parties. Many of these parties are also separately registered under state legislation.

Under the Commonwealth Electoral Act political parties and independent candidates are entitled to a payment of A$1.50 for each first preference vote in both the House of Representatives and the Senate, adjusted every six months for inflation. In the 2004 election the rate was about A$1.94 a vote, rising by December last year to A$2.49.

To qualify, candidates must receive at least 4 per cent of total first preference votes. (Under the Australian system voters list candidates in order of preference. These preferences are then allocated in order of popularity to produce the two-party preferred vote that decides the outcome.)

The payments, made automatically as soon as possible after the 20th day following the election, mirror the fortunes of political parties. They can also in turn significantly affect the parties' futures, because a bad election result dramatically reduces public funding and places much greater emphasis on donations and other fund-raising.

The 2004 election demonstrated this. Less than 20 per cent of total funding was available for minor parties. The junior coalition partner, the Nationals, received A$2.92 million, less than the A$3.3 million handed to the Greens after their surge in support.

The Democrats were previously the third force in Australian politics, but now face the huge task of rebuilding support after their hammering and finding the money to do it. Instead of the 6 per cent they received after the 2001 election, funding after the last election plummeted to just A$8491 - 0.02 per cent of the total - reflecting the collapse of their vote.

Donations are strictly controlled. Donors and parties must produce annual statements identifying donations of more than A$1500.

After each election, separate statements must be made by donors of any funds of more than A$200 to individual candidates or A$1000 to parties. Candidates must list every donation of A$200 or more, the amount spent on campaigning, and loans of A$1500 or more. Anonymous donations of more than A$1500 are illegal.

Broadcasters and publishers must also supply details of election advertising. These give an indication of the cost of swaying voters' minds. During the 2004 campaign A$37.4 million was splashed on TV and newspaper ads - A$16.3 million by the Liberals, A$15.4 million by Labor, and between A$1 million and A$2 million by the Greens, Nationals, and newcomer Family First, a religiously backed values party that elected a tie-breaking senator to the Upper House.

The states differ in their approach. New South Wales, Queensland, Victoria and the Australian Capital Territory follow federal rules by funding election spending based on a 4 per cent voting threshold. Unlike the federal system however, payouts are capped at the level of actual expenditure.

South Australia, Tasmania, Western Australia and the Northern Territory do not provide taxpayers' money for election campaigns. Only Tasmania imposes a ceiling on election spending, limiting Legislative Council candidates to A$10,000 each in 2005, with subsequent annual rises of A$500.

All states and territories except South Australia, Tasmania and Victoria also impose disclosure rules, requiring candidates and parties to detail donations. South Australia is at present considering disclosure legislation based on federal laws.

Funding models

State funding of political parties is common in Europe, but is not without controversy.

France, Italy and Germany devote large amounts of taxpayer money to parties. Some countries have a mix of state funding and public contributions and some have a cap on donations.

Britain is one of the few without state funding, but Prime Minister Tony Blair is pushing for such a system following the Labour Party loans for peerages scandal.

There are three main models of public funding in Western Europe. Countries with a high degree of state control are France, Spain and Italy where parties have become "para-state" organisations almost totally dependent on taxpayer money.

In Spain, 98 per cent of the main parties' income comes from the state. In France, the figure is more than half.

A mixed system exists in countries such as Turkey, Greece, Belgium, Austria, Ireland and Switzerland where there is roughly half state funding and half private funding.

The third system is mainly private funding, as in Britain.

A report by anti-corruption watchdog Transparency International says limits on spending for electoral campaigns have been put in place in most Western European countries, which has given rise to serious constitutional debate on the grounds of freedom of expression.

"But there is clear evidence that in countries where this is in place electoral campaigns are cleaner and less 'Americanised'," said the report.

It adds that in France, which has more than 210 political parties, the aim is to put candidates and parties on a more equal footing.

New Zealand's chief electoral officer, Helena Catt, says discussion on state funding in this country is important. "There are lots and lots of examples where it happens, so a) there are lots of democracies where they think it's a sensible thing to spend money on, and b) there are lots of different processes and sets of rules that we could quite easily look at and borrow."

"I think the important thing is we haven't had a debate in New Zealand about the role of political parties, where we stand on accountability and transparency."

Auckland University political scientist Jack Vowles says no single model will solve all problems.