South Australia introduces ‘world-leading’ bill to ban political donations from elections

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The South Australian premier, Peter Malinauskas, has announced plans to ban political donations from state elections, paving the way for nation-leading electoral reforms.

The state’s electoral amendment bill announced on Wednesday night will ban electoral donations and gifts to registered political parties, members of parliament and candidates. The state will provide funding to allow parties and candidates to contest elections, run campaigns and promote political ideas.

Malinauskas said his bill would put South Australia on the “cusp of becoming a world leader in ending the nexus between money and political power”.

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“We want money out of politics. We know this is not easy. These reforms may well face legal challenge,” Malinauskas said.

“But we are determined to deliver them, with this bill to be introduced in the parliament in the near future.”

In a subtle challenge to his federal and state counterparts, the premier told Guardian Australia he thought it was “something that democracies everywhere should be pursuing”.

The Albanese government pledged to introduce spending and donation caps, and truth in political advertising laws, as revealed by Guardian Australia after the 2022 federal election and confirmed by a parliamentary inquiry that reported last July.

The special minister of state, Don Farrell, said last month an agreement between the major parties and the crossbench had not yet been reached. An amendment bill is still expected by the middle of the year.

In order to level the playing field for newly created parties and independent candidates, the South Australia bill will allow candidates to receive donations up to $2,700, although they will remain subject to campaign spending caps.

Those spending caps have been set at $100,000, multiplied by the number of candidates up to a maximum of $500,000.

If the bill is passed, a registered political party will be entitled to a one-off payment of $200,000 before 31 August 2026. Whichever is lower out of $700,000 or the number of party members of parliament multiplied by $47,000 will also be given to parties for operational funding.

Membership fees will be allowed to continue but will be capped at $100 or less a year.

To deter attempts to circumvent the proposed changes, a maximum penalty of $50,000 or 10 years’ imprisonment will apply.

The guide acknowledges the proposal would lead to a rise in the cost of South Australia’s electoral system, but says a tightening of expenditure and party registration rules will keep costs to a minimum.

The Albanese government is under crossbench pressure to introduce electoral reforms before the next federal election.

Lower house independents, including Kate Chaney, Zali Steggall, the Greens, David Pocock, Lidia Thorpe and the Jacqui Lambie Network, joined forces to introduce a bill for fair and transparent elections in March.

The bill contained a suite of reforms including truth-in-political advertising, a ban on donations from socially harmful industries including fossil fuels, and tightening the definition of gifts to capture major party fundraisers, including dinners and business forums.

It would have also legislated Labor’s election promises to lower the donation disclosure threshold to $1,000 and real-time disclosure of donations within five business days.

Farrell told the ABC in May he wanted “an agreed outcome, not a disputed outcome” to prevent future government from winding back any changes.

“I think Australian politics works best when the political parties can work out an agreement for the future,” he said.

The opposition leader, Peter Dutton, suggested truth-in-political advertising laws would be “probably welcome” in March, raising expectations that a major party deal might be possible.

The Liberal leader’s comments were at odds with an opposition dissenting report on an inquiry into electoral reform. The Coalition’s members strongly opposed the government-chaired inquiry’s recommendations, saying any increase in the territories’ Senate representation would make the value of state votes more disproportionate.

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