Electoral Legislation Amendment (Fairer Contracts and Grants) Bill 2023: proposed ban on political donations from government contractors

The short answer

Electoral Legislation Amendment (Fairer Contracts and Grants) Bill 2023: proposed ban on political donations from government contractors

The Electoral Legislation Amendment (Fairer Contracts and Grants) Bill 2023 is a private senator's bill introduced by Senator Larissa Waters (Australian Greens) that would amend the Commonwealth Electoral Act 1918 to prohibit political donations being made by corporations (or their close associates) that hold Commonwealth government contracts or receive Commonwealth grants. The bill is currently before the Senate and has not been enacted.

This is a federal system guide. State constitutions, parliaments and local-government laws can allocate comparable functions differently.

The useful question is not only “what is the rule?” but also “who administers it, which document controls it, and when might it change?” That distinction prevents an accurate general explanation from becoming wrong advice in a particular election, chamber or policy setting.

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What the bill proposes

The Electoral Legislation Amendment (Fairer Contracts and Grants) Bill 2023 proposes to amend the Commonwealth Electoral Act 1918 — the principal legislation governing federal elections and political finance in Australia — to prohibit political donations from corporations that hold Commonwealth government contracts or receive Commonwealth grants. The ban would also extend to 'close associates' of such corporations.

The bill targets a specific concern in Australian political finance: the risk that corporations may use political donations to influence government contracting and grant-making decisions in their favour, or that the receipt of government contracts may be conditional on — or create expectations of — political donations. By prohibiting donations from government contractors and grant recipients, the bill seeks to sever the perceived or actual link between political giving and government procurement.

The term 'close associates' is significant. By extending the ban to close associates of corporations that hold government contracts or receive grants, the bill aims to prevent the use of related entities, subsidiaries, directors, or other connected persons to circumvent the prohibition. This is a common anti-avoidance technique in political finance regulation.

The bill amends the Commonwealth Electoral Act 1918, which is the statutory foundation for Australia's federal electoral system. The Act sets out rules for voter enrolment, the conduct of elections, the registration of political parties, and — critically for this bill — the disclosure and regulation of political donations and electoral expenditure.

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The current state of political donation law in Australia

Australia's federal political donation laws are among the least restrictive in the developed world. Under the Commonwealth Electoral Act 1918, there are no caps on the amount that can be donated to political parties or candidates at the federal level, and no restrictions on who can donate.

The primary regulatory mechanism is disclosure: donations above a threshold (currently $16,900 for the 2025-26 financial year, indexed annually) must be disclosed to the Australian Electoral Commission. However, disclosure occurs well after the fact — annual returns are typically published in February of the following year.

Several state and territory jurisdictions have gone further. New South Wales bans political donations from property developers and has capped political donations. Victoria has also introduced donation caps. The Commonwealth has lagged behind, with repeated calls for reform from civil society and parliamentary committees.

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Scope of the prohibition: government contractors and close associates

The bill proposes to insert new provisions into the Commonwealth Electoral Act that would render it unlawful for a corporation to make a political donation if the corporation — or a close associate of the corporation — holds a contract with the Commonwealth or receives a Commonwealth grant at the time the donation is made.

The scope of 'government contract' under the bill would likely extend to contracts for goods, services, or works entered into with Commonwealth entities. This could capture a broad range of commercial arrangements, from major defence and infrastructure contractors to providers of professional services, IT systems, consultancy, and office supplies to government departments.

The 'close associates' provision is an anti-avoidance measure designed to prevent corporations from routing donations through related entities. Under typical drafting approaches, a 'close associate' might include directors, officers, significant shareholders, related bodies corporate (as defined in the Corporations Act 2001), and spouses or dependants of such persons. The precise definition would be set out in the bill text.

The bill would sit alongside existing prohibitions in the Commonwealth Electoral Act. Currently, the Act prohibits foreign donations (donations from foreign governments, foreign political organisations, and foreign persons who are not Australian electors) and anonymous donations above the disclosure threshold. The bill would add government contractors and grant recipients to the list of prohibited donors.

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Sponsor and political context

The bill is sponsored by Senator Larissa Waters, the Australian Greens senator for Queensland and the party's spokesperson on democracy and integrity. Senator Waters has been a leading voice on political donation reform throughout her parliamentary career, which began in 2011. She has introduced multiple private senators' bills aimed at cleaning up political finance, including bills to ban donations from the mining, gambling, tobacco, alcohol, and firearms industries.

The 'Fairer Contracts and Grants' title of the bill reflects the Greens' long-standing framing of political donation reform as a fairness and integrity issue. The party has consistently argued that large corporate donations create a perception — and in some cases a reality — that government decisions are influenced by political giving. The focus on government contractors is particularly aligned with the Greens' critiques of the 'revolving door' between government and the private sector.

As a private senator's bill, the proposed legislation does not represent government policy. For the bill to become law, it would need to pass the Senate and then the House of Representatives, which would require support from the government or a parliamentary majority. Political donation reform has been a live issue in the 47th and 48th Parliaments, with both the government and crossbench advancing proposals. The Senate has considered integrity measures, including establishing inquiries into political donation reform.

The bill was introduced as s1389, indicating a Senate bill from 2023. Its status as 'Before Senate' as of the assignment data indicates it has been introduced and read a first time but has not yet been debated or voted on. The Joint Standing Committee on Electoral Matters has previously examined political donation reform; the bill could be referred to that committee or a similar body for inquiry and report.

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Constitutional considerations

Any restriction on political donations raises potential constitutional issues under the implied freedom of political communication, which the High Court has found to be implicit in the system of representative government established by the Australian Constitution. The implied freedom is not an absolute right but operates as a limitation on legislative power: a law that burdens political communication will be invalid unless it is reasonably appropriate and adapted to serve a legitimate end compatible with representative government.

The High Court has considered political donation restrictions on multiple occasions. In McCloy v New South Wales (2015), the Court upheld NSW laws banning donations from property developers and capping political donations, finding that the laws were compatible with the implied freedom because they served the legitimate purpose of reducing the risk of corruption and undue influence in the political process.

Senator Waters' bill, by targeting government contractors specifically, is framed as serving the purpose of preventing actual or perceived corruption in government procurement and grant-making. The High Court's reasoning in McCloy v New South Wales (2015) provides a legal framework for considering whether laws restricting political donations are compatible with the implied freedom of political communication. A court assessing the bill would examine whether the restrictions are proportionate to the purpose of safeguarding the integrity of the political process.

Common questions

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