The heady rise of mining donations

Labor's mining tax and the resources boom may have permanently and significantly changed the balance of political donations, with millions of dollars flowing from mining companies to the Coalition, Australian Electoral Commission data shows.

Mining companies began increasing their stake in the political process before the financial crisis, favouring the Coalition but also contributing to Labor. However, the mining tax saw an extraordinary increase in donations to the Coalition that has opened up a huge funding resource for the Liberals.

Mining company donations to state and federal Labor parties and the Coalition since 2004 show the extent to which Coalition benefited from the surge in mining company largesse after the Rudd government infuriated them with its RSPT proposal in May 2010.

But the largesse is predominantly from Western Australia. In Queensland, the ongoing support of Clive Palmer has been the primary mining contribution to the conservative cause, including a monster donation of $500,000 to the LNP by his Queensland Nickel. Other than Palmer, the federal Liberal Party took $100,000 from controversial miner New Hope – the target yesterday of a protest led by Alan Jones and Bob Katter – which maintained the Queensland representation in 2010-11. Last year the Queensland government capped donations at $5000 to parties and $2000 to candidates).

Santos and Beach Petroleum each gave big donations to the SA Liberals in 2010-11 as well.

However in Western Australia, mining company donations to the WA Liberal Party went from less than $100,000 in total in the mid-2000s to over $1.2 million in 2010 and 2011, forming around one dollar in five of the party's revenue.

Previously, mining companies had tended to follow the pattern of many industries and give to both sides of politics. Indeed, the Gallop government attracted more mining industry donations in 2004 and 2006 than the WA Liberals. But WA Labor didn't get a cent from miners in 2009-10 or 2010-11, presumably reflecting the party's dispatch into opposition as well as the mining tax.

Federally, Labor's take from miners slumped to a bare $50,000 worth of small donations and fund-raising dinner contributions, from $200,000 before the 2007 election.

The sheer scale of mining company generosity illustrates why Tony Abbott remains committed to repealing the carbon pricing package and the mining tax despite the difficulties he will face in securing Senate support. That should continue to lock in big mining company donations this year and next and establish the mining industry as a go-to source for big donations that Labor cannot access for years to come.

The donations are widespread across the WA industry, with 25 companies giving the party on average $95,000. The list doesn't include Rio Tinto and BHP Billiton, who no longer donate or only provide small donations; given they can pick and choose prime ministers and dictate how much tax they pay, donations would appear to be of limited value for the big foreign miners.

The long-term problem for Labor is that the habit of giving to the Liberals becomes permanent for mining companies. That will erase the advantages that have accrued to Labor in recent decades, whereby business has significantly lifted its donations to Labor while unions have continued to pump funds into the party.

This story first appeared on www.crikey.com.au on February 21. Republished with permission.