The Australian Greens oppose the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017 (the Bill).
We acknowledge and welcome the fact that the Bill has been amended to reflect some of the significant concerns raised by civil society through the original JSCEM inquiry process, particularly regarding how it would limit the ability of charities, not-for-profits and other civil society actors from receiving international philanthropy while maintaining their advocacy on public policy issues.
However, it is our firm view that the Bill will still diminish the ability of civil society to engage in advocacy campaigning, creating a confusing, burdensome and restrictive regulatory environment. It fails to address the fact that businesses can continue to buy political influence, including through the use of international funding.
The Greens have long supported a ban on foreign donations. We have consistently argued for serious reform of electoral funding and disclosure. We noted in our Minority Report to the original JSCEM inquiry into this Bill that we are prepared to work with any party to reduce the influence of big money in politics. This remains the case, and we have several Bills before the Senate which would help restore integrity to our democratic processes. These include: the National Integrity Commission Bill 2013, the Commonwealth Electoral Amendment (Reducing Barriers for Minor Parties) Bill 2014, the Commonwealth Electoral Amendment (Donations Reform) Bill 2014, and the Commonwealth Electoral Amendment (Political Donations and Other Measures) Bill 2016.
It is clear that this Bill is a missed opportunity to genuinely clean up our politics. In summary, the amended Bill:
Fails to achieve its ostensible purpose of preventing foreign interference,
Fails to reduce the corrupting influence of political donations,
Discourages charities and other civil society organisations from engaging in advocacy, and
Disadvantages smaller political actors relative to larger ones.
A chilling effect
Several charitable and civil society organisations made submissions and gave testimony that outlined their concerns that this Bill will have a chilling effect on advocacy and civil society.
GetUp noted in its submission:
...the sum effect of the Bill and draft amendments remains deeply problematic. The provisions still serve to enfeeble the ability of civil society to engage in vital advocacy campaign, while further entrenching the power of established political parties and large corporate donors.
In evidence provided to the public hearing, Alice MacDougall from the Law Council of Australia, noted:
...it is important to consider the potential for both unintended consequences and unreasonable regulatory burdens arising from such reforms. This is particularly the case for the charitable sector, where many entities already face an unnecessarily complex, confused and costly regulatory environment...The Law Council notes its concern with the drafting of the provisions relating to the prohibition of gifts from foreign donors due to the uncertainties in the interpretation, which may lead to extensive and burdensome compliance requirements or, effectively, limit advocacy activities.
During the public hearing, witnesses from the Public Health Association of Australia and the Australian Conservation Foundation highlighted the level of uncertainty that this Bill would create for charities and not-for-profit organisations.
The Greens hold the view that in a representative democracy, civil society groups of all sizes should be able to influence policy outcomes through electoral change, including by running public campaigns that put pressure on the political system to change public policy. The definition of “electoral matter” in the revised Bill fails to draw a clear line between issues-based advocacy and implicit comment on a political entity. The accompanying supplementary Explanatory Memorandum further confuses the issue by including contradictory and misleading examples. This uncertainty about what is regulated conduct and what is not will have the effect of deterring charities, not-for-profits and other civil society groups from speaking out. They will self-censor as they lack the resources to seek legal guidance.
This view is supported by the Law Council, which proposes amending s 4AA to:
assist in making it clearer that issue-based advocacy by charities as permitted under the Charities Act is not caught by the proposed measures. Without these amendments, or some means of distinguishing between a dominant purpose of influencing voters to vote for a party and/or a candidate, from a dominant purpose of raising awareness, education or promoting debate on an issue, the Bill is likely to catch issue-based advocacy by charities, and due to the uncertainty in application, may deter many charities from engaging in issue-based advocacy in furtherance of their charitable purposes.
It is the Greens view that there is no public interest benefit to the proposed added layer of regulation for the charitable sector. In its submission to the first draft of the Bill, the Australian Charities and Not-for-profits Commission (ACNC) explained how charity law applies to political activities of registered charities:
To become and remain a registered charity under the ACNC Act, among other requirements, a not-for-profit organisation must meet the definition of ‘charity’ in the Charities Act 2013 (Cth). Political parties are explicitly excluded from the definition of ‘charity’.
To be a registered charity, an organisation must have a charitable purpose. The Charities Act lists 12 charitable purposes, which includes ‘the purpose of promoting or opposing a change to any matter established by law, policy or practice in the Commonwealth, a State or a Territory or another country’ provided that the advocacy is in furtherance or aiding in one or more of the 11 other charitable purposes.
A registered charity must not have a ‘disqualifying purpose’. The meaning of disqualifying purpose is set out in section 11 of the Charities Act, and includes ‘the purpose of promoting or opposing a political party or a candidate for political Office’.
However, it is not a disqualifying purpose to distribute information, or advance debate, about the policies of political parties or candidates for political office (such as by assessing, critiquing, comparing or ranking those policies). Therefore a registered charity may carry out activities permitted under the Charities Act that will come within the proposed definition of ‘political purpose’ in the Bill.
In addition to our concerns regarding a chilling effect on civil society, questions remain as to whether this framework of disclosures would be effective at increasing transparency over industry bodies and membership organisations that do not rely on donations, yet influence the public debate in a comparable way to third parties.
Undermining state-based electoral transparency laws
The Greens are deeply concerned that new, and not previously discussed, amendments, have the effect of ensuring that lax federal transparency and disclosure laws override more stringent state and territory laws.
What hypocrisy that a Bill that purports (yet fails) to restrict the influence of money in politics actively facilitates donors avoiding state restrictions on political donations.
Constitutional Law Professor Anne Twomey gave evidence to the committee hearing to this effect:
The reason that caps are placed on donations at the state level and some jurisdictions and the reason for banning particular types of donors was to ensure the integrity of the electoral system. [...] If a state has gone to the efforts of making that kind of protection for its electoral system and it's been upheld by the High Court, as indeed it has been in the case of New South Wales, then one would imagine that that sort of system should be retained in relation to the state level, unless a state parliament itself decides to repeal it. It's not really a matter for the Commonwealth to interfere in relation to those matters. Allowing a way of avoiding the system, simply by just telling property developers or whoever else, 'Don't put conditions on your donation, so that we can just happily use them as we like at the state level without having to comply with our own laws,' seems to me to be singularly inappropriate and potentially also unconstitutional.
In his submission to the inquiry, Professor Joo-Cheong Tham from Melbourne Law School lists the state- and territory-level regulation that would be bypassed:
caps on electoral expenditure and disclosure obligations under Part 14 of Electoral Act 1992 (ACT);
disclosure obligations; caps on political donations and caps on electoral
expenditure under Electoral Funding Act 2018 (NSW);
disclosure obligations and bans in relation to gifts of ‘foreign property’ under Part 11 of Electoral Act 1992 (Qld);
disclosure obligations and caps on political expenditure under Part 13A of the Electoral Act 1985 (SA); and
restrictions on the receipt of political donations under Part 12 of the Electoral Act 2002 (Vic).
Additionally, he warns that sections 302A and 314 will change the structure of incentives for political parties because the mechanism to bypass state regulation:
create[s] a dual system of regulation that is likely to benefit major players and disadvantage lesser ones. The immunity granted by these sections will apply to political actors that engage both in federal elections and state and territory elections. Political actors that exclusively focus on State and territory elections will not benefit from this immunity [from state bans on donations to political parties].
According to Professor Graeme Orr, the proposed Bill:
has overreached [...] by throwing up rules without any apparent prior consultation with all states, or any apparent careful consultation with all political parties. Even if consultation with the States cannot harmonise all policy goals, it is important to avoid unintended cracks opening up between Federal and State laws: cracks in which donations made hide or through which they may seep. Sections 302CA and 314B should not be proceeded with/ They should go back to the drawing board, via a COAG process.
A missed opportunity for genuine reform
As stated in the Australian Greens Minority Report to JSCEM’s first inquiry into this Bill, we believe that undue influence and perceived or actual corruption arises from unchecked private funding of election campaigns. This view is widely held by the general public and supported by previous statements from senior members of all sides of politics.
We maintain our view that the current laws on political donations are unfair and counterproductive to the democratic process. It is telling that the government’s Bill still does not seek to even make modest improvements to the transparency of donations to political parties.
Furthermore, while the Australian Greens support a ban on foreign donations, we remain concerned that this Bill does not effectively address the corrupting influence of political donations, either domestic or international. Significantly, the Majority Report on the first version of this Bill recommended that a legislative framework should cover industry associations and businesses - and not just charities and not-for-profits. We are not satisfied that the revised Bill deals with this recommendation effectively.
This Bill represents a lost opportunity to address the corrupting influence of money in politics, because it focuses on the charitable sector (which is driven by donations) without due regard to the role of member-organisations and for-profit industry lobby organisations, whose influence is not curbed by the proposed legislation.
In addition, this legislation leaves continues to leave the door wide open for millions of dollars from foreign sources to be donated to political parties and candidates - the very problem it purports to try and solve. In her submission to the first version of the Bill, Professor Twomey gave evidence to this effect:
Firstly, it doesn't achieve its purpose, which is to prevent or obstruct foreign interference in parliamentary elections. Foreign nationals can still, under this Bill, make enormous and influential donations to political parties if it is done through a permanent resident or a foreign owned corporation or subsidiary that is incorporated in Australia.
The Greens reiterate our calls for the following measures to truly clean up politics:
A ban on donations from for-profit organisations, or a very low donation cap on such donations.
A low cap on the amount of money individuals and not-for-profit organisations can donate each year to a political party or candidates, excluding bequests and MPs’ tithes to their party.
Modest caps on election expenditure by political parties, candidates and associated entities.
In relation to third parties, the government should undertake wide consultation to help determine a fair system of regulation for all groupings – charities, not for profits, industry associations, and businesses.
Require all donations of $1,000 and above to be disclose in close to real time on an easy-to search, public website.
Election expenditure–impact on smaller parties
Voters are most engaged with, and best served by a political process in which they have the opportunity to participate in a wide spectrum of political debate. The diversity of political debate in Australia should be reflected in our candidates, parties and representatives. Measures that discourage or disadvantage non-major party participants risks narrowing the political debate and alienating voters.
Additional grounds on which the Bill should be rejected is that it would change electoral funding to political parties from an automatic payment of an amount for each vote received, to one based on the amount of election expenditure incurred in the election period. These changes would advantage major parties, which easily reach their maximum public funding entitlement, often based on advertising expenditure alone. While the Australian Greens would have no difficulty in claiming back our electoral expenses, smaller parties under the proposed funding system will be comparatively worse off because they lack initial capital to participate as fully in the electoral process. The Greens oppose any moves that would discourage the entrance of new political parties in our democracy and entrench the dominance of the major parties.
Inadequate consultation period
The Greens echo the concerns expressed by many of the organisations and individuals who made submissions that there was an inadequate period for consultation, with the 64-page Explanatory Memorandum only made public 24 hours before submissions were due.
Inadequate implementation period
The government confirmed informally at the committee hearing that, if this Bill is passed, the government intends for this legislation to apply to the next federal election.
Civil society groups, including both charities and political parties, need time to adjust their administrative processes to bring them in line with regulatory changes resulting from any amendments to the Electoral Legislation Act. Likewise, the Australian Electoral Commission and the Australian Charities and Not-for-profit Commission would benefit from additional time to draft guidelines to educate civil society groups about their added regulatory obligations under the new legislation.
In order to promote good compliance with a new electoral financing framework, the commencement of the Bill should coincide with a new financial year. For this reason, the Greens recommend that if this legislation is passed, it should not apply to the immediate next federal election. Instead, it should be commence on the first 1 July after assent.
Conclusion
Despite relative improvements, concerns remain that this legislation will still diminish the ability of civil society to advocate in the public interest, creating a confusing, burdensome and restrictive regulatory environment that duplicates the existing framework under the Charities Act 2013, which already regulates the ‘political activities’ of the charity sector. The regulation in this Bill is uncalled for. It has been extensively criticised by civil society groups and charitable organisations for adding considerable amounts of red tape that serves no public interest benefit.
It is the Greens view that the government has attempted to exploit the public’s appetite for more transparency in Australia’s political system by using the ‘foreign donations ban’ to cloak an attack on its political enemies, as well as a mechanism for circumventing state-based transparency laws.
The Greens believe that this Bill will lead to significant amounts of confusion that will have a silencing effect on the genuine advocacy, education, awareness-raising or debate-stimulating activities of the charities and not-for-profit sector. Smaller groups who lack the resources to seek legal clarification will not risk non-compliance and will instead choose silence over advocacy.
The existing regulatory framework under the Charities Act is sufficient. There is no public interest benefit to the proposed added layer of regulation for the charitable sector, and questions remain about whether this framework of disclosures would be effective at increasing transparency over industry bodies and membership organisations that do not rely on donations yet influence the public debate in a comparable way to the third parties (including for-profit industry groups).
More generally, the Bill is a missed opportunity to overhaul Australian electoral laws to deliver a stronger democracy. Under the proposed Bill, businesses can continue to buy political influence, including through the use of international funding. This Bill purports to clamp down on foreign donations when in reality it attacks the charity sector, at the same time as it opens the door for more donations to flow into big political parties by circumventing state-based limitations in political donations from industries with a history of buying political influence for private profit.
I conclude by supporting recommendations 1-9 and 11 in the report from the Committee Chair, but note that they do not go far enough to address our concerns about the chilling effect of this legislation on civil society. The Greens want to see genuine reform through political donations reform, not additional burdens for the charitable sector and civil society.
Recommendation
That the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017 not be passed.
Senator Larissa Waters
Greens Senator for Queensland
12 October 2018