19 March 2020
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Dr Damon
Muller
Politics and Public Administration
Political donations for Australian federal
elections are regulated by Part XX of the Commonwealth
Electoral Act 1918 (the Act). Donors, political parties, associated
entities and political
campaigners are required to submit an annual return for each financial year
to the Australian Electoral Commission (AEC) detailing any donations they make
or receive above the disclosure threshold. The disclosure threshold is indexed
annually and is $14,000 for the 2019–20 financial year.
Annual returns covering each financial year are published by
the AEC on its Transparency Register
on the first business day of February in the following year. States and
territories generally have their own political finance regimes for state and
territory elections, which are discussed in detail in the Parliamentary Library
publication Election
funding and disclosure in Australian states and territories: a quick guide.
Under Part XX of the Act disclosure of any money received consisting
of amounts that are at or below the threshold is not required. While some
political parties voluntarily disclose some donations (‘gifts’ in the Act) that
are below the disclosure threshold (see below), this means that a proportion of
the income that Australian political parties use to fund their election
campaigns and operate comes from unknown sources. Funds which can be used in
election campaigns that come from undisclosed sources have been referred to as
‘dark
money’.
Undisclosed money is simply the difference between what a
party records as its total income in a financial year, and the sum of its
reported money received—donations and other receipts. This information is
readily available on the AEC Transparency Register.[1]
Both party returns and donor returns provide information
about money in politics. However these two sources are often difficult to
reconcile, with some donations only listed on one of the two sources, or
aggregated in different ways.
It is important to note that donations do not constitute the
entirety of political parties’ incomes. Political party returns also list
non-donation income received above the disclosure threshold as ‘other
receipts’, and can also receive public funding in respect of elections. The
‘other receipts’ include membership fees and income such as proceeds from asset
sales or returns on investments. In addition, as well as setting out income,
political party annual
returns also list total annual expenses and debts.
The extent to which political party finances should be
entirely open to the public is a matter of debate (parties may have commercial-in-confidence
arrangements with suppliers, for example), however there is a public interest
argument for knowing who
donates to political parties.
What are party funds used for?
Like most sizeable organisations, political parties have a
range of expenses such as operating costs (salaries, rent, office expenses and
so forth). A regular (and major) expense for political parties is the funding
of election campaigns. Under Commonwealth electoral law political parties are
not required to disclose their campaign spending, and because returns cover a
financial year and so are often not aligned with election periods, it is not
possible to determine party campaign spending from reported total expenditure.
As a result we do not know how much Australian federal election campaigns cost.
In contrast, most states and territories do require parties to reveal how much
they spend on state and territory elections, and in New South Wales, South
Australia and the Australian Capital Territory the amount they can spend is
capped.
Parties that wish to receive public election funding
(calculated at a specific
rate per vote received in respect of candidates who receive more than four
per cent of the vote) are required to submit a claim detailing election
spending—however the details of the claims are not public, only the final
amount that the AEC pays (parties can also receive public funding from state
electoral authorities). For the 2019 federal election parties and
candidates were paid a total of around $70 million in public funding, of
which around $27 million went to the Liberal Party (around 40 per cent) and $24
million went to the ALP (around 35 per cent). There is no public information on
how parties spend this money.
How much money is from undisclosed
sources?
The amount of money from undisclosed sources in political
party annual returns differs from year to year, although it is generally higher
in an election year (the red highlighted years in Figure 1). In 2018–19, the
most recent year for which data are available and the year which included the
2019 federal election, just under $115 million was undisclosed by political
parties—over one-quarter of total income ($434.8 million). The total amount
between 2006–07 (when the disclosure threshold was increased to $10,000) and
2018–19 is just over $909 million; the annual average is about $70 million
(data on the amounts is in Appendix A).[2]
The amount varies by political party. For 2018–19, for
example (see Table 1 below), the Liberal Party reported the largest amount at
$59.2 million of its total $165.2 million income (almost 36 per cent of total
income). While Labor and the Greens have stated that they report
donations of, respectively, over $1,000 and $1,500 or more, the two parties
still account for around $38 million between them—$27.6 million for Labor
(almost 22 per cent of total income) and $10 million for the Greens (49 per
cent of total income). Seventy-nine per cent of the total income of the One
Nation Party is unreported, the largest proportion of undisclosed money
relative to total income of all of the significant parties, suggesting that the
party possibly has a large number of small donors.
Figure
1: Total reported receipts by type (federal)
Note: For the purposes of this chart any money received from
the AEC (or a state or territory electoral commission where the party has
listed that as a receipt in their returns) has been classified as ‘public
funding’. Receipts are classified as ‘subscription’ in a small number of
returns, however this does not reflect standard present practice. Selected data
for the table is in Appendix A.
Source: Parliamentary Library analysis of AEC data.
Table 1: Reported and unreported income by party in
2018–19
| Party |
Total income ($) |
Disclosed ($) |
Undisclosed ($) |
Undisclosed (%) |
| Liberal Party |
165 274 107 |
106 006 985 |
59 267 122 |
35.86 |
| Australian Labor Party |
126 279 024 |
98 656 531 |
27 622 493 |
21.87 |
| Others |
103 706 739 |
94 044 491 |
9 662 248 |
9.32 |
| The Greens |
20 409 109 |
10 406 605 |
10 002 504 |
49.01 |
| The Nationals |
16 114 060 |
10 338 157 |
5 775 903 |
35.84 |
| One Nation |
3 023 689 |
632 780 |
2 390 909 |
79.07 |
| Total |
434 806 728 |
320 085 549 |
114 721 179 |
26.38 |
Source: Parliamentary Library analysis of AEC data.
The laws around disclosure of donations make it relatively
easy to donate an aggregate amount greater than the disclosure threshold to a
political party but not have that donation disclosed. The most straightforward
way to do this is for a donor to make separate donations at or below the
disclosure threshold to each of a party’s state and territory branches. For a
party with branches in each state and territory, this means a single donor
could donate a (maximum) total of $112,000 (eight x $14,000) without being
required to disclose the donations.
In addition, the provisions of the Act that relate to
political party annual returns require the party to declare any donation where
‘the sum of all amounts ... is more than the disclosure threshold’
(subsection 314AC(1)), but that ‘in calculating the sum, an amount that is
less than or equal to the disclosure threshold need not be counted’ (subsection
314AC(2)). So, for example, 25 individual donations of $10,000 in one year to
one party—$250,000 in aggregate—would not count as being above the disclosure
threshold, and would not need to be reported by the party. The requirement for
reporting by individual donors is more stringent as the Act requires that a
donor must report donations ‘totalling more than the disclosure threshold’
(section 305B). But if a donor to a party did not comply with this, and the
party concerned did not disclose the aggregate amount received from that donor
because it was not required to, the AEC would have no way of knowing about the
donor in order to pursue them for compliance.
How effective is the disclosure
threshold?
While the AEC’s donor
disclosure return form specifies the amount of the disclosure threshold for
the given year, a large number of donors elect to complete a return and list
donations that are well below the disclosure threshold. Donors have disclosed
donations of as
little as $1.
Since 2006–07, below-threshold donations to political
parties disclosed by donors have averaged $5.45 million per year (an average of
23 per cent per year of total disclosed donations) (see Table 2 below). The
2018–19 financial year appears to be an outlier due mainly to the unusually
large donations received by the United
Australia Party in the reporting period. As noted above, donors are
required to declare below-threshold donations if the total amount of their
donations exceeds the threshold, and most (although not all) of the disclosures
set out below are due to this requirement.
Table 2: Donor returns donations below the disclosure
threshold, 2006–19
| Financial Year |
Threshold amount
($) |
Below threshold
disclosed ($) |
Total disclosed
($) |
Below threshold
(%) |
| 2006-07 |
10 300 |
4 950 298 |
18 077 096 |
27.38 |
| 2007-08 |
10 500 |
5 891 279 |
26 484 088 |
22.24 |
| 2008-09 |
10 900 |
3 546 389 |
12 437 390 |
28.51 |
| 2009-10 |
11 200 |
3 603 430 |
13 367 801 |
26.96 |
| 2010-11 |
11 500 |
5 886 113 |
27 797 959 |
21.17 |
| 2011-12 |
11 900 |
3 660 553 |
12 929 886 |
28.31 |
| 2012-13 |
12 100 |
5 214 448 |
19 664 286 |
26.52 |
| 2013-14 |
12 400 |
7 021 860 |
58 539 100 |
12.00 |
| 2014-15 |
12 800 |
4 917 540 |
24 082 643 |
20.42 |
| 2015-16 |
13 000 |
8 580 588 |
31 041 252 |
27.64 |
| 2016-17 |
13 200 |
4 034 911 |
15 425 763 |
26.16 |
| 2017-18 |
13 500 |
5 629 735 |
19 242 277 |
29.26 |
| 2018-19 |
13 800 |
7 920 599 |
121 476 994 |
6.52 |
| Total |
|
70 857 743 |
400 566 535 |
17.68 |
Source: Parliamentary Library analysis of AEC data.
The $70.86 million in disclosed below-threshold donations
over the period 2006–19 (approaching 18 per cent of total donations disclosed
by donors in the same period) gives an indication of how much money enters the
system in this way.
An examination of the detailed donor returns also suggests
that some donors are declaring donations that political parties are more likely
to record as ‘other receipts’. For example, a number of donors have disclosed
donations for attendance at dinners. A party, for its return, might consider
that the money paid to attend a dinner does not constitute a donation as a meal
was provided in return, and hence records the money as an ‘other receipt’. In evidence
to the Parliament the AEC has stated that that Act is not clear on the
handling of these situations and that this has been a longstanding issue.
Conflicting and occasionally contradictory rules, both
within the federal disclosure regime and in the interaction of the federal rules
and state/territory rules, also serve to lessen the effect of the federal
disclosure threshold.
In a 2019 decision (Spence v. State of
Queensland) the High Court of Australia ruled that federal political
donations in Queensland were subject to Queensland’s political finance laws,
including its $1,000 disclosure threshold, and that all donations above the
$1,000 threshold must be disclosed under the Queensland donations disclosure
regime. The AEC Transparency Register currently lists 389 donations that have
been declared under the federal regime from returns from political parties
located in Queensland for the 2018–19 financial year, totalling some $3.4
million according to Library analysis. In contrast, the Electoral Commission of
Queensland’s donations register lists 2,745 donations that have been
declared under Queensland’s lower threshold disclosure regime for the same
period totalling $9.2 million. While some of these donations will be for state
purposes (and hence not required to be disclosed federally), given that there
was no Queensland state election in that period, some proportion will likely be
federal donations that were below the federal disclosure threshold and thus not
reported on federal returns.
The Spence decision leaves open the possibility that
other jurisdictions, almost all of which have much lower disclosure thresholds
than the federal scheme (see Table 3 below), could follow Queensland’s lead and
require federal donations to be disclosed under the state schemes also. This
would effectively circumvent the federal disclosure threshold, rendering it
arguably redundant. However, even in the absence of Queensland-like legislation
in the other jurisdictions, the significant discrepancies between the federal
and state/territory disclosure thresholds is likely to be a source of confusion
for donors.
Table 3: Donation disclosure
thresholds in Australian jurisdictions
|
Federal |
NSW |
Vic. |
SA(a) |
Qld |
Tas.(b) |
WA |
ACT |
NT |
| Gift disclosure threshold |
14 000 |
1 000 |
1 020 |
5 381 |
1 000 |
N/A |
2 500 |
1 000 |
1 500 |
| Disclosure threshold indexed? |
Yes |
No |
Yes |
Yes |
No |
N/A |
Yes |
No |
No |
Note: Values as of February 2020, or the most recent as
published by the relevant authority.
- Applies to political parties that have opted into the SA
public funding scheme (all of the major and well-known minor parties at the 2018
state election).
- Tasmania currently relies on the federal political finance
regime and does not have a separate state regime.
Source: Parliamentary Library analysis of electoral commission
websites.
Appendix A: Total party receipts by
type by year (2006–07 to 2018–19)
|
Financial Year
|
Donations Received
|
Other Receipts
|
Public Funding
|
Other/
unspecified(a)
|
Undisclosed
|
Total Receipts
|
|
2006-07
|
25 915 879
|
25 961 659
|
13 328 352
|
3 125 238
|
66 937 227
|
135 268 355
|
|
2007-08
|
45 770 653
|
53 805 207
|
51 055 041
|
3 676 900
|
60 695 790
|
215 003 591
|
|
2008-09
|
20 112 894
|
18 689 424
|
6 150 224
|
4 171 638
|
49 591 036
|
98 715 216
|
|
2009-10
|
16 334 826
|
27 865 588
|
2 101 014
|
217 165
|
45 198 206
|
91 716 799
|
|
2010-11
|
40 680 523
|
53 917 969
|
65 647 667
|
29 176
|
67 851 659
|
228 126 994
|
|
2011-12
|
12 618 718
|
42 673 640
|
17 135 920
|
6 002 192
|
51 985 016
|
130 415 486
|
|
2012-13
|
20 605 174
|
38 182 296
|
19 106 322
|
0
|
76 277 040
|
154 170 832
|
|
2013-14
|
64 893 639
|
66 679 857
|
57 897 291
|
612 799
|
88 794 590
|
278 878 176
|
|
2014-15
|
29 544 318
|
53 814 265
|
31 809 694
|
1 374 650
|
67 195 956
|
183 738 883
|
|
2015-16
|
32 519 727
|
54 589 702
|
11 073 669
|
0
|
91 176 638
|
189 359 736
|
|
2016-17
|
14 572 348
|
54 834 739
|
79 103 793
|
74 990
|
59 986 159
|
208 572 029
|
|
2017-18
|
17 816 426
|
46 316 532
|
21 211 041
|
4 200
|
68 773 111
|
154 121 310
|
|
2018-19
|
130 925 969
|
98 809 831
|
90 211 667
|
138 082
|
114 721 179
|
434 806 728
|
|
Total
|
472 311 094
|
636 140 709
|
465 831 695
|
19 427 030
|
909 183 607
|
2 502 894 135
|
- Includes receipts listed as ‘subscriptions’, present in a
small number of returns, and receipts that were declared but were unclassified.
Note: The undisclosed amount was calculated by subtracting the
sum of the disclosed items from the total disclosed receipts, and does not
account for double-counting of intra-party transfers that may be listed as
other receipts. This means that the table likely underestimates the total
undisclosed amount.
Source: Parliamentary Library analysis of AEC data.
[1].
This calculation is complicated by parties including transfers of money
between different branches of the party on their annual returns in a way that
is not straightforward to account for. This means that when the ‘other
receipts’ of the different party branches within a group are added together,
the amount is likely double-counting some of these transfers. So the
differences between total receipts and declared receipts for party groups
likely underestimates the total amount of undisclosed money.
[2].
The analysis in this paper is taken from data extracted from the AEC
Transparency Index on 4 February 2020. Any amendments to submitted returns may
lead to variation in the figures after that date.
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