Chapter 8 Compliance
8.1
Compliance and enforcement of political financing arrangements is
central to the effectiveness of the overall scheme. There are a number of
issues relating to compliance and enforcement in the context of political
financing. However, based on the evidence received for the inquiry, the
committee focussed its discussion on the need for compliance and enforcement
measures to complement the principles and design of the broader funding and
disclosure scheme; the need for effective mechanisms for prosecution; and the issues
to be considered if major reforms to the wider system were to occur. These
matters formed the basis for discussion in this chapter.
8.2
The importance of an effective enforcement and compliance scheme was
highlighted in the Electoral Reform Green Paper – Donations, Funding and
Expenditure (first Green Paper):
To achieve real change in political practice, electoral
reforms must be backed by an effective regulatory and enforcement regime,
including penalties that those involved in the political system will take
seriously, and which will penalise those involved in practices that breach
electoral regulations.[1]
8.3
The current funding and disclosure scheme at the Commonwealth level is based
on two elements. First, disclosure is designed with the threat of sanction
through voting and ultimately the electoral outcome, as its primary enforcement
strategy. The idea is that the electorate will not vote for a political party
or candidate that does not comply with laws designed to combat the potential
for undue influence. The second element is the enforcement of the scheme
through offences and imposing penalties.[2]
8.4
The current compliance and enforcement scheme operates on an ex post
facto basis, which involves seeking to punish non-compliance, rather than
compelling compliance at the time relevant actions are being undertaken.
8.5
It has been argued that the ‘lag’ in disclosure coupled with the minor
penalties that currently apply mean that the threat of punishment does not act
as an effective deterrent to non-compliance.[3] The underlying principles
of the scheme—disclosure backed up by penalties to deter a breach, with the
ultimate threat of sanction at the ballot box—are not supported by the design
of the scheme itself. That is, disclosure happens on an ex post facto
basis meaning that sanction from electors at the ballot box is not possible.
8.6
The Nationals argued that there is no need for a reform of the offences
and penalties attached to breaches of funding and disclosure laws, because
compliance levels are high and ‘deliberate breaches are rare’.[4]
However, for disclosure returns relating to the 2007-2008 financial year, the
AEC website shows 17 political parties as not having lodged a disclosure return
as at the deadline of 20 October 2008. A breach of law, whether deliberate or
through poor management, has technically occurred in each of these cases.[5]
8.7
Calls for reform in the area of enforcement and compliance of the
Commonwealth political financing regime can be divided into two categories. Firstly,
there is the option to make changes to improve the existing enforcement and
compliance regime, if the broader scheme retains its current focus on
transparency and accountability through disclosure. Such measures would include
changes to render the design of the scheme more conducive to the principles and
rationales that underpin it.
8.8
Secondly, there are the necessary changes to the compliance and
enforcement scheme to align with the goals and direction of a revised scheme
involving, for example, caps and bans. It would be important to ensure that such
changes complement the principles driving reform of the broader funding and
disclosure regime. That is, where a political financing regulatory system
requires that something ‘not’ be done, such as breaching a cap, the enforcement
measures would be best suited to ensuring that the particular action is not taken,
rather than punishing the behaviour if the action is undertaken.[6]
8.9
Consensus among key stakeholders for political financing is the best
foundation for compliance because the key actors will be committed to upholding
and adhering to the system.
Improving the current system
8.10
There are two immediate issues with the current Commonwealth enforcement
scheme that warrant consideration:
n the introduction of
administrative penalties to increase administrative efficacy and address issues
pertaining to low prosecution rates; and
n the strengthening of
penalties for those matters considered serious and/or involve a ‘wilful’ breach
of the law.
Administrative penalties
8.11
One way in which to improve the current system is to introduce
administrative penalties to operate alongside the current criminal sanctions.
8.12
Administrative penalties would involve the imposition by the
administering agency of sanctions for a breach of the relevant law without
having to involve courts or tribunals. In practical terms, this could mean that
the AEC could impose a penalty, for example, issuing a fine for a failure to
lodge a disclosure return.
8.13
Currently, offences against Part XX of the Commonwealth Electoral Act
1918 (Electoral Act) are all criminal offences. This means that if
prosecution action is pursued, a brief of evidence must be compiled by the Australian
Electoral Commission (AEC), which is then referred to the Commonwealth Director
of Public Prosecutions (CDPP). The CDPP undertakes an assessment to determine
whether there is sufficient evidence and public interest to prosecute.
8.14
The prosecution rate for failing to lodge a disclosure return under the
Electoral Act is relatively low. In its supplementary submission, the AEC noted
that while no convictions had been obtained in the past five years, the CDPP in
Queensland had found that there was sufficient evidence to pursue a case for
failure to lodge a disclosure return and was prepared to issue a summons to
commence proceedings. The AEC suggested that the low rate of prosecutions is
due in part to the relatively weak penalties for offences under Part XX
Electoral Act, which indicates to the CDPP that the offences are not serious,
and that there will be limited public interest in pursuing prosecution. [7]
8.15
A shift to administrative penalties has been proposed as a means by
which some of these challenges can be addressed. The AEC explained its
rationale for supporting a move to administrative penalties for some offences,
arguing that:
The addition of administrative penalties would assist the AEC
to enforce compliance requirements without the necessity of referring all
matters to the CDPP. It is expected that these types of administrative
penalties would result in more timely compliance with disclosure provisions
without creating an additional burden on the CDPP resources.[8]
8.16
The AEC suggested that offences under Part XX of the Electoral Act that
could better operate as administrative ones were offences that were
‘straightforward matters of fact’.[9] These could include:
n late lodgement of a
disclosure return;
n failing to lodge a
disclosure return; or
n lodgement of an
incomplete return without meeting the requirements of section 318 of the
Electoral Act.
8.17
The AEC could issue ‘on-the-spot’ administrative penalties, such as
fines, where occurrences of non-compliance with the laws were found.[10]
The refusal to comply with a notice issued under section 316 could include the
penalty fine accumulating for each day the offence is active.
8.18
The AEC submitted that a move to administrative penalties for
straightforward offences would be vital under a system requiring contemporaneous
or continuous disclosure. This should help ensure that just as disclosure
occurs continuously, issues or failures can also be properly addressed in a
timely and efficient manner.[11]
8.19
A risk in the context of a move to administrative penalties is the
appearance of a reduction of the ‘gravity’ of a breach of the law. However,
the AEC highlighted additional measures that could be taken to address this
concern. It stated that:
...as the imposition of an administrative penalty is an
administrative decision, it would be appropriate to have a review right for an
aggrieved person to challenge the AEC decision in this area. Second, the AEC
could be required to publish on the Internet and in the subsection 17(2) report
(on the operation of the Funding and Disclosure scheme to the Parliament) a
regular updated list of all penalties imposed for a breach of the reporting
requirements. Any such information to be added to this list could only occur
after any period to seek a review had expired.[12]
8.20
The first Green Paper outlined the different approaches that other
countries have taken to devising effective penalty regimes for campaign
financing. It stated that some nations have differentiated between ‘corrupt
practices’ which ‘warrant criminal sanctions‘, and ‘illegal practices’ which
can be addressed through other mechanisms.[13] Such an approach
received support in the First Report of the Joint Select Committee on Electoral
Reform (JSCER) in 1983, in which it recommended that there be no penalty for
inadvertent breaches of the law, but that severe penalties be attached to the
‘wilful filing of false or incorrect returns’.[14]
8.21
The first Green Paper provided Canada as an example of a jurisdiction
that has effectively revised its enforcement regime and indicated that the
Canadian system included:
...a range of administrative options which are based on the
proposition that most participants in the electoral process want to comply with
the law and will react to correct their behaviour to ensure conformity with the
law. Canada continues to have criminal penalties for serious offences; however
it has also established a range of ‘administrative incentives’ to encourage
compliance.[15]
8.22
Among the penalties under the Canadian scheme are the powers to
deregister a political party and liquidate its assets, where the party provides
false or misleading information or fails to provide a financial transactions
return or related documents.[16]
8.23
An additional consideration where a shift to administrative penalties
takes place is whether those who may be issued with an administrative penalty
should have a right of review of the decision, as raised by the AEC above. At
the federal level in Australia, certain decisions such as an authorised officer
serving a notice to require a person to produce documents or give evidence
regarding whether a particular entity is an associated entity, allow the person
issued with a notice the right to request a review.[17]
8.24
Certain decisions under Part XI of the Electoral Act, which deals with
the registration of political parties, also give a person ‘affected by’ the
decision the right to seek a review by the full Electoral Commission.[18]
However, matters that would be considered ‘straightforward matters of fact’,
such as failing to respond to a notice of review issued under section 138A do
not give rise to a right of review by the Electoral Commission.[19]
8.25
Currently, even if a right of review to an AEC decision is not
explicitly provided for, an individual may challenge the imposition of a
penalty by the AEC by seeking a review of the decision by the Federal Court
under section 5 of the Administrative Decisions (Judicial Review) Act 1977.
Strengthening current penalties
8.26
The accompanying argument in support of a move to administrative
penalties for straightforward matters is that the penalties for the other
offences under Part XX of the Electoral Act that are classified as more
‘serious’, such as lodgement of a false and misleading disclosure return,
should be strengthened. The AEC advised that one way to address concerns about
enforcement was to reconsider the severity of offences under Part XX of the
Electoral Act.[20]
8.27
The issue of the weak penalties for offences against the Commonwealth political
financing arrangements has long featured in debate in the area. The Advisory
report on the Commonwealth Electoral Amendment (Political Donations and Other
Measures) Bill 2008 (2008 Advisory Report) identified low penalties as a
problem that the bill was seeking to rectify. The previous committee that
examined the bill noted that:
Since 1983, the real value of a number of financial penalties
has declined over time, to a level that is less than 40 per cent of its value
in 1983. For example, the penalty attached to the failure to furnish a return
has remained at $1,000 in nominal terms but has declined to only $382 in real
terms in 2008.[21]
8.28
The fines of approximately $1 000 to $10 000 that serve as penalties for
most offences under section 315 and section 316 have remained at the same level
since the inception of the Commonwealth political financing scheme in 1984. The
disclosure threshold for the 2010-2011 financial year is $11 500, which means
that a wealthy person can donate amounts greater than this, and submit a return
that is ‘false or misleading in a material particular’ and be subject to a fine
of just $5 000 if convicted.[22] Thus the potential for
this to act as a deterrent for a donor determined to obtain access or exercise
influence through political donations is limited.
8.29
Coupled with a shift of offences that are straightforward matters of
fact into administrative offences, the strengthening of penalties for offences
against the funding and disclosure provisions in the Electoral Act may play a
key role in indicating to the CDPP the gravity with which such offences should
be viewed, and accordingly, potentially increase the chance of prosecution.
8.30
The AEC argued that the reason for low prosecution rates stemmed from
the relatively weak penalties for offences against Part XX indicate to the CDPP
that the offences are not very serious.[23] It stated:
...in comparison to other penalties, they are relatively low.
That then takes you into a consideration with the DPP that, against all of the
other matters that they are prosecuting, our matters appear relatively low
priority from the perspective of public interest and what can be served.[24]
8.31
It has been suggested that ‘electoral integrity depends not on the
willing compliance of the ethical, but on the enforced compliance of the
unethical’.[25] The first Green Paper
stated that:
Australia’s electoral laws provide the framework for free and
fair elections and protect the integrity of the electoral system and the faith
Australians have in the process of democratically electing their government.
Deliberate contravention of those laws strikes at the heart of democracy, and
by undermining the legitimacy of the elected government, undermines governance
itself. Such breaches must be acted on and penalised.[26]
8.32
There are three options for strengthening the penalties under the
Electoral Act for breaches of the funding and disclosure laws:
n increase the
financial penalties;
n include imprisonment
as a penalty for additional offences; or
n implement both
increased financial penalties and add terms of imprisonment as a penalty for
offences deemed more ‘serious’.
8.33
The Commonwealth Electoral Amendment (Political Donations and Other
Measures) Bill 2010 (the 2010 bill) seeks to implement harsher penalties in
respect of offences under the Commonwealth political financing regime relating
to claims for election funding. In addition, the bill aims to strengthen
penalties in relation to:
n failure to furnish a
return;
n furnishing an
incomplete return;
n failure to retain
records;
n lodging a claim or return
that is known to be false or misleading in a material particular;
n providing information
to another that is false or misleading in a material particular in relation to
the making a claim or the furnishing of a return; and
n failure or refusal to
comply with notices relating to AEC‐authorised
investigations and knowingly giving false or misleading evidence required for
such investigations.[27]
8.34
The United States has taken the approach of dividing offences against
campaign finance laws into offences committed by ‘mistake’ or unintentionally,
and purposeful breaches of the law. Offences committed by mistake are handled
administratively, while offences committed with intent can be pursued through
criminal prosecution.[28]
8.35
The 2010 bill proposes to remove the status of offences under the
funding and disclosure provisions as strict liability ones, which means an
intention element will need to be proven.
Conclusion
8.36
The low penalties for offences relating to the funding and disclosure
regime, coupled with the Prosecution Policy of the Commonwealth Director of
Public Prosecutions which requires consideration of the public interest in
pursuing prosecution, have made it difficult to obtain criminal conviction for
breaches of the funding and disclosure provisions in the Electoral Act.
8.37
International examples provide some guidance on the way in which
dividing the administrative penalties and criminal penalties can be done. Greater
efficiencies in enforcement can be achieved if some offences that constitute
‘straightforward matters of fact’ are subject to administrative penalties in a
system of contemporaneous disclosure.
8.38
The committee supports a shift to administrative penalties for certain
more straightforward offences. The offences that could reasonably have
administrative penalties apply are:
n failure to lodge a disclosure
return by the due date (section 315(1));
n lodging an incomplete
return without complying with section 318 (section 315(2)); and
n refusal to comply
with a notice issued under section 316 (section 316(5)).
Recommendation 26 |
| 8.39 |
The committee recommends that the Commonwealth Electoral
Act 1918 be amended, as necessary, to make offences classified as
‘straightforward matters of fact’ subject to administrative penalties issued
by the Australian Electoral Commission. The issuance of an administrative
penalty should be accompanied by a mechanism for internal review. |
8.40
The committee supports the measures in the Commonwealth Electoral
Amendment (Political Donations and Other Measures) Bill 2010 that seek to
implement harsher penalties in relation to offences against Part XX of the
Electoral Act. The implementation of harsher penalties should act as a
deterrent to breaching the Commonwealth funding and disclosure laws, and apply
to the offences classified as more ‘serious’ breaches.
Recommendation 27 |
| 8.41 |
The committee recommends that the penalties in relation to
offences that are classified as more ‘serious’ should be strengthened along
the lines proposed in the Commonwealth Electoral Amendment (Political
Donations and Other Measures) Bill 2010. |
Compliance review powers
8.42
The AEC conducts compliance reviews of federal registered political
parties, their state branches and associated entities under the power conferred
in section 316(2A) of the (Electoral Act). The purpose of these reviews is to
assess each political party and associated entity’s adherence to the disclosure
laws. Every political party and its associated entities are generally reviewed once
in a parliamentary cycle. The AEC issues a report on its findings following the
compliance review to the political party agent or associated entity’s financial
controller, and if any problems are identified, the AEC can request that an
amendment be submitted, or that evidence be provided refuting the AEC’s
findings.[29]
8.43
Currently the AEC does not have any power to conduct compliance reviews
of candidates and Senate groups. Given that most endorsed candidates incur
expenditure and receive donations through the political party itself, prima
facie, the value of conferring the AEC with this power is limited.
8.44
The AEC is also missing the power to conduct reviews of elected members.
In fact, elected members, including Independents do not have disclosure
requirements and the trend in the Electoral Act has generally been to exempt
Independent members (following the end of their candidacy) from disclosure. In NSW
legislation the inspection powers extend to certain documents relating to
elected members, and accordingly, a matter for broader consideration is whether
there should also be a trend in this direction at the Commonwealth level.
8.45
Given the absence of regulation regarding Independent members once they
are elected, in some circumstances there may be value in being able to conduct
a compliance review of an individual candidate or Senate group, including
Independents, particularly where large amounts of money are in play.
8.46
The NSW jurisdiction provides inspectors under its legislation with the
power to inspect the books of candidates and groups. Section 110(2) of the NSW
Election Funding, Expenditure and Disclosures Act 1981 provides
‘inspectors’ under the legislation to inspect or take extracts of any bankers
book kept by or on behalf of and to the extent they relate to a party, elected
member, group or candidate or agent for any of these, and includes a former
party, elected member, group, candidate or agent.
8.47
Inspectors can ‘request’ that documents are produced and make
examinations.[30] There are financial
penalties for any person that refuses or intentionally delays admission of an
inspector, intentionally obstructs an inspector, or fails to comply with a
request made by an inspector.[31] This is in the context
of a more complex system.
Conclusion
8.48
The absence of a power for the Australian Electoral Commission to
conduct compliance reviews on candidates and Senate groups is contrary to the
principles of transparency and accountability on which the Commonwealth
political financing regime was built.
8.49
As most significant gifts and expenditure by endorsed candidates occurs
through the political party, the provision of a broad power to conduct
compliance reviews of all candidates and Senate groups may not be an effective
solution. However, there is merit in providing the AEC with the power to
conduct compliance reviews of candidates and Senate groups where there are
receipts of greater than a prescribed amount. This would then cover
Independents, Senate groups and candidates. The figure could be in line with
that which applies to donors, $25 000.
Recommendation 28 |
| 8.50 |
The committee recommends that the Commonwealth Electoral
Act 1918 be amended, as necessary, to provide the Australian Electoral
Commission with the power to conduct compliance reviews and serve notices on
candidates and Senate groups, in addition to federal registered political
parties, their state branches and associated entities. |
8.51
The compliance review function is an important mechanism to help ensure
that those involved in the political and electoral processes are meeting their
disclosure and reporting obligations. To enhance the transparency and
accountability of this process, the Australian Electoral Commission should make
all compliance reviews and details of final determinations available on its
website.
Recommendation 29 |
| 8.52 |
The committee recommends that the Commonwealth Electoral
Act 1918 be amended, as necessary, to require the Australian Electoral
Commission to make available on its website compliance review reports and details
of final determinations on reviews. |
Further reform options
Challenges
8.53
The AEC indicated in its submission that the current ex post facto approach
to punishing non-compliance with the Commonwealth political financing scheme
would not be effective if legislative changes were made which involved caps and
bans on donations from certain sources.[32] For example, a breach
of an expenditure cap or acceptance of an illegal donation would only become
evident after votes had already been cast.
8.54
Due to the current delay in relevant disclosure—political party returns
that will cover the period in which the 2010 federal election was held will
only be released to the public in February 2012—a breach of an expenditure cap
or acceptance of an illegal donation would only be evident well after votes had
already been cast if this disclosure system was maintained with such a scheme. The
AEC explained the issue in its submission, stating that:
The current approach under Part XX of the Electoral Act
relies on identifying, investigating and then prosecuting to enforce penalties
for offences committed. It is a traditional approach of punishing non-compliance
rather than contemporaneously enforcing compliance. This essentially post-event
strategy of enforcement through a penalty regime is perhaps best targeted at
compliance behaviour that requires something to be done (i.e. make disclosures)
rather than behaviour that requires something not be done (i.e. not exceed
donation or expenditure caps).[33]
8.55
The AEC argued that if a shift to a system of caps and bans was to take
place, then the need for the implementation of a contemporaneous reporting
requirement and an IT system to facilitate the administration of such a scheme
would be necessary. The AEC submitted that:
...the accountability imposed by financial disclosures can
ultimately only be exercised at the ballot box. To achieve this goal
necessitates material disclosures being made public in a timely fashion. In an
election campaign, this would require something as close to contemporaneous
disclosure as practicable. The only means that this could be achieved [sic]
would be for all disclosures to be made via an online lodgement system that
then would allow the AEC to release those disclosures without delay. (A continuation
of allowing disclosures to be lodged in paper format necessitates the AEC
manually data-entering that information, which could take many days.)[34]
8.56
In addition, the AEC highlighted the need for an effective enforcement
scheme to include penalties that target the motivation for the crime. For
example, the motivation for spending more than is allowed under an expenditure
cap is to win the seat in which the cap is exceeded. The AEC noted that where
the penalty is a fine, a wealthy person or group that is able to absorb the
cost can easily breach expenditure caps that act as a limitation to other
groups.[35] A more effective penalty
could be to prevent the person that breaches the cap from taking up their seat
in Parliament, as is currently applied in Canada. The AEC submitted that:
...presumably a candidate’s
motivation to spend above an expenditure cap would usually be to win a seat. If
the penalty included action that prevented or limited the ability of the
candidate to occupy that seat in the Parliament, then breaking the expenditure
cap ultimately would not deliver the candidate the reward of sitting in
Parliament and so would make overspending far riskier, and therefore a much
less appealing strategy.[36]
8.57
The Australian Greens also expressed support for targeting motivations
for breaches of funding and disclosure laws. However, the AEC noted that while
devising penalties that target the motivation for the crime is relatively
simple where political parties are concerned, the development of equally
effective penalties for offences by third parties may prove more difficult,
primarily because the motivation for each third party participating in the
political arena or breaching funding and disclosure laws is more difficult to
pinpoint. The AEC submitted that:
Not everyone, however, will have a motivation that can be
addressed in such a direct manner. Third parties particularly will fall into
such a category, as they are not personally contesting an election and the
outcome they are seeking is not always so readily identifiable or tangible.[37]
8.58
However, in practice an ex post facto approach to disclosure and
compliance could result in such penalties not serving their purpose. In Canada,
a case has been pending in relation to the reimbursement of election expenses
by political parties and candidates since 2006. While appeals were progressing,
the relevant members continued to sit in their seats in the Canadian parliament.
A further election was held due to ‘deadlocking’ of various committees on the
issue.[38]
8.59
Accordingly, the development of appropriate and effective penalties
within a system involving increased regulation presents significant difficulties.
The Canadian model discussed above provides some guidance, but a number of
issues need to be addressed to create an enforcement and compliance scheme that
is truly effective in an increased regulatory context.
8.60
In relation to the compliance and enforcement scheme in practice under
the NSW system, the AEC stated:
There is little by way of new or innovative compliance
strategies in New South Wales or Queensland. They are still largely dependent
upon a penalty-and-offence regime of punishing noncompliance after the
event...There is little in either of those two pieces of legislation that seeks
to enforce compliance or compel compliance at the time. It is waiting to
investigate noncompliance and prosecute offences after the event.[39]
8.61
The NSW regime also employs a mechanism known as ‘compliance
agreements’. Section 110B of the Election Funding, Expenditure and
Disclosures Act 1981 provides the Election Funding Authority with the
discretion to enter agreements with political parties to remedy non-compliance
with the legislation or ensuring compliance with the legislation.
8.62
However the penalty for breaching a cap is still a fine, with false and
misleading information offences carrying the potential for 12 months
imprisonment. Disclosure still takes place after the electoral event. As these
changes have only been in effect for approximately one year, it is too soon to
determine what issues may have arisen.
Proactive enforcement
8.63
Where a move to a system involving caps and bans may occur, consideration
could be given to a complete shift in approaches to penalties, compliance and
enforcement in the context of political financing to proactive enforcement.
Proactive enforcement models in the area of political financing can involve the
completion of certain ‘checks’ to ensure a cap has not been reached or exceeded
or that the legislation is not being breached before, for example, expenditure
can be incurred. Such models have been described as a ‘solution of speed bumps
rather than speed cameras’.[40]
8.64
If an increased regulatory scheme for political financing requires, for
example, a cap not to be breached, the mechanisms for enforcement must be
designed to ensure that action cannot be carried out.
8.65
In a paper prepared for the purposes of the Challenges of Electoral
Democracy Workshop held at the University of Melbourne Law School in July 2011,
Mr Brad Edgman, Director of financial compliance in the AEC’s Funding and
Disclosure section provided an example of the way in which such a model could
operate:
Registration of third parties
could be enlisted as a tool in enforcing compliance with campaign expenditure
caps. This would require media outlets to first verify that an entity is
registered to place advertisements (i.e. incur expenditure above a threshold)
and that their cumulative spend remains under the cap at the point it is to be
incurred. This would require checking registered details via a website, which
could extend to who is authorised to incur expenditure on behalf of the third
party, and to input the value of the advertising (through a secure logon issued
to the media outlet). Only if these conditions are met should the media outlet
be legally entitled to run/place the advertisement. Penalties should apply to
media outlets that do not abide by these procedures.[41]
8.66
In its submission, the AEC acknowledged that such models of enforcement
could be perceived as overly intrusive or bureaucratic, and as potentially
impeding the freedom of political communication to an unnecessary and
unwarranted extent, so far as it applies to third parties and political
parties. [42]
It has also been argued that there is a need to balance the delivery of an
effective solution and placing restrictions on participants in the political
process.[43]
8.67
Proactive enforcement necessarily requires the consideration of measures
to ensure laws are not broken as an integral part of any model of political
financing regulation,[44] rather than as a matter
to be dealt with once the rest of the scheme has already been designed. The AEC
noted in relation to the reforms recently implemented in NSW and Queensland
that this approach to enforcement had not been taken, stating that:
...with these new schemes... the outcomes they seek to
achieve are all premised on full compliance...There is little by way of new or
innovative compliance strategies... They are still largely dependent upon a
penalty-and-offence regime of punishing noncompliance after the event. With
donation and expenditure caps in particular, when trying to level the playing
field and keep the relativities between the players, [third parties and other
participants] become players within the integrity of the election outcome
itself. There is little in either of those two pieces of legislation that
seeks to enforce compliance or compel compliance at the time.[45]
Conclusion
8.68
Compliance and enforcement mechanisms play an important role in the
success of any regulatory framework for political financing.
8.69
If significant changes to the funding arrangements are to occur at the
Commonwealth level, a complete overhaul of the enforcement scheme would also
need to occur. However, a substantial reform of political financing
arrangements presents significant challenges, particularly where third parties
are concerned. The administering authority having more options for addressing
non-compliance, rather than simply punishing non-compliance, would better
support the aims of transparency and accountability of the funding and
disclosure system.
8.70
The committee believes that proactive enforcement mechanisms are likely to
be an effective measure in a system with increased regulation of the activities
of political actors. However, it is important to strike an effective and
workable balance between competing factors, and for the proactive enforcement
scheme to avoid being overly bureaucratic while also meeting its aims.
8.71
Thorough investigation, consultation with experts and planning are
essential if proactive enforcement mechanisms are to be pursued.