Chapter 10 Other issues
Administrative body for funding and disclosure
10.1
A number of submitters raised the option of creating a separate
administrative body for the enforcement of the Commonwealth funding and
disclosure scheme. Some submitters argued that a discrete administrative body
should exist under the current framework and others proposed that in cases
where substantial changes are made to the funding and disclosure scheme there
is justification for a separately resourced administrative body for political
financing.
10.2
The arguments for separating funding and disclosure functions from the
AEC relate mainly to the fact that it is a specialist field and may benefit
from having discrete funding and subject matter experts, rather than being part
of a larger organisation.
10.3
The Australian Labor Party submitted that, particularly where
requirements beyond disclosure are in place:
...the clearest case for a separate entity exists around what
may become the new and more detailed areas of campaign finance and expenditure.[1]
10.4
The issue was also raised in the submission from GetUp who outlined
options for the form the separate agency could take:
n the national campaign
authority may form part of the AEC;
n the national campaign
authority may be a separate office within the AEC; or
n the national campaign
authority may be a completely separate body from the AEC.[2]
10.5
The Democratic Audit of Australia indicated its general support for the
separation of funding and disclosure to be dealt with by a single
administrative body, in concert with recommendations regarding harmonisation of
federal, state and territory jurisdictions.[3] In its submission to the
JSCEM inquiry into the conduct of the 2007 federal election, the Democratic
Audit of Australia also stated that each of the tasks undertaken by the AEC, in
particular the administration of the electoral roll, conduct of elections, and
the administration of funding and disclosure, all required a variety of different
skills and expertise. The Democratic Audit also highlighted the fact that some
jurisdictions, such as New Zealand, have three separate electoral bodies for
enrolment, elections and campaign finance and related matters.[4]
10.6
Domestically, the NSW Election Funding Authority is a separate
administrative body for the purpose of funding and disclosure. It administers
the political party registration, public funding, disclosure and financial
compliance aspects of the NSW legislation. There is some overlap between staff
and some services. The Election Funding Authority existed as a separate body
prior to the implementation of the revised regulatory system in that
jurisdiction.
10.7
The AEC, in its appearance before the previous committee for the
purposes of the Advisory Report on the Commonwealth Electoral Amendment
(Political Donations and Other Measures) Bill 2008 (2008 Advisory Report),
expressed its support for the notion of a dedicated office within the AEC,
stating that:
The current funding and disclosure unit is within the AEC and
they are not really involved in our other core business. So if we were
resourced to establish such a unit that would be quite possible from within the
AEC.[5]
10.8
The resources and powers of any administrative authority responsible for
monitoring and enforcing compliance with a political financing scheme are also
key elements of its success. It has been argued that the resources available
for compliance activities in this area dictate, at least to an extent, the
‘nature and extent of support that can be offered to encourage and assist
voluntary compliance’.[6]
10.9
The Commonwealth Electoral Amendment (Political Donations and Other
Measures) Bill 2010 proposed providing the AEC’s authorised officers with
powers to seek documents from a broader range of people than is currently the
case under the Commonwealth legislation.
Conclusion
10.10
If a move to increased regulation occurs at the Commonwealth level, the
separation of the funding and disclosure functions into a separate, specialist
body with discrete resourcing will need to be seriously considered to ensure
that the administering agency can meet the increased compliance and enforcement
demands of a more complex funding and disclosure system.
10.11
However, under the current system, with the proposed reforms as outlined
in this report, administrative efficiencies would be best achieved by leaving the
administration of the Commonwealth funding and disclosure system with the
Australian Electoral Commission. It is imperative that the body is adequately
resourced and have sufficient enforcement powers to meet the demands of an
expanded funding and disclosure system.
Recommendation 30 |
| 10.12 |
The committee recommends that the funding and disclosure
functions in the Commonwealth Electoral Act 1918 continue to be
exercised and administered by the Australian Electoral Commission, and that
the Australian Electoral Commission receive additional resources to carry out
these functions and exercise its enforcement powers. |
Internal rules for corporate donations
10.13
Another point for consideration is the internal rules for corporations
or other organisations making political donations, as donations can be made by
corporations and trade unions without the knowledge of members or shareholders
or without their explicit consent.
10.14
The first Electoral Reform Green Paper raised the issue of corporations,
and other organisations, needing to get shareholder or member approval before
donations to political parties can be made. The requirement currently applies
in the United Kingdom. For any political donations greater than £5 000 in a 12
month period, a resolution itemising the money to be donated must be passed by
shareholders before the political donation can be made. This resolution is
valid for four years.[7]
10.15
In the findings of the Parliamentary Joint Committee’s inquiry into the
Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure)
Act 2004 (CLERP 9) draft exposure Bill, that committee recommended ‘that
provisions be inserted in the Corporations Act that would require the annual
report of listed companies to include a discussion of the board’s policy on making
political donations’.[8]
10.16
However, the additional burden that would be placed on corporations in
having to organise meetings for approval of donations or alternative mechanisms
for approval by shareholders, could discourage them from making political contributions.
There is also the concern that if shareholder approval were required, the
matter of making a political donation would become incredibly invasive and
complicated, and that it would be very difficult to reach consensus on a single
beneficiary.[9]
10.17
There are a number of alternatives available to address the concerns in
respect of requiring shareholder approval of individual political donations. For
example, companies could be required to develop political donations policies,
which would need to be made available on their websites. In addition, company annual
general meetings could serve as an appropriate forum for shareholders to air
any grievances about company political donations or donations policies.[10]
Conclusion
10.18
There would be benefits in following the United Kingdom’s model of
requiring shareholder approval for political donations by companies. However, the
precise amendments to the Corporations Act (Cth) and the
Electoral Act necessary to facilitate this change would need to be determined,
as would the means for the administration of such a requirement.
10.19
Another approach that would arguably be less onerous would be for corporations,
unions and other organisations that make political donations, to make full
disclosure of their policy in this regard on their websites, in their annual
reports and other publically accessible mediums.
Daryl Melham MP
Chair
30 November 2011