1.1
The Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Act 2018 (EFDR Act) amended the Commonwealth Electoral Act 1918 (Electoral Act) to:
require key non-party political actors to report data on their campaign activity, including greater transparency for political campaigners who play a major role in elections;
prohibit foreign donations, including from foreign governments and state-owned enterprises, being used to finance public debate;
clarify that spending solely on issue advocacy is not treated as electoral expenditure when that spending is not aimed at influencing voting in a federal election;
require donors of amounts more than $1,000 to affirm, in writing, to the recipient that they are not a foreign donor and require the recipient to check evidence that the donor is not foreign where they give above the disclosure threshold;
require non-compliant donations to be returned within six weeks, or transferred to the Commonwealth to avoid penalty (donations that are from foreigners, or for which the origin cannot be established satisfactorily as from a non-foreign source);
prohibit other regulated political actors from using donations from foreign sources to fund political expenditure;
limit public election funding to demonstrated electoral spending, so that public funding is used to support election debate but not to generate a political profit;
clarify the overlap of state and Commonwealth disclosure regimes, to ensure that federal law only regulates donations for federal elections, and state and territory law regulates donations for elections within their respective jurisdictions; and
modernise the enforcement and compliance regime for political finance to simplify red tape and make penalties more proportionate to the size of any breaches.
1.2
The EFDR Act was introduced in the context of heightened concerns around foreign interference in elections around the world and in the Australian political system. The second interim report on the inquiry into the conduct of the 2016 federal election examined the issue of foreign donations in depth, recommending:
… a prohibition on donations from foreign citizens and foreign entities to Australian registered political parties, associated entities and third parties.
1.3
Despite broad community consensus on the principle of prohibiting foreign donations, the EFDR Act generated significant discussion about how these restrictions might inadvertently constrain valuable political advocacy.
1.4
The Chair highlighted the review of the EFDR Act as an opportunity to examine the operation of the amendments, particularly their impact on charitable issue-based advocacy and foreign donations.
Legislative history and previous inquiries
1.5
In December 2017 the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2018 (EFDR Bill) was introduced to the 45th Parliament and, after the second reading, immediately referred to the Joint Standing Committee on Electoral Matters (JSCEM) for inquiry. The first advisory report on the EFDR Bill was issued on 9 April 2018; it contained fifteen recommendations relating to the Bill:
revising the definition of ‘political expenditure’ so as to not restrict apolitical, issues-based advocacy;
streamlining the various registration requirements for third-party and political campaigners through the establishment of a single Transparency Register;
defining ‘non-allowable’ donors and obligations surrounding their donations;
removing the aggregation of donations and replacing these with anti-avoidance measures; and
establishing a minimum threshold for requiring substantiation of public funding claims.
1.6
The Government considered these recommendations and subsequently proposed amendments to the Bill, which were referred to the JSCEM to consider whether the recommendations had been satisfactorily addressed.
1.7
The second advisory report on the EFDR Bill was released on 15 October 2018, stating that the amended Bill had addressed recommendations made in the first advisory report, and indeed contained new provisions which went ‘beyond what was anticipated by the Committee’. An additional 12 recommendations were made regarding the EFDR Bill:
not requiring the disclosure of donations to political campaigners which are also registered charities, where none of that donation is used on electoral expenditure;
redrafting the fault element of the amendments so that the offence requires a recipient to have actual knowledge that a donor is non-allowable, as well as a minimum threshold of $100;
removing the requirement to disclose the political affiliation of senior staff on the Transparency Register; and
ensuring that Commonwealth laws do not apply to donations directed towards non-federal campaigns.
1.8
On 30 October 2018 the Government circulated revised amendments to address the further recommendations contained in the second advisory report. The amended Bill was passed in the Senate on 15 November 2018 with bipartisan support, passed the House of Representatives on 27 November 2018 and received Royal Assent on 30 November 2018.
1.9
In its response to both advisory reports, released 14 November 2018, the Government flagged its intention to refer a review of the Bill to the JSCEM following the next federal election. The purpose of that undertaking was to ensure that there were no adverse or unforeseen consequences from the amendments, after they had been tested in operation through an electoral event.
Referral and conduct of the inquiry
1.10
On 6 December 2018, on a motion moved on behalf of the former Minister for Finance, Senator the Hon Mathias Cormann, the Senate referred the review of the operation of the EFDR amendments to the JSCEM.
1.11
Under the terms of this Government-sponsored motion the JSCEM was to undertake a review on the second anniversary of the Royal Assent and report within 6 months of receiving the reference.
1.12
The Minister for Finance and Leader of the Government in the Senate wrote to the Chair to commence the review on 30 November 2020, the second anniversary for the Royal Assent of the amendment.
1.13
The Committee adopted the review on that day and called for submissions by 29 January 2021. Submitters to the previous inquiries on the Bill were invited to submit to the review.
1.14
The Committee received 64 submissions from a range of organisations including State/Territory Government departments, advocacy groups, academics and concerned citizens (Appendix A). The Committee also heard evidence from organisations and individuals at a public hearing held via teleconference (Appendix B).
1.15
The Committee thanks those individuals and organisations who contributed to the inquiry.
Structure of the Report
1.16
This chapter examines the operation of the EFDR Act’s amendments; whether the changes have affected charities and civil society organisations; the proposal to lower the threshold for political campaigners; the current donation disclosure regime; and other reforms put to the Committee as part of this inquiry.
Operation of the Electoral Funding and Disclosure Reform Act amendments
1.17
The Australian Electoral Commission (AEC) in its submission provided an overview of the operation of the EFDR Act’s following amendments during the 2019 Federal election including those related to the Transparency Register; election funding; political campaigners; prosecution for non-lodgement of disclosure returns; and foreign donations.
Transparency register
1.18
The JSCEM, in its Advisory report on the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017 (Advisory Report), recommended establishing a publicly available Transparency Register designed to introduce greater simplicity and transparency:
In line with the principle of introducing greater simplicity into the Act, the Committee is proposing that, instead of the proposed ‘campaigner’ registration categories, a single general transparency register be established for all entities expending more than the disclosure threshold on activities undertaken to change voter intention as defined under an amended definition of ‘political purpose’.
1.19
Established on 1 December 2018, the Transparency Register ‘is a single access point for information about political parties, candidates, Senate groups, political campaigners, associated entities, third parties and donors registered with or recognised by the AEC.’
1.20
Since its establishment, information on the Transparency Register has been downloaded 8,176 times in 2019 and 4,593 times in 2020. For the 2019 Federal election the AEC published candidate, Senate group and donor 2019 federal election returns on the Transparency Register.
1.21
At a public hearing, the AEC commented on some discrepancies on how some donations were being recorded in the Transparency Register noting that there are a number of reasons discrepancies might occur such as:
the miscategorisation of the donation;
the donor genuinely thinks they're donating to a particular entity but actually is donating to a state branch of a party rather than the party;
the subset of the corporation or a different branch of the organisation records a donation that may be recorded by another branch;
the miscategorisation of a gift;
a difference in the legislation where party has to report every receipt above the threshold only, whereas a donor has to accumulate their donations given over a year to a particular party.
1.22
The AEC added that they have a process in place to ascertain the reason for any discrepancies it finds and amend the Transparency Register to reflect the accurate record:
The general process is that we will write to the relevant party, and to the donor, to establish the facts behind a particular amount. And, if an amendment is required, amendments are lodged and available on the transparency register.
Election Funding
1.23
The Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017 (the Bill) contained amendments that were designed to improve the public election funding regime. The then Minister for Finance, Senator the Hon. Mathias Cormann, in his second reading speech stated:
Public election funding is payable in relation to any candidate who received more than four percent of the total first preference votes cast in an election. While this qualification requirement remains unchanged, the bill will limit public election funding to demonstrated electoral spending, which will prevent political actors from profiteering and achieving private gain by standing candidates.
1.24
The revised election funding mechanism was initially implemented during the 2019 Federal election. The AEC stated that the changes necessitated the design of a new election funding process for the 2019 federal election (and future elections) to facilitate the:
Payment of the automatic payment amount to eligible political parties, candidates and Senate groups as soon as practicable after 20 days after polling day
Lodgement of a claim for election funding greater than the automatic payment
Assessment, determination and payment of a claim within 20 days of receipt by the AEC
Review of election funding claims post payment.
1.25
The AEC added that it had made 58 automatic payments (related to the first $10,000 of entitlement, indexed), and assessed, determined and paid 51 claims within the statutory timeframes. They commented that they also undertook a review of all the claims which identified ‘three claims contained items that did not meet the criteria’ and ‘areas where the claim form or guidance material could be clarified or improved’. The AEC indicated that they would be implementing the changes prior to the next federal election.
Political Campaigner
1.26
The Bill also proposed a new category of regulated political organisation – to be called a ‘political campaigner’. In his second reading speech, the then Minister for Finance noted the increased role of third party campaign groups, particularly during times of elections, which necessitated the introduction of the new category:
In recognition of the prominent role that third party campaign groups play in public debate and their growing influence in elections, a new category of political campaigners who incur significant political expenditure (such as those who spend more than $100,000 in a financial year) will have disclosure obligations in-line with other prominent political actors, such as political parties. The creation of this new ‘political campaigner’ category enables significant political actors to be subject to greater transparency, befitting their significant expenditure, while providing less onerous compliance measures for smaller third party campaigners.
1.27
In its Advisory Report the JSCEM commented that the $100,000 threshold for Political Campaigners should be re-evaluated:
Reporting obligations should be proportionate to expenditure levels, so those third‐party campaigners with lower expenditure levels, including one‐off campaigns, are not subject to the same obligations as political campaigners with significant expenditure and greater influence on electoral outcomes.
1.28
The JSCEM recommended that the Government:
… consider setting expenditure thresholds for triggering increased reporting obligations under the proposed Transparency Register be set at a level that could reasonably be expected to have a significant impact on voter behaviour and that these obligations be proportionate to levels of expenditure.
1.29
As a result of the JSCEM’s recommendation, the Bill was revised by Government amendment so that the threshold was increased to half a million dollars:
… threshold for Political Campaigners is increased to cover those who incur electoral expenditure of $500,000 or more in the current or past three financial years (or where they spend more than $100,000 on electoral expenditure and electoral expenditure was at least two-thirds of revenue in the previous year).
1.30
In December 2018, the AEC undertook a process to ‘assist entities in identifying whether they were political campaigners’:
… the AEC wrote to all stakeholders that had previously disclosed electoral expenditure in a third party disclosure return to advise of the new legislative requirements. A Financial Disclosure Guide for Political Campaigners was also made available on the AEC website.
1.31
During the 2019 Federal election, the AEC identified potential political campaigners through monitoring ‘the media or other public channels such as social media for entities that appeared to be incurring large amounts of electoral expenditure in order to inform any such entities of their potential obligation to register as a political campaigner.’
1.32
The AEC highlighted that ‘during the 2018-19 financial year, there were 24 political campaigners registered with the AEC.’ At the tabling of this report, there are 17 registered political campaigners.
Foreign donations
1.33
With the intended aim of keeping foreign money out of Australian elections the EFDR Act introduced a number of requirements focussed on keeping foreign money out of Australian elections including to:
prohibit the giving and knowing receipt of all gifts from foreign donors, where the donor intends the gift to be used for electoral expenditure and apply penalties to donors who make prohibited gifts or false or misleading statements to recipients;
require donors to affirm to political campaigners, political parties and candidates that they are not foreign for gifts between $1,000 and the disclosure threshold ($13,800 in 2018-19), for instance a check box on a donation form; and
require all covered recipients to verify that donors are not foreign for gifts above the disclosure threshold ($13,800) (a menu of alternative forms of proof is listed, to help recipients check a donor’s status).
1.34
In its submission the AEC noted that for the ‘2019 federal election, political parties, candidates, Senate groups and political campaigners were required to have processes in place to ensure donations were not received from foreign donors.’
1.35
As part of their compliance regime, the AEC advised that it had taken a number of actions to ensure that donations are not received from foreign donors including:
verifying proof of Australian citizenship from individuals that donate $1,000 or more;
review of bank statement transactions for foreign currency receipts; and
checking the addresses of donors disclosed in disclosure returns to ensure that any donor with an overseas addresses are Australian citizens with independent checking of the electoral roll or other appropriate sources.
1.36
At a public hearing the AEC provided an update on several candidates who the AEC initiated legal action against for non-compliance in 2019. Nonlodgment of electoral returns is a serious issue for several reasons, including the fact that this makes it harder to identify foreign donors::
Initially there were 11 candidates from the 2019 federal election who we took follow-up action in relation to. Six of those provided their annual returns, so we commenced civil action against the remaining five. Three of those candidates have subsequently put in their election returns. They've also given enforceable undertakings to the AEC in relation to complying with the act if they ever stand again as candidates. Those enforceable undertakings have been published on the Transparency Register, so there remain just two candidates from the 2019 election who we're following up with in court at the moment.
Definitions
1.37
As noted above, the EFDR Act introduced a new category – political campaigner. Some submitters from not-for-profits and civil society organisations expressed concern that the definition could be causing their organisations reputational harm. Many of those arguments re-explored issues covered in the prior inquiry and which had already been addressed in subsequent JSCEM recommendations and amendments to the Bill.
1.38
Conversely, many of these organisations were supportive of the change to the definition of electoral matter. Those definitions previously addressed some boundary issues between conduct that involves mere issue advocacy, versus campaign activity that seeks to influence the outcome of an election. Their views are explored in this section.
Political campaigner
1.39
Mr Ted Wziontek, Non Executive Director for Results International Australia (RIA), called for the ‘definition of ‘political campaigner’ to distinguish between advocacy for the purpose of raising public awareness about an issue and the advocacy for the dominant purpose of influencing votes in an election.’
1.40
Hands Off Our Charities (HOOC) and the Australian Religious Response to Climate Change (ARRCC) held the view that ‘the term ‘political campaigner’ wrongly conflates public interest advocacy by independent, non-partisan groups with 'political campaigning’.
1.41
HOOC highlighted that some charities feared being labelled a political campaigner as it would put their charitable status at risk:
By calling large third parties (those that incur more that $500,000 in electoral expenditure) “political campaigners”, the Act gives the false impression that large third parties are inherently political organisations. Some charities have reported fearing becoming a political campaigner due to the public perception of a charity having this status and the perceived risk to their charitable status. This is an unfortunate consequence of the Act as the impact is to silence important community voices around election debates.
1.42
HOOC in particular suggested that the new definition would add greater consistency with other terminology used in the Electoral Act:
The alliance recognises the benefit of having a distinct category with more extensive regulatory obligations for larger third party spenders, however the category would be better served by removing the misleading name of ‘political campaigner’ and replacing it with ‘large third party’. This would be consistent with other terminology used in the Electoral Act and would better reflect the role of such organisations in election debates.
1.43
The Australian Council of Social Service (ACOSS) commented that renaming political campaigner to large third party would better reflect the role of non-political party organisations that participate in elections:
By naming non-political party organisations that participate in elections as “political campaigners”, the Act posits that organisations (including charities) are inherently political organisations, when they are in fact not. By renaming it, the Act will more accurately reflect the role of these participants in election campaigns and ensure that organisations are not dissuaded from participating in this type of advocacy during elections.
1.44
Anglicare Australia agreed with the suggestion to redefine political campaigner as large third party, suggested that categorising charities, not-for-profits and community groups as political campaigners could cause undue harm:
Classifying charities, not-for-profits, and community groups as political campaigners will not only add a regulatory burden to their work, but will prevent many from participating in public debate for fear of attracting this label. Given the tendency of some Government ministers and parliamentarians to cast legitimate advocacy as electioneering, formally labelling charities as ‘political campaigners’ would be particularly harmful. For the same reason, Anglicare Australia supports the proposal from Hands Off Our Charities to rename this category ‘large third party.’
1.45
The Association of Australian Medical Research Institutes (AAMRI) raised concerns that the definition of political campaigner could potentially impact Medical Research Institutes (MRIs) philanthropic efforts:
… primary concerns with the proposed changes to the Act in 2018 had centred on whether some routine activities of MRIs could inadvertently be branded as ‘political campaigning’ because of the loose definitions that had been proposed, along with the previously proposed low expenditure threshold.
1.46
The ACOSS, HOOC, the ARRCC, RIA, People with Disability Australia (PWDA), and Ms Jen Robinson, all recommended renaming political campaigner to ‘large third party’.
1.47
Non-profit organisation Frog Safe Inc commented on a separate aspect on the definitions of political campaigner or third party, particularly as it related to foreign donations. They held the view that it was difficult for a non-profit to assess whether they fall into the category of political campaigner or third party for the purposes of foreign donations. They called for the AEC to include clear definitions of what constitutes a political campaigner or third party in their foreign donations fact sheet.
1.48
Professor Anne Twomey, Professor of Constitutional Law at the University of Sydney, however, believed that the distinction between third-party campaigners and political campaigners was a good one.
1.49
When the legislation was first introduced the AEC ‘developed a comprehensive communications and education plan to target the needs of all relevant stakeholders affected by the changes in the lead-up to the 2019 federal election.’ They added that they:
…built a specific page for charities to help them understand those particular terms and how it relates to them. There are some specific differences in the legislation for charities. Our engagement with the ACNC has always been that, given they're the peak body for charities, if they receive queries or there seems to be a common issue or theme, they should approach us so we can deal with those. We haven't had, as I said, any such need to do so since the legislation was introduced, but we are conscious of the need to have provided that very specific information.
Electoral matter
1.50
RIA, HOOC, and Anglicare Australia were of the view that the current definition of Electoral Matter contained in the Act was appropriate. This definition was crafted to exclude particular non-partisan activities from falling under electoral law, such as academic commentary on policy detail, or advocacy related to legislation directed privately at parliamentarians and other public officials. Anglicare Australia stated:
… the current definition of ‘Electoral Matter’ has struck the right balance between transparency and promoting participation in the political process. It is consistent with definitions outlined in the Charities Act 2013, which recognises that charities can advance their purpose by engaging in public debate about public policies.
1.51
While agreeing that the definition of electoral matter definition ‘strikes the right balance between being suitably broad to capture the appropriate range of activities for regulation without being indeterminate and thus impossible to implement’, HOOC noted that it had experienced some challenges in complying with the legislative requirements:
While the HOOC alliance supports the current definition, we note that interpreting and applying the complex and lengthy definition has required significant time and resources of many members. This administrative burden will presumably lessen as we have more elections and charities become accustomed to the laws, but nonetheless this is an important example of how seemingly neutral laws can, in application, impose discriminatory burdens on some participants in public debate. These additional costs were also unseen prior to implementation, as there was no comprehensive regulatory impact statement conducted for the Bill.
1.52
The Australian Conservation Foundation (ACF) held the view that the process was working well but also commented on the additional administrative burden they faced in complying with the requirements:
For our organisation as an example: in complying around the elections we do have to look at every single piece of public communication that we put out, and we make a determination around whether that could be classified as electoral matter. That process, we agree, is working very well, but it's worth noting that that does take a single amount of resources in order to make those decisions for each piece of communication. And it's one of the really significant differences that charities have to deal with compared to political parties. For us, not every piece of communication is going to be classified as electoral matter; so we do actually have to go through and make a determination every single time, which requires that specific resources be in place towards that.
1.53
The joint submission from RESULTS Advocates, Mr Wziontek, ACOSS, PWDA, and Ms Jen Robinson, in addition to the above submitters, recommended that no changes be made to the current definition of electoral matter. This is indicative of members of the sector gaining familiarity with the definitions and finding them workable.
1.54
AAMRI recommended that government be cautious when considering any changes to the definition of electoral matter because it has ‘the potential to cause disruption the important work public health work undertaken by MRIs.’ New definitions would for instance require new legal advice and training within organisations who undertake diverse activity.
Advocacy of charities
1.55
Submitters to this inquiry, particularly charities and not-for-profits commented on the additional administrative burden it placed on them in order to ensure they complied with the new requirements of the EFDR Act. Submitters raised particular concerns against enacting legislation that would impose excessive administrative burdens which could potentially harm charities and non-government advocacy bodies. This evidence is examined in this section.
Additional administrative burden
1.56
Some charities and not-for-profits have indicated that ensure compliance with the EFDR Act’s new requirements has proved costly. The ARRCC, RIA, Mr Wziontek, Ms Robinson, and HOOC all submitted similar evidence that:
Now that the EFDR legislation of 2018 has been implemented, many charities have taken significant steps to ensure their compliance with the new requirements. This has required significant resources and any substantive changes to the current regime would introduce further administrative costs.
1.57
The ARRCC, RIA, HOOC and Ms Robinson added that:
Unclear definitions, disproportionate, burdensome financial and disclosure obligations, and significant penalties, will — through self-silencing or regulatory overload — prevent charities and wider civil society from playing a part in Australian democracy.
1.58
HOOC elaborated that new laws, such as the EFDR Act, can impose unintended administrative burdens on charities:
This administrative burden will presumably lessen as we have more elections and charities become accustomed to the laws, but nonetheless this is an important example of how seemingly neutral laws can, in application, impose discriminatory burdens on some participants in public debate. These additional costs were also unseen prior to implementation, as there was no comprehensive regulatory impact statement conducted for the Bill.
1.59
Professor Twomey held the view that excessive administrative burdens could potentially harm charities and non-government advocacy bodies:
Charities and non-government advocacy bodies have an important role to play in advocating for the interests of the least powerful in society. This is an essential aspect of the political communication protected by the Constitution. It is vulnerable both to express prohibition and to strangulation through the imposition of excessive administrative burdens that eat away at the body’s financial resources.
1.60
Professor Twomey added that the EFDR Act ‘should not adversely affect the capacity of charities to fulfil their charitable functions and to advocate for charitable causes.’
1.61
Anglicare Australia agreed that the EFDR Act should not limit charities’ role as advocates but rather that it ensure:
That charities and not-for-profits don't face a greater compliance burden than they do presently, and are not subject to more limitations to participate in the political process than other third parties (such as businesses and industry associations).
1.62
Philanthropy Australia stated that it would not support any proposed additional amendments to the EFDR Act that ‘would increase the regulatory burden on Australian charities and/or which might hinder the ability of charities to undertake issues-based advocacy in a manner consistent with the Charities Act 2013.’
1.63
The Sisters of St Joseph suggested that there had been ‘an increased burden of administrative processes and red tape, which has increased in the past twenty years.’
1.64
The Victorian Alcohol and Drug Association (VAADA) agreed that ‘not for profit organisations are increasingly facing an unfunded increasingly overwhelming burden of compliance across a range of areas’.
1.65
The RESULTS Advocates recommended that there be no further amendments to the EFDR Act to avoid any additional administrative burdens:
The compliance regime remain as it stands … to avoid imposition of additional and unnecessary administrative burden on small, low income Charitable and NFP [Not-For-Profit] organisations which are already struggling with heavy compliance costs across their operations.
1.66
Foodbank Australia believed that the Act in its current form was working well:
Foodbank Australia believes the Act - in its current form - strikes the right balance between appropriately regulating the conduct of organisations engaged in election-based advocacy and ensuring that regulation does not unduly prevent community sector organisations such as ours to provide an expert, apolitical voice for vulnerable Australians.
1.67
Philanthropy Australia and the Ian Potter Foundation also believed that the Act was working appropriately and commented that they had not received any advice from their members about the operation of the Act:
In discussions with representatives of Philanthropy Australia, The Ian Potter Foundation understands that no members (charity or foundation) have advised Philanthropy Australia of any concerns they have regarding the operation of The Act. As a leading member of Philanthropy Australia and as a major funder of Australian charities, The Ian Potter Foundation confirms that we also are very comfortable with the legislative framework established by The Act for both charities and funders.
1.68
The Ian Potter Foundation added that the Act did not hinder any of their issued based advocacy activities:
In its current form, the Act also preserves the ability of charities to undertake issued based advocacy activities which The Ian Potter Foundation does fund from time to time, and which we regard as an important dimension of some organisations’ charitable work. We do not wish to see this important aspect of charitable work hindered at all.
1.69
Anglicare Australia stated that they believed ‘that the current Act is functioning properly in meeting these needs and regulating the election activities of charities and not-for-profits.’
1.70
RIA stated that the Act had not placed any undue restrictions on their organisation and had enabled them to continue their advocacy work.
Threshold for political campaigners
1.71
While not necessarily falling within the remit of this inquiry’s terms of reference, some submitters expressed their opposition to the recommendation made in the Committee’s report on the 2019 Federal election to reduce the threshold for political campaigners to $100,000 or expenditure of a third of the entity’s annual income on electoral matters, whichever is lower.
1.72
The ARRCC held the view that ‘lowering the threshold for becoming a political campaigner would introduce very significant administrative burdens on many charities and would have a silencing effect in the lead up to elections.’ The effect however of political campaigner obligations is to provide transparency, not to prevent contributions to public debate.
1.73
The ARRCC argued that it was unfair to lower the threshold for political campaigner for the charities sector when the Government resists reforms to lower the disclosure threshold on political parties:
If there is a case for reform, it is in the area of more transparency of donations to political parties, lowering the disclosure threshold, real time disclosure of money received and limits to the level of donations political parties can receive. The Government has resisted these reforms arguing that the administrative burden on political parties would be too high. It is unfair to seek to lay more burdens on the charities sector while the Government is unwilling to raise accountability standards for political parties.
1.74
The existing $500,000 threshold is a material threshold at which non-party organisations have to report on a comparable footing to political parties. By contrast reporting obligations for political parties apply regardless of the scale of their political expenditure. The political campaigner threshold is intended to reflect an amount that would entail a significant level of influence on an election campaign, consistent with the JSCEM recommendation for:
… setting expenditure thresholds for triggering increased reporting obligations under the proposed Transparency Register … at a level that could reasonably be expected to have a significant impact on voter behaviour and that these obligations be proportionate to levels of expenditure.
1.75
Anglicare Australia also opposed the recommendation stating that the Committee had:
No evidence has been provided through the Committee’s Inquiry into the Federal Election that advocacy activities undertaken by charities, community groups, or civil society organisations eroded debate at the last election. The Committee also provided no evidence that debate generated by civil society more broadly led to undue influence at the election. Indeed, the evidence that does explore community advocacy largely focuses on its social value.
1.76
There is however no suggestion in the law that transparency requirements should hinge on subjective judgments about whether organisations that spend heavily to influence an election outcome are having “undue” influence, or alternatively are adding some ill-defined “social value”. Orwellian language does not help define the risks. The real issue is whether an amount, by its magnitude alone, could be sufficient to have influence. The choice of $500,000 or $100,000 is therefore a question of materiality. A lower threshold will pick up slightly more groups and a higher one fewer. A lower threshold could consequently pick up a range of groups across the political spectrum who influence federal electoral outcomes, potentially including industry associations and activist groups of all political colours.
1.77
Some groups may spend $100,000 in one electorate, or a small number of electorates. Such targeted efforts could obviously be determinative of an electorate outcome and consequently could tip the balance in the parliament.
1.78
VAADA raised concerns about the potential adverse impact of the recommendation and agreed with Anglicare’s view stating:
The report’s recommendation to lower the threshold for becoming a political campaigner does not appear to draw on any evidence or suggestion that the current arrangement is in anyway unsatisfactory. Any changes to the threshold will run the risk of generating further red tape for community agencies by way of an increased burden of compliance and impair the transfer of policy being informed by evidence.
1.79
As noted however, the Act already includes carve-outs for policy influence activity, such as lobbying of parliamentarians or academic commentary on policy. The political campaigner rules relate to influence of voter decisions at the booths, not to informing policy formulation.
1.80
HOOC was also ‘extremely concerned’ by the recommendation of a revised $100,000 threshold because of a perceived administrative burden:
Lowering the threshold for becoming a political campaigner would introduce a very significant compliance burden for many third parties and … the amendment would have a chilling effect on public interest advocacy in the lead up to elections.
1.81
The Australian Council for International Development (ACFID) agreed that the proposal to lower the threshold ‘would put additional burdens on a much greater number of small organisations that have every right to advance and advocate on legitimate purpose.’ They added:
Even if a charity does not exceed the threshold that's been set out already in the legislation, in approaching it there would be some charities that would over moderate or cease advocacy out of fear of breaching that classification.
1.82
Anglicare Australia concurred with the view that the proposal to lower the threshold could see a reduction in charity engagement and less advocacy from civil society voices, adding:
I think that's one of the concerns with all of these types of changes and proposals—each one of them will self-sanction some organisations, each one will censure people, because every single one, let alone together, moves people away from this. People get more frightened and move away from evidence and advocacy.
1.83
RIA agreed with the view that lowering the threshold could potentially impact charities advocacy work, particularly during times of elections, and add to their compliance costs:
I think there would be some extra compliance costs because then we'd have to put even more effort into how we classify different types of spending and identify which meets the standard of being election related spending or campaign related spending and which is our regular advocacy spending. I think it could actually be the extra compliance costs as much as the fact that we'd have to report on that funding that could limit the amount of advocacy activity that people are conducting.
1.84
Philanthropy Australia, RIA, RESULTS Advocates, PWDA, ACOSS, Liberty Victoria, and Ms Robinson all opposed the recommendation to lower the threshold for political campaigner.
1.85
Professor Twomey believed that, if the recommendation were enacted, the amendments to the legislation would be open to constitutional challenge:
If implemented, this would be vulnerable to constitutional challenge to the extent that the law effectively burdens political communication and is not reasonably appropriate and adapted to advance a legitimate purpose in a manner that is compatible with the system of representative and responsible government prescribed by the Constitution.
1.86
Professor Twomey urged caution at enacting legislation that could potentially increase the burden on third party campaigners:
The Committee should be wary of changes that are directed at increasing the level of burden upon third party campaigners. The High Court, in Unions NSW v NSW (No 2) (2019) 264 CLR 595, held invalid a law that reduced the cap on the amount that could be spent on political advertising by third party campaigners in the absence of adequate justification of such a change. The High Court tends to seek to protect the diversity of voices in political discourse in Australia and will apply particularly close scrutiny to any attempts to limit that participation, whether it be done directly or indirectly through the imposition of administrative burdens.
1.87
When asked about the number of organisations that are going to be captured if the threshold were lowered, the AEC advised that the lower the threshold, the more organisations would be captured, adding:
Two of the 17 political campaigners are registered charities, so they would also have some requirements under the ACNC [Australian Charities and Not-for-profits Commission] provisions. Twenty-seven of 84 third parties are also registered charities. If I'm reading this correctly, 10 of 27 third parties that are charities would be required to register as political campaigners if the threshold were $100,000 or more.
Donations
1.88
The Committee in its Advisory Report on the Commonwealth Electoral Amendment (Lowering the Donation Disclosure Threshold) Bill 2019 and Advisory Report on the Commonwealth Electoral Amendment (Real Time Disclosure of Political Donations) Bill 2019 commented that it would be undertaking a holistic examination of the current disclose regime of political donations as part of this review into the EFDR Act.
1.89
Many of the submissions to this review commented on the current donation disclosure regime including foreign influence, corporate influence, establishing caps or banning donations, and real time disclosure. This section examines these views.
Foreign influence
1.90
Professor Twomey commented that the EFDR Act had failed in its purpose to ‘prevent foreign influence upon elections and the risk or perception of corruption resulting from the making of political donations’, adding:
It is very easy for large foreign donations to be made to political parties in an attempt to influence both elections and the behaviour of parties when in Government. This can be done by uncapped large donations being made by permanent residents of Australia or via Australian formed corporations that are owned by foreign individuals or corporations.
1.91
This view assumes that permanent residents should not have an equivalent right to influence public debate in Australia. The Act errs on the side of conservatism, as Australian permanent residents and New Zealand special category visa holders are subject to the laws of Australia, and in many respects have access to the same rights and privileges as Australian citizens. For example, New Zealand special category visa holders are able to stay and work indefinitely in Australia. It is ultimately a question for the High Court whether a narrower definition – say limited to citizens – would withstand legal challenge.
1.92
As noted above, Professor Twomey recommended imposing a cap on political donations if government wanted to reduce or eliminate foreign influence upon elections and potential corruption arising from political donations.
1.93
The Hon. Mr Kelvin Thomson raised his concerns about the potential for foreign influence via campaign donations and the potential loophole for foreign entities to make a payment to either an Australian person or entity for the purpose of campaign donations. The Hon. Mr Thomson suggested banning foreign donations adding it was ‘a necessary and appropriate response to increasing attempts to influence Australia’s political direction.’
1.94
The Sisters of St Joseph and Associate Professor Beck agreed that the EFDR Act was not working as intended as foreign actors can secretly channel money though Australian residents or corporations. Associate Professor Beck added::
A foreign actor can donate as much money as they want to a federal politician or political party simply by channelling that money through Australian residents or Australian corporations (including those Australian corporations wholly owned by foreign interests).
Foreign actors can also make secret donations to federal politicians and political parties simply by channelling that money through Australian residents or Australian corporations, provided each donation is under the disclosure threshold of $14,300.
1.95
This view does not however take account of the specific anti-avoidance powers already in the Act, the information-discovery powers already possessed by the AEC, or the compliance and enforcement funding currently provided to the AEC (higher than in previous years).
1.96
Associate Professor Beck concurred with the view that placing a cap on donations would prevent an Australian intermediary from out-donating any genuinely Australian donor. That view does not however take into account the existing more direct solution involving anti-siphoning laws, together with existing information discovery powers and resources.
1.97
Mr Anderson also advocated for placing a cap on the size of political donations suggesting it was the ‘most effective way to limit foreign influence on Australian elections.’ Mr Anderson recommended that:
… all donations, whether from Australian citizens, residents or organisations, should be limited to not more than $10,000 per political party per year, with a similar cap on the funding of election campaigns.
1.98
When questioned on whether foreign entities can easily circumvent the prohibition on foreign donations by donating to Australian based entities or an Australian subsidiary, the AEC stated that there is currently a provision within the Electoral Act that enables the AEC to investigate allegations:
…section 302H of the Commonwealth Electoral Act in that the electoral commissioner may give someone a notice if we have reasonable grounds to conclude that the relevant person was basically channelling money through some sort of third party, third entity, third person to avoid the foreign donation restriction. Again, it comes back to that point I made before about having some degree of information or evidence to have reasonable grounds to issue that notice.
1.99
The AEC added that they would however ‘need some sort of indication, evidence or information’ before being able to investigate any allegations. JSCEM has already recognised that which there are anti-siphoning rules in the Act aimed at foreign donors, there are not equivalent safeguards directed against avoidance by domestic actors.
1.100
In recent Estimates hearings there was evidence of large donations made by climate-related groups in key electoral battlegrounds, through intermediaries, minimising transparency. JSCEM has therefore observed that there is room to strengthen the safeguards in relation to mischief by domestic actors, so that major financial contributors to campaigns have to report either as donors or associated entities, even where they bounce their donations through chains of front groups. Accordingly, in recommendation 3 of its review of the 2019 election, JSCEM proposed that:
… the Electoral Act be amended to include new offences for siphoning money through intermediaries. The offences should be drafted to deal with avoidance behaviour by donors who channel money through intermediaries, to avoid transparency. The offences should likewise cover any funnelling entities, including persons or organisations who play a part in a chain of entities that siphon money. The offences should also cover receiving entities that had knowledge of siphoning arrangements and who did nothing to stop, or repay siphoned amounts. Persons who coordinate siphoning arrangements should also be liable to appropriate sanctions.
Corporate influence
1.101
Submitters generally held the perception that exorbitant amounts of money were being spent on political donations. Ms Judy Kneale, private capacity, cited a case study from the Centre for Public Integrity which stated ‘that in the last two decades the resource industry has donated more than 136 million dollars to political parties and related activities.’
1.102
Also citing the Centre for Public Integrity’s case study, Doctors for the Environment Australia (DEA) added:
One individual was responsible for the bulk of donations from the resources sector spending $89 million campaigning during the 2019 federal election. … some of Australia’s largest resources companies donate to lobby groups and peak bodies. BHP, Rio Tinto and Glencore were substantial political donors to the Minerals Council of Australia, Coal21, and the Business Council of Australia. The Minerals Council of Australia has donated more than $33 million to political parties.
1.103
The DEA posited that donations to political parties enabled the donor unfettered access to ministers:
Money donated can buy access, relationships and political connections. Major donors to political parties are more likely to get a meeting with a senior minister. Political donations can foster a sense of reciprocity not available to other stakeholders. This is unfair, not consistent with our democracy and such practices destroy community faith in government approval processes.
1.104
Ms Sandra Boulter, private capacity, believed that ‘mining and gas companies ramped up their spending on political parties in recent years to outstrip property developers and other big donors.’
1.105
Ms Celine Lai, private capacity, held the view that organisations that made large donations were provided greater opportunities to meet with decision makers:
It is clear that large political donations create extra opportunities to meet with and influence decision makers, prioritising the interests of large donors over the average voter who cannot buy access to politicians. This corrupts a system whose basic function is to represent the best interests of the majority of citizens, not a corporate elite.
1.106
Mr John Watts, private capacity, perceived that corporations were making significant donations in order to assert influence on government decision making.
Corporations and wealthy individuals often make substantial donations to political parties and candidates. In my view this is an insidious practice which requires much greater regulation. Politicians are often heard to say that they are not influenced by such donations, and it is often impossible to establish a direct link between a donation and a particular decision, but a corporation would only make a political donation if it was in the interests of that company to do so. In my view it is fanciful to suggest that large political donations do not affect Government decision making in some way.
1.107
Mr Mark Brentnall, private capacity, suggested that corporate donations and donations from unions are designed to obtain influence and a return on their investment:
It is rare that a corporate donation is made without an expectation of a return. Companies are in the business of making money and in every other aspect of their operation the spending of capital is required to generate a measured return. It is a nonsense to expect that corporate donations to political parties would be any different.
Similarly, the use of union funds to support a particular party should also be prevented. Again, it is the use of large sums of money to garner influence that far exceeds that which is available to ordinary people.
1.108
The Western Australian (WA) Local Government Elected Members Association (LGEMA) alleged that ‘property developers and mining and gas companies ramped up their spending on political parties in recent years … to buy influence which compromises the integrity, ethics and respectability of government decisions, donations lead to greater access and influence.’
1.109
Ms Evelyn Doyle, private capacity, also voiced concerns that ‘growing influence of the business sector on our governments has steadily increased and poses a real threat to our democracy.’ Ms Doyle suggested making ‘it illegal for corporations to entice donations from their staff to any political party with promise of reimbursement or other incentives.’
1.110
The Sisters of St Joseph suggested that Australian corporate donations aimed at influencing government policies and decisions were a significantly greater challenge. They added:
Welfare, community and religious leaders have increasingly contended over recent years that legislation does not provide adequate protection from the influence of big money over politics.
1.111
Ms Sandra Betts and submitter who asked for their name to be withheld perceived that the gas industry was having an unfair influence in policy making after donating over $1.3 million dollars to the major parties.
1.112
Ms Sophia Platthy, private capacity, perceived that the government was ‘corrupted by big business, particularly given that our political parties received over $1.3 million dollars from coal, oil and gas companies (in 2019-2020) and a further $38million from undisclosed donors.’
1.113
Ms Frances Winfield and Ms Elizabeth Cox, private capacity, expressed concern about very large political donations being made by big companies and the impression that donors expect quid pro quo. Such submissions did not however draw particular attention to the conduct of some donors who contribute to both sides of politics, supporting rival platforms. It may be the case of course that some, or indeed many donors, expect no particular outcome other than the health of Australian democratic debate. It is already the case that an offer of money in exchange for policy commitments would constitute a serious criminal matter.
1.114
Ms Stephanie Holden, private capacity, suggested that there is a perception that donations made by ‘vested interests’ were being rewarded with favourable government decisions. She suggested that political parties should be publicly funded.
1.115
The Church Council of the Pitt Street Uniting Church (PSUC) believed that large donations enable donors to gain access to political power:
Donations give wealthy corporations and individuals access to people with political power, and have the potential to influence their policies. Ordinary citizens have far less sway; offering more power to the wealthy is undemocratic.
1.116
Non-Government organisation, 350 Boorloo Perth, agreed with PSUC’s belief that ‘large political donations create extra opportunities to meet with and influence decision makers, prioritising the interests of large donors over the average voter who cannot buy access to politicians.’ Of course large donors are also revealed through the disclosure system and this can lead to public scrutiny where there are any perceived concerns about the potential influence of donors.
Caps on donations
1.117
Mr Ian Bowie, private capacity, called for establishing relatively low caps ‘on both individual donations and on amounts not required to be publicly disclosed’ in the interests of transparency. Mr Bowie and Mr Brentnall made a number of similar recommendations that:
only natural persons whose names are on a public electoral roll should be allowed to make political/electoral donations
an individual’s annual donations to political parties in aggregate should be capped at the quantum of median annual personal income
an individual’s donations towards a specific electoral or other political campaign should also be capped at the quantum of median annual personal income
their own donations intended to be directed towards a candidate’s electoral campaign should be similarly capped.
1.118
Mr Denby Angus, private capacity, concurred with the above view that only natural persons should be allowed to make political donations to political parties. Mr Angus suggested that ‘each person should be limited annually to $2,000 per candidate and $5,000 per political party, excluding party membership up to $600.’
1.119
Ms Kneale, Mr Oscar Delaney, private capacity, and a submitter who asked for their name to be withheld, agreed with the view that political donations should be capped, and suggested that the amount be $1,000 per year.
1.120
A submitter who asked for their name to be withheld supported reforms aimed at capping ‘the amount that can be donated to political parties and candidates.’ While not suggesting a particular amount that donations should be capped at, several submitters also echoed the call for establishing donation caps or limits.
1.121
Professor Twomey noted that capping political donations at small amounts, such as $5,000 or less, would prevent candidates or political parties being influenced by domestic or foreign individuals, industries, or organisations:
Influence is not obtained by making a $50 donation to a candidate or political party. Influence is obtained by making a very large donation to a candidate or political party. The way to prevent malign influence is to impose a cap on donations so that the maximum donation made by one person is worth the same as everyone else’s maximum donation. If there are thousands of them, then influence cannot be bought by foreigners or anyone else. We know from High Court judgments, such as that in McCloy v New South Wales (2015) 257 CLR 178, that caps on donations can be constitutionally valid.
1.122
Professor Twomey added that it would be preferable to also cap electoral expenditure in addition to establishing caps on political donations:
I think that it's preferable, if you're going to have caps on donations, to also have caps on expenditure. It takes a lot of the money out of the system, which is a good thing. It also means that political parties need to raise less, and that in itself is a way of reducing the risk of corruption because political parties don't have to spend so much of their time focused on fundraising.
1.123
Mr Stephen Brown, private capacity, proposed establishing an overall cap on the total amount that body should be able to receive in a calendar year:
No donor should be allowed to give more than $20,000 to a single body in a calendar year.
1.124
Mr Colin Fleming, Dr John Davison-Mowle and Ms Cox, private capacity, agreed with the view of limiting the total amount a political party can receive. Mr Fleming suggested that the amount should be $10,000 while Ms Cox suggested $5,000 and Dr Davison-Mowle and DEA suggested $1,000.
1.125
The Hon. Mr Kelvin Thomson concurred with Mr Felming’s view of capping donations to $10,000 per annum, adding:
There needs to be a cap on political donations and contributions that prevents wealthy corporations and individuals from exercising undue influence on Australian political debate. Australia is becoming less equal and less fair as time passes, and large campaign donations will inevitably reinforce this inequality and make it harder to address in future. Capping donations and contributions at a total of $10,000 per annum per person would be a step in the right direction.
1.126
Coincidentally the figure of $10,000 was set as the disclosure threshold some years back, and has changed over time only due to indexation (maintaining its real value).
1.127
Many of the suggestions came down to the vantage point of submitters, with several advancing proposals that would favour their corner of the political field. Ms Zali Steggall MP, Federal Member for Warringah, recommended capping electoral expenditure on a per candidate basis and including associated entities and third parties rather than placing a cap on donations, adding:
Placing a limit on the amount of money that can be spent per candidate in an election would further limit the influence of donations to individuals. Capping electoral expenditure is required to stop the rapid race for funding and donations and the high advertising spends by candidates and parties in election campaigns. This high spend drives greater influence from donors.
1.128
Frog Safe Inc suggested limiting candidates spending by providing a specific amount of public money to spend:
Local government candidates would get a specific amount (let's call that $10,000 as an example) while state election candidates might get $25,000 ($50,000 for the Premier). For federal elections, candidates for MP and Senate would get $75,000 each and for prime ministers, $100,000 each.
1.129
The Hon. Mr Thomson stated that ‘public funding plays an important and positive role in Australian democracy, and if the flipside of reducing donations and so on were that public funding had to play a greater role then I'd see that as a reasonable price to pay.’
1.130
Professor Twomey cautioned any amendments that would allow parties access to public funds for the purpose of electoral expenditure:
… I do have to say that my view is not to replace political donations completely with public funding. That's not good because I think there should be some level of burden on political parties to engage with their constituents and to have their public support reflected in the types and amounts of donations they receive.
1.131
On the proposal, Professor Twomey elaborated that any public funding model shouldn’t fully fund parties that actually really don't have community support:
You can have parties that represent the obsessions of a very, very small section of the community, and if you have a full public funding model then you end up funding them to the same level, potentially, as parties that have widespread public support, and I think that's inappropriate.
1.132
Professor Twomey posited that limiting expenditure would enable parties to know how much money it would need to raise and reduce the risk of corruption:
There does need to be a threshold, and that's obviously a very difficult question. So there are threshold issues, and then there's a question of how much a party itself should raise. I don't have a number. These questions are really, in the end, more for the political science side. As a rough estimate, I think in New South Wales that maybe 20 per cent of what you can spend you have to raise yourself. The rest might be raised by public expenditure. If you do have limits on expenditure and you know precisely the amount the maximum cap is that you can expend, it then does make it easier to be able to decide how far the public funding should go up to that expenditure amount—so what proportion of it the party itself should fund. The other beauty of it is that you know that in advance, so you can plan for the period of time—this is also helpful when you have fixed term parliaments, as in New South Wales—and you know precisely how much money you need to raise over that period of time. You know that you don't need more and you know that you're not in a funding war competition with another party. So that means parties have to raise a lot less, and that really does take down the risk of corruption.
1.133
While suggesting that establishing caps on political donations was appropriate, Ms Doyle suggested capping donations to political parties from the same source.
1.134
The Hon. Mr Thomson, however, pointed out that some organisations may take steps to evade expenditure caps:
It obviously occurs to me that if you have spending caps then maybe organisations are happy enough to split themselves into different parts in order to evade those rules and requirements. This happens overseas, or anywhere where the spending caps are being put into effect.
Banning donations
1.135
Mr Andrew Mangano, Councillor ‐ City of Nedlands Western Australia, called for the banning of all monetary and in‐kind donations to political parties. There are obvious constitutional risks with such proposals and, as explained above, the High Court has proven loathe to permit unjustified restraints on the freedom of political communication.
1.136
Ms Betts, Mr Peter Crawford, Ms Peta Tynan, Mr David Mackay, private capacity, and the Sisters of St Joseph agreed with the view that all political donations should be banned.
1.137
Some submitters were specific in which industries they thought should be banned from making political donations such as property developers.
1.138
Ms Lorna Buchan commented that developers should be stopped from making funding contributions to federal election campaigns because it:
destroys public trust in government decision making
leads to government decision-making not being merit based
donations unfairly lead to greater access to decision makers where undue influence is exercised by donors
is not in the public interest.
1.139
LGEMA believed that donations from property developers and mining and gas companies should be prohibited because an absence of third party appeal rights against development, subdivision or zoning approvals in WA fosters corruption through influence by donating property developers.
1.140
Ms Dawn Jecks, Mr Kevin Morgan and Mrs Joanne Chenery, private capacity, also called for the banning of donations from property developers.
1.141
Mr Watts agreed that, at a minimum, all resource companies should be banned from making donations, and suggested banning all political donations above a very small amount.
1.142
350 Boorloo Perth called for a ban on all corporate donations.
1.143
The Hon. Mr Thomson supported ‘a ban on property developer campaign donations’ adding:
Why single out property developers? Why not others as well? My response is that it's not a matter of logic but of experience. The financial advantages that come from successfully influencing government have proved irresistible to property developers, and that's been a key driver of corruption in Australian politics. New South Wales and Queensland acted after scandals, and the IBAC inquiry into the Casey council in Victoria has revealed the same problem in Victoria.
1.144
Ms Steggall MP agreed that consideration should be given to prohibit ‘certain industries from making donations based on those most impacted by changes to Federal legislation or land use approval.’ Land use issues are however primarily matters for states, territories and local government. Much of this thinking about donations comes from debate at those levels of government, where the constitutional responsibilities are different.
Real time disclosure
1.145
While several submitters agreed that it would be valuable to establish real time disclosure for political donations, many had different expectations of how quickly the disclosure should be required; within 4 weeks, 14 days, two days, or 24 hours. These proposals often do not work through the significant administrative costs and compliance burdens, and whether those burdens – particularly on small donors or political actors – would be proportionate to any public benefit.
1.146
Mr Bowie advocated for the ‘public disclosure of all annual or campaign donations above the quantum of median weekly personal income.’
1.147
Ms Kneale and a submitter with name withheld called for ‘the immediate publication of the name of any donor and the amount donated on the Australian Electoral Commission website’. Mr Watts, Mr Brentnall, Mr David Arthur, and a submitter with name withheld also recommended immediate disclosure of political donations online.
1.148
In order to facilitate the real time disclosure of donations, Mr Arthur suggested establishing ‘a Political Donations Commission, which would receive and disburse all donations, and immediately publish on a searchable online register the identity of the donor, the recipient and the amount of the donation.’ Ms Winfield also suggested appointing an independent authority to oversee all political donations.
1.149
Mr Brown advocated for all political donations over $500 to be disclosed, including smaller amounts that add up to $500 in a calendar year, within 14 days.
1.150
Ms Platthy and Mr Patrick Anderson, private capacity, agreed with the view that all donations over $500 be disclosed. Mr Anderson elaborated that ‘the donor’s name and/or organisation published by the political party or campaign within two weeks of the donation being received, and then published on a government website on electoral matters within 4 weeks of being received.’
1.151
Ms Doyle called for real-time political donation disclosure for amounts over $4,000 to be published on the AEC website while Mr Delaney and Mrs Chenery suggested any amounts of $1,000 should be disclosed.
1.152
Associate Professor Luke Beck, Monash University, also commented that ‘all federal political donations over $1,000 should be disclosed to the Australian Electoral Commission within 21 days and then promptly published online.’
1.153
Mr Angus held the same view that any donation over $1,000 should be disclosed. Mr Angus however suggested that the donation should be disclosed within 14 days:
… and reported in aggregated quarterly summaries. Donations must be defined broadly to include income from fundraisers, sponsorship of forums and annual membership fees over $600.
1.154
While acknowledging that parties and candidates may have found the recording of donations challenging in the past, the Hon. Mr Thomson stated that the digital environment had simplified the process:
In years gone by the task of adding up and recording all the donations candidates and parties received was very onerous, but we have now moved so far to online banking and away from cash that it is no longer onerous at all. Candidates and parties routinely record their income from all sources as a matter of financial prudence. It is appropriate that the public should be able to see the source of these donations, and not appropriate that they be hidden behind a disclosure threshold.
1.155
The Hon. Mr Thomson advocated for the real time disclosure of donations.
1.156
However a considerable body of evidence was recently taken from the charitable and civil society sector, exposing the burdens that would fall upon them from real-time systems. This evidence was provided to the Finance and Public Administration Legislation Committee (F&PA Committee), during their review of a private Senator’s Bill from Senator Jacqui Lambie, titled the Commonwealth Electoral Amendment (Donation Reform and Other Measures) Bill 2020.
1.157
While acknowledging that real time disclosure could potentially add an additional burden on smaller parties, Ms Steggall MP believed that the benefits of legislating real time disclosure of political donations outweigh those difficulties adding:
An appropriate system of disclosure focused on ease of use could be established by the Australian Electoral Commission to minimise burden on candidates, third parties and the Commission.
1.158
However evidence given to the F&PA Committee indicated that giving the AEC a role in the handling of electoral funding and expenditure would create opportunities for the AEC's independence to be questioned. As the committee observed at paragraph 2.92 of their report:
There is no guarantee that the AEC could release of funds at the pace that is needed during an election campaign, particularly given the bill proposes that parties have to apply for each release of funds and the AEC has to assess each such application. This would hamstring parties when they need to rebut their opponents in fast-moving public debate. It would expose the AEC to claims of bias and interference when they fail to release funds as swiftly as parties require.
1.159
Those issues around portals and real-time reporting were not in scope of the present inquiry and therefore they have been raised by only some submitters, without an opportunity for full scrutiny by the many people and organisations who would be impacted. Least of all this does not take into account that fact that the vast majority of political organisations operate primarily on the back of volunteer work, with only some having professional staff who are few in number.
Consistency in financial disclosure returns
1.160
According to the Electoral Act and Candidates Handbook Federal elections By-elections (Candidates Handbook), all candidates, including the individual members of a Senate group, have a financial disclosure obligation after an election and must lodge financial disclosure returns with the AEC.
1.161
The financial disclosure returns of candidates must include the following:
the total number of donors and total amount of all donations received
the names and details of people and organisations who made donations in excess of the disclosure threshold (information about the disclosure threshold is available on the AEC website)
amounts spent on electoral expenditure
details of discretionary benefits received from the Commonwealth, State or Territory during the period of 12 months before polling day.
1.162
The Candidates Handbook states that donations made to a party endorsed candidate are the same as making a donation directly to their respective political party:
If a person or organisation makes a donation to the campaign committee of an endorsed candidate, this is treated as though the donation is made to the registered political party and is therefore required to be reported in the party’s annual disclosure returns rather than the candidate’s election return.
1.163
Ms Steggall MP noted that there appeared to be an inconsistency in the reporting requirements of independent candidates compared to political party endorsed candidates as endorsed candidates are not required to lodge separate financial disclosure returns:
In contrast, party endorsed candidates are covered by their party’s annual return. There is no obligation to report on election related donations separately, nor is there a breakdown of the dollar value brought in by each individual candidate or the expenditure by the parties in each electorate. Parties report their annual return and are published on the first business day in February in the calendar year after the return is provided.
1.164
Ms Steggall MP argued that this meant that ‘independent candidates are held to a much higher standard of disclosure, needing to disclose returns in more detail and, depending on the timing of the election, sooner than those who belong to a party.’ Ms Steggall MP recommended:
That the reporting period in an election year be tied to the election, with all parties, third parties and candidates required to report donations within 24 weeks of election day.
That all parties and candidates disclose expenditure in each electorate.
1.165
However Ms Steggall’s claims ignore the fact that political party candidates do in fact face the same disclosure obligations where they control donations and electoral expenditure, for instance through their own campaign accounts. Nor does her critique acknowledge that party returns report these amounts on behalf of remaining candidates, because most campaign activity by party candidates is generally undertaken on a vicarious basis through party organisations. As noted those party organisations are predominantly volunteer-run.
Register in-kind donations
1.166
Mr Brentnall perceived that political parties were in receipt of other non-financial donations and called for their regulation:
Political parties receive boundless contributions to their cause through means other than financial contributions, including unpaid, positive media endorsement and uncommercial transactions related to campaigns. Each of these transactions has a value and subsequent return, to both the political party and the donator. They should be treated in exactly the same way as monetary donations.
1.167
This claim ignores the fact that in-kind donations are already defined as donations under the Electoral Act. Relevantly, 'gift' is defined under the Electoral Act to cover any donation made without matching ‘consideration’ (a legal term meaning reciprocal exchange for something of value), including:
… [A]ny disposition of property made by a person to another person, otherwise than by will, being a disposition made without consideration in money or money’s worth or with inadequate consideration, and includes the provision of a service (other than volunteer labour) for no consideration or for inadequate consideration…
Additional reform recommendations
1.168
Several submitters put forward additional reform recommendations to this inquiry on the establishment of a federal integrity commission and regulating lobbyists which are explored below.
Federal integrity commission
1.169
A few submitters called for the establishment of a Federal Integrity Commission. Ms Doyle recommended establishing an integrity commission as soon as practicable:
… to oversight some of these aspects and carry out independent investigations for breaches by Ministers, MPs and Senators and their parliamentary staff, particularly in relation to misuse of government funds for political advertising.
1.170
The DEA suggested funding an ‘independent federal integrity commission on political donations to address public complaints as well as criminal matters, with full transparency of results.’
1.171
Ms Cox also recommended the creation of ‘an independent watchdog commission to investigate and prevent corruption.’
1.172
Ms Steggall MP and Mr Fleming were of the view that the absence of a federal integrity commission leaves ‘no avenues to investigate corrupt conduct which occurs as a result of political donations.’ Those issues are obvious subject to ongoing policy and legislative developments that other committees continue to consider.
Lobbyists
1.173
Several submitters raised concerns about the activities of lobbyists and a perception that politicians move into lobbying roles in businesses.
1.174
Sisters of St Joseph, in particular, held the view that:
The revolving door between politics and big business means that retiring politicians frequently move from politics to employment with the resources sector, corporations and lobby groups, who had previously been involved in political advocacy with them.
1.175
The DEA agreed with the view that politicians seek employment as lobbyists post-politics:
More than one-quarter of federal politicians go on to post-politics jobs in companies and entities where they have established relationships during their political careers. The issue of the revolving door – whereby government officials become lobbyists after departing government, and ex-lobbyists become government officials – requires stronger checks and balances.
1.176
Mr Harold Gallasch, private capacity, and Mr Crawford raised concerns about the contribution and activities of specific lobby groups.
1.177
Ms Cox called for the regulation of lobbyists:
To set stronger lobbying regulation and greater transparency so we know who is meeting with elected representatives. This includes making public minister’s diaries and clearly identifying lobbyists and ensuring they follow a code of conduct.
1.178
The DEA suggested publishing information about Federal Minister meeting’s with lobbyists; and a list of lobbyists with security passes to federal Parliament House. That matter is obviously another tangential topic outside the ambit of this inquiry.
Committee comment
1.179
The Committee acknowledges that in order to comply with new legislative requirements there is an initial additional administrative burden placed on all those involved in the transition process. For the most part, this initial burden should only be a short-term while organisations adapt to the changes. The definitions of ‘electoral matter’ and ‘electoral expenditure’ were specifically designed to ensure that non-partisan activities are not inappropriately covered by electoral law. It was a necessary consequence of this boundary-drawing that there is minor complexity and that some organisations with more diverse activities had to make a transitional effort to ensure that they had a good understanding of the boundary.
1.180
It is clear from the evidence provided to this inquiry that after an initial transition period, the Act in its current form is working appropriately and not hindering the current activities of charitable based organisations. It is very positive that many members of the sector report that their organisations have gained familiarity with the definitions and find them workable. To the benefit of many non-profit and charitable organisations, these definitions appropriately demarcate advocacy activities (sitting outside electoral law) and clarify what is instead electoral campaigning activity (falling within electoral law). To disturb these boundaries, that are now working effectively and are generally well understood, would cause cost and disruption and in the committee’s judgment not add improvement.
1.181
Some submitters suggested that there was a risk of foreign donations influencing Australian elections, but the AEC evidence was that they already had anti-avoidance powers related to siphoning. This commentary drew the committee’s attention again to the lack of equivalent anti-siphoning rules for domestic actors and the importance of such reforms to prevent an undermining of transparency where siphoning is conducted by locals.
1.182
The Committee acknowledges the additional suggestions put forward during the course of this inquiry on capping or banning political donations or expenditure; establishing real-time disclosure of political donations; consistency in financial disclosure returns; the regulation of lobbyists; establishment of a federal integrity commission; and lowering the threshold for political campaigners. Suggestions on donation caps and spending caps were very divergent, with no consensus. The committee takes the view that public funding model shouldn’t fully fund parties that actually really don't have community support, therefore there remains a very important place for voluntary donations to support public debate in elections.
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However these suggestions were outside the purpose of the review of the EFDR Act and are more suitable issues for consideration in the context of legislation dealing with substantive policy revisions.
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The committee also received evidence on whether the political campaigner threshold should be lowered to $100,000. The committee notes that the evidence provided by the AEC is that 27 of 84 third parties are also registered charities and of those, just 10 of those third parties that are charities would be required to register as political campaigners if the threshold were lowered to $100,000.
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In summary the committee considers that the relevant parts of the Act are working effectively and have become understood by affected groups. The committee notes there are a variety of conflicting views about possible amendments, but this reflects diverse interest from observers of the political system and is not suggestive of fundamental structural problems. The Australian political system continues to be a successful exemplar democracy, that is looked on with admiration by many others around the world. Public debate in Australian elections is conducted in a fair manner, facilitating the open discussion of ideas and the peaceful transfer of power.