Is there a problem?
Many Australians, including many submitters to this inquiry, are concerned by the corrupting influence of big money in our democracy, leading to private interests being prioritised over the public interest.
There is a volume of research and analysis supporting concerns regarding the undue influence of political donations, and that lack of transparency of donations continues to hamper research efforts.
The Senate Select Committee on the Political Influence of Donations in 2018 noted:
It is difficult to objectively establish the intent behind political donations and whether they have had any influence on government policy outcomes. However, strong indications of undue influence are provided by patterns between political donations over time and their proximity to key policy decisions.
After reviewing a wide range of case studies in which a nexus could be identified between donations and policy outcomes, that Committee concluded:
The committee accepts and supports that all stakeholders have a right to have a legitimate say in the democratic process. However, there is significant public concern around the motivations of some donors, and that the influence they have on the decision-making of governments is disproportionate to the influence other citizens enjoy.
The committee heard compelling evidence that the current political funding and disclosure regime fails to provide the necessary safeguards to prevent corruption of the political process. The fact that the source of the significant majority of funding to those involved in the political process is undisclosed and unknown, is inimical to maintaining trust in the process.
The Grattan Institute's forensic examination, Who's in the Room: Access and Influence in Australian Politics, demonstrated how those with the most to gain or lose from policy changes push their agenda, and how special-interest groups can hijack the policy-making process:
Who's in the room – and who's in the news – matters for policy outcomes. Powerful groups have triumphed over the public interest in some recent debates, from pokies reforms to pharmaceutical prices, to toll roads and superannuation governance.
There is undeniably a problem, no matter how hard the government tries to pretend otherwise. The problem is clear, and electoral laws must be strengthened to manage the inherent risks.
We need to remove the influence of big money on politics, and ensure people know who is gaining from the decisions being made. Much needed reforms include greater transparency, donations caps and bans on donations from damaging industries, election spending reforms, and improving accountability and transparency of campaign funding.
The National Integrity System Assessment undertaken by Transparency International Australia and Griffith University identifies such reforms as a key action to secure fair and honest democracy:
Universal, workable caps on political campaign expenditure,
Common political donation limits and public election funding rules,
Reasonable, consistent, real-time public disclosure of donations, and
Enhanced sanctions and enforcement by the AEC.
Whilst it does not go as far as the Greens think is necessary, Senator Lambie’s Commonwealth Electoral Amendment (Donation Reform and Other Measures) Bill 2020 (the Bill) takes significant steps towards these objectives, and the Australian Greens support it.
Recommendation
That the Bill be passed, with amendments outlined below.
Improving disclosure
Thresholds and real-time disclosure
The Greens agree with the majority of submitters to this inquiry that the threshold set for disclosure of donations in the Commonwealth Electoral Act 1918 is too high, and that disclosures are not timely enough. This allows considerable influence to be exerted without transparency.
With the exception of Tasmania, all States and Territories have adopted disclosure thresholds less than $5 000 and require disclosures to be made within one to three weeks of a donation being received. There is no defensible rationale for the much higher rates applying at the Commonwealth level.
While the Greens support real-time disclosure of amounts over $1 000, consistent with many States, the Grattan Institute has identified $5 000 as an appropriate amount to balance broad democratic participation through supporting a political party with the need to identify sources of influence.
We strongly disagree with the Committee's view that disclosure thresholds are designed to 'ensure that only significant donors lose the privacy of their political beliefs and are exposed to the risk of unsavoury political harassment'.
It is ridiculous to imply that the risk that political donors will be 'harassed' outweighs the corrosive impact that undisclosed influence (or influence disclosed only months after it is exerted) has on Australian democracy.
Definition of gifts
We support the expanded definition of 'gift' in s287AAA of the Bill to capture the range of ways that financial support can be provided to political parties and candidates.
The current definition of 'gift' under the Commonwealth Electoral Act 1918, which expressly excludes subscription and membership fees, levies and attendance fees at fundraising events, has been rightly criticised. As identified in the submissions from the Grattan Institute, Human Rights Law Centre, GetUp and others, the exclusion of such fees effectively hides a significant source of campaign income for many political parties and political campaigners.
Disclosure Portal
Arguments are often made that introducing lower disclosure thresholds or real-time disclosure obligations imposes significant administrative costs and compliance burden. However, lower thresholds and disclosure timeframes currently operate at the State level without unduly constraining political organisations.
Providing a nationally consistent threshold and harmonised mechanisms for reporting would go a long way towards reducing the administrative burden for organisations.
To serve its purpose of allowing the public to make informed decisions, disclosure data must be accessible, understandable and able to be effectively interrogated. Improved data capture and analysis would facilitate the sort of research regarding the nexus between donations and policy outcomes that the Committee has asked for. A consistent reporting mechanism, such as the Disclosure Portal proposed by the Bill could assist with this and should be given further consideration.
The Committee has dismissed the Disclosure Portal on the basis of its potential design and implementation costs but fails to consider the cost of not acting to strengthen reporting. The Australia Institute has estimated that perception of corruption risks has cost Australian $72.3 billion since 2012.
On balance, the economic benefits of strengthening the disclosure system, improving the rigour of data, and better managing corruption risks justifies investment in a consistent, user-friendly data portal.
Recommendation
Ensure AEC funding is adequate to allow implementation of the Bill.
Merely disclosing donations is not enough to stop their corrupting influence, and the Greens believe that more needs to be done to prevent donations from industries with a history of using their wealth to influence political discourse.
The Greens support the recommendations made by the Senate Select Committee Inquiry into the Political Influence of Donations to ban all donations from developers, banks, mining companies and the tobacco, liquor, gambling, defence and pharmaceutical industries to political parties, candidates and associated entities.
Recommendation
That the government implement the recommendations made by the Senate Select Committee Inquiry unto the Political Influence of Donations.
Recommendation
That the government adopt the Commonwealth Electoral Amendment (Banning Dirty Donations) Bill 2020.
Impact on third parties and political campaigners
ACF and the Human Rights Law Centre previously pointed out that lowering the disclosure threshold without consequential amendments would mean that any person or entity who incurred more than $5 000 on electoral expenditure would become subject to third party reporting obligations (s.314AEB).
Given the broad definition of electoral expenditure, this could result in significant additional reporting obligations on small organisations seeking to advocate for policy issues in election periods.
The Greens recommend further amendments to the Bill to 'decouple' the disclosure threshold from the electoral expenditure threshold relied on in the definition of 'third party'.
Recommendation
That the definition of 'third party' refer to an 'electoral expenditure threshold', rather than the disclosure threshold, for triggering when organisations become subject to reporting obligations.
Undermining state donation laws
The recently enacted Electoral Legislation Amendment (Miscellaneous Measures) Act 2020 (Cth) will allow donors and political parties to get around State efforts to regulate the influence of donations through strong disclosure rules, banning and capping donations. As outlined in the Greens dissenting report on that Bill, we oppose the provisions that undermine strong State approaches to accountability and transparency.
This Bill provides an opportunity to rectify this problem.
Recommendation
That the Bill be augmented and add provisions repealing ss.302CA and 314B of the Commonwealth Electoral Act 1918.
Electoral funding and spending caps
Transparency International Australia and Griffith University, ACF and the Human Rights Law Centre all identify campaign expenditure caps as a key reform to manage the influence of political donations. The Greens agree, and have long advocated for action to review campaign financing and public funding of elections to level the playing field for democratic participation.
The majority report states:
The electoral funding and disclosure regime is of enormous significance for Australia's democratic processes and institutions. In the committee's view, changes to this regime should only be made following a comprehensive policy process, with the input of key stakeholders, to ensure that the regime upholds the principles of transparency, clarity, timeliness and enforceability.
Various parliamentary inquiries have reviewed this regime and invited public comment. Incremental changes have been made, but substantive changes have not.
The Greens look forward to this Government proposing a further comprehensive review that builds on those recommendations and seeks to deliver an electoral funding and disclosure regime in line with the principles espoused by the Committee.
Recommendation
That the Government commence a review of the electoral expenditure framework, in line with the principles outlined by Transparency International.