The Committee chair comments that -
Australia can be proud of its democratic system, but there is scope for improvement. In terms of political financing arrangements, the funding and disclosure system that was introduced in 1984 was a leader in its field. However, more than a quarter of a century later, Australia’s political financing arrangements are in need of review and revitalising.In relation to Private Funding the Committee recommends -
While there is no evidence that the funding and disclosure system is being abused, the inquiry has provided an opportunity to strengthen and provide more confidence in the system.
Transparency and accountability must remain central goals of our financing arrangements. Disclosure should continue to be a central pillar of our arrangements in Australia to provide electors with sufficient information on which to base selection of their political representatives. ...
In Australia, it is important to safeguard the integrity of our funding and disclosure system, but it is also vital not to unduly restrict the ability of individuals and groups to engage in the political arena, whether through donating to a candidate, political party or third party, or advocating on, or seeking to engage the community on, a particular issue. Australians’ rights to freedom of political expression and participation must also remain a high priority. In making the recommendations in this report, the committee has sought to strike an appropriate balance between these competing concerns.
Key reforms include increasing the level and frequency of disclosure, by reducing the disclosure threshold from the current $11,900 (indexed to CPI) to $1,000, without indexation. The reporting requirement for political parties, associated entities and third parties, which is currently annual will initially move to six-monthly, with a view to moving to contemporaneous reporting following an investigation of options by the Australian Electoral Commission (AEC). The committee has also recommended the introduction of special reporting of single donations over $100 000, which must be disclosed to the AEC within 14 business days of receiving the donation and made publically available soon after on the AEC website.
To improve overall transparency of the flow of money, the committee also proposes requiring greater disclosure of political expenditure. Currently, expenditure is disclosed as a block sum with no specific details.
These increased disclosure requirements will place additional administrative burdens on those with reporting obligations. To help address this, an additional stream of funding is proposed to assist Independents and political parties in meeting their increased obligations. While the provision of administrative funding does mean additional public money, the increased transparency will leave electors better armed with relevant information about the movement of money.
The committee has also made recommendations to enhance the administrative efficiency of disclosure arrangements, including the AEC enhancing its online lodgement system to assist those with reporting requirements for donations and expenditure.
The committee also recognised that effective compliance arrangements are essential for a workable funding and disclosure scheme. Offences that are straightforward matters of fact, such as the late lodgement of a return, should have administrative penalties attached, to enable the AEC to issue fines for breaches of these laws, rather than requiring criminal prosecution by the Commonwealth Director of Public Prosecutions (CDPP). However, for offences of a more serious nature, penalties should be strengthened to send a clear message to individuals, groups and the CDPP of the gravity of breaches of this nature and the need to take action on these matters.
R 1 - that the disclosure threshold be lowered to $1,000 and CPI indexation be removed.Recommendations on Options for private funding reform are -
R 2 - that the Commonwealth Electoral Act 1918 (Cth) be amended to require that only the name, suburb, postcode, state and the amount donated by individual donors be released on the public website by the AEC.
R 3 - that donations to ‘related political parties’ be treated as donations to the same political party for the purposes of the disclosure threshold. Once the combined donations to related political parties from a single donor reaches the $1,000 threshold, disclosure is required.
R 4 - that the definition of ‘gift’ in the Commonwealth Electoral Act 1918 (Cth) be amended to include fundraising events.
R 5 - that the Commonwealth Electoral Act 1918 (Cth) be amended, as necessary, to include the following:
• to require political parties and associated entities to classify their receipts exceeding the disclosure threshold as ‘donations’ or ‘other receipts’;R 6 - that the Australian Government introduce a six-monthly disclosure reporting timeframe, as outlined in the Commonwealth Electoral Amendment (Political Donations and Other Measures) Bill 2010.
• to include an adequate definition of ‘donation’ and ‘other receipt’; and
• to make the requisite changes to the enforcement and investigation provisions to allow the AEC to investigate and enforce these classifications.
R 7 - that if a single donation above $100,000 is made to a political party, associated entity, third party, candidate or Senate group, then a 'Special Reporting Event' return must be lodged with the Australian Electoral Commission by the political party, associated entity, third party, candidate or Senate group and the donor within 14 days of receipt of the donation. The AEC must publish details of these returns within 10 business days of lodgement.
R 8 - that the AEC investigate the feasibility and requirements necessary to implement and administer a system of contemporaneous disclosure and report back to the Special Minister of State by 31 March 2012.
R 9 - that the Commonwealth Electoral Act 1918 (Cth) be amended, as necessary, to require political parties to aggregate all individual donation receipts, not just those individual receipts that exceed the disclosure threshold, in line with the current disclosure requirement for donors.
R 10 - that the Commonwealth Electoral Act 1918 (Cth) be amended to ban political parties, Independent candidates, associated entities and third parties from receiving ‘gifts of foreign property’.Expenditure is covered by two recommendations -
R 11 - that a ban be imposed on anonymous donations above $50 to political parties, associated entities, third parties, Independent candidates and Senate groups.
R 12 - that in addition to the measure to prohibit gifts of foreign property being implemented, methods to curb the potential for circumvention be examined and solutions devised.
R 13 - that the Commonwealth Electoral Act 1918 (Cth) be amended, as necessary, to require political parties and associated entities to disclose details of their expenditure above the applicable disclosure threshold in their six-monthly returns.Recommendations regarding Public funding are as follows -
R 14 - that to complement the requirement for political parties and associated entities to disclose details of expenditure above the disclosure threshold, the AEC should provide guidance and enhance its online lodgement system to help ensure that those with reporting obligations have a clear understanding of, and the administrative means by which, to meet this obligation.
R 15 - that public funding to political parties and candidates be allocated on the basis of the lesser of:In relation to Third parties and associated entities the committee recommends -
• the application of the per vote formula to the first preference votes won; orR 16 - that members elected with less than four per cent of the first preference vote be eligible for election funding. These members should be entitled to the lesser of:
• reimbursement for proven expenditure following the lodgement of a claim,
provided they obtain four per cent of the first preference vote, as proposed in the Commonwealth Electoral Amendment (Political Donations and Other Measures) Bill 2010.
• the application of the ‘per vote’ rate to the first preference votes won; orR 17 - that the Commonwealth Electoral Act 1918 (Cth) be amended, as necessary, to ensure the payment of election funding entitlements for eligible candidates and Senate groups can be made to the party, whether or not the party is organised on the basis of a particular state or territory.
• reimbursement for proven expenditure following the lodgement of a claim.
R 18 - that the Commonwealth Electoral Act 1918 (Cth) be amended to implement a scheme of ongoing administrative funding for registered political parties and Independents. The proposal for administrative funding is part of a broader package of public funding reforms and should complement the changes to election funding arrangements in recommendations 14, 15 and 16. The Australian Government should, in consultation with key stakeholders, develop a model for the entitlement and payment of administrative funding appropriate for application at the Commonwealth level.
R 19 - removing the reference to ‘issues in an election’ from the definition of political expenditure, by deleting s 314AEB(1)(a)(ii) of the Commonwealth Electoral Act 1918 (Cth).In relation to Compliance the Committee's recommendations are -
R 20 - removing the reference to opinion polls and other research from the definition of political expenditure, by deleting s 314AEB(1)(a)(v) of the Commonwealth Electoral Act 1918 (Cth).
R 21 - that the frequency of disclosure reporting obligations for third parties under the Commonwealth Electoral Act 1918 (Cth) align with the frequency with which political party disclosure takes place, to minimise the potential for circumvention of requirements.
R 22 - that third parties be subject to the same disclosure threshold as political parties, Independent candidates, Senate groups, associated entities and donors.
R 23 - that the Commonwealth Electoral Act 1918 (Cth) be amended, as necessary, to impose a disclosure obligation on donors to third parties. Amendments should be worded so that only the name, suburb, state and postcode of individual donors are required to be made public.
R 24 - that the Australian Government investigate options for:
• restricting or capping third party political expenditure; andR 25 - that the Commonwealth Electoral Act 1918 (Cth) be amended to improve the clarity of the definition of ‘Associated Entity’. Particular steps that could be taken might include the following:
• setting a reasonable period relevant to the election date around which this restriction would apply.
• defining ‘controlled’ as used in section 287(1)(a) to include the right of a party to appoint a majority of directors, trustees or office bearers;
• defining ‘to a significant extent’ as used in s 287(1)(b) to include the receipt of a political party of more than 50% of the distributed funds, entitlements or benefits enjoyed and/or services provided by the associated entity in a financial year; and
• defining ‘benefit’ as used in s 287(1)(b) to include the receipt of favourable, non-commercial arrangements where the party or its members ultimately receives the benefit.
R 26 - that the Commonwealth Electoral Act 1918 (Cth) be amended, as necessary, to make offences classified as ‘straightforward matters of fact’ subject to administrative penalties issued by the AEC. The issuance of an administrative penalty should be accompanied by a mechanism for internal review.The Committee's 30th recommendation is that the funding and disclosure functions in the Commonwealth Electoral Act 1918 (Cth) continue to be exercised and administered by the AEC, and that the AEC receive additional resources to carry out these functions and exercise its enforcement powers.
R 27 - that the penalties in relation to offences that are classified as more ‘serious’ should be strengthened along the lines proposed in the Commonwealth Electoral Amendment (Political Donations and Other Measures) Bill 2010.
R 28 - that the Commonwealth Electoral Act 1918 (Cth) be amended, as necessary, to provide the AEC with the power to conduct compliance reviews and serve notices on candidates and Senate groups, in addition to federal registered political parties, their state branches and associated entities.
R 29 - that the Commonwealth Electoral Act 1918 (Cth) be amended, as necessary, to require the AEC to make available on its website compliance review reports and details of final determinations on reviews.
The dissenting report from Coalition members of the Committee comments that -
Coalition members of the Joint Standing Committee on Electoral Matters note most of the recommendations by the Committee are solely to serve the interests of the Australian Labor Party, the Greens and their backers such as GetUp. This is particularly evident in relation to the proposed lowering of the donation disclosure threshold from $11,900 to $1000, which will significantly impact the ability of individuals to give donations to political parties without the potential for intimidation and harassment.It goes on to state that -
The Coalition believes in participatory democracy and that individuals should be allowed to contribute to the political process, however, the proposed reduction in the disclosure threshold will greatly hamper the ability of individuals and firms to contribute.That is surely the point: we might consider that there is a need for actions that inhibit the ability - or perceived ability - of major interests to subvert the democratic process by 'buying the election'.
The dissenting report sniffs that -
Neither the evidence heard by the inquiry, nor the submissions of the Labor Party, the Greens, GetUp or any other group have shown there to be any cause for concern of donations under the current threshold buying political influence. These groups have also failed to address the more obvious cause for concern where affiliation fees from unions directly buy votes on the Labor Party conference floor and a significant say in the preselection process. The hypocrisy of groups such as GetUp and political parties such as the Greens is also quite concerning, whilst both organisations claim that large political donations have the potential to corrupt the process, both organisations accepted individual donations over $1 million during the 2010 Federal Election and did not declare them until well after the election campaign had finished.