In June 2014, Premier Baird established the Panel to consider and report on long term reform of election funding laws in New South Wales. The Panel members are Dr Kerry Schott (Chair), The Hon. John Watkins, and Mr Andrew Tink AM. The Panel members have been appointed under Letters Patent issued by the Governor.
Following its terms of reference, the Panel is required to investigate options for long term reform of NSW political donations laws. This includes consideration of whether it is feasible and in the public interest to provide full public funding of State election campaigns. The Panel is required to report by 31 December 2014.The panel's terms of reference are
to consider and report to the Premier by 31 December 2014 on options for long term reform of political donations, including:
1. Whether or not it is feasible and in the public interest given all considerations (including legal, constitutional and others), to provide full public funding of State election campaigns.
2. What is the appropriate level to cap the expenditure on State election campaigns and what methodology should be utilised to determine that cap?
3. If full public funding of State election campaigns is to be provided: (a) what measures can be put in place to ensure the integrity of public funding; (b) what is the appropriate regulation of third party campaigners (such as peak bodies, companies or industrial organisations) to run political campaigns and the impact of full public funding on them; (c) what is the impact on minor parties and independent candidates; and (d) what is the level of public funding that would be required?
4. If full public funding of State election campaigns is not to be provided, what models are recommended, taking into account issues including: (a) what is the appropriate level of caps on political donations; (b) what measures can be put in place to ensure that any caps are effective; (c) what is the appropriate regulation of third party campaigners (such as peak bodies, companies or industrial organisations) to run political campaigns and the impact of any proposed models on them; (d) what is the impact on minor parties and independent candidates; and (e) what is the level of public funding that would be required?
5. In considering all reform options, the Panel should consider: (a) what controls should apply to the making of donations, such as (i) whether or not particular entities or groups of donors should be excluded; (ii) whether prior approval of a majority of members of a corporate entity or other organisation is required; (iii) Any limitations or restrictions on such political donations; and (b) the appropriate frequency and timing of disclosure obligations under election funding laws.
The report comments6. Whether the penalties for contravening provisions in the Election Funding, Expenditure and Disclosures Act 1981 (NSW) are commensurate with the nature of the offence. This should include advice on penalties that could apply to donors, intermediaries or recipients of unlawful donations.
The Panel advertised widely to invite written submissions by 17 September 2014, and published an Issues Paper and a series of Working Papers on its website to guide and inform the debate. The Panel has so far received over 70 submissions from a broad range of interested people and organisations including members of the public, political parties, Members of Parliament (past and present), academics, peak bodies and other third-party interest groups. The issues that the Panel is considering have been covered by the media and this has led to some lively social media debate. The common theme has been disgust with corruption with different views about how to address it.
Different opinions are held about limits on political donations and electoral expenditure, the level of public funding that should be provided, and the extent to which the State should regulate the internal governance of political parties. The Panel hosted roundtable discussions with leading academics on 24, 25 and 29 September 2014 to further inquire into these issues. Members of the public were invited to attend and transcripts have been published on the Panel’s website (see http://www.dpc.nsw.gov.au/announcements/panel_of_experts_-_political_donations).
The submissions received by the Panel do reveal some areas of consensus. Most agree that more frequent and meaningful disclosure of political donations would help electors cast an informed vote, perhaps improving public confidence in the electoral system. Many submissions describe the current offences and penalties as inadequate and call for increased penalties to match the seriousness of deliberate breaches of election funding laws. A longer timeframe to bring prosecutions of potential breaches of election funding law was also commonly advocated. There have also been calls to better educate candidates and Members of Parliament about both ethical conduct and compliance with the Act.
Although the Panel has not yet formed a view on all of the matters set out in its terms of reference, it has prepared a short Interim Report on those areas where it has formed a clear view or identified a broad direction for action.
The Panel favours a number of measures to improve transparency, accountability and integrity of the election funding regime, including:
- more frequent and timely disclosure of reportable political donations so that voters are aware of fundraising activity before an election;
- increased penalties for serious breaches of election funding laws, a longer time period for commencing prosecutions and a new general anti-circumvention measure; and
- mandatory education programs for candidates and Members of Parliament on ethical conduct and compliance with the Act.
In the Panel's view, these measures would not require significant legislative amendment or lead to further complications in an already complicated Act. The Panel believes that they could have a practical impact in terms of transparency, accountability and integrity.The report notes
In New South Wales, annual disclosure obligations apply to political parties, elected members, candidates and groups. Third-party campaigners and major political donors are also required to lodge annual declarations with the EFA.
For donations of $1,000 or more, details including the name and address of the donor must be disclosed and are published in the EFA’s searchable online database. For donations under $1,000, the total amount of small donations and the total number of persons who made those donations must be disclosed. Donations of less than $1,000 from the same source in the same financial year must be aggregated for the purposes of the disclosure threshold. Given the broad definition of ‘political donation’ under the Act, the disclosure rules capture membership and affiliation fees, the proceeds of fundraising ventures and functions, and transfers of money to the NSW branch of a political party from the federal or other State or Territory branches of the party.
Annual disclosures must be lodged within 12 weeks of 30 June each year (or within 16 weeks of 30 June each year in the case of major donors). This means there is a delay between the making of a donation, the disclosure of that donation to the EFA and the release of information about the donation to the public. For example, disclosures (other than disclosure by major donors) covering the period from 1 July 2012 to 30 June 2013 were not due to be lodged until 22 September 2013 and were not available to the public until 25 November 2013. This means that NSW voters had to wait up to seventeen months to find out the sources and amounts of political donations made during the 2012-13 financial year.
A number of jurisdictions require either continuous or real-time disclosure in the lead up to an election. For example:
- The New York City Campaign Finance Board requires candidates to report political donations within 24 hours of receipt using a software package called C-SMART. Disclosure statements are then published on the Board’s website in near real time.
- In New York State elections, candidates must lodge three campaign disclosure reports in addition to their annual disclosure reports: 32 days and 11 days pre-election and 10 days post-election. Donations of $1,000 or more received in the 11-day period before the election must be disclosed within 24 hours of receipt. Electronically filed disclosures are generally available through the New York State Board of Elections’ searchable database on the day they are received.
- Ontario, Canada requires donations of $100 or more to be reported within 10 days of being deposited. Information about such donations is then published on the Elections Ontario website within 10 days of being reported.
- In the ACT, donations over $1,000 must be disclosed within seven days if received after 1 January in an election year. Disclosures are generally made available for public inspection within a week.
- From 2015, South Australia will require immediate reporting of donations over $25,000 and weekly disclosure of donations of $5,000 or more in the lead-up to elections.