Commonwealth Electoral Amendment Bill (No.1) 2002


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Bills Digest No. 141  2001-02

Commonwealth Electoral Amendment Bill (No.1) 2002

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details


Passage History

Commonwealth Electoral Amendment Bill (No.1) 2002

Date Introduced: 14 March 2002

House: House of Representatives

Portfolio: Special Minister of State

Commencement: Royal Assent.

Purpose

To amend the Commonwealth Electoral Act 1918 to allow the agent of the Liberal Party of Australia (the 'Federal Secretariat') to determine the distribution of election funding between the Federal Secretariat and the State and Territory Divisions of the Liberal Party.

Background

The provisions in this Bill (the 2002 Bill) were contained in the Commonwealth Electoral Amendment Bill 2001 (the 2001 Bill). The 2001 Bill was introduced into the House of Representatives on 9 August 2001. Once passed it was introduced into the Senate on 23 August. It lapsed when Parliament was prorogued for the 2001 General Election.

Essentially, the 2001 Bill dealt with the distribution of election funding to the various State and Federal parts of Liberal Party. It provided an avenue by which the Liberal Party of Australia (the 'Federal Secretariat') could conclusively determine the proportion of election funds payable to the State branches of the Liberal Party (the 'State branches').

This determination is currently made by the Australian Electoral Commission, based on agreements between the State Branch and the Federal Secretariat. Absent an agreement, election funding would go to the State Branches. Moreover, most of the funding would go to those State Branches whose candidates achieved the best polling during the election.

Rationale

The official rationale for the amendments is that they reflect the purpose and the pattern of election funding expenditure. Thus, the Second Reading Speech asserts that 'as the Federal Secretariat of the Liberal Party is responsible for federal election campaigns', and is therefore responsible for controlling mass media coverage, etc., 'it is appropriate that all or part of the public funding be paid to the agent of the Federal Secretariat'.

At least two other rationales were put forward by other commentators.

One rational alleges that the amendments serve to relieve the Liberal Party of an unnecessary administrative burden associated with the Goods and Services Tax (GST). Broadly, the argument is that the payment of election funding by a State Division to the Federal Secretariat, for the purposes of their managing a federal election campaign, is a 'taxable supply' under the A New Tax System (Goods and Services Tax) Act 1999. While the arrangement is financially neutral from the perspective of the State Division and the Federal Secretariat (because the State Division is entitled to reclaim that GST payment in the form of input tax credits) it does impose a modest compliance burden on both parties. Peter Wells, the Director of the Western Australian Division of the Liberal Party, is reported to have observed that this creates a cash-flow problem for the State Divisions and the Federal Secretariat.(1) Moreover, he is reported to have said: 'why mess around with GST if you don't have to?'.(2) This rationale was rejected by Lynton Crosby, Director of the Federal Secretariat, who claimed that the amendments were not related to the GST but 'more accurately reflected the purpose for which public funding is paid - that is, for federal election campaigns'.(3)

Another rationale alleges that the amendments serve to settle an unresolved dispute among the Federal Secretariat and certain of the State and Territory Divisions. As indicated, while the State and Federal Branches of parties are entitled to determine by agreement the distribution of election funding, the State and Territory Divisions and the Federal Secretariat have not yet lodged such an agreement with the AEC. Thus, the distribution of election funding to the Federal Secretariat is effectively determined on an ad hoc State by State basis. While this autonomy is consistent with the federal structure of the Liberal Party, it has the disadvantage that a State Division may 'opt out'. In this context the Prime Minister was reported to have expressed concern that, following the 1996 federal election, the Queensland Division 'had reneged on handing over its share of funding'. On this basis, he was reported to have 'made it clear' the Bill was going ahead.(4)

Not surprisingly, there have been reports suggesting divisions between certain of the State Divisions and the Federal Secretariat over the measures proposed in this Bill. One Liberal Member was reported as stating that the Bill would make State Divisions 'mendicants'.(5) The backdrop to this comment has been a series of interventions by the Federal Secretariat in the affairs of State Divisions in Queensland, Victoria and New South Wales. In particular, the Queensland State Division has been reportedly plagued by factional divisions, 'dire financial troubles' (debts of $300 000) with threats of a 'federal takeover'.(6)

Issues in the 2001 Bills Digest

In Bills Digest No. 42 2001-2002 the key issues for comment fell under the headings of 'public accountability', 'centralisation' and 'the future of Liberal Party agreements'.

Public Accountability

Strictly speaking, the Federal Secretariat and the State Divisions of the Liberal Party are separate entities. A law which permits the Federal Secretariat to determine the funding entitlements of a State Division would seem to be a law which gives the Federal Secretariat, a private body, the power to make an important public funding decision.

The apparent 'outsourcing' of this decision from the AEC to the Federal Secretariat raises some difficult public accountability questions. The decision has some attributes which may be considered 'legislative' in character: it establishes a rule which must be applied by a public body (the AEC) in performing its functions. Alternatively, it has attributes which may be considered 'administrative' in character: it effectively determines a private body's entitlement to a public resource in accordance with a power given in legislation.

While it is not impermissible to delegate legislative power to a non-legislative body, it is extremely unusual to delegate such a power to a non-executive or private body. Moreover, while it is not impermissible to delegate an administrative decision making power to a private body, it would seem to be unusual to do so in a situation where the private body may be a beneficiary and may not be in agreement with other beneficiaries. Significantly, the decision making power is unfettered. No guidance is given in the Bill as to the matters which the agent of the Federal Secretariat must take into account when determining the specified federal and state percentages under proposed subsections 299(5E)-(5G).

Centralisation

One of the key themes in the measures discussed above is the centralisation of federal election expenditure and the apparent need to centralise election funding accordingly. In the context of rising emphasis on national campaigns and national media, there may be strong arguments to adopt a 'Common Fund'/'Constituency Fund' model that is used in New South Wales. In this way, a proportion of election funding is preserved for each electorate, emphasising and encouraging campaign activities at the local or state level.

The Future of Liberal Party Agreements

Significantly, it is still open for the State Division(s) and the Federal Secretariat to reach an agreement which would determine the distribution of election funding by the AEC. However, the Federal Secretariat still has the ability to issue a binding notice on the AEC. Moreover, the notice has precedence over any agreement. Thus, while an agreement may be reached, its enforceability will depend on the goodwill of the Federal Secretariat.

Issues in the 2001 Debates

The Second Reading Debates canvassed many of the issues identified above. The Opposition suggested that the real purpose of Bill was to resolve the 'internal problems of the Liberal Party' and to centralise control over financing for national campaigns.(7) It reflected that 'the federal office of the Liberal Party does not trust its state divisions', particularly Queensland.(8) It was 'not urgent', 'unnecessary',(9) an 'abuse of process', an 'abuse of parliament'(10) and, possibly, an unjustified interference with freedom of association.(11)

The Government argued that the measures were 'simple' and 'procedural'(12) and that the Liberal Party was being 'utterly transparent' about its funding arrangements.(13) In its view, the centralisation of electoral funds reflected 'the way that federal elections are now being run'. Moreover, the measures simply '[put] into practice, as far as the Liberal Party is concerned, a similar arrangement to that which relates to the Australian Labor Party',(14) or that which the Labor Party had achieved 'through coercion within their internal systems'.(15)

The debate delved into the work of the Joint Standing Committee on Electoral Matters, but the Opposition noted that the Bill was not a product of that work. It was being introduced 'not for transparency or integrity of the electoral roll but for political advantage'.(16)

The debate also implied that there might have been divisions within the Liberal Party over whether the Bill was necessary or desirable. The AM program on ABC Radio suggested that Senators Brett Mason, John Herron and George Brandis had argued that the Bill 'subverts the Menzies' ideal of a federation of state-based parties'.(17) The Opposition also identified Alby Schulz MP who indicated that while he had 'some personal views', the party would follow through with decisions made by senior members of the Liberal Party.(18)

The Bill was introduced into the Senate on 23 August 2001. Debate was adjourned to the first day of the 2002 autumn sittings in accordance with Standing Order 111.

Funding for the 2001 General Election

Funding, Rates, Etc.

Since its introduction in 1983, public funding for federal elections has grown significantly. As indicated, funding is determined by the number of primary votes obtained by the party. The original rate was 60c per vote in the House of Representatives and 30c per vote in the Senate. In 1995 the 60c was increased to 150c.(19) As at June 2001 the rate was 176.554c. The rate at the 1998 election was 162.21c. The indexation increase to June 2001 is partly a result of an inflation spike related to the introduction of the Goods and Services Tax.(20) The growth and mix of total election funding over this period is indicated in the figures below.

 

Figure 1: Total election funding disbursed by AEC (1984-2001)(21)

 

Figure 2: Distribution of election funding (2001 Federal Election)(22)

 

Main Provisions

The key provision which deals with disbursement of election funding is section 299. Broadly, where a candidate is endorsed by a registered political party, any election funding payable to the candidate is paid to the State Branch of the party (subsection 299(1)). Similarly, where a group of candidates is endorsed by a registered political party for a Senate election, election funding is also paid to the State Branch (subsection 299(4)). Where the group was endorsed by 2 or more parties, election funding is paid to the respective State Branches in such shares as agreed by the agents of those branches, or, in the absence of agreement, in such shares as the AEC determines (paragraph 299(4)(b)).

Section 299 makes provision for the payment of election funding to a Principal Agent appointed by the Australian Democrats under section 288A.

Item 2 amends subsection 299(1) to give effect to the regime described above.

  • Proposed paragraph 299(1)(b) imposes the general presumption that election funding payable to a State Branch of the Liberal Party must be paid to the agent of the Federal Secretariat.
  • Proposed paragraph 299(1)(a) provides for the payment of election funding in accordance with a notice issued under proposed subsection 299(5E).

Item 3 amends subsection 229(4) in a similar way, taking into account the existence of endorsed groups for the purpose of Senate elections.

  • For groups endorsed by a single registered political party:
  • Proposed paragraph 299(4)(aa) imposes the general presumption.
  • Proposed paragraph 299(4)(a) provides for the distribution of election funding between the relevant State Division and the Federal Secretariat in accordance with a notice issued under proposed subsection 299(5E).
  • For groups endorsed by 2 or more registered political parties:
  • Proposed paragraph 299(4)(ad) imposes the general presumption. Thus, election funding is payable in such shares as agreed by the agents of the respective State Branches. However, the share of election funding payable to a State Branch of the Liberal Party must be paid to the agent of the Federal Secretariat.
  • Proposed paragraph 299(4)(ac) provides for the payment of election funding in accordance with a notice issued under proposed subsection 299(5E). Thus, the share of election funding payable to a State Branch of the Liberal Party must be distributed between the State Branch and the Federal Secretariat.

Item 6 inserts new subsections 299(5E)-(5G) which essentially give the agent of the Federal Secretariat the power to determine for each State branch, a specified federal percentage and a specified state percentage, effectively determining the distribution of electoral funding by the AEC.

Endnotes

  1. Kirsten Lawson, 'Libs to bypass own GST woes', The Canberra Times, 08/08/01, p. 4.

  2. ibid.

  3. ibid.

  4. Michelle Grattan, ' Howard vows to fight 'unhelpful' National assault on Liberal minister's seat', The Sydney Morning Herald, 08/08/01.

  5. Tony Walker and Chelsey Martin, 'Liberal split over election funds grab', The Australian Financial Review, 27/06/01.

  6. Greg Roberts, 'Liberals set to pounce in Queensland', The Age, 6 April 2001; Louise Dodson and Greg Roberts, 'Liberals fight liberals in Queensland', The Age, 27 July 2001.

  7. Daryl Melham MP, 'Commonwealth Electoral Amendment Bill 2002', Second Reading Debate, House of Representatives, Debates, 22 August 2001, p. 29930.

  8. Lindsay Tanner MP, 'Commonwealth Electoral Amendment Bill 2002', Second Reading Debate, House of Representatives, Debates, 22 August 2001, p. 29923.

  9. Daryl Melham MP, 'Commonwealth Electoral Amendment Bill 2002', Second Reading Debate, House of Representatives, Debates, 22 August 2001, p. 29930.

  10. Lindsay Tanner MP, 'Commonwealth Electoral Amendment Bill 2002', Second Reading Debate, House of Representatives, Debates, 22 August 2001, p. 29923; Daryl Melham MP, 'Commonwealth Electoral Amendment Bill 2002', Second Reading Debate, House of Representatives, Debates, 22 August 2001, p. 29930, Craig Emerson MP, 'Commonwealth Electoral Amendment Bill 2002', Second Reading Debate, House of Representatives, Debates, 22 August 2001, p. 29942.

  11. Lindsay Tanner MP, 'Commonwealth Electoral Amendment Bill 2002', Second Reading Debate, House of Representatives, Debates, 22 August 2001, p. 29923.

  12. Gary Hardgrave MP, 'Commonwealth Electoral Amendment Bill 2002', Second Reading Debate, House of Representatives, Debates, 22 August 2001, p. 29926.

  13. Peter Slipper MP, 'Commonwealth Electoral Amendment Bill 2002', Second Reading Debate, House of Representatives, Debates, 22 August 2001, p. 29954.

  14. Peter Slipper MP, 'Commonwealth Electoral Amendment Bill 2002', Second Reading Debate, House of Representatives, Debates, 22 August 2001, p. 29954.

  15. Gary Hardgrave MP, 'Commonwealth Electoral Amendment Bill 2002', Second Reading Debate, House of Representatives, Debates, 22 August 2001, p. 29926.

  16. Daryl Melham MP, 'Commonwealth Electoral Amendment Bill 2002', Second Reading Debate, House of Representatives, Debates, 22 August 2001, p. 29930.

  17. Mark Willacy, 'Election funding set to change', AM, 22 August 2001.

  18. Michael Danby MP, 'Commonwealth Electoral Amendment Bill 2002', Second Reading Debate, House of Representatives, Debates, 22 August 2001, p. 29934.

  19. Commonwealth Electoral Amendment Act 1995, No. 42 of 1995, Schedule, item 4, replacing subsection 294(1).

  20. Dean Jaensch, 'As the poll looms, so does a GST bonus for major parties', The Advertiser, 19/07/01.

  21. Source: Australian Electoral Commission, Funding and Disclosure Report of the 1998 Federal Election, Part 2 Election Funding and Australian Electoral Commission, '2001 Federal Election funding payments announced', Media Release, 14 January 2002.

  22. Australian Electoral Commission, '2001 Federal Election funding payments announced', Media Release, 14 January 2002.

 

Contact Officer and Copyright Details

Nathan Hancock
14 May 2002
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 2002

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 2002.

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