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.
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.
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)
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'.
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).
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.
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.
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.
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.
-
- Kirsten Lawson, 'Libs to bypass own GST woes', The Canberra
Times, 08/08/01, p. 4.
- ibid.
- ibid.
- Michelle Grattan, ' Howard vows to fight 'unhelpful' National
assault on Liberal minister's seat', The Sydney Morning
Herald, 08/08/01.
- Tony Walker and Chelsey Martin, 'Liberal split over election
funds grab', The Australian Financial Review, 27/06/01.
- 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.
- Daryl Melham MP, 'Commonwealth Electoral Amendment Bill 2002',
Second Reading Debate, House of Representatives, Debates,
22 August 2001, p. 29930.
- 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.
- 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.
- Lindsay Tanner MP, 'Commonwealth Electoral Amendment Bill
2002', Second Reading Debate, House of Representatives,
Debates, 22 August 2001, p. 29923.
- Gary Hardgrave MP, 'Commonwealth Electoral Amendment Bill
2002', Second Reading Debate, House of Representatives,
Debates, 22 August 2001, p. 29926.
- Peter Slipper MP, 'Commonwealth Electoral Amendment Bill 2002',
Second Reading Debate, House of Representatives, Debates,
22 August 2001, p. 29954.
- Peter Slipper MP, 'Commonwealth Electoral Amendment Bill 2002',
Second Reading Debate, House of Representatives, Debates,
22 August 2001, p. 29954.
- Gary Hardgrave MP, 'Commonwealth Electoral Amendment Bill
2002', Second Reading Debate, House of Representatives,
Debates, 22 August 2001, p. 29926.
- Daryl Melham MP, 'Commonwealth Electoral Amendment Bill 2002',
Second Reading Debate, House of Representatives, Debates,
22 August 2001, p. 29930.
- Mark Willacy, 'Election funding set to change', AM, 22 August
2001.
- Michael Danby MP, 'Commonwealth Electoral Amendment Bill 2002',
Second Reading Debate, House of Representatives, Debates,
22 August 2001, p. 29934.
- Commonwealth Electoral Amendment Act 1995, No. 42 of
1995, Schedule, item 4, replacing subsection 294(1).
- Dean Jaensch, 'As the poll looms, so does a GST bonus for major
parties', The Advertiser, 19/07/01.
- 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.
- Australian Electoral Commission, '2001
Federal Election funding payments announced', Media Release, 14
January 2002.
Nathan Hancock
14 May 2002
Bills Digest Service
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