Bills Digest no. 6 2008–09
Commonwealth Electoral Amendment (Political Donations
and Other Measures) Bill 2008
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
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage
history
Date introduced:
15 May 2008
House: Senate
Portfolio: Special Minister of State
Commencement:
Sections 1 3 commence on
the day the Act receives Royal Assent. Schedule 1 was to have
commenced on 1 July 2008; the Bill has been referred to the Joint
Standing Committee on Electoral Matters (see below).
Links: The
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The main
purpose of the Bill is to amend the Commonwealth Electoral Act
1918 (the Act) so as to:
- reduce the donations disclosure threshold from $10 900 (current
rate, CPI-indexed) to $1000 and remove CPI indexation
- prohibit foreign and anonymous donations to registered
political parties, candidates and members of Senate groups and also
prevent the use of foreign and anonymous donations for political
expenditure
- limit the potential for donation splitting
- introduce a claims system for electoral funding and tie funding
to electoral expenditure
- introduce a biannual disclosure framework in place of annual
returns and reduce timeframes for election returns, and
- introduce new offences and increase penalties for a range of
existing offences.
The Bill also contains other provisions such
as application and savings provisions.
In 2006 the Howard Government made a number of
changes to the Act including raising the disclosure threshold for
political donations ( gifts in the Act) from $1500 to more than
$10,000 (CPI indexed) and raising the limit for anonymous donations
from $1000 to donations exceeding $10 000 (also indexed).[1] These and other measures
were controversial and were opposed by the Australian Labor Party
(ALP) (then in Opposition) and by the minor parties.[2] During Senate debate on
the Bill introducing the changes Senator Carr stated that:
The opposition s opinion is that this bill
should be entirely rejected. It should be withdrawn, and I have
moved a second reading amendment to that effect.[3]
In its National Platform and Constitution
2007 and pre-election policies, the ALP indicated its
intention to make further changes to the electoral system. These
included reversing the increase in the donation threshold
established by the Howard Government and removing tax deductibility
for donations.[4] In
March 2008 the Special Minister of State announced the introduction
of legislation in the 2008 winter sitting and specified some of the
measures that would be contained in the legislation.[5]
While it has been reported in the media that
the Opposition has decided to oppose the legislation, the
Opposition has not yet formally indicated its position.[6] Upon introduction of the
Bill the Opposition was highly critical of the proposed measures,
stating that they were ill-conceived and patchwork , that there had
been no consultation, and that the Government was pre-empting its
own Green Paper review process (see below).[7] The Opposition also reiterated its call
for the Government to support its motion in the Senate to refer a
wide-ranging inquiry to the Joint Standing Committee on Electoral
Matters (JSCEM) regarding the 2007 federal election and election
finance matters (see below).[8] Prior to the introduction of the Bill the Opposition had
expressed concerns regarding consultation on the proposed electoral
reform measures and the lack of Government support for the JSCEM
reference.[9]
In addition, current and former Liberal MPs
have suggested that the proposed disclosure threshold changes will
have a disproportionately adverse effect on the Liberal Party
donation base due to a reluctance on the part of certain donors,
such as individuals and small business, to have donations publicly
disclosed. It has been suggested that the lower threshold could
lead to intimidation of such donors, whereas the lower threshold
would not be an issue for unions.[10] Concern has also been expressed that the eventual
effect of the changes could be entrenchment of the ALP in
government and an erosion of democratic contestability between the
two major parties.[11]
It has also been argued from the Liberal side
that union affiliation fees and third party (including union)
campaign expenditure in favour of the ALP must be brought within
the scope of the Government s electoral finance reform.[12] For its part, the
Government has indicated that union donations and affiliation fees
will be scrutinised (including the possibility of a ban) as part of
its broader electoral finance reform process (see below).[13] One national union has
reportedly supported the Commonwealth Government s electoral
finance reform drive.[14]
In terms of the minor parties, in late March
2008 the Australian Greens endorsed the electoral measures
announced by the Government while also calling for further
donations reform and an end to preference deals.[15] In late June 2008 Family First
signalled its intention to seek a cap on the amounts claimable by
political parties for electoral expenditure.[16]
Independent Senator Nick Xenophon has not yet
indicated his position on the Bill, but in a May 2008 submission to
the JSCEM inquiry, then Senator-elect Xenophon indicated his
support for electoral finance reform measures such as continuous
online donation disclosure and linking public electoral funding to
expenditure and to restrictions on donations.[17]
In the lead-up to the introduction of the Bill
a range of issues relating to the proposed reforms were raised in
the media including:
- the administrative burden that could flow from the proposed
lowering of the disclosure threshold.[18]
- the delay that would still occur before disclosures were made
public under the proposed biannual reporting framework, and the
fact that timely internet-based disclosures are already
possible.[19]
- the possibility that proposed changes will have a
disproportionately adverse effect on the Liberal Party and related
matters (see above).[20]
- the possibility that the proposed funding changes will have a
negative impact on the ability of minor parties and independents to
financially compete in campaigns due to smaller donation-bases and
future difficulties in building up campaign funds under the
proposed provisions.[21]
On 18 June 2008 the Bill was referred by the
Senate to the JSCEM for inquiry and report on 30 June 2009.[22] During debate on the
motion to refer the Bill, it was moved by Senator Fielding that the
Committee s reporting date should be changed from 30 June 2009 to
before November 2008 : this was not agreed to by the
Senate.[23] On
19 June Senator Fielding placed on notice a second motion that
the JSCEM report by 10 November 2008 ; consideration of this motion
by the Senate has been postponed until 26 August 2008.[24]
Before the Bill was referred to the JSCEM the
Committee had already received references to inquire into the 2007
federal election (referred by the Special Minister of State on
27 February 2008 and by the Senate on 12 March 2008) and the
Commonwealth Electoral (Above-the-Line Voting) Amendment Bill 2008
(referred by the Senate on 14 May 2008). The terms of reference for
the 2007 federal election element of the JSCEM inquiry are as
follows:
All aspects of the 2007 Federal election and
matters related thereto, with particular reference to:
(a) the level of donations, income and
expenditure received by political parties, associated entities and
third parties at recent local, state and federal elections;
(b) the extent to which political fundraising
and expenditure by third parties is conducted in concert with
registered political parties;
(c) the take up, by whom and by what groups, of
current provisions for tax deductibility for political donations as
well as other groups with tax deductibility that involve themselves
in the political process without disclosing that tax deductible
funds are being used;
(d) the provisions of the Act that relate to
disclosure and the activities of associated entities, and third
parties not covered by the disclosure provisions;
(e) the appropriateness of current levels of
public funding provided for political parties and candidates
contesting federal elections;
(f) the availability and efficacy of free time
provided to political parties in relation to federal elections in
print and electronic media at local, state and national levels;
(g) the public funding of candidates whose
eligibility is questionable before, during and after an election
with the view to ensuring public confidence in the public funding
system;
(h) the relationship between public funding and
campaign expenditure; and
(i) the harmonisation of state and federal laws
that relate to political donations, gifts and expenditure.
That in conducting the review the committee
undertake hearings in all capital cities and major regional centres
and call for submissions.[25]
The JSCEM has resolved to conduct a single
inquiry encompassing its multiple references.[26] In addition to its 30 June 2009
reporting date for the Bill, the JSCEM has been asked to report on
the Commonwealth Electoral (Above-the-Line Voting) Amendment Bill
2008 not before June 2009 (the 2007 federal election element of the
inquiry has no set reporting date).[27]
Senator Fielding s notice of motion to amend
the 30 June 2009 reporting date for the Committee s consideration
of the donations Bill to be by 10 November 2008 indicates that the
matter may come before the newly-constituted Senate for
consideration in the near future. The JSCEM s current Resolution of
Appointment may in any event enable the JSCEM to ignore the
reporting date and report on a date of its choosing. The
Resolution, which is authoritative for the operations of the
Committee, states that the Committee may report from time to time
.[28] Certainly 30
June 2009 would seem to be a long timeframe for consideration of
the Bill.
The Bill is the first element in a broad
electoral reform agenda being pursued by the Government. On 28
March 2008 the Special Minister of State announced that the
Government would be producing a Green Paper on wider electoral
reform.[29] The
Green Paper will be released for discussion in two parts; the first
part was to have been released in July 2008 (but has not yet
appeared), and the second part is scheduled for release in October
2008. The first part of the Green Paper will examine disclosure,
funding and expenditure issues and the second part will examine
broader matters such as enrolment processes, roll closures, and the
harmonisation of Commonwealth, state and territory electoral
laws.[30]
The Government will ask the JSCEM to consider
the Green Paper and will seek the participation of the state and
territory governments in the reform process.[31] The Green Paper will be prepared by
the Australian Electoral Commission (AEC), the Department of Prime
Minister and Cabinet, and the Department of Finance and
Deregulation.
As noted above, the abolition of tax
deductibility for donations was part of the Government s platform
and pre-election policy. Proposed measures to abolish tax
deductibility for donations are contained in a separate bill, the
Tax Laws Amendment (2008 Measures No. 1) Bill 2008.[32] That Bill, which
contains a wide range of tax measures, was defeated in the Senate
on 26 June 2008.
Currently under the Act candidates and Senate
groups are entitled to indexed funding for each first preference
vote received once a minimum of four per cent of first preference
votes are attained. In the case of party-endorsed candidates and
Senate groups the funding entitlement is paid to the relevant
registered political party. In the case of unendorsed candidates
and Senate groups the funding entitlement is paid directly to the
candidate or group (or to their agent).
In its 2005 inquiry report on the 2004 federal
election the JSCEM acknowledged concerns relating to potential
profiteering by candidates under the current system. A majority of
the Committee concluded that instituting a campaign expenditure
reimbursement system (which had operated between 1983 and 1995)
would not be viable due to the administrative burden and the
potential for unjustified expenditure to still be claimed. It was
suggested, however, that raising the first preference vote
threshold to five per cent or instituting separate thresholds for
House of Representatives and Senate candidates could be potential
solutions to the profiteering issue.[33] In an earlier (2000) election inquiry
report a majority of the JSCEM had expressed the view that
returning to a campaign expense reimbursement system would realise
little if any savings but would simply reimpose another layer of
administration and cost and also delay the payment of funding
entitlements compared to the present system .[34]
The Bill seeks to introduce a claims-based
funding framework that returns to the principle of tying electoral
funding to electoral expenditure; the substance of the existing
definition of electoral expenditure in the Act would not be changed
by the Bill. In the Second Reading speech on the Bill it was stated
that the new measures:
are aimed at addressing the possibility that
some candidates and other groups may obtain a windfall payment of
election funding as a result of running for office The policy
intention behind these measures is that candidates, registered
political parties and Senate groups should only receive the lesser
amount of either the electoral expenditure that was actually
incurred in an election campaign, or the amount awarded per vote
provided at least 4% of first preference votes have been
won.[35]
The Bill seeks to achieve these aims by:
- introducing new electoral funding entitlement provisions for
registered political parties, unendorsed candidates, unendorsed
Senate groups, and joint Senate groups. A new base funding rate of
$2.1894 (CPI-indexed) would be introduced, and the funding
entitlement would either be this rate per first preference vote
received or the amount of electoral expenditure claimed and
accepted by the AEC, whichever is the lesser. Funding would be
contingent on attaining at least four per cent of first preference
votes.
- registered political parties would be entitled to funding in
respect of party-endorsed candidates (endorsed candidates for the
House of Representatives, endorsed ungrouped Senate candidates, and
endorsed candidates in a Senate group) who met the four per cent
threshold. Special requirements would apply in the case of joint
Senate groups (see below).
- unendorsed candidates (candidates not endorsed by a registered
political party or members of a Senate group) who met the four per
cent threshold would be entitled to funding.
- unendorsed Senate groups (groups comprised of candidates who
are not endorsed by any registered political party) meeting the
four per cent threshold would be entitled to funding.
- for joint Senate groups (groups comprised of candidates
endorsed by two or more registered political parties), the Bill
would require the agents of one of the political parties to submit
the signed agreement between the parties setting out the division
of first preference votes to the Electoral Commissioner before
polling day for the Senate election. Compliance with this
requirement would mean that the first preference group votes would
be divided according to the agreement; non compliance would mean
that division of first preference votes would be determined by the
AEC.
The indexation of the base rate would commence
on 1 January 2009.
- introducing a new claims process for electoral funding whereby
making a claim would be necessary in order to receive the funding
entitlement. Under the provisions in the Bill the proposed claims
process would have the following elements:
- agents of registered political parties, candidates or groups
would need to make a claim for funding. Agents would be able to
make interim claims, or final claims, or both (one of each only).
Final claims would need to specify all electoral expenditure for
which funding is sought, including expenditure specified in an
interim claim (final claims would be able to do this by making
reference to the interim claim).
- claims would need to specify electoral expenditure incurred by
the parties (or party-endorsed candidates), candidates, or groups
(or candidate members of groups) for which funding was
sought.[36]
- interim claims would need to be lodged with the AEC between the
20th day after polling day and six months after polling
day. Final claims for a single election would need to be lodged
with the AEC between the day on which the election writ was
returned and six months after polling day; final claims relating to
two or more elections (presumably to account for by-elections and
separate Senate elections) would need to be lodged with the AEC
between the day on which the election writs were returned and six
months after polling day, or, where election writs were returned on
different days, between the last day of writs being returned and
six months after polling day. Claims lodged outside the periods
specified would be invalid.
- the AEC would have to accept or refuse the claim and pay the
applicable funding entitlement within 20 days of receiving a claim.
The only consideration for the AEC in determining a claim would be
whether the claimed expenditure was electoral expenditure and
whether it was actually incurred.
- for accepted interim claims, the AEC would have to pay 95 per
cent of the relevant entitlement for first preference votes
calculated as at the 20th day after polling day or the
amount of accepted electoral expenditure, whichever is the lesser.
Where an acceptable interim claim was lodged but no final claim was
lodged, no further election funding would be payable and the
interim claim would be taken to be a final claim by the AEC. This
presumably means that the remaining five per cent of the
entitlement would be forfeited; yet the Explanatory Memorandum
states that the intention here is similar to an existing subsection
in the Act which provides for paying the entitlement balance as
soon as possible after the full entitlement is known.[37]
- for accepted final claims, the AEC would have to pay 100 per
cent of the relevant entitlement for first preference votes or the
amount of accepted electoral expenditure, whichever is the lesser.
Amounts already paid under interim claims would be deducted from
the final payment.
- where a final claim was refused the AEC would be obliged to
serve a notice on the relevant agent stating that the claim had
been refused together with reasons for the refusal. Agents would be
able to apply for reconsideration of refused claims and the Bill
provides for a reconsideration process to be followed by the
AEC.
- election funding entitlements in respect of candidates may
still be payable in the event of a candidate s death.
Importantly, under the new framework the AEC
would have the power to revisit and vary a decision to accept a
final claim for electoral expenditure where the AEC became
satisfied that the amount of expenditure should not have been
accepted or that only a lesser amount of expenditure should have
been accepted. In cases where a variation decision was made after a
funding entitlement had been paid and the total payment exceeded
what should have been paid, the excess amount would be an
overpayment and would be recoverable as a debt due to the
Commonwealth. The reconsideration process for refused claims would
also be available in relation to variation decisions.
The Bill also proposes to ensure that
electoral expenditure incurred by divisions of state and territory
branches of political parties (or on their behalf) is treated as
having been incurred by the branch, thus enabling state and
territory branches to lodge returns and claims for divisional
funding and expenditure.
Currently under the Commonwealth Electoral
Act 1918 the disclosure threshold for donations is donations
totalling more than $10 900 (CPI-indexed). The Bill proposes to
lower the disclosure threshold to donations totalling $1000 or more
and to remove indexation. Reversal of the threshold increase
introduced by the Howard Government in 2006 has been ALP policy
since before the 2007 federal election (see above). The Second
Reading speech on the Bill indicated that the main rationale for
these measures is:
to provide transparency and accountability in
the donations and expenditure received or incurred by key
participants in the political process a flat rate of $1,000 greatly
extends the transparency of our system and ensures that the scope
for any undisclosed gifts will be reduced.[38]
The Bill also seeks to limit the potential for
donation splitting (making multiple donations under the disclosure
threshold to different branches of a political party in order to
avoid disclosure). Currently under the Act the upper limits of
donations that can be made without disclosure by using donation
splitting are high (e.g. a total of $87 200 from an individual
donor making eight separate donations of $10 900 to the state and
territory branches of a major political party). The Bill seeks to
limit the potential for donation splitting by:
- inserting a definition of related into the Act which would
apply to the whole Act and thus the funding and disclosure
provisions in Part XX.[39] This would provide that a political party is related to
another political party if one of the parties is part of the other
party or if both parties are parts of the same political
party.
- inserting provisions which would provide that donations made to
related political parties are treated for disclosure purposes as
donations made to the single political party as one entity, thereby
triggering the disclosure requirements for donations totalling
$1000 or more to related parties.
While these measures would greatly lower the
amount that could be donated without disclosure by means of
donation splitting, they would not prohibit the practice outright.
Under the proposed rules it would still be possible to utilise
donation splitting and avoid disclosure for donations totalling
$999 or less (e.g. eight separate donations of $124.87 to the state
and territory branches of a party).
The Bill also proposes to bring donations made
to political parties via intermediaries into the disclosure regime
by treating such donations as donations made directly to the
political party, and by requiring the disclosure of donations of
$1000 or more which are received by intermediaries and then used to
fund donations to parties. In addition, the Bill proposes to ensure
that donations of $1000 or more which are made to political parties
which are not registered are also brought within the disclosure
requirements.
The Bill further proposes to lower the
threshold for lawful loans to political parties, state or territory
party branches, candidates, members of Senate groups, or persons
acting on behalf of parties, branches, candidates or Senate groups
from the current level of $10 900 (CPI-indexed) to $1000
(unindexed).
Currently under the Act donation and
expenditure returns for elections must be submitted within 15 weeks
after polling day, and annual returns must be submitted once per
year within 16 or 20 weeks after the end of financial year
depending on circumstances.
For election returns, the Bill proposes to
shorten the disclosure timeframe by requiring that election returns
must be submitted within eight weeks after polling day. In place of
the current annual return framework, the Bill proposes to introduce
a new biannual framework involving two reporting periods , one
being the first six months of the financial year and the other
being the full financial year, and a requirement to submit returns
after each period. These returns would need to be submitted within
eight weeks after the end of each reporting period.
In the Second Reading speech on the Bill it
was stated that the proposed changes:
will ensure that the Australian Electoral
Commission has in its possession details of gifts, revenues and
political expenditure that are both timely and up-to-date. The
publication of this information will also be more timely and will
enable the Australian community to fully examine the financial
dealings of the main players involved in the political process and
to scrutinise the sources of any donations that have been
received.[40]
For donors, under the Bill s provisions
biannual returns would need to be submitted if donations of $1000
or more are made to the same political party in both reporting
periods (i.e. within the first six months of a financial year and
again during the remainder of the financial year). Such returns
would need to be submitted within eight weeks of the end of each
reporting period.
- the new framework would not apply to donations returned within
six weeks of receipt. However, the framework would apply
to any foreign or anonymous donations of $1000 or more, whether or
not such donations were returned or paid within six weeks (see
below for new foreign and anonymous donation measures).
- under the definition of related (see above) donations to two or
more related parties would be treated as donations to the same
registered political party if at least one of the parties is
registered.
- donations made to persons or bodies with the intention of
benefiting a political party would also be treated as donations
made directly to the party for the purposes of this system.
- to avoid duplication, donors who make donations of $1000 or
more in the first six months of a financial year and submit the
necessary return would not be required to submit a second return
for the full financial year if no further donations were made in
the remainder of the financial year. Also, donor returns submitted
for a full financial year would not need to disclose donations that
were made during the first six months of the financial year and
disclosed separately for that reporting period.
For political parties, associated entities,
and those incurring political expenditure who are subject to the
current disclosure requirements in the Act, the Bill would apply
the new biannual reporting framework, $1000 donations threshold,
dual reporting periods, and eight week disclosure timeframe.
Returns would need to be submitted biannually after the end of each
reporting period without exception.
For political parties and associated entities
the following additional features would also apply:
- the new framework would not apply to donations returned within
six weeks of receipt. However, the framework would apply
to any foreign or anonymous donations of $1000 or more, whether or
not such donations were returned or paid within six weeks (see
below for new foreign and anonymous donation measures).
- all donations would need to be included when calculating
whether particulars of donations would need to be disclosed.
- the disclosure threshold for outstanding debts would be reduced
to $1000.
While the proposed shortened disclosure
timeframes and biannual framework would reduce the current delays
before disclosures are made public, it is important to note that
some delay would still occur. The Government has indicated that
disclosures made under the biannual framework would be publicly
available within three months of the end of a reporting
period.[41] The
more timely mechanism of posting disclosures on the internet as
they are made has been flagged as a possible matter for
consideration by the forthcoming Green Paper.[42]
The Bill also proposes to change the
requirements for additional returns that must be submitted in
respect of donations received which enable or reimburse political
expenditure. Additional returns would need to be submitted for each
donation of $1000 or more received from a donor (defined as a major
donor ) in a reporting period that had the purpose of enabling or
reimbursing political expenditure.
In addition, the Bill proposes to change the
current provisions in the Act governing public inspection or
perusal of returns and claims so that they may be inspected or
perused as soon as is reasonably practicable after lodgement.
Currently the Act places no restrictions on
foreign donations. In its 2005 inquiry report on the 2004 federal
election a majority of the JSCEM noted foreign donations as an
issue, but concluded that banning donations from particular sources
could lead to inequities and that, more generally, reform was not
required as there was no evidence of corruption or undue
influence.[43]
There have been calls in the past, for example from former
Democrats Senator Andrew Murray, for foreign donations to be
banned.[44] The
issue of foreign donations achieved some recent prominence with the
disclosure in early 2006 of a donation of $1 million to the
Liberal Party made by British peer Lord Ashcroft in 2004.[45]
In essence, the Bill proposes to prohibit all
foreign donations to registered political parties, candidates and
members of Senate groups and to prevent the use of foreign
donations for political expenditure. In the Second Reading speech
on the Bill it was stated that:
There has been concern that large overseas
companies may be able to exert influence through the making of
significant and often unreported gifts and donations The policy
intent is to ensure that the source of all funds that are used for
political purposes are clearly identified, to enable the AEC to
have jurisdiction over those donations, and to enable the
Australian public to scrutinise any possible impact that such
donations may have on political decision-making.[46]
The Bill seeks to achieve these aims by:
- making it unlawful for registered political parties, state or
territory party branches, or persons acting on behalf of a party or
branch to receive donations of foreign property.
- making it unlawful for candidates, members of Senate groups, or
persons acting on behalf of candidates or Senate groups to receive
donations of foreign property during the candidacy or group period
(the period beginning with the announcement or nomination of a
person s candidacy or with Senate candidates request to have their
names grouped and ending 30 days after polling day).
- preventing the use of foreign property donations for political
expenditure by making it unlawful for a person to incur political
expenditure if the person:
- is not and has not been a candidate or member of a group and is
not an associated entity
- was enabled to incur the expenditure by means of a foreign
donation
- is required to provide a return regarding the expenditure,
and
- if the donor s main purpose in making the foreign donation was
to enable the recipient to incur the expenditure.
- preventing the use of foreign property donations for political
expenditure by making it unlawful for current or former candidates,
or members of groups, to incur political expenditure where they
were enabled to incur the expenditure by means of a foreign
donation, and where the donor s main purpose in making the donation
was to enable the recipient to incur the expenditure.
- Preventing the use of foreign property donations for political
expenditure by making it unlawful for associated entities to
receive foreign donations if the donor s main purpose in making the
donation was to enable the entity to incur the expenditure.
The Bill defines foreign property as money
standing to the credit of an account kept outside Australia, other
money located outside Australia, or property other than money
located outside Australia ( Australian property is defined with the
same categories of property being kept or located in Australia).
The Bill also contains provisions to prevent the use of
intermediaries for donating foreign property and provisions for
determining whether a donation or transfer is of Australian or
foreign property.
One potential effect of the drafting of the
Bill s foreign donation measures is that it could be unlawful to
receive, or incur political expenditure on the basis of, donations
made by Australian citizens but sourced from overseas accounts.
The Bill specifies that the new provisions
governing foreign donations would not apply if a donation was
returned within 6 weeks of receipt. In the event of an unlawful
donation not being returned within 6 weeks, the Bill would make the
amount of the donation payable to the Commonwealth and sets out
liability and debt recovery arrangements. The Bill would also
ensure, however, that the Commonwealth would not be able to recover
the amount or value of a donation twice.[47]
Currently under the Act it is unlawful for a
political party, state or territory party branch, candidate or
Senate group or persons acting on behalf of a party, branch,
candidate or Senate group to receive donations of more than
$10 900 (CPI-indexed) from anonymous donors.
In essence, the Bill proposes to prohibit all
anonymous donations to registered political parties, candidates and
members of Senate groups and to prevent the use of anonymous
donations for political expenditure by:
- making it unlawful for registered political parties, state or
territory party branches, or persons acting on behalf of a party or
branch to receive anonymous donations.
- making it unlawful for candidates, members of Senate groups, or
persons acting on behalf of candidates or Senate groups to receive
anonymous donations during the candidacy or group period (the
period beginning with the announcement or nomination of a person s
candidacy or with Senate candidates request to have their names
grouped and ending 30 days after polling day).
- preventing anonymous donations via intermediaries by making it
unlawful for donations to be received by the persons or entities
set out above from a donor where an anonymous gift received by the
donor enabled the donor to make the donation.
- making it unlawful for a person to incur political expenditure
if the person is not and has not been a candidate or member of a
group, was enabled to incur the expenditure by means of an
anonymous donation, and is required to provide a return regarding
the expenditure. The Bill would also make it unlawful for current
or former candidates or members of groups to incur political
expenditure where they were enabled to incur the expenditure by
means of an anonymous donation.
In a similar vein to the treatment of foreign
donations, the Bill specifies that the new provisions governing
anonymous donations would not apply if an anonymous donation was
returned within 6 weeks of receipt or, if return is not possible or
practicable, the amount of the donation was paid to the
Commonwealth within the 6 week period. In the event of an unlawful
donation not being returned/paid to the Commonwealth within 6
weeks, the Bill would make the amount of the donation payable to
the Commonwealth and sets out liability and debt recovery
arrangements. As noted above, however, the Bill would also ensure
that the Commonwealth would not be able to recover the amount or
value of a donation twice.
The Bill proposes to increase penalties for
some existing offences in Part XX of the Act and introduce some new
offences. In the Second Reading speech on the Bill it was indicated
that the rationale for the changes was to ensure that the AEC can
implement and enforce the provisions introduced by the Bill. It was
also stated that existing penalties in the Electoral Act have
largely remained the same as when introduced in 1983 , and
that:
In relation to claims for election funding, the
levels of penalties have been substantially increased to reflect
the seriousness of the crimes and the amount of public funds that
are paid following an election.[48]
Penalties would be increased for the offences
of:
- failure to furnish a return
- furnishing an incomplete return
- failure to retain records
- lodging a claim or return that is known to be false or
misleading in a material particular
- providing information to another that is false or misleading in
a material particular in relation to the making a claim or the
furnishing of a return, and
- failure or refusal to comply with notices relating to
AEC-authorised investigations and knowingly giving false or
misleading evidence required for such investigations.
For the offences relating to false or
misleading information and failure or refusal to comply with
notices, the Bill would also introduce imprisonment as a possible
penalty and would repeal the current reasonable excuse defence for
the non-compliance offences. Failure to furnish a return,
furnishing an incomplete return, failure to retain records, and
failure to comply with a notice would no longer be offences of
strict liability as they are currently under the Act.
New offences would be created for the unlawful
receipt of foreign or anonymous donations and the unlawful
incurring of political expenditure in relation to foreign or
anonymous donations (see above). Penalties for these offences would
be imprisonment for 12 months or 240 penalty units or both.[49] Liability arrangements
are set out for entities that are not bodies corporate; exclusions
from liability are specified here where there is no knowledge of
the circumstances making the donation unlawful or where all
reasonable steps have been taken to avoid these circumstances.
The Bill also proposes to create new
arrangements for the recovery of undisclosed donations. Under the
new arrangements a donation would be undisclosed where details of
the donation were required to be included in election and biannual
returns, but were not, or where the return was not furnished within
the time required. The amount or value of undisclosed donations
would be payable to the Commonwealth and the Bill sets out
liability and debt recovery arrangements. The Bill would also
provide an extension of time mechanism so that relevant donation
details could still be furnished so as to avoid donations becoming
undisclosed.
Further, the Bill also seeks to broaden the
investigatory scope of AEC-authorised officers in relation to Part
XX compliance by extending the list of persons who may be required,
by notice, to produce documents or other evidence (for example
candidates and their agents, members of Senate groups and their
agents, and those acting on behalf of registered political parties,
party branches, candidates, groups, and associated entities would
be added to the list).
The Government has indicated that the
amendments may result in increased costs for the AEC. Public
funding may be reduced due to the electoral funding reforms and
there may be additional revenue from the recovery of unlawful or
undisclosed donations.[50]
Definition amendments
Item 1 inserts into the
definition section of the Commonwealth Electoral Act 1918
(the Act), section 4, a definition of when a political party is
related to another political party, which is when
one of the parties is part of the other, or when both parties are
parts of the same political party. This amendment is necessary as
the current definition of related political parties in located in
Part XI of the Act which provides for the registration of political
parties. The definition is being placed in the general definition
section of the Act by this Bill so that it will apply across the
whole of the Act, but in particular to Parts XI and XX. Part XX of
the Act deals with election funding and financial disclosures,
which are the principle features being dealt with by this Bill.
Item 2 inserts a new
definition of reporting period for the purposes of
the Act which will be either the first six months of a financial
year or a full financial year. The definition is related to new
biannual disclosure requirements in item 37and
also to items 54-57, items 60-67,
70-77, item 80 and item
104 which are discussed below.
The proposed amendments reflect the policy
decision to tighten the electoral laws so that candidates and other
groups can no longer obtain a windfall payment for running for
office. The proposed amendments will have the effect that
candidates, registered political parties and Senate groups should
only receive the lesser amount of either the electoral
expenditure that was actually incurred in the campaign or the
amount awarded per vote, provided at least four per cent of first
preference votes have been won.
Item 16 repeals sections 294
and 297 entirely and creates new Subdivision A and
new sections 293, 294,
295 and 296 in Part XX of the Act which deals with
election funding and financial disclosure.
New section 293 applies to
candidates in the House of Representatives and the Senate belonging
to a registered political party whose total number of formal first
preference votes is at least four per cent of the total number of
such votes cast in the election.
For an endorsed candidate in the House or the
Senate (and who is not a member of a group), new paragraphs
293(2)(a)(i) and (b) provide that the registered political
party is entitled to the lesser amount of $2.1894 for each
formal first preference vote or the amount of actual electoral
expenditure claimed and accepted by the Australian Electoral
Commission (AEC).
For a candidate in a Senate election who is a
member of a group the same choice will also apply, except if
new section 296 applies. New section
296 makes provision for the event that two or more
political parties endorse candidates who are members of a group in
a Senate election. One of the agents of the parties must provide a
signed agreement to the AEC of how the parties agree to divide the
formal first preference votes before polling day. If this is done,
then the agreement will prevail. If a copy of an agreement is not
provided, the formal first preference votes are divided in whatever
way the AEC determines (new subsection
296(5)).[51]
Entitlements of unendorsed candidates and
unendorsed groups who have received the threshold percentage of
votes, are similarly limited to the lesser amount of the amount per
vote given or the amount actually incurred and accepted by the AEC
(new sections 294 and 295).
New Subdivision B,
new sections 297 298H are the machinery provisions
of how to make a claim for election funding to the AEC.
An agent can make:
- an interim claim,
- both an interim and final claim, or
- just a final claim (new subsection
297(2)).
If an interim claim is made it must be made
between the 20th day after polling day and six months
after the polling day (new subsection
298B(1)).
A final claim for only one election must be
lodged between the day on which the writ is returned and six months
after the polling day (new paragraphs 298B(2)(a)(i) and
(b)). A final claim relating to two or more elections must
be lodged on the days on which the writs are returned (or if the
writs are returned on different days, the last of those days) and
ending six months after the polling day for the election or
elections (new paragraphs 298B(2)(a)(ii) and (b)).
The Explanatory Memorandum does not explain these provisions
regarding two or more elections but, as noted above, it is
presumably in place to cover circumstances of a by-election or a
Senate election occurring on a different date to a general
election.
A claim made outside the times set in
subsections 298B(1) and (2) will not be valid and:
[w]ill not be processed by the Commission or
attract any election funding.[52]
New sections 298D and 298E
mandate that the AEC must pay the lesser amount between the amount
calculated under new paragraphs 293(2)(a),
294(2)(a) or 295(2)(a) or the
amount actually expended ( accepted ) (However, note that under
new paragraph 298D(2)(a) for interim claims, the
amount is 95 per cent of the amount calculated, see p.12 of this
Digest, above ).
If a claim is refused, the AEC must serve a
notice of the refusal and the reasons for the refusal on the agent
of the appropriate party, person or group (new section
298F), and the agent can apply to the AEC for a
reconsideration of the refusal (new section
298H).
The Administrative Appeals Tribunal Act
1975 (the AAT Act) provides for review of decisions made under
an enactment to be reviewable by the Administrative Appeals
Tribunal (AAT) if the enactment provides that an application can be
made. For example, section 121 of the Commonwealth Electoral
Act 1918 currently provides that certain decisions made by an
Australian Electoral Officer or a Divisional Returning Officer can
be reviewed by the AAT if an application is made to it. Section 141
of the Act allows an application to be made to the AAT for review
of decisions made by the AEC in relation to the registration or
refusal to register a political party. However, none of these are
relevant to any decision by the AEC about a claim for electoral
funding. No other provision of the Act or the Bill enables for
review by the AAT.
However a decision by the AEC refusing to
refund an amount under the Act or a dispute as to quantum would be
reviewable under the Administrative Decisions (Judicial Review)
Act 1977 before the Federal Court of Australia.[53] The review would be
restricted to whether the AEC made an error of law in its decision,
as opposed to merits review under the AAT Act.
Items 17 20 make amendments
in new Subdivision C relating to payments of
election funding. Subsections 299(2) to (5) are repealed and
replaced with new subsections 299(2) and
(3) to provide that any payment made in respect of an
unendorsed candidate (that is, not within subsection 299(1)), or in
respect of a Senate group is to be made to the candidate s or group
s agent.
Section 299(1) remains substantially unamended
in relation to payment of election funding for endorsed
candidates.
Item 20 repeals and
substitutes sections 300 and 301 which deal with
payments in the event of the death of a candidate or the death of a
candidate is a member of a group. New subsections 300(1)
(4) collapses the two provisions into one provision with
no substantive change to the existing provisions.[54]
New section 301 will allow
the AEC to vary a decision[55] made under section 298C to accept an amount of
electoral expenditure. If under the varied decision an overpayment
had been made, the excess amount may be recovered by the
Commonwealth as a debt due to the Commonwealth by way of court
action (new subsection 301(3)). This effectively
replaces subsection 299(6) which will be repealed (item
19).
The decision to reduce the disclosure
threshold for donors, registered political parties, candidates and
others involving in incurring political expenditure from the
current level of donations over $10 900 (CPI-indexed) to the
proposed level of $1 000 or more (unindexed) is
dealt with in items 23, 24,
26, 27, 30,
32, 34, 41,
43, 45, 50,
57, 60, 67,
76 and 78. Item 102 repeals
section 321A of the Act which provides for the
indexation of money amounts in certain provisions of the Act and,
in particular, the provisions dealing with disclosure of donations.
As a consequence of this proposed repeal, all of the notes to the
sections amended referring to indexation under section 321A are
also repealed (for example, items 25, 28, 31, 33, and 35
etc.).
Item 21 inserts new
section 303A which will have the effect that donations
that are returned within six weeks of receipt will not come within
Division 4 (which covers disclosure of donations). However, foreign
and anonymous donations will not be exempted from
the disclosure provisions and will come within Division 4 of the
Act (new subsections 303A(2) (5)).
Election disclosure returns will have to be
returned within eight weeks, down from 15 weeks
(item 22).
Items 23,
24, 26 and 27 will reduce the
disclosure threshold from over $10 900 (current, CPI-indexed) to $1
000 or more in existing section 304.
New subsections 304(9) and
(10) will require a nil return to be put in, to the effect
that no donations of a kind required to be disclosed were received,
regardless of whether any donations have been received.[56]
Items 30 36 amend
section 305A to reduce the disclosure threshold to
$1 000 or more for donations to candidates or a member of a group,
and the time an election return must be provided to the AEC from 15
weeks to eight weeks.
Item 37 makes amendments to
section 305B to insert new subsections
(1), (1A), (2),
(2A) and (2B) in order to
introduce biannual returns requirements; to deem that donations
made to a related political party will be made to one political
party; and also to bring donations made to a person with the
intention of benefiting a party into the disclosure regime.
Item 37 requires returns to be provided biannually
instead of once every twelve months.[57] For example, currently donations over
$10 900 (CPI-indexed) to a political party must be disclosed to the
AEC within 20 weeks after the end of the financial year (subsection
305B(1)). Item 37 repeals this provision and will
have the effect (in part) that a donation of $1 000 or more must be
disclosed to the AEC within eight weeks after the end of the
reporting period (new subsection 305B(1)). There
are exceptions to avoid duplication, for example if a return has
been already furnished in the first six months of the financial
year, and there are no further donations for the remainder of the
financial year, a second return will not be required (new
subsections 305B(2A) and (2B)). Item 37
also provides that if two or more political parties are related to
each other and at least one is registered, then the parties are in
effect deemed to be a single registered political party and a
donation to any of the parties will be a donation to the single
registered party (new subsection 305B(1A)).
Note that item 38 will amend
paragraph 305B(3)(c) to reflect that for each
donation made the return must set out the amount of the donation,
the date it was made, and the name and address of the political
party that received the gift . The amendment
deletes the word registered from the paragraph, despite new
subsection 305B(1A)(d) expressly referring to the single
registered political party referred to in paragraph (c)
(italics added).
Item 40 repeals section 306
and substitutes new Division 4A Subdivision A,
new sections 306, 306AA,
306AB, 306AC,
306AD to make rules in relation to donations of
foreign property. Foreign property is defined to be money in an
account outside Australian, other money outside Australia, or
property that is located outside Australia.
New section 306AC will make
it unlawful for a registered political party, State branch of a
registered political party, a candidate or a member of a group, or
a person acting for any such party or person to receive a donation
of foreign property. The prohibition will only apply to candidates
and members of groups during the candidacy or group period (the
period beginning with the announcement or nomination of a person s
candidacy or with Senate candidates request to have their names
grouped and ending 30 days after polling day).
New section 306AD will make
it unlawful for a person to incur political expenditure in certain
circumstances where the expenditure is enabled by a foreign
donation. Under section 314AEB(1)(a) of the Act political
expenditure is expenditure for the purposes of:
- the public expression of views on a political party, or a
candidate by any means
- the public expression of views on an issue in an election by
any means
- the printing, production, publication or distribution of any
material that is required to include a name and address
- the broadcast of any political matter required to be announced
under the Broadcasting Services Act 1992
- the carrying out of an opinion poll or other research relating
to an election or the voting intentions of electors.
New subdivision B new sections 306AE
to 306AI will make it unlawful to receive an anonymous
donation. New section 306AG provides that it is
unlawful for a registered political party, a State branch of a
registered political party, candidate or a member of a group to
receive an anonymous donation (the prohibition on candidates and
members of groups will only apply during the candidacy or group
period). As for foreign donations, new section
306AI will make it unlawful for a person to incur
political expenditure in certain circumstances where the
expenditure is enabled by an anonymous donation.
Both new sections 306AA and
306AF clarify that donations of anonymous or
foreign property returned within six weeks after receipt will not
incur an offence or penalty. If it is not possible or practicable
to return an anonymous gift, the amount or value of the gift can be
paid to the Commonwealth (new paragraph
306AF(b)).
Item 82 repeals subsection
315(1) to (4) and substitutes new subsections 315 (1) to
(4B).
New subsections 315 (1) to
(4) provide that a person will commit an offence for
failure to furnish a return, furnishing a return that is incomplete
or failing to keep records as required under section 317. The
penalty is increased to 120 penalty points ($23 000). Item
82 repeals the provisions that applied strict liability to
the offences, which means that all elements of the offences have to
be proved, potentially making prosecutions more difficult.
New subsections 315 (4A) and
(4B) recast existing subsections 315(3) and (4) where a
person furnishes a claim or a return that the person knows is false
or misleading in a material particular or knows the claim or return
has an omission that makes the claim or return false or misleading.
The penalty will be 2 years imprisonment or 240 penalty points (or
both) for a false or misleading claim conviction, or 12 months
imprisonment or 120 penalty points (or both) for a false or
misleading particulars offence. Currently the penalties are $10 000
or $5 000 respectively.
Similarly, there is a significant increase in
the penalty for an offence against subsection
315(6A) where a person gives false or misleading
information to another person making a claim under Division 3. The
penalty is increased from $1 000 to imprisonment for 2 years or 240
penalty points (or both).
Offences are created for the unlawful receipt
of a donation in new subsections 315(10A),
(10B) and (10D), and also for
incurring unlawful expenditure under new subsections
306AD(1) or (2) or 306AI(1) or
(2) (new subsection 315(10E). These carry
the penalty of imprisonment of 12 months or 240 penalty points, or
both.
Diane Spooner and Nicholas Horne
Bills Digest Service
20 August 2008
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