Preliminary Pages
Chair’s foreword
Australia can be proud of its
democratic system, but there is scope for improvement. In terms of political
financing arrangements, the funding and disclosure system that was introduced
in 1984 was a leader in its field. However, more than a quarter of a century
later, Australia’s political financing arrangements are in need of review and
revitalising.
While there is no evidence that
the funding and disclosure system is being abused, the inquiry has provided an
opportunity to strengthen and provide more confidence in the system.
Transparency and accountability
must remain central goals of our financing arrangements. Disclosure should
continue to be a central pillar of our arrangements in Australia to provide
electors with sufficient information on which to base selection of their political
representatives.
It is important that any changes
made in Australia to funding and disclosure arrangements at the Commonwealth
level are not merely a reaction to incidents or calls for reform, but a
considered and carefully designed approach to help ensure transparency and
accountability.
In Australia, it is important to
safeguard the integrity of our funding and disclosure system, but it is also vital
not to unduly restrict the ability of individuals and groups to engage in the
political arena, whether through donating to a candidate, political party or
third party, or advocating on, or seeking to engage the community on, a
particular issue. Australians’ rights to freedom of political expression and
participation must also remain a high priority. In making the recommendations
in this report, the committee has sought to strike an appropriate balance
between these competing concerns.
Key reforms include increasing
the level and frequency of disclosure, by reducing the disclosure threshold
from the current $11 900 (indexed to CPI) to $1 000, without
indexation. The reporting requirement for political parties, associated
entities and third parties, which is currently annual will initially move to
six-monthly, with a view to moving to contemporaneous reporting following an
investigation of options by the Australian Electoral Commission (AEC). The
committee has also recommended the introduction of special reporting of single
donations over $100 000, which must be disclosed to the AEC within 14
business days of receiving the donation and made publically available soon
after on the AEC website.
To improve overall transparency
of the flow of money, the committee also proposes requiring greater disclosure
of political expenditure. Currently, expenditure is disclosed as a block sum
with no specific details.
These increased disclosure
requirements will place additional administrative burdens on those with
reporting obligations. To help address this, an additional stream of funding is
proposed to assist Independents and political parties in meeting their
increased obligations. While the provision of administrative funding does mean additional
public money, the increased transparency will leave electors better armed with
relevant information about the movement of money.
The committee has also made
recommendations to enhance the administrative efficiency of disclosure
arrangements, including the AEC enhancing its online lodgement system to assist
those with reporting requirements for donations and expenditure.
The committee also recognised that effective compliance
arrangements are essential for a workable funding and disclosure scheme.
Offences that are straightforward matters of fact, such as the late lodgement
of a return, should have administrative penalties attached, to enable the AEC
to issue fines for breaches of these laws, rather than requiring criminal
prosecution by the Commonwealth Director of Public Prosecutions (CDPP).
However, for offences of a more serious nature, penalties should be
strengthened to send a clear message to individuals, groups and the CDPP of the
gravity of breaches of this nature and the need to take action on these
matters.
While there may be a time in the
future when overall, stricter regulation of funding, expenditure and disclosure
is warranted, currently significantly enhancing the transparency of the
movement of money by increasing the amount and timeliness of disclosure is best
suited to the Australian context.
The key proposals for reform are
set out in the Executive summary, which provides an easy comparison of the
current arrangements against the committee’s proposed reforms.
On behalf of the committee I thank
the individuals and groups who participated in the inquiry. I also thank the members
of the committee for their work and contribution to this report, and the committee
secretariat for their work in preparing this report.
Daryl Melham MP
Chair
Terms of reference
On 11 May 2011 the Senate referred to the Joint Standing
Committee on Electoral Matters the following matter for inquiry and report by
30 September 2011:
Options to improve the system for the funding of political
parties and election campaigns, with particular reference to:
(a) issues
raised in the Government's Electoral Reform Green Paper –Donations, Funding
and Expenditure, released in December 2008;
(b) the role of third
parties in the electoral process;
(c) the transparency and
accountability of the funding regime;
(d) limiting the escalating
cost of elections;
(e) any
relevant measures at the state and territory level and implications for the
Commonwealth; and
(f) the
international practices for the funding of political parties and election
campaigns, including in Canada, the United Kingdom, New Zealand and the United
States of America.
On 25 May 2011 the Special Minister of State, the Hon Gary
Gray AO MP, wrote to ascertain the views of the Joint Standing Committee on
Electoral Matters on Senator Bob Brown’s proposed amendment to the Commonwealth
Electoral Act 1918, to make it unlawful for political parties to accept
donations from manufacturers or wholesalers of tobacco products, or their
agents. The committee resolved to examine this matter as part of the wider
inquiry into the funding of political parties and election campaigns.
On 21 September 2011 the Senate granted the committee an
extension of its reporting date until 1 December 2011. A subsequent extension
was granted until 12 December 2011.
Resolution
On 11 and 12 May 2011, the Senate and the House of
Representatives agreed to the following resolution:
(1) That
the following matter be referred to the Joint Standing Committee on Electoral
Matters for inquiry and report by 30 September 2011:
Options to improve the system for
the funding of political parties and election campaigns, with particular
reference to:
(a) issues
raised in the Government's Electoral Reform Green Paper –Donations, Funding
and Expenditure, released in December 2008;
(b) the
role of third parties in the electoral process;
(c) the
transparency and accountability of the funding regime;
(d) limiting
the escalating cost of elections;
(e) any
relevant measures at the state and territory level and implications for the
Commonwealth; and
(f) the
international practices for the funding of political parties and election
campaigns, including in Canada, the United Kingdom, New Zealand and the United
States of America.
(2) That,
for the purposes of this inquiry only, paragraph (3) of the resolution of
appointment be amended to read:
That the committee consist of 12
members, 3 Members of the House of Representatives to be nominated by the
Government Whip or Whips, 4 Members of the House of Representatives to be
nominated by the Opposition Whip or Whips and 1 non-aligned Member,
2 Senators to be nominated by the Leader of the Government in the Senate,
1 Senator to be nominated by the Leader of the Opposition in the Senate
and 1 Senator to be nominated by any minority group or groups or independent
Senator or independent Senators.
(3) For
the purposes of this inquiry only, the resolution of appointment be amended by
inserting the following paragraph:
That participating members may be
appointed to the committee. Participating members may participate in hearings
of evidence and deliberations of the committee, and have all the rights of a
member of the committee, but may not vote on any questions before the
committee.
List of recommendations
3 Private
funding
Recommendation 1 (paragraph 3.59)
The committee recommends that the disclosure threshold be lowered
to $1 000, and CPI indexation be removed.
Recommendation 2 (paragraph 3.61)
The committee recommends that the Commonwealth Electoral
Act 1918 be amended to require that only the name, suburb, postcode, state
and the amount donated by individual donors be released on the public website
by the Australian Electoral Commission.
Recommendation 3 (paragraph 3.72)
The committee recommends that donations to ‘related political
parties’ be treated as donations to the same political party for the purposes
of the disclosure threshold. Once the combined donations to related political
parties from a single donor reaches the $1 000 threshold, disclosure is
required.
Recommendation 4 (paragraph 3.96)
The Committee recommends that the definition of ‘gift’ in the Commonwealth
Electoral Act 1918 be amended to include fundraising events.
Recommendation 5 (paragraph 3.107)
The committee recommends that the Commonwealth Electoral
Act 1918 be amended, as necessary, to include the following:
n to require political parties and
associated entities to classify their receipts exceeding the disclosure
threshold as ‘donations’ or ‘other receipts’;
n to include an adequate definition of
‘donation’ and ‘other receipt’; and
n to make the requisite changes to the
enforcement and investigation provisions to allow the Australian Electoral
Commission to investigate and enforce these classifications.
Recommendation 6 (paragraph 3.134)
The committee recommends that the Australian Government
introduce a six-monthly disclosure reporting timeframe, as outlined in the
Commonwealth Electoral Amendment (Political Donations and Other Measures) Bill
2010.
Recommendation 7 (paragraph 3.137)
The committee recommends that if a single donation above
$100 000 is made to a political party, associated entity, third party,
candidate or Senate group, then a ‘Special Reporting Event’ return must be
lodged with the Australian Electoral Commission by the political party,
associated entity, third party, candidate or Senate group and the donor within
14 days of receipt of the donation. The Australian Electoral Commission must
publish details of these returns within 10 business days of lodgement.
Recommendation 8 (paragraph 3.140)
The committee recommends that the Australian Electoral
Commission investigate the feasibility and requirements necessary to implement
and administer a system of contemporaneous disclosure and report back to the
Special Minister of State by 31 March 2012.
Recommendation 9 (paragraph
3.146)
The committee recommends that the Commonwealth Electoral
Act 1918 be amended, as necessary, to require political parties to
aggregate all individual donation receipts, not just those individual receipts
that exceed the disclosure threshold, in line with the current disclosure
requirement for donors.
4 Options for private funding reform
Recommendation 10 (paragraph 4.74)
The committee recommends that the Commonwealth Electoral
Act 1918 be amended to ban political parties, Independent candidates,
associated entities and third parties from receiving ‘gifts of foreign
property’.
Recommendation 11 (paragraph 4.90)
The committee recommends that a ban be imposed on anonymous
donations above $50 to political parties, associated entities, third parties,
Independent candidates and Senate groups.
Recommendation 12 (paragraph 4.102)
The committee recommends that in addition to the measure to
prohibit gifts of foreign property being implemented, methods to curb the
potential for circumvention be examined and solutions devised.
5 Expenditure
Recommendation 13 (paragraph 5.51)
The committee recommends that the Commonwealth Electoral
Act 1918 be amended, as necessary, to require political parties and
associated entities to disclose details of their expenditure above the
applicable disclosure threshold in their six-monthly returns.
Recommendation 14 (paragraph 5.52)
The committee recommends that to complement the requirement
for political parties and associated entities to disclose details of
expenditure above the disclosure threshold, the Australian Electoral Commission
should provide guidance and enhance its online lodgement system to help ensure
that those with reporting obligations have a clear understanding of, and the
administrative means by which, to meet this obligation.
6 Public funding
Recommendation 15 (paragraph 6.42)
The committee recommends that public funding to political
parties and candidates be allocated on the basis of the lesser of:
n the application of the per vote formula
to the first preference votes won; or
n reimbursement for proven expenditure following
the lodgement of a claim,
provided they obtain four per cent of the first preference
vote, as proposed in the Commonwealth Electoral Amendment (Political Donations
and Other Measures) Bill 2010.
Recommendation 16 (paragraph 6.93)
The committee recommends that members elected with less than
four per cent of the first preference vote be eligible for election
funding. These members should be entitled to the lesser of:
n the application of the ‘per vote’ rate to
the first preference votes won; or
n reimbursement for proven expenditure
following the lodgement of a claim.
Recommendation 17 (paragraph 6.101)
The committee recommends that the Commonwealth Electoral
Act 1918 be amended, as necessary, to ensure the payment of election
funding entitlements for eligible candidates and Senate groups can be made to
the party, whether or not the party is organised on the basis of a particular
state or territory.
Recommendation 18 (paragraph 6.129)
The committee recommends that the Commonwealth Electoral
Act 1918 be amended to implement a scheme of ongoing administrative funding
for registered political parties and Independents. The proposal for
administrative funding is part of a broader package of public funding reforms
and should complement the changes to election funding arrangements in
recommendations 14, 15 and 16. The Australian Government should, in
consultation with key stakeholders, develop a model for the entitlement and
payment of administrative funding appropriate for application at the
Commonwealth level.
7 Third parties and associated entities
Recommendation 19 (paragraph 7.46)
The committee recommends removing the reference to ‘issues in
an election’ from the definition of political expenditure, by deleting section
314AEB(1)(a)(ii) of the Commonwealth Electoral Act 1918.
Recommendation 20 (paragraph 7.50)
The committee recommends removing the reference to opinion
polls and other research from the definition of political expenditure, by
deleting section 314AEB(1)(a)(v) of the Commonwealth Electoral Act 1918.
Recommendation 21 (paragraph 7.57)
The committee recommends that the frequency of disclosure
reporting obligations for third parties under the Commonwealth Electoral Act
1918 align with the frequency with which political party disclosure takes
place, to minimise the potential for circumvention of requirements.
Recommendation 22 (paragraph 7.68)
The committee recommends that third parties be subject to the
same disclosure threshold as political parties, Independent candidates, Senate
groups, associated entities and donors.
Recommendation 23 (paragraph 7.82)
The committee recommends that the Commonwealth Electoral
Act 1918 be amended, as necessary, to impose a disclosure obligation on
donors to third parties. Amendments should be worded so that only the name,
suburb, state and postcode of individual donors are required to be made public.
Recommendation 24 (paragraph 7.105)
The committee recommends that the Australian Government investigate
options for:
restricting
or capping third party political expenditure; and
n setting a reasonable period relevant to
the election date around which this restriction would apply.
Recommendation 25 (paragraph 7.134)
The committee recommends that the Commonwealth Electoral
Act 1918 be amended to improve the clarity of the definition of ‘Associated
Entity’. Particular steps that could be taken might include the following:
n Defining ‘controlled’ as used in section
287(1)(a) to include the right of a party to appoint a majority of directors,
trustees or office bearers;
n Defining ‘to a significant extent’ as
used in section 287(1)(b) to include the receipt of a political party of more
than 50 per cent of the distributed funds, entitlements or benefits enjoyed
and/or services provided by the associated entity in a financial year; and
n Defining ‘benefit’ as used in section
287(1)(b) to include the receipt of favourable, non-commercial arrangements
where the party or its members ultimately receives the benefit.
8 Compliance
Recommendation 26 (paragraph 8.39)
The committee recommends that the Commonwealth Electoral
Act 1918 be amended, as necessary, to make offences classified as
‘straightforward matters of fact’ subject to administrative penalties issued by
the Australian Electoral Commission. The issuance of an administrative penalty
should be accompanied by a mechanism for internal review.
Recommendation 27 (paragraph 8.41)
The committee recommends that the penalties in relation to
offences that are classified as more ‘serious’ should be strengthened along the
lines proposed in the Commonwealth Electoral Amendment (Political Donations and
Other Measures) Bill 2010.
Recommendation 28 (paragraph 8.50)
The committee recommends that the Commonwealth Electoral
Act 1918 be amended, as necessary, to provide the Australian Electoral
Commission with the power to conduct compliance reviews and serve notices on
candidates and Senate groups, in addition to federal registered political
parties, their state branches and associated entities.
Recommendation 29 (paragraph 8.52)
The committee recommends that the Commonwealth Electoral
Act 1918 be amended, as necessary, to require the Australian Electoral
Commission to make available on its website compliance review reports and
details of final determinations on reviews.
10 Other issues
Recommendation 30 (paragraph
10.12)
The committee recommends that the funding and disclosure
functions in the Commonwealth Electoral Act 1918 continue to be
exercised and administered by the Australian Electoral Commission, and that the
Australian Electoral Commission receive additional resources to carry out these
functions and exercise its enforcement powers.