Chapter 3 AEC possible measures for consideration
The Australian Electoral Commission’s (AEC) analysis of the Fair Work
Australia (FWA) report into the investigation of the National Office of the
Health Services Union (HSU) drew attention to limitations in the Commonwealth
Electoral Act 1918 (Electoral Act). The Electoral Commissioner, in his
letter dated 16 May 2012 to the Special Minister of State, provided a list of
matters for consideration to address limitations in the Electoral Act. These possible
measures are shown in Appendix A. The Electoral Commissioner noted that ‘some
of these matters have been considered previously by the Joint Standing
Committee on Electoral Matters without being adopted’.
The Electoral Commissioner listed 17 possible measures for
consideration. These measures are examined in this chapter. Where the committee
has previously examined certain matters, the committee’s position is overlayed
against the relevant measure. Recommendations will be made, where appropriate.
Measure 1—Reconsideration of the disclosure threshold
The Electoral Commissioner proposed that there be ‘reconsideration of
the appropriate level of the disclosure threshold’.
Transparency and accountability are central goals of Australia’s disclosure
arrangements. Disclosure is crucial to provide electors with sufficient
information about the flow of money in the political system.
In 2006 the Electoral Act was amended to increase the disclosure
threshold from $1 500 to $10 000, indexed annually in line with the Consumer
Price Index (CPI) figure. The disclosure threshold for returns relating to the
2008-2009 financial year was $10 900. It rose to $11 200 for 2009-2010, and $11
500 for the 2010-2011 financial year. As a result of a higher disclosure
threshold fewer receipts by political parties are publicly disclosed.
The committee has previously reviewed and made recommendations about the
level of the disclosure threshold. In October 2008 the disclosure threshold was
examined in the Advisory Report on the Commonwealth Electoral Amendment
(Political Donations and Other Measures) Bill 2008.
This Bill proposed that the disclosure threshold be reduced from the then $10 900
(adjusted annually for inflation) to $1 000 (not adjusted for inflation).
The committee supported this proposal commenting that it ‘will lead to a
significant increase in the transparency of financial support and expenditure
by participants in the political process’.
The committee also supported the proposal ‘to close the existing
loophole that allows for donation splitting—which treats state and territory
branches as separate entities and allows donors to contribute up to
$10 899.99 to nine separate branches of the same political party (almost
$98 100 in total)’.
The 2008 Bill was subsequently negatived at the second reading stage in
the Senate on 11 March 2009. The Commonwealth Electoral Amendment (Political
Donations and Other Measures) Bills introduced in 2009 (2009 Bill) and 2010
(2010 Bill) were substantially similar to the 2008 Bill, and proposed to reduce
the disclosure threshold for political donations to $1 000, without CPI
indexation. The 2009 Bill lapsed at the end of the 42nd Parliament. The
2010 Bill passed the House of Representatives in November 2010 and was
introduced into the Senate, but has not progressed further.
In November 2011 the disclosure threshold was examined again in the Report
on the funding of political parties and election campaigns (November 2011
report). The committee recommended
that the disclosure threshold be lowered to $1 000, and CPI indexation be
removed. The committee stated:
An effective financial disclosure scheme is an important
measure for transparency and accountability in the political financing process.
In particular, the level of the disclosure threshold is central to the
effectiveness and accountability obtained by the financial disclosure scheme.
Coalition members of the committee opposed the recommendation to reduce
the disclosure threshold to $1 000, stating:
Coalition members of the Joint Standing Committee on
Electoral Matters note most of the recommendations by the Committee are solely
to serve the interests of the Australian Labor Party, the Greens and their
backers such as GetUp. This is particularly evident in relation to the proposed
lowering of the donation disclosure threshold from $11,900 to $1000, which will
significantly impact the ability of individuals to give donations to political
parties without the potential for intimidation and harassment.
No further legislative action has been taken in 2012 to amend the
In its submission to the inquiry, the AEC revisited the arguement that a
lower threshold would provide greater transparency of ‘who is funding or
donating to election campaigns and what those funds are being spent on’.
It was also posited that treating related political parties as a single entity
for disclosure purposes would help combat the practice of donation splitting.
The AEC acknowledged that decreasing the threshold would also result in:
n increased numbers of
persons having reporting obligations;
n increased reporting
and therefore compliance costs to donors, political parties and candidates; and
administration costs to be incurred by the AEC.
More generally, in relation to political party disclosures, the AEC
It is the case that disclosures by political parties is now a
considerably less complex and time consuming activity than it was when first
introduced. But this simplification of disclosures has made cross-checking more
complicated. Part of the design of disclosures was for returns to be
complementary in terms of providing some cross checking of completeness and
accuracy. The returns by broadcasters, publishers and printers were meant to be
able to be compared to what was disclosed for advertising by political parties,
candidates and Senate groups in their returns of electoral expenditure.
Similarly, cross checking of donations between the disclosure returns of
political parties and donors has been complicated by the removal of the
requirement for political parties to list each receipt and by allowing
political parties to omit individual receipts of less than the threshold
While the AEC did not offer a suggestion as to the appropriate
disclosure level, it commented on issues to be considered when determining an
appropriate disclosure level:
Mr Killesteyn: ... The lower the threshold, the greater are
the reporting obligations that arise both in terms of donors as well as
recipients of those donations. As our report said, the AEC does not have a view
on what the appropriate disclosure threshold should be. If you go through all
of the jurisdictions across Australia and, indeed, jurisdictions overseas, you
see many different levels of disclosure thresholds. There are some that are
lower than ours and, obviously, there are some that are higher. For example, if
you look at Canada as a comparable jurisdiction, their disclosure threshold is
I believe, $1,500. If you go to the United Kingdom, they have a disclosure
threshold for central parties of £7,600 or the equivalent of about A$11,000.
You see quite a variety of disclosure thresholds from very low comparable to
the Australian federal scene.
CHAIR: So when you say that a measure is the
reconsideration of the appropriate level of the disclosure threshold, what does
that mean if you do not do not have a level that you want to recommend to the
committee or to the parliament?
Mr Killesteyn: It means, ultimately, there is a
question of balance that the lower the threshold the more you are likely to
capture and the more that you are likely to see the sorts of circumstances that
arose in relation to this particular matter being revealed. However, the
balance is that the more you capture the greater is the obligation that is
imposed on donors and the greater is the workload that is imposed on the AEC.
You could take this to the level of having no disclosure
threshold at all. That would obviously be terrific in terms of transparency
but, equally, you could also suggest that that would present such a level of
detail that transparency would be mitigated because you would have so much work
to do, and the ability of the AEC to process this information and put it in the
public domain would be compromised.
We are suggesting that the committee may, once again, want to
consider this issue. If it is concerned about the sorts of issues that arose in
relation to Mr Thomson, then it can lower it, but if it believes on balance
that the disclosure threshold provides a reasonable level of information for
the public, then it can leave it as it is.
The AEC anticipates that the disclosure threshold for the current
financial year 2012-2013 will be more than $12 100.
Add to this the practice of donation splitting, this can mean significant sums
of money moving through the political system without the knowledge of
There are clear benefits in having a lower threshold to improve
transparency in the movement of money in Australia’s political system. The
level of the threshold is central to the effectiveness of the current system
which relies on disclosure.
As outlined in the above discussion the committee has already considered
the issue of the disclosure level on a number of occasions, and has recommended
the lowering of the disclosure threshold to $1 000.
The committee maintains its position that an appropriate disclosure
threshold must strike the right balance between achieving transparency of the
movement of money in the political system and the administrative demands placed
on individuals, parties and organisations with reporting obligations under the
The committee continues to support its previous recommendations that the
disclosure threshold be lowered to $1 000, and that the CPI indexation be
||The committee recommends that the disclosure threshold be
lowered to $1 000, and that the CPI indexation be removed.
Measure 2—Administrative penalties
Under item (ii) in the list of possible measures, the Electoral
Commissioner proposed the introduction of administrative penalties for
objective failures, such as failing to lodge on time.
Administrative penalties would involve the AEC administering sanctions
for a breach of the relevant law, without having to involve the courts. For
example, the AEC would be able to issue a fine for a failure to lodge a
Currently, offences against Part XX of the Electoral Act are all
criminal offences. This means that if prosecution action is pursued, a brief of
evidence must be compiled by the AEC, which is then referred to the
Commonwealth Director of Public Prosecutions (CDPP). The CDPP undertakes an
assessment to determine whether there is sufficient evidence and public
interest to prosecute.
The AEC has previously argued for the introduction of administrative
penalties for certain offences:
The addition of administrative penalties would assist the AEC
to enforce compliance requirements without the necessity of referring all
matters to the CDPP. It is expected that these types of administrative
penalties would result in more timely compliance with disclosure provisions
without creating an additional burden on the CDPP resources.
The AEC also advised that it has advocated for similar changes in
Recommendation 12 of the AEC’s Funding and Disclosure
Report on the 2010 Federal Election was that ‘the Act be amended to
introduce administrative penalties to support compliance with the provisions of
the disclosure scheme based on objective tests, for example late lodgement’.
A similar recommendation has previously been made in the AEC
submission no. 11 of 26 April 2004 to the JSCEM’s Inquiry into Disclosure of
Donations to Political Parties and Candidates. Recommendation 4 of this
report was: ‘that Part XX of the Commonwealth Electoral Act 1918 be
amended to enable the AEC to apply an administrative penalty for failure to
lodge a return by the due date, including the capacity to impose further
administrative penalties for continued failure to lodge’.
In its November 2011 report on the funding of political parties and
election campaigns, the committee considered the matter of administrative
penalties. One concern raised was that having an administrative rather than a criminal
penalty could be seen as lessening the gravity of the offence. In evidence to
the committee, the AEC suggested that additional measures could be taken to
encourage compliance. For example, the AEC could publish a list of all
penalties imposed for breaches of the reporting requirements.
The committee supported the introduction of administrative penalties for
‘certain more straightforward offences’, such as a failure to lodge a
disclosure return by the due date and lodging an incomplete return. The
committee made a unanimous recommendation:
... 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.
The AEC in its submission to this inquiry again expressed support for
the introduction of administrative penalties, stating:
We think there would be value
if an administrative penalty allowed us to impose a small monetary sanction.
Certainly the evidence from overseas is that this would instil greater urgency
in the minds of those who have an obligation to lodge.
The AEC submitted that the current arrangement is ‘time consuming,
costly and often fraught with there being no guarantee that the CDPP will
accept the brief of evidence given their need to prioritise work or that a
court will record a conviction even in the case of a successful prosecution’.
Few electoral offences are criminally prosecuted, particularly if they
are of a relatively minor administrative nature.
The AEC has previously advised that in late 2011 the CDPP in NSW and
Queensland were considering whether to pursue three cases of failure to lodge a
disclosure return. The AEC has since
advised that the Queensland case did not proceed, as the candidate eventually
lodged the return before the court attendance notice (CAN) was issued.
The NSW DPP pursued one of the NSW candidates who failed to lodge a
return. A magistrate found the candidate guilty. The case was ‘proven, but
dismissed without penalty, section 19B Crimes Act 1914’. The second
candidate could not be served with a CAN as a residential address could not be
The AEC also noted that while there were other candidates who failed to
lodge a return for the 2010 federal election, it has not been able to contact
them, and consequently has been unable to prepare a brief of evidence that
would satisfy the CDPP to proceed with a prosecution.
Administrative penalties for straightforward offences would complement
the criminal penalties for more serious breaches of the reporting obligations,
such as fraudulent behaviour. This is discussed further in the section on measure
10 on increasing the criminal penalties for fraud related offences.
The committee reiterates its conclusions in its November 2011 report
that the low penalties for offences relating to the funding and disclosure
regime, coupled with the Prosecution Policy of the Commonwealth Director of
Public Prosecutions which requires consideration of the public interest in
pursuing prosecution, have made it difficult to obtain criminal conviction for
breaches of the funding and disclosure provisions in the Electoral Act.
Having administrative penalties, to complement the criminal penalties to
deal with more serious offences, will provide the AEC with greater flexibility
to more effectively deal with breaches of straightforward offences.
The committee endorses recommendation 26 in its November 2011 report to
introduce administrative penalties for objective failures to meet certain
||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.
Measure 3—Offsetting financial penalties against public funding
The Electoral Commissioner, under item (iii), proposed that ‘financial
penalties be offset against public funding entitlements (perhaps combined with
the AEC withholding a small percentage of such entitlements for a period of 12
months following an election)’.
As political parties are generally not legal entities, party agents are
appointed and themselves become liable for penalties and the recovery of
monies. If there is not an agent appointment in place the members of the
executive committee are liable. This can be problematic when seeking to prosecute
breaches of reporting obligations, and particularly when seeking to recover
significant sums of money. Having to repay significant monies can have a
serious financial impact on party agents. Alternatively, if the proposal to
deem political parties as bodies corporate under item (xvi) is adopted, there
could be direct financial implications for parties.
The AEC saw merit in moving the focus away from individual officers to political
parties. It stated:
At the present stage the AEC has to [prosecute] individual
officers within a political party and associated entities and a donor in
relation to any failures. Having penalties offset against public funding
entitlements would provide a neater, easier and more cost-effective way to
recover any amounts.
If action is taken against a party agent for noncompliance or recovery
of monies—or is able to be taken against the registered political party
itself—the AEC proposed:
A means of recovering those sums while also easing the
financial impact could be to offset a sum equivalent to the penalty or monies
to be recovered against public funding entitlements. This could be by way of
the AEC withholding a proportion of current entitlements for a period, for
instance withholding a sum of election funding equivalent to the maximum
penalty for failure to lodge an election disclosure return by the due date
which will then only be released if the return is lodged on time. Another
method would be to register the sum owed to be offset against future public
funding entitlements before their payment. 
The AEC also argued that linking reporting obligations to public funding
would be even more effective if an ongoing system of administrative funding to
political parties is introduced.
The committee in its November 2011 report recommended that
administrative funding be introduced for registered political parties and
Independents—as part of a broader package of proposed funding and disclosure
reforms—to assist them to meet the administrative burden of more frequent and
detailed disclosure reporting requirements.
Canada has taken a proactive approach in linking reporting obligations
to public funding. The Electoral Reform Green Paper: Donations, Funding and
Expenditure (Green Paper) noted that Canada has established a range of ‘administrative incentives’ to encourage compliance.
These include the power to withhold the final instalment of election funding
where reporting requirements are not met.
Progressively reimbursing public funding entitlements has been proposed
in the 2010 Bill. However, in the 2010 Bill it is not linked to offsetting
penalties for noncompliance with disclosure obligations. Rather, the 2010 Bill
proposed to allow the AEC to revisit and adjust a final claim for electoral
expenditure, and where necessary recover debts to the Commonwealth. It will
involve a two-stage process in which the claimant must submit: (1) an interim
claim—at which time the claimant would receive 95 per cent of their
entitlement; and (2) a final claim—where the claimant would receive the
remaining five per cent of their entitlement.
The committee does not support the idea of offsetting financial
penalties or potentially withholding public funding. It would add an
unnecessary layer of complexity to the public funding process.
The fact that to pursue a breach of reporting obligations involves
prosecuting an individual is an issue warranting review. The difficulties
associated with criminal prosecutions of certain funding and disclosure
breaches and the potential criminal and financial implications for the
individuals need to be considered. However, this issue will be addressed as
part of the committee’s consideration of measure 16.
Measure 4—Compulsory and timely independent audits
The Electoral Commissioner, in item (iv), proposed requiring ‘the
compulsory and timely auditing of all records held by registered parties (and
party units), candidates, third parties, etc, by independent auditors (do not
The AEC has previously recommended in its Funding and Disclosure
Report on the 1996 Federal Election that ‘political party annual returns be
accompanied by a report from an accredited auditor’.
Section 316(2A) of the Electoral Act confers power on the AEC to conduct
compliance reviews of federal registered political parties, their state
branches and associated entities for the purpose of assessing adherence to the
disclosure laws. However, currently the AEC does not have any powers to conduct
compliance reviews of candidates and Senate groups. Most candidates incur
expenditure and receive donations through the political party itself.
The 2010 Bill seeks to broaden the investigatory scope of AEC-authorised
officers in relation to 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.
In November 2011 the committee recommended providing the AEC 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’.
In relation to their current compliance review powers under section 316,
the AEC stated:
... it is impossible for the
AEC to achieve a full coverage of compliance returns lodged by political
parties and associated entities in the course of 12 months, much less during
the window from lodgement in October through January before public release on
1 February. Even with greatly increased resources, both the volume of the
task and the complication that audits would be being undertaken over the
Christmas/New Year holiday period makes impossible audits being undertaken by a
single, central body.
The AEC suggested that one alternative is to require that returns be
audited prior to lodgement. In evidence to the committee, it stated:
... the independent auditing of disclosure returns may be
worth considering, given the sorts of issues that we have uncovered here.
Essentially, there is a lot of work associated with the returns. The ability of
the AEC or indeed of any agency to audit every single return, I think, will
lead to a significant cost. Here is a potential way of ensuring that donors and
others who have an obligation provide information which has been audited.
The AEC indicated that the onus would be on the person with the reporting
obligation to arrange for a suitable auditor. The AEC acknowledged:
If moving in this direction, consideration would need to be
given to whether registered auditors need further accreditation as an assurance
that they are proficient in the requirements of disclosure under Part XX
of the Electoral Act. Such accreditation could be managed by the AEC either
through face-to-face training or via the development of an on-line training
course. Accreditation would need to be updated every time an important change
is made to disclosure requirements.
... Consideration would also need to be given to whether the
AEC should be tasked with exercising a quality assurance function over audit
certificates issued on lodged disclosure returns.
The Green Paper noted Canada, New Zealand and the United Kingdom
currently require returns to be accompanied by an auditor’s report vouching for their
The AEC acknowledged that requiring auditing before lodgement could have
cost implications. For some it may be relatively inexpensive, but large parties
with a range of party units may incur significant costs.
The committee does not support a requirement for compulsory auditing of
returns prior to lodgement. Weighed against the potential benefit, such a
requirement could place a disproportionate administrative and financial burden
on those with reporting obligations.
The AEC drew attention to the possibility that a system of further
accreditation may be required to ensure that auditors are proficient in the
disclosure reports of Part XX of the Electoral Act.
The committee endorses recommendations 28 and 29 in its November 2011
report: to provide the AEC 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; and
to make available on the AEC website
compliance review reports and details of final determinations.
The AEC is the body best placed to conduct compliance reviews to ensure
that those lodging returns are meeting reporting requirements under the
Electoral Act. However, the committee appreciates that there are resourcing
pressures on the unit that prevent a review of all returns and those with
suspected obligations. In developing its compliance review programs and
prioritising reviews, the AEC should take into consideration: ensuring reviews
are undertaken on a cross-section of organisations; returns that involve the
movement of significant sums; and cases where returns—or the lack of
returns—seem to warrant closer examination.
Measure 5—Abolish associated entities
Previously, the AEC has supported improving the clarity of the
definition of associated entities. However, under item (v), the AEC went
further and included in its list of matters abolishing ‘associated entities’
and establishing a third party scheme similar to Canada and the United Kingdom.
The requirement for annual disclosures by associated entities was introduced
in 1995 in recognition that there were organisations with strong links to
political parties. At the time this covered entities that were ‘controlled’ by
or operating ‘wholly or mainly for the benefit of’ a political party. In 2006
the category was expanded to cover ‘any entity that, or on whose behalf a
person, is a financial member of a political party or has voting rights in a
Currently, section 287 of Part XX of the Electoral Act defines an
associated entity as:
(a) an entity that is
controlled by one or more registered political parties; or
entity that operates wholly, or to a significant extent, for the benefit of one
or more registered political parties; or
entity that is a financial member of a registered political party; or
entity on whose behalf another person is a financial member of a registered
political party; or
(e) an entity that has
voting rights in a registered political party; or
entity on whose behalf another person has voting rights in a registered
Associated entities operating wholly, or to a significant extent, for
the benefit of a political party may include: companies or incorporated associations,
trusts, unincorporated associations, societies, groups or clubs.
Associated entities are required to lodge annual returns by 20 October
each year. The information to be disclosed includes:
n total receipts and
payments, and total debts for the financial year;
n details of amounts
received above the disclosure threshold;
n details of
outstanding debts above the disclosure threshold; and
n details of capital
contributions (deposits) from which payments to a political party were
In addition, some associated entities who incur political expenditure
also have an obligation to lodge a Third Party Return of Political Expenditure.
The definition of ‘associated entity’ in the Electoral Act has been, and
remains, a source of concern. There are three main weaknesses in the current definition
of associated entities:
n it does not capture
all groups and organisations that it should (that is, it is under-inclusive);
n it captures groups
and organisations that do not have an influence over political party affairs
(that is, it is over-inclusive); and
n it results in
inconsistencies with some groups and organisations being classified as
associated entities, with similar groups and organisations escaping the
disclosure obligations (that is, it has a disparate impact).
The AEC has previously advised that the current definition of an
‘associated entity’ creates administrative challenges:
... imprecision in the second arm of the definition – ‘an
entity that operates wholly, or to a significant extent, for the benefit of one
or more registered political parties’ – complicates its administration. It
is also the case that the AEC’s interpretation of its practical application
opens a potential loophole whereby an entity need only prove that a
comparatively small proportion of its operations benefit someone other than a
political party for it to escape having a disclosure obligation.
Such definitional weaknesses can result in an inconsistent application
of the requirements for associated entities and potentially undermine the aims of
the Electoral Act.
In order to address these concerns, the committee has previously
unanimously recommended amending the Electoral Act:
... 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.
In evidence to the committee, the AEC restated concerns around the
current operation of associated entity provisions:
As has been highlighted in a number of inquiries and
complaints received by the AEC, the current test for what is an “associated
entity” included an inexact test of “operates wholly, or to a significant
extent, for the benefit of one or more registered political parties”.
The AEC observed that under the current provisions in the Electoral Act,
registered political parties are not required to identify all associated
entities which ‘operate for their benefits or which have voting rights in their
party’. The AEC argued that:
Accordingly, it is often not clear whether or not a
particular organisation is an “associated entity” and it is clearly possible
for an organisation to be established in such a way as to avoid being subject
to the operation of the existing provisions and yet have a significant impact
on the electoral processes.
In its submission to the current inquiry the AEC questioned the value of
retaining the category of associated entity, and contended that disclosure by
groups could operate effectively as part of third party arrangements. The AEC submitted:
The primary policy aim behind any disclosure scheme is that
electors should be informed of the sources of funds used in an election
campaign so as to inform their decisions about who to vote for on polling day.
Applying this policy aim to the disclosures by all of the players in an
election campaign suggests that the distinction between a third party incurring
political expenditure and an “associated entity” would be of little, if any,
utility to electors making a decision about how to vote for on polling day.
Further, the AEC argued that:
This is particularly the case given that the current
disclosure obligations differ so markedly between an “associated entity” and a
third party incurring political expenditure. On the one hand the third party
disclosure obligation is targeted at matters that related to the conduct of an
election campaign. This is to be contrasted with the current disclosure
obligation that is placed on an “associated entity” which includes all
payments, revenue and debts irrespectively of whether or not they related to an
election campaign. In general terms, the experience of the AEC is that for registered
organisations (e.g. trade unions), the majority of the payments made and
revenue raised relate to their primary activities under industrial law.
The AEC asserted that:
The provisions under 287(1)(b) have a fairly high benchmark.
This is one of the reasons we put forward the idea to the committee is to
consider moving to a third-party registration scheme. That would mean so that
you would not get into these subjective assessments of whether an organisation
is an associated entity or not.
The proposed approach has the potential to bypass the ongoing arguments
about whether certain organisations are associated entities. At the public
hearing on 6 July 2012, the AEC stated:
We have long arguments in relation to whether particular
agencies are associated entities. We have had ongoing arguments about Coastal
Voice. Other arguments have been raised about GetUp! One matter that we are
suggesting is worthy of consideration is that we simply move to a third-party
registration scheme, which would avoid all of the arguments. Essentially, they
are subjective arguments and a third-party registration scheme would clearly
result in additional work but may avoid some of the subjective issues
associated with assessing whether an agency is an associated entity.
When questioned by the committee, the AEC outlined the following
advantages of abolishing ‘associated entities’ and establishing a new third
n clarity of
information available to electors;
n harmonisation of the
n clarity as to who
will have a reporting obligation;
n potential for “campaign
accounts” to be specified at the time of registration to assist in reporting
and disclosure to electors;
n the ability for the
Parliament to set an expenditure threshold for amounts of electoral expenditure
that are regarded as material before a registration requirement arises.
The AEC also outlined the following disadvantages, which would include:
n the potential that
some third parties may not recognise that certain activities are related to the
conduct of an election requiring their prior registration before the
expenditure is incurred;
n additional compliance
costs, as consequences of increased numbers of organisations and individuals
that could be captures by the scheme. Again this would be affected by any
The AEC acknowledged that a third party registration scheme would bring
in more organisations. This would increase the resources needed by organisations
to understand and comply with their obligations and by the AEC to monitor these
Table 3.1 sets out the current disclosure requirements for associated
entities and third parties.
Table 3.1 Disclosure requirements for associated entities
and third parties
Type of return
Associated Entity Disclosure Return
Third Party Return of Political Expenditure
16 weeks after the end of the
20 weeks after the end of the financial year
Items to be disclosed
- total receipts
- details of
amounts received that are more than the disclosure threshold
- total payments
- total debts as
at 30 June
- details of
debts, outstanding as at 30 June that total more than the disclosure
details of capital contributions (deposits) from which payments to a
political party were generated
expenditure incurred for one or more of the five specified purposes listed in
section 314AEB(1)(a) (the disclosure threshold applies)
received, that were used to incur such political expenditure (gifts from the
same person or entity are cumulative for disclosure threshold purposes)
Who is responsible for lodging the return
Financial controller of the associated entity
A person or entity incurring political expenditure or
receiving gifts that were used for political expenditure purposes
Disclosure Guide for Associated Entities: 2011-12 financial year, p. 6; and Financial
Disclosure Guide for Third Parties incurring Political Expenditure: 2011-12
Canada and UK third party arrangements
In comparing Australia’s arrangements with international approaches, the
The overseas approach has generally been to require any third
party who incurs political expenditure during an election campaign over a set
threshold to be registered with the relevant electoral management body before
that expenditure is incurred. This enables their campaign accounts to be
reported against in a manner that enables electors to be fully informed as to
those parts of the business of the third party which are involved in seeking to
influence the outcome of an election.
The AEC has suggested that developing third party arrangements based on
Canadian and UK practices is an option for Australia to consider.
In Canada, the Canada Elections Act regulates third parties who
engage in election advertising. A third party can be an individual or a group,
with the latter including an unincorporated trade union, trade association,
corporation or a group of people acting together for a common purpose.
When an individual or group spends more than $500 on election
advertising, they are required to register as a third party with the Chief
Electoral Officer of Elections Canada. If less than $500 is spent on the
election advertising, the responsible individual or group does not need to
register as a third party, but must identify themselves on the advertising material
as having authorised the advertisement. Certain limits apply to third parties
depending on whether the advertising supports or opposes a specific candidate
or political party.
A registered third party is required to report its election advertising
expenses within four months after the relevant Election Day. For a general
election the report must include the times and places of the broadcasts or
publication of advertisements, indicating (1) promotion of or opposition to one
or more candidates in a given electoral district (to which a $3 000 limit
applies), and (2) all other electoral advertising expenses.
In the United Kingdom, third parties are ‘individuals or organisations
other than political parties or candidates which campaign at an election’.
Different electoral laws apply depending on whether the campaign is for or
against an individual candidate, political party or issue. Strict expenditure
limits apply to candidate based campaigns under section 75 of the UK Representation
of the People Act 1983. No returns are required and there are no controls
on their donations or loans.
Election campaigning for or against a political party or issue is
regulated under the UK Political Parties, Elections and Referendums Act 2000.
Spending is regulated for a year ending with the date of poll for UK
Parliamentary general elections and for four months preceding an election for
the other types of regulated elections. Section 87 of that Act provides:
(2) “Controlled expenditure”, in relation to a third party,
means (subject to section 87) expenses incurred by or on behalf of the third
party in connection with the production or publication of election material
which is made available to the public at large or any section of the public (in
whatever form and by whatever means).
After an election third parties must submit a spending return to the UK
Electoral Commission. There are restrictions on the amount of donations third
parties can receive, when it is to be directed to ‘controlled expenditure’, and
the donor must be a ‘permissible donor’, as provided in Part II of that Act.
The AEC noted that the Canadian and UK third party registration process
‘appears to only operate during an election period’. The AEC explained that
this is because the requirement relates to expenditure caps that apply only
during election periods.
The committee questioned the AEC as to what features of the Canadian and
UK arrangements it saw as being applicable in the Australian context. The AEC
outlined the following as specific features that could be included in a
redesign of Australian arrangements:
n The harmonisation of
disclosure requirements (i.e. the same for political parties, candidates, third
parties) that are linked to electoral expenditure;
n The establishment of
a prior registration requirement for any person or organisation (excluding
candidates and registered political parties) who intend to incur electoral
n A requirement to
nominate a “campaign account” to the AEC at the time of registration and any
electoral expenditure can only be lawfully incurred from funds available in
n An expenditure
threshold before third party registration is required. ...
n Loans that are used
to incur political expenditure should be disclosed.
The AEC acknowledged that a third party approach such as that in Canada
broadens the groups covered and moves the focus away from groups that have a
significant connection with a given political party or candidate. This was
discussed at the hearing on 16 July 2012:
Senator RYAN: But there is a very big difference
between the current associated entity test, which talks about political
parties, and a third-party registration regime that is broad enough to capture
political entity, isn't there? They are two very different concepts, aren't
Mr Pirani: We acknowledge that.
Mr Killesteyn: They are different concepts, but we are
suggesting that the concept of 'associated entity' is not working as well as—
Senator RYAN: To further the point put by Mr Griffin,
the intent of this is to disclose the activities of political parties and the
groups that are in orbit around them, for lack of a better way of putting it. A
third-party regime such as that in Canada captures groups that are in no way
operating to a significant or other extent for the benefit of one or more
registered political parties.
Mr GRIFFIN: Or maybe doing so in a manner which is a
little less transparent.
Senator RYAN: Groups that are getting involved in the
political process, to use your phrase.
Mr Killesteyn: That is true; we acknowledge that.
In relation to setting thresholds before third party registration is
required, the AEC noted how this operates in some Australian state
jurisdictions and internationally:
The AEC notes that in NSW, the registration of “third party
campaigners” under sections 38A to 38D of the Electoral Funding, Expenditure
and Disclosures Act 1981 has a threshold of $2,000 of electoral
communication expenditure before registration is required. In Queensland the
registration of third parties takes place under section 297 of the Electoral
Act 1992 and has a threshold of $200. In Canada, section 353 of the Canada
Elections Act 2000 provides for the registration of third parties who incur
electoral advertising expenses after the issuing of the writs for an election
with a threshold of $500 (Canadian dollars). In the United Kingdom, Part VI of
the Political Parties, Elections and Referendums Act 2000 deals with the
registration of third parties and section 86 includes a threshold of £200.
In this and previous inquiries it has been apparent that the category of
‘associated entity’, as defined in section 287 of the Electoral Act, lacks
At various hearings during the course of this parliament, time was spent
debating whether specific organisations should be classified an associated
entities for the purposes of disclosure reporting requirements. The AEC made
judgments based on the current definition, but it was argued by some that
certain groups should be classified as associated entities as they have
significant links to political parties or candidates.
It is clear that the current associated entities provision does create
confusion. This is problematic as it could result in the aims of the category
not being met and an inconsistent application of which groups are included in
the category for disclosure purposes.
If the category of associated entity was abolished this could mean
simply requiring all organisations to come under the third party requirements
rather than having a discrete category for associated entities. Or there could
be a redesign of the current third party system, drawing on features from
international approaches, such as the Canadian and UK requirement for third
parties to register with the electoral commission if they intend to incur
political expenditure above a certain threshold.
A system of pre-registration of third parties would be administratively
beneficial in assisting the AEC to identify those with reporting obligations.
However, the AEC would still need to monitor that obligations were being met, ensure
that individuals and organisations know about the requirement, and identify and
take action against those who fail to do so.
As Table 3.1 reflects, the disclosure required by associated entities is
more detailed than that required of third parties incurring political
expenditure. This is appropriate as the intention of the third party
arrangements are to capture movements of funds by people and organisations that
are not necessarily linked to political parties or candidates but are playing a
financial role in the political arena.
Having associated entities come under the broader third party
arrangements would mean that some transparency is being lost in the disclosure
by entities that are recognised as being closely linked to specific political
parties or candidates.
On balance, the committee believes that work should be done to improve
the clarity of the current definition of an associated entity rather than
abolish the category. This should involve revisiting the intent of the
category, entities that should be covered, and addressing any loopholes that
The committee endorses recommendation 25 of its November 2011 report to
improve the clarity of definition of ‘associated entity’. This clarification
requires detailed consideration to target some of the current problems
hampering the operation of this category for disclosure purposes.
The committee recommends that the Commonwealth Electoral
Act 1918 be amended to improve the clarity of the definition of
‘Associated Entity’. Changes could include:
‘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;
‘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
‘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.
Measure 6—Dedicated campaign accounts
Under item (vi), the Electoral Commissioner proposed requiring ‘that
electoral expenditure can only come from specific and dedicated campaign
accounts into which all donations must be deposited that have been nominated to
the AEC and which can be “trawled” by the Australian Transaction Reports and
Analysis Centre (AUSTRAC)’. This would also require the Financial
Transactions and Report Act 1988 to be amended to include these campaign
Electoral expenditure is defined under subsection 308(1) of the
Electoral Act as encompassing a very specific list of categories. The proposal
to expand the categories within the definition is discussed in the section on
The Financial Transactions and Report Act 1988 provides for the
reporting of certain transactions and transfers to AUSTRAC and imposes certain
obligations in relation to accounts.
The AEC argued that from an electoral administrative and monitoring
perspective, there are benefits to having dedicated campaign accounts.
The practice of campaign accounts is used overseas; it is
certainly a practice used in Canada. It is a mechanism for ensuring that all
donations and all expenditure flow through a single account, which makes it
much easier for audits and compliance to be determined.
The AEC argued that requiring the use of a dedicated account for
campaign donations and expenditure would ‘greatly enhance accountability’. The
With a dedicated campaign account there can be no doubt as to
what the total cost of an election campaign was and how it was funded. It would
make disclosure a simpler task, while it also becomes easier to identify
possible omissions from that record, as the election disclosure record should
reconcile back to the campaign account.
The AEC also stated that it would be necessary to articulate if the AEC
is to play a role in conducting compliance reviews and investigations of
campaign accounts, as this could ‘potentially be a very resource intensive role
Both New South Wales and Queensland have introduced measures to more
directly regulate the management of campaign finances in recent years.
From 2008 New South Wales has required candidates and groups to register
with the Election Funding Authority before being able to accept donations. They
are also required to appoint and register an official agent and must have a
campaign account before receiving or spending $1 000 or more for an
election. All donations must be paid into the campaign account of the party,
group or candidate, and all electoral expenditure must be paid from the
campaign account, to ensure that political donations are used for legitimate
Similarly, from 2011 Queensland has required that all political parties,
candidates and third parties establish and maintain a dedicated state campaign
The committee does not support requiring dedicated campaign accounts.
While introducing dedicated campaign accounts may assist the AEC in monitoring
donations and electoral expenditure, this benefit is likely to be
disproportionate to the considerable administrative burden it would place on
Measure 7—Electronic lodgement of returns
The Electoral Commissioner, at item (vii) on the list of possible
measures, proposed requiring ‘the electronic lodgement of all returns to the
AEC (with the power for the Electoral Commissioner to grant some exceptions)’.
In the Green Paper, the timely publication of returns in the United
States and the United Kingdom is attributed to ‘their systems of mandatory
electronic record keeping and lodgement’.
The AEC noted that disclosure was introduced in 1984 before there was
widespread use of computers or online technology. In the past the AEC has met
its section 320 requirement (to make copies of claims and returns available for
public inspection) by making hard copies available for public inspection at AEC
offices. Since the 1998 to 1999 reporting period, the AEC has been entering the
information from returns into an electronic database, and making scanned copies
of returns available on the AEC website.
In July 2010 the AEC introduced the eReturns system, a secure online
lodgement facility for election and annual returns. Clients have a logon, and
can regularly update their records before completing and submitting their
returns. Spreadsheets and other relevant documentation can also be attached. Once
it is lodged, the material becomes available to the AEC.
More than 40 per cent of 2009-2010 annual returns and 2010 federal
election returns were lodged electronically. However, that still leaves a
significant amount of data contained in other returns that still must be
entered by AEC staff. The AEC submitted:
This is a lengthy and expensive exercise for the AEC and is
simply not practical if timely turnarounds in placing information from lodged
returns on the internet are required.
The AEC has indicated that electronic lodgement of returns would provide
administrative efficiencies in the processing and publication of returns.
The AEC stated:
If more timely disclosure becomes a requirement, and
especially if accompanied by a requirement for the AEC to release that
information to its website in a timely manner, then electronic lodgement of
disclosure information must be mandatory. Otherwise the objective of timely
disclosure could be frustrated by the inevitable delay caused by the AEC
needing to manually input the information into a database. Electronic lodgement
would allow disclosure information to be released to public scrutiny almost
immediately if so desired.
In addition, electronic lodgement would also provide efficiency benefits
in the conduct of compliance reviews. The AEC stated:
During 2009 and 2010 the AEC requested records
electronically, where they existed, and undertook increasing amounts of
analysis electronically on a dedicated secure network at the AEC’s National
Office in Canberra. From 2011 the AEC will undertake all reviews electronically
where such records exist (almost all parties and associated entities use
electronic accounting packages). Electronic records allow for compliance
reviews to be undertaken at the AEC’s premises, with less disruption to the
political parties and associated entities, resulting in more comprehensive,
efficient and cost effective reviews.
In its Election Funding and Disclosure Report on the 2010 federal
election, the AEC recommended:
In the event of electoral reform increasing the frequency of
periodic reporting, reducing the disclosure threshold and reducing the
timeframe for political parties to lodge periodic returns, and for the AEC to
make them publicly available, the Act be amended to require political parties
and associated entities to lodge disclosure returns electronically.
Receiving returns electronically would be an essential part of the
development of a system of contemporaneous disclosure. The committee, in its
November 2011 report, unanimously recommended:
... 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.
The AEC has since made a submission to the Special Minister of State on
the feasibility of contemporaneous disclosure, which the Minister is
The committee supports introducing the requirement that returns be
lodged electronically with the AEC. It would improve the transparency and
efficiency of the disclosure system. It also appropriate for the Electoral
Commissioner to be able to grant exceptions in limited circumstances where electronic
submission may place an unreasonable burden on those lodging the return. For
example, in the case of an individual one-off donor without convenient access
to facilities to lodge an electronic return.
As the committee has indicated in previous reports, it supports a move
to more timely disclosure, and potentially contemporaneous disclosure. The
electronic lodgement of returns will be an important step towards achieving
||The committee recommends that the Commonwealth Electoral
Act 1918 be amended to require the electronic lodgement of returns with
the Australian Electoral Commission. The Electoral Commissioner should be
able to grant exemptions to this requirement in limited circumstances.
Measure 8—Extending the period for retaining records
Under item (viii), the Electoral Commissioner proposed that ‘the period
for the retention of records in section 317 and related offence in section
315(2)(b) be increased to 7 years’.
Section 317 states that records pertaining to an election claim or
return must be retained for three years:
317 Records to be kept
Where, on or after the
commencement of Part 3 of the Political Broadcasts and Political Disclosures
Act 1991, a person makes or obtains a document or other thing that is or
includes a record relating to a matter particulars of which are, or could be,
required to be set out in a claim or return under this Part relating to an
election, not being a record that, in the normal course of business or
administration, would be transferred to another person, the first mentioned
person must retain that record for a period of at least 3 years commencing on
the polling day in that election.
Subsection 315(2)(b) stipulates that where a person fails to retain
records for three years in accordance with section 317, ‘the person is guilty
of an offence punishable, upon conviction, by a fine not exceeding
The time period in which action can be taken on this offence is outlined
in section 315(11):
A prosecution in respect of an
offence against a provision of this section (being an offence committed on or
after the commencement of this subsection) may be started at any time within 3
years after the offence was committed.
The AEC observed that the three year period in which action can be taken
for a breach of the requirement to retain records correlates to the normal
electoral cycle. However, the AEC argued that the three year requirement in
relation to records can be problematic:
Allegations of offences against the disclosure provisions of
the Electoral Act have on occasion stretched back to events and transactions
more than three years prior. In these circumstances records which may provide
important evidence no longer need to be retained, and so do not need to be
presented for examination. This can undermine the success of any inquiries into
The AEC maintains that a record retention period of seven years—as is
applied to records for taxation purposes—would provide more ‘flexibility for
inquiries and investigations into possible contraventions of the disclosure
provisions of the Electoral Act’.
The AEC drew the committee’s attention to the fact that section 317
covers election returns and does not extend to annual returns. The AEC stated:
This situation has arisen because this section was not
updated at the time that disclosure moved from an entirely election based
scheme to one that now has its major emphasis on annual returns.
This apparent oversight means that there is no requirement to
retain any records that support the disclosures made in annual returns. Even
without an extension to the retention period, there is a need to bring records
that support annual disclosure returns under coverage of s.317.
Further, the AEC explained that:
The reason why these two recommendations [measures 8 and 10]
are linked is because the status of the offence has an impact on the time
period in which a prosecution can be commenced.
Australia’s funding and disclosure system relies on individuals and
organisations disclosing money received and spent relating to their activities
in the political arena. Accordingly, their ability to accurately disclose, and
for the AEC to be able to check that they are complying with the relevant
Electoral Act obligations, is dependent on the accuracy and retention of
There can be considerable time lags between when certain donations or
gifts were received or expenditure incurred, and the lodgement of election and
annual returns. It is important that those with reporting obligations be
required to retain records to help ensure that the AEC can effectively
undertake any necessary compliance reviews or investigations.
The proposed extended period of seven years would not apply to the
other offences in section 315, such as a failure to lodge a return or providing
false or misleading material for the purposes of a return. The AEC indicated
that the prosecution period for fraud related offences under section 315 are to
be addressed as part of measure 10, which proposes increasing criminal penalties
for these offences.
||The committee recommends that the Commonwealth Electoral
Act 1918 be amended to increase the period for the retention of records
in section 317 and related offence in section 315(2)(b) to seven years.
Measure 9—Failure to make a record for disclosure purposes
Item (ix) of the AEC’s list of matters is also related to disclosure
records. The Electoral Commissioner proposed a new offence be inserted into the
Act for a ‘person who fails to make records to enable complete and accurate
While section 315(2)(b) makes not retaining a record an offence, no
penalty applies to a person who fails to make a record.
The AEC has previously suggested that the Electoral Act be amended to provide a
penalty for a person who fails to make a record.
The AEC indicated that it has been seeking to address this issue for
some time, outlining relevant recommendations it has made in its funding and
disclosure reports on the 1993, 1998 and 2010 federal elections. The AEC
A series of recommendations has been made in relation to this
matter. Recommendation 18 of the AEC’s Funding and Disclosure Report on the
1993 Federal Election was that: ‘persons required to furnish returns under
Part XX be required to make and maintain such records as are necessary to
enable them to comply with the disclosure requirement of the Act’.
This was followed by Recommendation 5 of the AEC’s Funding
and Disclosure Report on the 1998 Federal Election which was that: ‘persons
who fail to make or maintain such records as enables them to comply with the
disclosure provisions of the Act be subject to the same penalty provisions as
apply to persons who fail to retain records’.
Most recently, Recommendation 15 of the AEC’s Funding and
Disclosure Report on the 2010 was that ‘the Act be amended to provide a
penalty for a person who fails to make records to enable complete and accurate
The AEC noted that the Electoral Act ‘does not demand any minimum
standards of record keeping’. The AEC suggested that this has implications for
those attempting to discharge their reporting obligations, and in the conduct
of compliance reviews or more serious investigations of possible offences.
The AEC claimed that reviews and investigations ‘can be effectively
frustrated by inadequate records’. The AEC stated:
Where the records are deficient in establishing evidence of
the financial dealings of a person/entity with a disclosure responsibility, it
undercuts the purpose of any requirement for records to be retained. Provisions
need to work together to first ensure that adequate records are
created/maintained and that those records are then retained for a minimum
period of time as evidence of disclosures made.
As indicated in the committee’s response to measure 8, the accuracy of
records is important for disclosure purposes. In addition to retaining records
for a reasonable period, it is essential that individuals and organisations
make accurate records in relation to disclosure obligations.
Unless the necessary records are made, individuals and those responsible
for reporting in organisations may not be able to meet their disclosure
obligations. Further, the AEC will be hampered in the event that compliance
reviews or investigations need to be undertaken.
||The committee recommends that the Commonwealth Electoral
Act 1918 be amended to insert an offence for a person who fails to make
records to enable complete and accurate disclosure.
Measure 10—Criminal penalties for fraud offences
The Electoral Commissioner, under list item (x), proposed increasing the
‘relevant criminal penalties that are fraud related’.
It is central to a successful penalty regime that the penalty is
proportional to the offence and that the penalty can be enforced. The AEC submitted:
The financial penalties in Part XX of the Electoral Act
have not been increased since they were introduced (in many cases that means
there has been no increase since 1984). ... That these penalties have not been
updated has eroded their value not only in simple present dollar terms but also
in terms of their deterrence value and their relative severity to other
Submitting a false or misleading claim or return to an AEC agent is an
offence under sections 315. A political agent lodging a false or misleading
return is committing an offence punishable by a $10 000 fine. A person
(not a political agent) who makes a false or misleading claim is committing an
offence punishable by a $5 000 fine. Providing a person who is making a claim
with false or misleading material is an offence punishable by a $1 000
fine. Providing a person making a return with false or misleading material is
an offence punishable by a $1 000 fine. Section 315 provides:
... (3) Where
the agent of a political party or of a State branch of a political party lodges
a claim under Division 3, or furnishes a return that the agent is required
to furnish under Division 4, 5 or 5A, that contains particulars that are,
to the knowledge of the agent, false or misleading in a material particular,
the agent is guilty of an offence punishable, upon conviction, by a fine not
a person (not being the agent of a political party or of a State branch of a
political party) lodges a claim under Division 3, or furnishes a return
that the person is required to furnish under Division 4 or 5, that contains
particulars that are, to the knowledge of the person, false or misleading in a
material particular, the person is guilty of an offence punishable, upon
conviction, by a fine not exceeding $5,000 ...
person shall not give to another person, for the purpose of the making by that
other person of a claim under Division 3, information that is, to the knowledge
of the first mentioned person, false or misleading in a material particular.
(7) A person shall not furnish to another person who is required
to furnish a return under Division 4, 5 or 5A information that relates to the
return and that is, to the knowledge of the first mentioned person, false or
misleading in a material particular.
Penalty: $1,000. ...
prosecution in respect of an offence against a provision of this section (being
an offence committed on or after the commencement of this subsection) may be
started at any time within 3 years after the offence was committed.
The AEC maintains that the criminal prosecution of offences is a ‘timely
and costly process’. A person must be pursued
for prosecution by the CDPP and convicted in a court for a penalty to be imposed.
On conviction, the courts are also able to order the reimbursement to the
Commonwealth of a wrongfully obtained payment.
The Green Paper made the observation that Australia’s approach to
electoral regulation can be categorised as ‘all carrots, no stick’.
The Joint Select Committee on Electoral Reform report in 1983 recommended that suitably
severe penalties be attached to the ‘wilful filing of false or incorrect
In the 2010 Bill the Government proposed strengthening the funding and
disclosure penalty regime. In its November 2011 report, the committee supported
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.
In the 2010 Bill imprisonment and increased monetary penalties are
proposed for offences relating to false or misleading information and failure
or refusal to comply with notices. The ‘reasonable excuse’ defence for the noncompliance
offences will also be repealed. As discussed, failure to furnish a return,
furnishing an incomplete return, failure to retain records, and failure to
comply with a notice will no longer be offences of strict liability and will
instead be treated as administrative breaches by the AEC. The key proposed
changes are outlined below:
Item 98 repeals subsection 315(1) to (4) and
substitutes new subsections 315 (1) to (4C).
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 maximum penalty is increased to 120 penalty units ($13 200).
Item 98 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), (4B) and (4C) provide for
offences 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; or makes a
record about an activity connected with permitted anonymous gifts and knows
that the record is false or misleading. The penalty will be 2 years
imprisonment or 240 penalty units (or both) for a false or misleading claim
conviction, or 12 months imprisonment or 120 penalty units (or both) for a
false or misleading particulars offence.
Item 100 provides for 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
maximum penalty is increased from $1 000 to imprisonment for 2 years or 240
penalty units (or both).
Offences are created (Item 102) 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 306AJ(1) or (2) [new subsection 315(10E)]. These carry the
penalty of imprisonment of 12 months or 240 penalty units, or both.
The offences under section 315 of the Electoral Act are currently
‘summary offences’, which are punishable by not more than 12 months
imprisonment. These are usually regarded as less serious offences. The AEC
Under section 15B of the Crimes Act 1914 the usual
limitation period for commencing a prosecution for such offences is within one
year of the commission of the offence.
Further, the AEC noted that there is ‘no such limitation on the
commencement of a prosecution for an indictable offence’.
In the AEC analysis on the FWA report, when considering the period in
which prosecutions must commence, the AEC observed:
As the three disclosure
returns completed by Ms Jackson were received by the AEC on 13 October 2009,
the three year limitation period in subsection 315(11) of the Electoral Act has
not expired. However, in relation to the return lodged by the candidate agent
for Mr Thomson and the ALP NSW Branch returns, the three period to commence any
prosecution has expired.
In evidence to the committee during the inquiry into the funding of
political parties and election campaigns, the AEC submitted:
The AEC notes that the Act contains a 3 year limitation
placed on commencing prosecution action. Under subsection 315(11) of the Act
prosecutions for offences against the funding and disclosure provisions must be
commenced within three years of the offence being committed. In practical terms
(particularly due to the post event reporting of matters), this means, in some
instances, that by the time the AEC becomes aware of a possible breach and/or
conducts inquiries to accumulate sufficient evidence to warrant the preparation
of a brief of evidence, there is no opportunity to pursue prosecution action.
The can leave the AEC with no ability to enforce a correction to the public
However, the AEC notes that the general provision in section
4H of the Crimes Act 1914 for commencing criminal proceedings for a
summary offence is only 12 months. Accordingly, the level of the offences
impacts on the time in which proceedings must be commenced.
The AEC noted that Parliament has already ‘extended the normal timeframe
for commencing a prosecution for an offence under Part XX of the Electoral Act
from the usual one year of the offence being committed to three years’.
The AEC surmised that the current three year period for commencing
prosecution of offences under Part XX of the Electoral Act relates to the
normal election cycle. The AEC submitted:
This suggests that the original intention of the Parliament
was that the resolution of any criminal proceedings could be resolved prior to
the next election where voters would be able to express their view by the way
that they cast their ballots.
The AEC has listed as a matter for consideration increasing the relevant
criminal penalties under Part XX of the Electoral Act for fraud related
offences. When considering what penalties may be appropriate for funding and
disclosure purposes, the AEC submitted:
Similar fraud offences under 7.3 of the Criminal Code Act
1995 carry penalties ranging from 12 months imprisonment to up to 10 years
imprisonment. The actual level of any penalty would need to be considered
against the Guide to Framing Commonwealth Offences, Infringement Notices and
Enforcement Powers issued by the Attorney-General’s Department.
The committee supports stronger penalties for fraud related offences in
the funding and disclosure requirements of the Electoral Act. This should provide
a greater deterrent to individuals and organisations who deliberately attempt
to mislead the AEC and Australian electors about relevant donations, gifts or
The committee endorses recommendation 27 in its November 2011 report
‘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’. It is
appropriate that fraud related offences should be categorised among the more
‘serious’ breaches against the Electoral Act.
||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. Fraud related offences should be treated
as serious offences for the purposes of the Commonwealth Electoral Act
Measure 11—Frequency of expenditure reporting
Under item (xi), the Electoral Commissioner proposed ‘more frequent
reporting of relevant expenditure and receipts’.
The timeframes for the lodgement and public release of disclosure
returns differs between submitters. Annual returns by registered political
parties and associated entities must be furnished 16 weeks after the end of the
financial year (sections 314AB and 314AEA). Donors to a political party and
returns by third parties must be lodged 20 weeks after the end of the financial
year (sections 314AEB and 314AEC). Annual returns are made public on the first
working day of February after lodgement. Election returns by candidates, Senate
groups and donors to candidates must be lodged 15 weeks after polling day
(section 309). Returns are made public nine weeks after lodgement.
In the 2008 and 2010 Bills the Government proposed to reduce the
disclosure timeframes. Provisions in the 2010 Bill, which is still before the
n replace annual return
requirements with bi-annual return provisions which are due 8 weeks after the
end of the reporting period;  and
n shorten the reporting
period for election returns from 15 weeks to 8 weeks after polling day.
Replacing annual reporting with the six monthly reporting of disclosure
returns has been recommended in various forums.
In 2011 the committee supported the introduction of six-monthly reporting as
outlined in the 2010 Bill. The Coalition members on
the committee saw no problem with the current annual reporting requirement, and
opposed the introduction of six monthly disclosure requirements on the basis
that it would ‘add significant compliance costs’ and increase the
administrative burden on those with reporting obligations and the AEC.
The committee also addressed the issue of reporting large single
donations, recommending that single donations above $100 000 should be
subject to special reporting requirements, in particular the lodgement of a
return with the AEC within 14 days of receipt of the donation.
Additionally, the AEC should publish these returns within 10 business days
The Green Paper noted that the lag between transactions being entered
into and their disclosure raises questions over their transparency. It stated:
Clearly the major point of public disclosure, particularly in
the absence of comprehensive regulation through bans or caps on financial
activities, is to allow the public to form judgements about political parties
and candidates and to apply that knowledge in exercising their franchise at the
The AEC stressed that the public are the users of disclosure information:
For the public, as voters, to effectively exercise their
discretion at the ballot box based on financial disclosures made by those
directly and indirectly participating in the election, those disclosures need
to be available to them in a suitably timely manner. In this context, that
would require disclosures in the lead-up to the polling day in an election to
be made contemporaneously, or as close to contemporaneously as practical.
To further minimise the lag time between lodgement and public disclosure
the committee also recommended the AEC investigate the feasibility of a ‘system
of contemporaneous disclosure’. At the time of writing,
this Government has not responded to the committee’s recommendation.
The AEC advised that it has undertaken some preliminary work in this
area, including some analysis of international approaches. However, it stated:
... until such time as an actual model is proposed, the AEC
is unable to undertake a detailed analysis of any such scheme. Further ... any
lowering of disclosure thresholds and increasing reporting frequency will also
result in increased compliance costs to third parties, candidates, registered
political parties and donors.
More frequent reporting for disclosure purposes is important. The
committee reiterates recommendation 6 in its November 2011 report for the
introduction of six-monthly rather than annual reporting. This would include
expenditure. Ultimately, the committee supports moving towards a system of
contemporaneous disclosure, which would provide greater and timelier transparency.
||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)
Measure 12—Campaign committee expenditure reporting
The Electoral Commissioner, under item (xii), proposed reintroducing
‘requirements that campaign committee expenditure is to be reported separately
from the state party unit and specifically covers the election period for each
Donations received or expenditure incurred by a campaign committee on
behalf of an endorsed candidate is required to be disclosed by the relevant political
party rather than by the candidate themselves. This information is disclosed
within the political party’s annual return but is not separately identified.
A ‘campaign committee’ is defined in subsection 287A(2) of the Act as ‘a
body of persons appointed or engaged to form a committee to assist the campaign
of the candidate or group in an election’.
Section 287A states that campaign committees are to be treated as part
of the State branch of a party:
Divisions 4, 5 and 5A apply as
if a campaign committee of an endorsed candidate or endorsed group were a
division of the relevant State branch of the political party that endorsed the
candidate or the members of the group.
Divisions 4, 5, and 5A relate to the ‘disclosure of donations’,
‘disclosure of electoral expenditure’ and ‘annual returns by registered
political parties and other persons’.
In its submission to the inquiry, the AEC stated:
Changes under the Electoral Act, such as the deeming of the
transactions of campaign committees and Senate groups to be transactions of the
political party irrespective of the nature of their operation, have had the
effect of shifting the responsibility for disclosure away from endorsed
candidates and Senate groups to political parties.
Having the disclosure as part of a larger party return makes it
difficult for the public to interpret in relation to a particular candidate or
campaign. The AEC submitted:
The means of achieving this break-down of disclosure would be
to require campaign committees of endorsed candidates and Senate groups to
lodge separate election disclosure returns rather than have their financials
subsumed into the annual disclosures of their political parties...This then
provides a picture of the activity at the electorate level (or Senate group
The Green Paper also cautioned that ‘requiring individual branches of a
party to lodge returns may impose a substantial and unnecessary administrative
burden on these groups’.
The committee considered the issue of campaign committees lodging
returns, in its 2010 report on the funding of political parties and election
campaigns, and did not support the reintroduction of campaign committee
returns. The committee concluded:
Volunteers [of campaign committees] play important roles in
the political process and care should be taken to ensure that changes to
funding and disclosure arrangements do not discourage participation through
imposing onerous obligations on those that wish to contribute in this manner.
However, the committee further observed that there is still an onus on
campaign committees to keep appropriate records and provided these to the
relevant party for inclusion in returns. The committee stated:
The committee has recommended that detailed disclosure of
expenditure be introduced. While the agent for the relevant party will be
responsible for lodging this information, the campaign committees will also
have a role to play in being aware of these obligations and maintaining
accurate records of relevant expenditure that will need to be provided to the
The committee does not support the reintroduction of campaign committee
expenditure reporting requirements. As outlined in its report in November 2011,
reintroducing this requirement would place an undue burden on campaign committee
members, many of whom are often volunteers, by adding another layer of
The campaign committees have a role to place in the creation and
retention of accurate records, but the parties need to take responsibility for
meeting reporting obligations.
Measure 13—Disclosure and election periods
The Electoral Commissioner proposed reviewing ‘the “disclosure period”
and the “election period” in relation to disclosure obligations and new
candidates who are seeking pre-selection’.
The ‘disclosure period’ is defined under subsection 287(1):
in relation to an election, means the period that commenced:
in the case of a candidate in
the election (including a member of a group) who had been a candidate in a
general election or by‑election the polling day in which was within 4
years before polling day in the election or in a Senate election the polling
day in which was within 7 years before polling day in the election—at the end
of 30 days after polling day in the last such general election, by‑election
or Senate election in which the person was a candidate;
in the case of a candidate in
the election (including a member of a group) who had not been a candidate in a
general election or by‑election the polling day in which was within 4
years before polling day in the relevant election or in a Senate election the
polling day in which was within 7 years before polling day in the relevant
election—on the day on which the person announced that he or she would be a
candidate in the election or on the day on which the person nominated as a
candidate, whichever was the earlier;
in the case of a person who,
when he or she became a candidate in the relevant election, was a Senator
holding office under section 15 of the Constitution but was not a person
who had been a candidate in a general election or by‑election the polling
day in which was within 4 years before polling day in the relevant election or
in a Senate election the polling day in which was within 7 years before polling
day in the relevant election—on the day on which the person was chosen or
appointed under section 15;
in the case of a group—on the
day on which the members made a request under section 168; and
in the case of a person or
organisation to which subsection 305A(1) or (1A) applies—at the end of 30 days
after the polling day in the last general election or election of Senators for
a State or Territory;
and ended 30 days after
polling day in the election.
The disclosure period differs significantly for new candidates and
candidates who have previously contested elections. For candidates who
contested an earlier election, the disclosure period commences 30 days after
polling day of the last federal election they contested within the past four
years in the case of the House of Representatives, or seven years for the Senate.
For new candidates the disclosure period commences from the earlier of
the date the candidate nominated for the election he or she is contesting, or
the date the candidate declared his or her candidacy. For endorsed candidates
this is usually the date of their formal pre-selection, and for Independents
their nomination date. For a casual Senate vacancy, the disclosure period is
taken from their appointment.
Section 287(1) defines ‘election period’ as ‘the period commencing on
the day of issue of the writ for the election and ending at the latest time on
polling day at which an elector in Australia could enter a polling booth for
the purpose of casting a vote in the election’.
The Green Paper made the point that ‘in the current climate of
“continuous campaigning”, significant expenditure can occur quite some time
before this’. The Green Paper also noted that extending the definition of the
election period has only been feasible in jurisdictions that have fixed terms
and that without this certainty, ‘spending during an election period can only
be clearly defined by the calling of an election’.
Some alternative approaches suggested included ‘expecting political
parties, candidates and other participants to plan their expenditure according
to the anticipated date, or, alternately, applying a cap to certain kinds of
expenditure across the entire election cycle’.
In relation to the disclosure period, the AEC noted in its submission to
Extending the disclosure
period for first time candidates by having it commence on the 31st
day after the last general or Senate election would have little practical
impact in most instances, but, it would capture all donations received and used
in relation to an election campaign irrespective of whether they were received
prior to a person’s formal announcement of their candidacy.
The AEC indicated that the election period had remained unchanged since
the introduction of the disclosure provisions in 1984. It suggested that a
review of the election period would be timely, as the nature of campaigning is
now substantially different, with ‘proxy’ campaigns often commencing in advance
of an election announcement. The AEC submitted:
The definition of election period could be commenced earlier
so as to capture expenditures incurred on campaign activities being undertaken
prior to the formal commencement of the election campaign at the time of the
issuing of the election writs by the Governor-General. The complication in
setting a new commencement date when there is not a fixed election date is to
provide certainty for those with disclosure obligations. For this reason it
would be preferable to count forward from a known date, such as calculating the
commencement period as being 24 or 30 months from the polling day in the last
election, although with the rider that it be the earlier of this calculated
date or the date of the issue of the writ in case of an early election (or by-election).
The election period is a relatively straightforward category from the
issue of the writs to Election Day. The committee acknowledges that the nature
of political engagement has changed the face of campaigning from what used to
be a distinct period to an ongoing activity.
However, there does not seem to be another timeframe that would lend
itself to being a recognisable ‘election period’. One option could be to
identify a certain amount of time after the last election and deem that to be
the commencement of the election period, but this would not necessarily address
the concerns motivating such a change, especially in a culture of continuous
Currently, incumbent parliamentarians have ongoing disclosure
obligations, but new candidates only have an obligation from when they announce
their candidacy or nominate. For candidates seeking pre-selection with a
political party, there is the potential for them to be receiving donations and
gifts and incurring political expenditure prior to their candidacy being
formalised. However, they do not have to disclose transactions prior to their
pre-selection. Independent candidates do not have to disclose until they
announce their intention to run or nominate with the AEC.
The committee acknowledges that this is a gap in the current system. It
is reasonable that new candidates also be accountable for the receipt of
donations and gifts and expenditure that relates to their political candidacy.
However, identifying an appropriate period in which to extend the
disclosure period for new candidates does pose a challenge. For example, the disclosure
period for endorsed candidates could be from the date they nominated to be
considered for pre-selection, but this date could vary considerably between and
within parties. Such an approach would also fail to cover Independent
The committee believes that the transactions of new candidates for
election purposes must be transparent. New candidates should be accountable for
the flow of money in relation to their election activities. It is
reasonable to suggest that many new candidates would have had an intention to,
or at the very least interest in, seeking pre-selection or running as an
Independent well in advance of the election.
The committee proposes extending the disclosure period for new candidates
to twelve months prior to their pre-selection or nomination date, whichever is
the earlier, to address the current gap in transparency. A period of twelve
months strikes an appropriate balance between increasing transparency without
imposing unnecessary administrative burdens on these individuals.
||The committee recommends that the Commonwealth Electoral
Act 1918 be amended to extend the disclosure period for new candidates to
12 months prior to pre-selection or nomination, whichever is earlier.
Measure 14—Coercive powers of the AEC
The Electoral Commissioner proposed increasing ‘the coercive powers of
the AEC to enable it to act as a regulator in relation to matters under Part XX
of the Electoral Act’. Part XX of the Electoral Act relates to election funding
and financial disclosure.
The Green Paper highlighted the importance of an effective compliance
regime stating that ‘electoral reforms must be backed by an effective
regulatory and enforcement regime’. However, it was also noted that ‘the number
of successful prosecutions in relation to offences under the Electoral Act is
small, which raises the question of whether the current offence provisions are
effective to enforce compliance with the Electoral Act’.
Section 316 of the Electoral Act provides the AEC with coercive
information gathering powers:
authorised officer may, for the purpose of finding out whether a prescribed
person, the financial controller of an associated entity or the agent of a
registered political party has complied with this Part, by notice served
personally or by post on:
(a) the agent
or any officer of the political party; or
financial controller of the associated entity or any officer of the associated
prescribed person or, if the prescribed person is a body corporate, any of its
as the case may be, require
the agent, financial controller, person or officer:
produce, within the period and in the manner specified in the notice, the
documents or other things referred to in the notice; or
appear, at a time and place specified in the notice, before the authorised
officer to give evidence, either orally or in writing, and to produce the
documents or other things referred to in the notice.
In the November 2011 report, the committee recommended that funding and
disclosure functions ‘continue to be exercised and administered by the
Australian Electoral Commission, and that the Australian Electoral Commission
receives additional resources to carry out these functions and exercise its
The AEC argued that the section 316 information gathering powers are
limited by subsection 315(3) that requires ‘reasonable grounds’ be established
before these coercive powers can be used. The AEC stated:
It prevents investigations being mounted as ‘fishing
expeditions’ by requiring that there be credible evidence of a possible
contravention of a disclosure offence rather than mere suspicion. It also acts
as a safeguard against harassment being visited upon parties or other persons
from unsupported allegations being levelled at them.
In response to further questioning from the committee on the perceived
restrictions imposed by the ‘reasonable grounds’ test, the AEC submitted:
The power in subsection 316(3) of the Electoral Act has
several limitations. The authorised officer must have:
i. “reasonable grounds”;
ii. to believe that a
iii. is capable of producing or
giving evidence; and
documents or evidence relates to a contravention or possible contravention of
power contained in subsection 316(#A) of the Electoral Act has several
limitations. The authorised officer must have:
i. “reasonable grounds”;
believe that a person who is the financial controller or an officer of the
capable of producing documents or giving evidence; and
iv. the documents or evidence
relates to whether an entity is an associated entity.
Unless all of the above elements
are satisfied, then the Electoral Act provides the AEC with no legal authority
to issue the notices to any person or entity to ascertain whether a
contravention has occurred or whether an entity is an “associated entity”.
When asked about its actions pertaining to the HSU and ALP reporting
obligations, the AEC commented that:
... in its dealings with the HSU National Officer and the NSW
Branch of the ALP in this matter, the AEC has received full cooperation and
response to inquiries without the need to use any of its coercive powers.
However, the AEC argued that additional action could have been taken by
the AEC if it were operating under a different enforcement model:
... one of the examples is in relation to the penalty
provisions. We have offered, for your information, a model that applies, for
example, in the United Kingdom. I think it is a useful model in the sense that
it provides a graduated set of sanctions starting with relatively modest fines
for fairly objective offences such as late lodgement and then progressively
moves up towards more serious offences for misleading information, and then
indeed finalised in relation to the investigation powers that we have been
discussing in the last hearing.
That is a model that in the circumstances of the HSU case
might have provided some additional ability for the AEC to encourage the
lodgement of the returns from the HSU national office in a much more
expeditious manner. As you would have seen in the chronology that we provided
to you in the attachment to our first submission, there were some delays in
there. We were in constant discussions and contact with the HSU national
office. With some additional powers, for example, to issue a compliance notice
to comply, that would have been a matter that we would have had some additional
authority to demand the returns.
The penalty sanctions generally have not been changed since
1984. So I think invariably there is an argument that suggests—as you were just
talking to Mr Nassios about—that perhaps the penalty provisions are in need of
some modernisation and some lifting.
The AEC asserted that greater coercive powers would enable it to act as
The AEC notes that the recommendation that was made in
Measure 14 was couched in terms of enabling the AEC to act as a regulator. The
present powers contained in section 316 of the Electoral Act are the same in
substance as when this provision was inserted by the Commonwealth Electoral
Act 1983. The powers are essential limited to the conduct of monitoring
activities (e.g. compliance review) and the investigation of possible criminal
offences under section 315 of the Electoral Act.
The AEC acknowledged that ‘changes to penalties and the exercise of
coercive powers under Commonwealth laws require consultation with the
Attorney-General’s Department’, to ensure that any changes are consistent other
Commonwealth laws and compliant with human rights obligations. The AEC also
noted that the Guide to Framing Commonwealth Offences, Infringement Notices
and Enforcement Powers (the Guide) contained principles for coercive powers
that need to be taken into account.
The AEC asserted that the following issues would need to be considered:
Firstly, whether the criminal offence framework presently in
Part XX of the Electoral Act is the appropriate framework for dealing with
all breaches of the disclosure provisions in section 315. Second, whether the
development and use of sanctions such as infringement notices and enforceable
undertakings should arise from the use of coercive powers. Third, whether there
is some public interest in apply the Crime Act model.
The AEC submitted that Australia could draw on the United Kingdom
enforcement policy model:
The AEC suggests that a similar approach could be considered
in relation to the coercive powers that are available to the AEC for dealing
with breaches under section 315 of the Electoral Act. Once set of powers for
dealing with monitoring and supervisory work. A separate set of powers for the
investigation of breaches, This approach appears to be consistent with the
approach set out for the Commonwealth laws in the Guide issued by the
The UK Electoral Commission’s powers are separated into supervisory and
investigatory work. Its approach is described as follows:
The Commission undertakes supervisory work to ensure that
those who are regulated meet their legal requirements. Funding is checked to
ensure it is derived from permissible sources. Formal processes ensure the
Commission’s advice is targeted and supervisory and auditing resources are
The Commission will take enforcement action where it is
necessary and proportionate to do so. Many of the individuals responsible for
complying with the law at the local level are volunteers. It is therefore
particularly important that the Commission’s objectives are pursued in a
proportionate way, taking the facts of each case into account and only taking
action when it is necessary in order to achieve its objectives.
The UK Electoral Commission’s Enforcement Policy outlines how the
The supervisory powers available to the Commission only apply
to those who are regulated under The Political Parties, Elections and Referendums
Act 2000 (PPERA). These powers support
routine work monitoring compliance by regulated organisations and individuals
with the requirements set down in law.
The investigatory powers available to the Commission extend
to individuals and organisations beyond those who it regulates. The Commission may use its investigatory powers
(to require documents, information or to attend an interview) in respect of any
person or organisation when it has reasonable grounds to consider that there
has been a breach of the law on party and election finance. The Commission’s
powers to request information apply to and may be enforced against both the
subject of any investigation and any other person or organisation that holds
In relation to the ‘reasonable grounds’ test, the AEC noted that a
similar test applies in the UK.
The AEC indicated that additional resources would be required if it is
expected to take a ‘more activist role’ in conducting investigations.
During the inquiry, there was some discussion at public hearings about
whether the AEC had effectively utilised its existing powers in addressing the
matters arising in relation to the HSU National Office and that organisation’s
obligations under the Electoral Act.
The AEC asserted that it had used the coercive powers at its disposal in
relation to the HSU matters, and argued that it was restricted by the ‘reasonable
The committee sees merit in strengthening the AEC’s coercive powers in
such a way that it puts beyond question the AEC’s powers to determine the
extent of an organisation’s disclosure obligations (i.e. what type of return(s)
it should lodge) and investigate whether these obligations have been met.
It should be made clear what steps the AEC can take in gathering
information from organisations with confirmed, or suspected, reporting
obligations under the Electoral Act.
||The committee recommends that the Australian Government clarify,
and where needed strengthen, the coercive powers of the Australian Electoral
Commission to determine the extent of an individual or organisation’s
disclosure obligations and to investigate whether reporting obligations under
Part XX of the Commonwealth Electoral Act 1918 have been met.
Measure 15—Categories of electoral expenditure
The Electoral Commissioner, under item (xv), proposed expanding ‘the
categories of “electoral expenditure” that are to be disclosed to include
campaign staff, premises, office equipment, vehicles and travel’.
Electoral expenditure is defined under subsection 308(1) of the
Electoral Act as encompassing a specific list of categories:
In this Division, electoral
expenditure, in relation to an election, means expenditure incurred (whether or
not incurred during the election period) on:
broadcasting, during the election period, of an advertisement relating to the
publishing in a journal, during the election period, of an advertisement
relating to the election; or
display, during the election period, at a theatre or other place of
entertainment, of an advertisement relating to the election; or
production of an advertisement relating to the election, being an advertisement
that is broadcast, published or displayed as mentioned in paragraph (a), (b) or
production of any material (not being material referred to in paragraph (a),
(b) or (c)) that is required under section 328, 328A or 328B to include the
name and address of the author of the material or of the person authorizing the
material and that is used during the election period; or
production and distribution of electoral matter that is addressed to particular
persons or organisations and is distributed during the election period; or
carrying out, during the election period, of an opinion poll, or other
research, relating to the election.
In the advisory report on the 2008 Bill, the committee recommended
broadening the definition of electoral expenditure to ‘include reasonable costs
incurred for the rental of dedicated campaign premises, the hiring and payment
of dedicated campaign staff, and office administration’.
The committee was concerned with ensuring that all ‘reasonable administrative
expenses related to campaigning’ would be eligible to receive public funding.
In the 2010 Bill, which is still before the Senate, the Government
proposes the inclusion of five new categories of electoral expenditure:
n the rent of any
house, building or premises used for the primary purpose of conducting an
n paying additional
staff employed, or a person contracted, for the primary purpose of conducting
an election campaign
n office equipment
purchased, leased or hired for the primary purpose of conducting an election
n the costs of running
or maintaining that office equipment, and
n expenditure incurred
on travel, or on travel and associated accommodation, to the extent that the
expenditure could reasonably be expected to have been incurred for the primary
purpose of conducting an election campaign.
The AEC maintained that the current categories are ‘targeted primarily
at electoral advertising costs and do not cover the range of campaign costs’.
The AEC suggested that a more comprehensive disclosure should cover expenditure
on additional items, including: staff; premises; office furniture and
equipment; communication costs; vehicles; and transport and accommodation.
When commenting on the possible expansion of the categories of electoral
expenditure, the AEC cautioned that these disclosures ‘are not designed to
provide details of expenditure, on an overall view of the scale of certain
Further, the AEC submitted that the expansion of the categories of
electoral expenditure should be considered in conjunction with reviewing who is
responsible for these disclosures, as proposed in measure 17.
The current categories of electoral expenditure are limited, and fail to
include certain key expenditure such as the rental of dedicated campaign
premises, hiring campaign staff and office administration. To enhance
transparency it is important to recognise these items that are integral to the
conduct of a political campaign.
||The committee recommends that the Commonwealth Electoral
Act 1918 be amended to expand the categories of ‘electoral expenditure’
as set out in section 308(1), to cover additional relevant items including
campaign staff, premises, office equipment, vehicles and travel
Measure 16—Deem registered political parties as bodies corporate
Under item (xvi), the Electoral Commissioner has proposed for
‘registered political parties to be bodies corporate for the purposes of Part
XX of the Electoral Act’.
At present the offence provisions in the Electoral Act do not apply to
political parties, as generally parties are voluntary associations and are
therefore not legal entities. Agents appointed by the
political party can be prosecuted under the Act. Section 414AEA provides:
reference in this Part to things done by or with the authority of a political
party, a State branch of a political party or a division of a State branch of a
political party shall, if the party, branch or division is not a body
corporate, be read as a reference to things done by or with the authority of
members or officers of the party, branch or division on behalf of the party,
branch or division.
The Green Paper posited that political parties could be incorporated
associations—under state or territory legislation or as a company under the Corporation
Act 2001—in order to be registered. This would allow
registered political parties to hold property and be liable for prosecution and
recovery purposes, rather than focusing prosecution and recovery on an
The AEC argued that individuals can be personally liable for matters
that the person ‘may have no knowledge of or which may be a wider
responsibility within the party’. The AEC submitted:
The most effective solution to
this anomaly is for political parties to be recognised as legal entities for
the purposes of the Electoral Act as part of the registration process under
Part XI of the Electoral Act. This would allow the AEC to take prosecution or
recovery action against the registered political party as a legal entity rather
than against an individual office holder within the party.
The AEC noted that in the 1983 report from the committee’s predecessor,
the Joint Select Committee on Electoral Reform, it was stated:
As some parties are not incorporated bodies there needs to be
a means of enforcement. Legislation to give effect to these recommendations
could deem an unincorporated political party to be a person for the purposes of
The AEC expressed the view that:
It is not apparent to the AEC why this recommendation has not
been acted upon given the practical issues outlined in the AEC submission about
identifying individual members of a political party for any breaches of the
funding and disclosure obligations rather than the party as a whole which has
obtained the benefit.
When responding to committee questioning on approaches taken in
comparative jurisdictions, the AEC observed that:
The issue of whether or not a political party is a legal
entity separate from its members appears to be peculiar to Australia.
The AEC noted that in other jurisdictions corporate entities can be
registered as political parties. For example, in Canada, section 376 of the Canada
Elections Act 2000 provides that a corporation is eligible to be a chief
agent or agent of a registered or eligible party. At the Australian state
level, the AEC also noted that:
... in Western Australia, the provisions of the Associations
Incorporations Act 1987 enable 5 or more members of an association that is
established for political purposes to apply for incorporation. The AEC is not
aware of any issues having been raised about the application of the Western
Australian legislation to political parties who have chosen to make application
In its submission to the current inquiry the AEC stated:
The argument for having parties treated as bodies corporate
is to allow the parties, rather than individuals within the party, to be held
accountable under the (funding and) disclosure provisions of the Electoral Act.
This is particularly the case where financial penalties are to be imposed for
convictions of offences against the disclosure provisions and where monies are
to be recovered. It is both more feasible and appropriate to seek these
outcomes from the political party as an entity with collective responsibility
rather than from an individual officer holder within that party.
While requiring political parties to incorporate before registration may
solve some of the legal standing issues, there would also be consequences in
other areas of the internal party practices. All internal party
practices would need to be in accordance with the relevant legislation
governing incorporated bodies.
An alternative approach may be to insert a provision into the Electoral
Act that deems political parties to have legal standing for the purposes of
that Act alone, or for prosecution and recovery purposes. The mechanism for
‘deeming’ could be upon registration. Once a political party is registered, it
could be deemed to have legal standing for the purposes of the Electoral Act or
before a court for certain proceedings.
It was acknowledged in the Green Paper that such an approach could be
problematic as most political parties do not hold assets in their own name
which would make it difficult to impose monetary fines.
The discussion under item (iii)—to offset penalties against public funding
entitlements—is one way to address this limitation.
The committee supports introducing a provision to deem registered
political parties as bodies corporate for the purposes of funding and
The current focus on the individual when pursuing failures to meet
reporting obligations is not the most effective way to ensure full and accurate
disclosure by political parties and organisations. The practicalities of taking
action against an individual and the impact of financial penalties on that
individual must be taken into consideration. Ultimately, the political party
must be responsible for meeting its reporting obligations, and to bear the
consequences of a deliberate or inadvertent failure to do so. It must ensure
that the person tasked with lodging its returns is suitably qualified to
perform the role and that it has systems in place for record keeping that
enables the person to complete and lodge an accurate return that fully meets
the party’s disclosure obligations under the Electoral Act.
||The committee recommends that the Commonwealth Electoral
Act 1918 be amended to provide that registered political parties be
deemed bodies corporate for the purposes of Part XX of the Act.
Measure 17—Greater certainty about who has reporting obligations
The Electoral Commissioner also proposed, under item (xvii), introducing
‘provisions with greater certainty about who has the relevant reporting
There are a range of donations and expenditure reporting obligations for
political parties, associated entities, third parties, donors, candidates and
The AEC suggested that the Electoral Act should be amended to make it
explicit which person in an organisation is responsible for reporting various
fiscal interests in political activities.
The AEC noted that in other areas of law, such as the Corporations Act
and industrial law, there is a clearly defined person who has responsibility
for certain reporting requirement under relevant legislation. The AEC stated:
Under the current provisions of Part XX of the Electoral Act
there is no such clear obligation. It is generally left up to the political
party or other entity to determine who is to sign the disclosure return. ... Establishing
a specific person or position within a political party or other entity that is
responsible for signing the disclosure return would provide certainty as to who
has the reporting obligation and that the return is authorised by the person or
entity with the reporting obligation.
When commenting on the international experience in this area, the AEC
The overseas experience in both the UK and Canada is that
specific office bearers within a political party (treasurers in the UK and
three registered officers in Canada) are given the responsibility of lodging
returns and maintaining the campaign accounts.
When discussing the application of this approach in Australia, the AEC
If a particular officer has the responsibility to lodge a
return and fails to do so, then this would be a relatively simple matter to identity
and prosecute. However, the AEC has experience with one matter where the Court
declined to make a finding of guilt for the relevant party official on the
basis that he was reasonably entitled to rely on the work of that party’s
finance staff in assembly the information that was included in an incorrect
However, given the range of possible individuals and entities
with reporting obligations, perhaps reference to the relevant person with the
financial obligation under corporations law or under industrial laws would be
sufficient to identity who within the body corporate has the reporting
obligation. If the failure exists with those persons, then the corporate veil
would then be lifted so that only those individuals would be held liable.
However, if the failure arose due to some systemic failure to
put systems in place and to maintain those systems, then the penalties would
more appropriately be directed to the corporate entity rather than individual
members of the political party.
It is desirable for there to be greater clarity of who in an
organisation has disclosure responsibilities. It is also important to ensure
that there are appropriate systems in place to ensure that these people can meet
their reporting obligations.
||The committee recommends that the Commonwealth Electoral
Act 1918 be amended to introduce provisions with greater certainty about which
position or individual has relevant reporting obligations within political
parties, associated entities and third party organisations.
10 September 2012