Committee activities (inquiries and reports)

Financial reporting by political parties

Government response

This document has been scanned from the original government response. It may contain some errors.

THE GOVERNMENT RESPONSE TO THE INTERIM REPORT OF THE JOINT STANDING COMMITTEE ON ELECTORAL MATTERS ENTITLED 'FINANCIAL REPORTING BY POLITICAL PARTIES'

In May 1994 the Joint Standing Committee on Electoral Matters (JSC) resolved, pursuant to its more general reference covering the conduct of the 1993 election, to take evidence on the funding and disclosure provisions of the Commonwealth Electoral Act 1918 (the Act). It did so in response to a number of representations on the administrative burdens imposed by the requirement for registered political parties to furnish to the Australian Electoral Commission (AEC) Annual Returns of income and expenditure. This requirement was introduced by the Political Broadcasts and Political Disclosures Act 1991.

2. The JSC advertised its inquiry in the national press and in response received nine submissions from individuals, political party organisations and the AEC. Public hearings were conducted on 6 and 7 June 1994.

3. The Interim Report of the JSC entitled 'Financial Reporting by Political Parties' was tabled in Parliament on 30 June 1994 and contained nine recommendations.

Recommendation 1
4. That Division 5A of the Commonwealth Electoral Act 1918 and associated regulations be amended as necessary so that Annual Returns by registered political parties list a total amount of expenditure, rather than individual transactions within that total.

Response
5. Supported.
6. The Government remains fully committed to the essential objective of disclosure as expressed in the second reading speech of the Political Broadcasts and Political Disclosures Bill 1991 that "electoral, financing in Australia should be open and transparent" to minimise the risks of corruption m funding political campaigns. The Government does not believe, however, that this objective is significantly enhanced by the requirement for parties to record and report transactions within set categories as currently set down in the regulations. The Government proposes, therefore, that the requirement for parties to disclose their expenditure under particular categories should be removed.
7. In order to maintain the spirit of the current legislation, the Government would wish to retain the requirement that payments to any individual or organisation equal to, or exceeding the threshold of, $1500 be disclosed. It would no longer require parties to disclose the individual transactions within that total. It proposes that the legislation be amended so that only transactions of $500 or more need to be aggregated when determining whether the threshold is reached. These changes would apply to individual party units and therefore substantially lessen the administrative burden placed upon them.

Recommendation 2
8. That section 314AB of the Commonwealth Electoral Act 1918 be amended so that Annual Returns from registered political parties are required to be lodged within 16 weeks after the end of the relevant financial year.

Response
9. Supported.
10. This recommendation is welcomed by the Government as it would enable more timely processing of Annual Returns by the Australian Electoral Commission prior to their release for public inspection. The Government realises, however, that the shortened reporting deadline would be a further burden on political parties if the reporting requirements were not streamlined and acknowledges that the shortened period is only practicable in terms of party administration if recommendations 1 and 3 are implemented.

Recommendation 3
11. That the Commonwealth Electoral Act 1918 be amended as necessary so that $500 is set as the threshold for disclosure of individual amounts received and paid by, on or behalf of political parties.

Response
12. Supported.
13. The Government proposes that the recording and reporting of income received by political parties be simplified. This would be achieved by removing the reporting categories specified in the regulations and the requirement to report certain individual income transactions. It is proposed therefore that only where individual transactions exceed $500 will the particulars of those transactions be required to be recorded by party units. In addition, only where the total of such receipts (i.e. sums exceeding $500) by a party unit from an individual or organisation aggregates to $1500 or, more would the source and total of that income then need to be disclosed. The requirement to disclose each individual transaction within those aggregates would be removed.
14. These changes would substantially lessen the administrative burden across the party, and particularly on the party agent.

Recommendation 4
15. That section 305A of the Commonwealth Electoral Act 1918 be amended so that donors to registered political parties or State branches thereof are not required to lodge a return with the AEC

Response
16. Not supported.
17. While the Government is in favour of simplifying reporting requirements as far as possible, it is of the view that there remains a need for sufficient checks to ensure that the integrity of the system is maintained. The Government sees one means of achieving this as being the maintenance of third party reporting which would enable an appropriate level of verification to be conducted by the AEC.
18. The Government does believe, however, that third party reporting should be made consistent with the disclosure requirements of political parties. The Government proposes, therefore, that the legislation be amended to require donors to lodge annual disclosure returns rather than submittingreturns following an election. Consistent with this annual reporting requirement, the disclosure threshold would be reduced from $4500 to $1500.

Recommendation 5
19. That procedures for AEC compliance audits be amended so that agents of registered political parties are required to be present at local audits, and are responsible for presenting to the AEC such records for audit as are required.

Response
20. Supported.
21. There is nothing in the current legislation which prevents State agents or any other party official from being present at local audits, and indeed it has been the practice of the AEC to allow them to attend. The Government acknowledges, however, that the present provisions do not guarantee party agents the right to be present if they so desire. Accordingly, the Government is prepared to amend the legislation to provide party agents with the right to be present but, in order to retain an appropriate degree of flexibility for all involved, it proposes that the agent be given the power to delegate this responsibility or waive the right of attendance.

Recommendation 6
22. That Part XX (Election Funding and Financial Disclosure) of the Commonwealth Electoral Act 1918 be amended to clearly require disclosure of income received by registered political parties from any trust fund or similar fund or account, where such income is above the disclosable amounts set out in the Act.

Response
23. The Act already requires the disclosure by political parties of all income received from any trust fund or similar fund or account. The Government proposes that disclosure be extended to include not only the donations made to political parties but also the deposits of capital into such funds and accounts where the fund or account functions substantially for the benefit of a party or parties. The Government does not seek to impose retrospective disclosure in respect of past returns, rather it proposes that if the Party receives any future interest payment from the same f und or from any new fund containing all or part of the original fund then the base source of capital that earned the interest must then be fully disclosed.
24. The Government also proposes that the legislation be amended to ensure that there is full disclosure of the transactions of all bodies over which a party exercises control or which exist substantially for the benefit of a party or parties.

Recommendation 7
25. That Part XX of the Commonwealth Electoral Act 1918 be amended as necessary to enableparties to designate officers to sign correspondence on behalf of agents.

Response
26. Supported.
27. The Government would also aim to ensure that full accountability under the Act is maintained.

Recommendation 8
28. That section 294 of the Commonwealth Electoral Act 1918 be amended so that the same amount of public funding is payable for a Senate vote as for a House of Representatives vote.

Response
29. Supported.
30. Currently a Senate vote attracts a funding rate equal to one half of the rate payable for a House of Representatives vote where both elections are held simultaneously or three quarters of the funding rate for a House of Representatives vote where the Senate election is held separately. The election funding rates applicable at the 1993 federal election were 100.787 cents for a House of Representatives vote and 50.393 cents for a Senate vote.
31. The Government proposes an increase in the level of public funding for a Senate vote so that it is equal to the funding level for a House of Representatives vote. The level of public funding for both Houses will be increased to $1.50. On the basis of election funding payments made at the 1993 federal election, this proposal would result in a budgetary increase in a joint House of Representatives and half Senate election of around $14.656 million.

Recommendation 9
32. That Part XX of the Commonwealth Electoral Act 1918 be amended to provide that political parties registered on a national basis receive public funding for elections directly to their federal or national offices, via national agents. Where political parties registered on a State basis do not notify the AEC that they wish to receive public funding on a national basis, those parties shall continue to receive public funding through their State agents.

Response
33. To give effect to what it understands to be the intention of this recommendation, the Government proposes to amend the Act to require a party agent making a claim for election funding to provide a statement either nominating a registered political party to which payment is to be made or advising that the claimant party does not wish to make a nomination. Where a nomination has been made the AEC must make the payment to the nominated party. This will enable State/Territory branches of parties to nominate that payment be made to the National Secretariat of the party.

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