Foreign donations are donations received from overseas entities or individuals. Many democracies ban foreign donations on the basis that foreign donors should not be able to – or have a right to - influence domestic policy. The two common approaches to regulation in this area are to ban donations from foreigners or donations of foreign property.
This chapter focuses on three key issues regarding foreign donations:
Sovereignty – only Australians can influence domestic policy and elections;
Compliance – ensuring foreigners and domestic political actors are prevented from circumventing donation regulations; and
Transparency – public confidence that regulations are working effectively.
The sovereignty of Australia is entrenched within the Constitution and must be protected from outside influence at all times. Only Australians should have the power to influence elections.
Mr Tony Nutt, LP questioned why domestic policy should be influenced by foreign entities, and reinforced the ideal of a level playing field:
I think that, as the chair indicated earlier, it should be a level playing field, so, if parties have to disclose according to law, other people should have to disclose. If we are talking about foreign activities properly defined, as we were talking about earlier, then I am not sure why Australian public policy should be impacted or significantly impacted by genuine foreigners pumping money into this country for their own purposes, be that a state purpose or a quasi-state purpose, as against Australians—whatever their politics, whatever their views, whatever their social activism—being able to participate in the system.
A number of other submitters and witnesses to the inquiry raised concerns about perceived intentions and expectations behind political donations generally, and from foreign sources in particular. The Committee notes these concerns add to the argument that foreign donations are problematic for Australia’s political system because they can affect its reputation by creating perceptions of undue influence.
In light of the concerns about foreign donations and that they could lead to undue influence on domestic policy, many submitters and witnesses suggested that such donations be banned from the Australian political landscape. For example, the Australian Greens recommended a ban on donations from overseas residents:
We maintain our view that the current laws on political donations are unfair and counterproductive to the democratic process. We continue to advocate for significant reforms to the current electoral funding system including bans on donations from individuals resident overseas.
Further, Dr Martin Drum of the University of Notre Dame Australia commented in his submission that while political donations are a legitimate form of political participation, donations from foreign sources raised concerns:
What is less desirable is the influx of foreign money within election campaigns. There are naturally concerns about the national interest when such donations occur. There are also significant issues around transparency; whilst we have the ability to investigate political donors who are based in Australia it can be much more difficult to understand and analyse those who are based overseas … As a principle we should proceed on the basis that foreign donations have the potential to undermine our democratic process and should be banned.
In her submission, Professor Anne Twomey supported the case for banning foreign donations:
There appear to be good policy grounds for the banning of foreign political donations. It is not appropriate that other countries should be able to use donations as a means of influencing the outcome of elections within Australia. This is consistent with the spirit of s 44(i) of the Constitution, which disqualifies from Parliament any person who has an allegiance to a foreign power.
The Uniting Church in Australia referred in their submission to a 2016 Organisation for Economic Co-operation and Development (OECD) report comparing political funding arrangements and commented that many other OECD countries ban political donations from foreign sources:
Australia should join the 68 per cent of OECD countries that ban donations from foreign interests to political parties and the 56 per cent that ban such donations to candidates.
The Liberal Democrats commented that differentiating between domestic and foreign donations was not necessary:
It is the position of the Liberal Democrats that donations and contributions from foreign sources should be treated no differently from those obtained domestically. As long as the source of the donation is sufficiently identifiable, voters will be able to use the information to create an informed opinion on which candidates and parties they would choose to support.
Compliance and transparency
The Committee identified a need to provide the public with confidence that donations are being regulated effectively, through timely and accessible disclosure of donations, and visible compliance by political actors with the donation regulations.
Associate Professor Tham commented that the main drivers for reform are sovereignty risks posed by donations by foreign governments and compliance risks around donations from foreign sources:
When you consider the 'what' in terms of what foreign donations are, it closely connects to the 'why'. With foreign governments I would argue there is a compelling case to restrict donations. I think we all treat it as illegitimate for countries to influence the domestic politics of other countries through political money. They should respect the autonomy of those polities and pursue their agenda through regular diplomatic channels.
With donations coming from overseas or foreign sourced donations, I think the concern is a bit different. It is less about interference with sovereignty and more about concerns about compliance, and enforcing Australia's electoral laws overseas is all but impossible. I think this supplies another compelling rationale to severely restrict donations from overseas.
The Act does not have extra-territorial application, limiting the ability of the Australian Electoral Commission (AEC) to enforce compliance with introduced regulations covering foreign donations in Australia. In these circumstances it is sensible that Australian regulation should focus the onus of compliance on the recipients of donations to prevent acceptance of donations from foreign sources:
… while the AEC can seek voluntary compliance with the disclosure requirements, overseas donors cannot be compelled to comply with Australian law.
The mechanisms used to facilitate significant donations without disclosing the identity of donors discussed in Chapter Two are applicable to foreign donations.
Establishing and addressing non-compliance is also problematic for donations from foreign sources:
Organisations operating internationally and in Australia can transfer funding into Australia and between different parts of their Australian operations, making it difficult to link funding for political purposes to a foreign or domestic source;
Some foreign individuals and organisations have what in the Australian context are vast resources at their disposal, and the capacity to quickly and significantly influence Australia’s political process with (to them) relatively little expense; and
The AEC cannot compel foreign entities to comply with Australian political donation regulations.
Many countries have regulated to ban or limit the influence of foreign donations on the outcomes of elections and decisions of government. The forms of regulation vary significantly across countries.
The AEC commented on the different regulatory schemes in Australian jurisdictions and internationally:
There is a vast array of different political funding and disclosure schemes within Australian and international jurisdictions. Some of these schemes are highly regulated, including bans on various categories of donation and punitive sanctions, whilst other schemes are less prescriptive. There are also significant differences, even between Australian jurisdictions.
New Zealand, Canada, the United Kingdom and the United States all have legislative bans or limits on foreign donations as follows:
New Zealand bans donations from foreign donors to political parties and candidates exceeding NZ$1,500 (A$1400) in aggregate from one source;
Canada bans donations from foreign donors by only allowing natural persons that are Canadian citizens or permanent residents to make political donations;
In the United Kingdom a donation to a political party is defined as a contribution exceeding £500 (A$800). Donations from foreign donors are effectively banned because foreigners are not included in the defined list of ‘permissible donors’, except where they support international travel, accommodation or subsistence by party officers. Donations to candidates largely follow the same rules as to political parties. Contributions to candidates below £50 (A$80) are not considered as donations and can therefore be made by foreign interests; and
The United States bans direct and indirect donations by foreigners of cash or other things of value, as well as promised or implied donations.
Many OECD countries have experienced similar social concerns with respect to foreign donations and consequently most OECD countries ban foreign donations to political parties and candidates. Banning foreign donations is clearly considered to be an important step in safeguarding domestic policy from the influences of those not directly involved.
Dr Colleen Lewis commented that other countries have acted on concerns about foreign donations in a definitive way by simply banning them:
A lot of countries around the world do not allow foreign donations because they do not feel it appropriate that somebody who is not a citizen of the country can have an influence.
In providing an international comparative perspective on foreign donations, Mr Samuel Jones of International IDEA, an organisation that works to support sustainable democracy around the world, commented:
… I think it is fair to say that a ban on foreign donations to political parties and/or candidates or other electoral actors is one of the most common political finance regulatory measures. International IDEA’s political finance database shows that almost two-thirds of countries have a ban on donations to political parties from foreign interests, while almost half have a ban on foreign donations to candidates. Among those established democracies that do not have a ban, most place a limit on the amount that a foreign entity can contribute, as a measure to curb undue influence. This is the case, for example, in Germany, Spain and New Zealand.
When you put those two together, it is very common that donations from foreign sources are either banned or regulated in some way. The rationale is quite simply to prevent undue influence by foreign interests in domestic political affairs or, to phrase it differently, to protect the principle of self-determination and national sovereignty. While there are no global standards or guidelines on political finance, the European guidelines that we do have—from both the Council of Europe and the Organization for Security and Co-operation in Europe, the OSCE—are very clear that foreign donations should be either banned or regulated.
This evidence demonstrates that many countries do not believe that it is appropriate to allow unfettered access to foreign donations, and that it is important to take steps to safeguard a nation’s political system.
The Committee notes concerns that foreign players should not be able to influence domestic policy by virtue of making donations to political actors.
The Committee further notes that many submitters and witnesses to this inquiry believe that banning foreign donations is an appropriate way of managing the risks associated with foreign donations, and is consistent with the approach of other countries.
Current Australian regulation
The Act does not prevent foreign citizens or corporations from making political donations.
While the Act does not currently limit foreign donations, relevant legislation has been implemented in New South Wales and Queensland.
Section 96D of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) requires that donors must be resident, operating a business, or otherwise demonstrating some connection to Australia, to the satisfaction of the NSW Electoral Commissioner, before a political donation can be accepted:
It also provides that the objects of the section are to create certainty about who is making a political donations by ensuring the donor is properly identified and ‘to remove a perception that certain foreign donors could exert influence over the Australian political process, by requiring a donor to have a legitimate link with Australia, either through residence of the donor or its officer or by being registered in Australia.’
Section 270 of the Electoral Act 1992 (Queensland) Gifts of foreign property—when unlawful for political party, candidate etc. to receive gift prohibits political parties and candidates from receiving foreign property:
It is unlawful for an entity to receive a gift of foreign property in any of the following circumstances—
(a) the gift is received by a registered political party (or by a person acting on behalf of a registered political party);(b) the gift is received by a candidate (or by a person acting on behalf of a candidate) during the candidacy period.
The definition of foreign property in the Commonwealth Electoral Amendment (Political Donations and Other Measures) Bill 2017 tabled by the Australian Labor Party (ALP) on 13 February 2017 is effectively the same as the definition in the Electoral Act 1992 (Qld):
foreign property means:
(a)money standing to the credit of an account kept outside Australia; or
(b)other money (for example, cash) that is located outside Australia; or
(c)property, other than money, that is located outside Australia.
Constitutional validity and the defining of foreign donations are the two key factors to be considered when regulating foreign donations in Australia. These factors are examined further below.
There are two main constitutional considerations in relation to foreign donations: the implied freedom of political communication, and the spirit of s 44(i) of the Australian Constitution disqualifying a person with allegiance to a foreign power from Parliament.
Implied freedom of political communication
Professor Anne Twomey commented that the High Court has upheld an implied freedom of political communication under the Australian Constitution that extends to participating in the electoral process through making political donations:
In Unions NSW v New South Wales (2013), the High Court struck down the NSW Government's attempts to confine political donations to persons on the electoral roll (including a ban on donations from corporations, unions, charities and the like). The High Court noted that there ‘are many in the community who are not electors but who are governed and are affected by decisions of government’. They have ‘a legitimate interest in governmental action and the direction of policy’ and 'may seek to influence the ultimate choice of the people as to who should govern' by, for example, making political donations. This applies both to individuals and entities, such as corporations and unions.
Professor Twomey also commented on how the Election Funding, Expenditure and Disclosures Act 1981 (NSW) works with the High Court ruling:
The New South Wales provision, in section 96D of the act, works on the basis that you can make a political donation if you are on the electoral roll—that is fine—or if you are a permanent resident, or even any kind of resident, so if you live here. The reason for that is the High Court’s decision in Unions New South Wales suggested you could not confine it just to people on the electoral roll. The people who live here are affected by the rules of government and therefore should have a say in the way governments operate, even if they do not have a vote. So we have to include them. So there is provision to allow people to provide identification of their residential address to the Electoral Commissioner and therefore be put on a list of people who are allowed to donate. Then, when it comes to corporations, it is about looking at whether you have some kind of identifying number in Australia—so an ABN or any other kind of identification through ASIC. So you are recognised as a company that operates in Australia.
Associate Professor Tham commented on the main constitutional issues:
I think the main constitutional issue stems from the implied freedom, but freedom of political communication is implied in the Commonwealth Constitution and specifically the High Court decision in Unions New South Wales v New South Wales. In that particular case there were two provisions being challenged, but the provision of particular concern to us was the provision that restricted the ability to make political donations in New South Wales to those on the electoral rolls. The clear justification for that—it is clear in the sense that it comes from the second reading speech that then Premier Barry O'Farrell made—and the argument was that only those that had the right to vote should have the right to make political donations. I think it is fair to say—and you see that extracted in terms of the dictum I have on page 10 of the notes that I have circulated—that what the High Court rejects is the view that, simply because persons do not have the right to vote, they do not have a legitimate interest in the political process.
What does that mean in terms of regulation in this particular area? It proceeds, I think it is fair to say, that if you have a provision that is basically cast in the same way as the New South Wales provision—for example, calls that the political donation be restricted to those on electoral rolls—that is basically replicating the invalidated provision in Unions New South Wales. So I would say it is extremely probable that that would be unconstitutional. Secondly, I would say this: if there are provisions that are motivated and the features reflect the idea that, simply because you do not have the right to vote, you therefore do not have a legitimate interest, I think those provisions too would be highly problematic.
However, if there are different rationale for restrictions—for example, when I discuss the narrow meaning of ‘foreign’ in the sense of donations coming from overseas, the argument is not that these people do not have a legitimate interest in the political process; the argument there is one of compliance. If the money is coming from overseas, it is extremely difficult to ensure that whatever disclosure is made in relation to the money is made with proper integrity. I will expand on that point. The Queensland provisions are not like the New South Wales provisions. They ban ‘gifts of foreign property’—that is, gifts that come from money outside the territory of Australia. I would have thought that a ban like that would not fall foul of the High Court’s decision.
It is useful to note that the Electoral Act 1992 (Qld) is consistent with the High Court ruling by banning donations of foreign property rather than banning donations from foreign sources.
The purpose of section 44 of the Constitution is to protect the parliamentary system by disqualifying candidates and Members of Parliament who are at risk of allowing conflicts of loyalty to affect their performance.
Section 44(i) of the Constitution disqualifies from Parliament any person with allegiance to a foreign power:
Any person who:
(i) is under any acknowledgment of allegiance, obedience, or adherence to a foreign power, or is a subject or a citizen or entitled to the rights or privileges of a subject or a citizen of a foreign power; or …
… shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives.
Defining foreign donations
The extent of foreign donations is currently difficult to measure because there is no requirement for donations to be identified as foreign under the current funding and disclosure regulations, and no agreed definition of what constitutes a foreign donation.
Analysis provided to this inquiry based on the addresses of donors from disclosure returns published by the AEC suggests the value of foreign donations is increasing.
In evidence given to the Committee, Associate Professor Tham suggested that consideration should be given to the meaning of ‘foreign political donations’ and why they pose a democratic risk. Only once these questions are answered can Australia deal with the issue of foreign political donations:
In this context, “foreign” seems to have three possible meanings: a narrow one, which refers to overseas-based donors; and a broad one, which extends to all non-citizens who donate to political parties, whether or not they are residing in Australia. The third understanding is more complex: it refers to individuals born overseas who are now Australian citizens or permanent residents and who, while they are closely involved in business activities in their country of adoption, nevertheless retain close government and business connections in their country of origin. Indeed, their implicit “foreignness” devolves from the fact that they may hold citizenship (or permanent residence status) in Australia and in another country.
While noting the potential conflict of interest for Australian citizens and permanent residents with citizenship, government and business connections in other countries, the Committee does not support banning Australians with dual citizenship from political donations.
Associate Professor Tham also commented there was an additional fourth category of Australian citizens living overseas who would also be prevented from donating foreign property if this was used as the basis for banning foreign donations:
Because I support a ban on foreign sourced donations, because of the issues of compliance, I would in fact—if that donation has been made by an Australian citizen directly from overseas, they would be caught by the ban that I support. So for those particular citizens, what they need to do is make the donation from moneys that are sourced from within Australia. I would have thought that for people with proper connections to this country that should not be a difficult thing.
Thus, before any regulation is made, the Committee supports a clear definition of what constitutes a foreign donation.
While the Committee has not made a recommendation on such a definition, it believes this issue should be addressed as a priority ensuring the four categories of foreign donations described by Associate Professor Tham are considered and captured in the legislation.
Regulating foreign donations
The Committee considered the key question of how a ban on foreign donations should be regulated. The main approaches taken internationally and in current Australian regulations are bans on donations by foreign donors or bans on donations of foreign property.
As discussed above, the existing state regulations on foreign donations address the issue, without explicitly defining what constitutes foreign donations, by requiring donors to demonstrate a connection to Australia in NSW or by banning donations of foreign property in Queensland.
The Committee notes that there are unintended consequences from a blanket ban on donations of foreign property. As noted in the Bills Digest for legislation introduced in 2010, there is a very real risk that a ban on donations of foreign property could encapsulate Australian citizens or Australian entities if they use money from their personal or organisation’s overseas bank account.
In his address to the Press Club, Mr Tony Nutt, LP commented on the potential for unintended consequences of banning foreign political donations, and questioned how donations from Australians with dual citizenship might be treated:
They are citizens who have houses and businesses and activities in Australia, family in Australia but also in, for instance, some other countries, China, other parts of Asia, Europe, America, are they permitted as citizens to make donations or not?
Broader funding and disclosure reform
Regulation of political donations is a complex and multi-dimensional challenge. Witnesses and submitters supported regulation of foreign donations as part of broader reform to Australia’s system for political donations.
In evidence to the Committee, Associate Professor Tham supported a suite of measures to improve the integrity and trust in Australia’s system for political donations, and commented:
A workable and effective political finance law or set of finance laws need to rely on a suite of measures. I would include in that suite of measures a ban on foreign sourced donations as well as low caps on political donations and caps on election spending.
Mr Paul Erickson, ALP commented that the ALP also supports reform on foreign donations as part of broader reform on political donations:
From the ALP’s perspective, we welcome any examination of the legal framework applying to foreign donations. It has been our position for some time that foreign political donations should be addressed as part of a broader reform that strengthens the Commonwealth Electoral Act… and increasing existing penalties for abuses of the disclosure regime.
… As part of that package of reforms, we advocate a prohibition on the receipt of foreign donations.
The Committee is of the view that support broadly exists for reforms but that any such reforms should be practicable and not add to the burden already carried by political parties in disclosing donations.
In considering reforms, the report examines in more detail the four principles identified in Chapter One of this report.
Principle 1 – Transparency
A transparent political donations regime provides voters with clear, timely and accessible information on donations and donors. The Committee received evidence from submitters and witnesses that the current political donations regime does not meet community expectations of transparency.
Dr Belinda Edwards gave evidence based on her analysis of donation returns from political parties published by the AEC and noted a number of issues with the data which limit the transparency of political donations:
…on the extent of the transparency problems: my analysis of the disclosure data found that for the last financial year only 13 per cent of the Liberal Party's and 21 per cent of the Labor Party’s privately sourced incomes were transparently attributed to political donors, but 20 to 30 per cent of their incomes fell into the grey areas of ‘affiliates’ and ‘other receipts’; and that the sources of 66 per cent of the Liberal Party's income and 49 per cent of the Labor Party's income went entirely undisclosed. This is an amount of some $70 million worth of income which we have no information about. I suggest that this combines with the delayed release of the disclosure information to make Australia’s financial disclosure system more or less a farce—that it is actually extremely problematic.
The Committee notes that the disclosure requirements are different for parties, associated entities and third parties, providing at best a partial picture of total donations, and adding to the paucity of information about foreign sourced donations.
The Committee also received evidence about third parties with access to considerable foreign resources campaigning in concert without being captured by the current disclosure regime (see Principle 2).
The Committee supports improvements to the coverage and timeliness of disclosure regulations to improve transparency.
Principle 2 – Clarity
Clarity in a political donations regime provides the public and participants in the political process with simple, unambiguous regulations addressing all aspects of participants’ financial dealings for the whole electoral cycle.
The Committee heard evidence from witnesses and submitters that there was a lack of clarity and confusion around who needs to disclose information about donations, how the information should be broken down into categories for reporting, and how the information can be meaningfully interpreted.
In their submission, the Minerals Council of Australia (MCA) commented that advocacy groups were undertaking what appeared to be political campaigning without being required to disclose information about the donations they receive:
All these examples highlight the importance of ensuring that all organisations engaged in political advocacy are subject to the same rules of transparency. While political parties are obliged to disclose the source of donations more than $13,200, environmental organisations like the Sunrise Project, Greenpeace and WWF-Australia can spend millions of dollars every year without having to disclose the identities or locations of their donors. In particular, the case of the Sunrise Project exposes the risk to Australia’s sovereignty of permitting foreign entities to fund – in secret – activities intended to shut down a key Australian export industry.
Associate Professor Tham highlighted the importance of clarity on what constitutes a foreign donation, however this is defined in regulations:
When we delve deeper in terms of the countries that have actually banned foreign political donations, we in fact encounter quite dramatic regulatory diversity and complexity. We see, for example—and the provisions are extracted in the appendix of my note—bans on foreign donations in Queensland, Canada, New Zealand, United Kingdom and the United States, but these bans operate in quite different ways with quite different scopes with quite different quanta. Really this diversity raises more foundational questions. What do we mean by ‘foreign political donations’ and why do these contributions pose democratic risk? My strong point at this juncture is that these questions need to be addressed before we determine how to deal with foreign political donations, whether through a ban or otherwise.
The Committee notes the link between improving transparency through coverage and timeliness, and providing clarity to donors and recipients about requirements for accepting and disclosing donations under a foreign donations ban.
Principle 3 – Consistency
Consistency in a political donations regime is important in ensuring a level playing field for participants in the political process. The Committee heard evidence that the Act has not kept pace with changing campaign communication techniques. Similarly, the nature of organisations engaging in political campaigns is evolving faster than the Act itself.
While there was broad support for a level playing field for political donations, submissions and evidence from witnesses revealed divergent perspectives.
Mr Nutt commented that the Liberal Party supports a level playing field for political donations which includes capturing new players, new mechanisms and new tactics:
We have a democratic political society. There are rules, and rules should be set in such a way as to capture all the participants and to ensure that they meet the obligations that society, through the parliament, imposes on everyone. If we need to revise those rules to capture new players, or new mechanisms or new tactics then we should do so, just to ensure that it is a level playing field. As a matter of principle, the Liberal Party would support a level playing field—as a general principle. Adjustments need to be made so that people who are now aggregating and deploying very significant resources are covered in the same way, or in an appropriate way, as political parties are.
Mr Erickson commented that the ALP supports regulation of all participants but suggested in his evidence that applying the same rules to third parties may not be appropriate:
We would obviously support an approach where the principles that inform the requirements that we place upon our parties and their associated entities are also in place when it comes to—the reference uses this phrase, I think—third parties and entities that are undertaking campaign activities. I suppose the point I am making is that third parties and entities that undertake campaign activities but are not political parties or associated entities do not enjoy many of the other rights of parties such as access to the electoral roll and whatnot. So they are in a slightly different position. I cannot say that I have thought this through to its absolute endpoint, but I am not sure that it would be entirely feasible simply to pick up the regulatory approach that applies to parties and apply it to any third party …
Our view would be that we should have a principles-driven approach that ensures that there is a level playing field. Obviously, political parties, associated entities or other third parties and entities that undertake campaign activities are treated differently by the law, have different interactions with the commission and have different rights and responsibilities. I think what we are grasping at here is that it is not as simple as simply enforcing one rule for all, because not every actor is engaging in the system from the same position, so the rules that apply to them obviously need to be practical and applicable.
Mr Jonathan Hawkes from the MCA commented that advocacy groups were undertaking what appeared to be political activities without being covered by the current disclosure requirements:
It is a complex area, and obviously there are different parts of legislation that cover different parts of their activity. I think there probably needs to be a definition or an improved definition of what an electoral matter or electoral activity is under the Commonwealth Electoral Act. I think that would help identify what is a political activity that needs to be disclosed and what these groups are undertaking which they claim are not political activities. I think there needs to be some further transparency in the Commonwealth Electoral Act in that regard.
… there are certainly examples of activity and materials either during or before elections that could be considered election material. There is a very grey area around whether that has to be authorised or not, because essentially the public want to know who is doing it, who is behind it, who is carrying it out and for what reason. I think anything that can clarify that is very worthwhile. Again, you can assess that against whether it is political activity or not. That is very important in terms of trust in the system, and that goes to donations and the source of donations as well.
The Committee supports a level playing field which ensures all participants are included and opportunities to circumvent the intent of regulations banning foreign donations are effectively managed by focusing on the electoral activity being undertaken rather than the status of the participant.
Principle 4 – Compliance
Compliance in an effective political donations regime involves monitoring to ensure the requirements are met, coupled with appropriate and proportionate sanctions for non-compliance.
Mr Erickson, ALP commented on the need to consider managing non-compliance and circumvention in reforms:
…a necessary corollary of the approach that we are advocating would be that the parliament would need to take a very good look at whether any additional legislation or regulation would be required to ensure that the law contemplates scenarios where foreign money is brought into the country via third parties that operate within Australia and are used, essentially, to mask a gift of foreign property.
Our view would be that it is very important, in order for the public to have confidence in our political system, for there to be transparency, and the disclosure regime essentially seeks to provide that transparency. The disclosure regime is then administered and enforced by the AEC. One of the issues with the two categories of donor or gift that, we are advocating, require attention and prohibition—those being donations of foreign property and anonymous gifts—is that, by definition, donations of foreign property coming from what I think Mr Buchholz described earlier as large foreign bodies are beyond the remit of the commission to enforce the disclosure regime, so in a sense they pose a direct challenge to the settled approach to regulating private money in politics.
While acknowledging the risks around foreign donations and the need for reform, Mr Nutt, LP urged caution against imposing a disproportionate compliance burden on donors and participants in the interests of addressing these risks, and commented:
When it comes to compliance, it is very important that we do not impose excessive new obligations on the vast majority of donors and other participants in the political system who are not now and will never be captured by foreign prohibitions, and whose rights to participate should not be excessively burdened and their opportunities to contribute inhibited by a huge regime designed to identify and prevent a small number of cases. As always, the compliance needs to be proportionate and needs to be sensible, and a combination of some kind of declaration and AEC compliance would deal with those matters.
The Committee supports a sensible, proportionate regulation response to the risk of foreigners influencing the Australian political process, via a ban on appropriately defined foreign donations.
The Joint Standing Committee on Electoral Matters recommends that any donation reform of the Commonwealth Electoral Act 1918 be in accordance with Australia’s sovereign interests.
The Joint Standing Committee on Electoral Matters recommends that any donation reform of the Commonwealth Electoral Act 1918 be consistent with the four principles of transparency, clarity, consistency and compliance as identified by the Committee in this interim report.
The Joint Standing Committee on Electoral Matters recommends a prohibition on donations from foreign citizens and foreign entities to Australian registered political parties, associated entities and third parties. This ban would not apply to dual Australian citizens either in Australia or overseas, or to non-Australian permanent residents in Australia.
The committee recommends that the Joint Standing Committee on Electoral Matters, in its wider inquiry into donations and disclosure, further examines the requirement to extend a foreign donations ban to all other political actors. The key issue to be considered is how to prevent foreign funds being channelled through organisations engaging in political activities and who are not subject to regulation under the Commonwealth Electoral Act 1918. This new inquiry would also examine related issues that have arisen in this inquiry which are outside the current terms of reference, including tax deductibility for gifts.
The Joint Standing Committee on Electoral Matters recommends that the penalties in relation to offences in the Commonwealth Electoral Act 1918 are significantly strengthened to include stricter penalties for non-compliance.
Senator Linda Reynolds CSC