Introduction
This Minority Report has been written to highlight that while the Committee was able to agree on a number of key recommendations differences remain on the critical issue of the role of non-government organisations and charities in engaging in issue based advocacy.
While the Australian Greens support a ban on foreign donations we remain concerned that one of the Majority Report’s recommendations effectively leaves the door open to limiting the activities of civil society.
The Majority Report does not endorse the Bill in its current form.
Significantly the Majority Report recommends that a legislative framework should cover industry associations and businesses and not just charities and not for profits.
The Turnbull government has asserted that the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill will achieve a ban on foreign donations. However, the Bill does not achieve that. An examination of the Bill shows that it is a partisan attack on groups perceived to be politically opposed to the government.
Submissions to the inquiry, evidence from witnesses and subsequent public commentary have added weight to this argument. In summary this Bill:
Fails to achieve its ostensible purpose of preventing foreign interference,
Fails to reduce the corrupting influence of political donations,
Discourages charities and other civil society organisations from engaging in advocacy, and
Disadvantages smaller political actors relative to larger ones.
We reiterate that the Australian Greens have long argued for serious reform of electoral funding and disclosure. We are prepared to work with any party to reduce the influence of big money in politics. A number of our bills which would help restore integrity to our democratic process and institutions are currently before the Senate:
1
National Integrity Commission Bill 2013
2
Commonwealth Electoral Amendment (Reducing Barriers for Minor Parties) Bill 2014
3
Commonwealth Electoral Amendment (Donations Reform) Bill 2014
4
Commonwealth Electoral Amendment (Political Donations and Other Measures) Bill 2016
Recent scandals have increased the public’s appetite for reform. It is deeply disappointing that the government has attempted to exploit that appetite by using the ‘foreign donations ban’ to cloak an attack on its political enemies.
In the sections that follow I examine the short comings in this Bill and set out a framework for reform.
Foreign donations
The Australian Greens support a ban on donations from foreign entities. Our Commonwealth Electoral Amendment (Political Donations and Other Measures) Bill 2016 seeks to do just that, as part of a wider range of reforms for political donations from domestic sources. A ban on foreign donations is no substitute for placing caps on all donations and expenditure.
The government has argued that this Bill will reduce foreign interference in Australia by banning foreign donations. However, the legislation leaves the door wide open for millions of dollars from foreign sources to be donated to political parties and candidates.
Professor Twomey gave evidence that the bill does not achieve its stated purpose:
Firstly, it doesn't achieve its purpose, which is to prevent or obstruct foreign interference in parliamentary elections. Foreign nationals can still, under this bill, make enormous and influential donations to political parties if it is done through a permanent resident or a foreign owned corporation or subsidiary that is incorporated in Australia.
GetUp noted that the Bill would not have prevented the very donations which apparently precipitated the government to introduce this legislation:
The Bill is ostensibly a response to a series of recent scandals surrounding foreign funding of politicians and political parties – and the potential for undue foreign influence thus created. Yet these scandals would not have played out any differently if the Bill were enacted into law. The “foreign donors” namechecked in the media – Chau Chak Wing and Huang Xiang Mo – both hold or held Australian citizenship or residency at the time the donations were made and therefore would be allowable donors under the provisions of the Bill.
Effect on civil society
The Bill contains a number of provisions that place significant restrictions on the capacity of charities and other groups that undertake advocacy to receive donations, and how those donations are spent, thereby stymying their ability to advocate for policy change.
The bill broadens the concept of “political expenditure” to include advocacy, and compels those organisations which spend some resources on advocacy to comply with onerous restrictions on receiving international philanthropy, including increased disclosure obligations. Some organisations must keep records to prove that a donor is an “allowable donor” (broadly speaking an Australian citizen or resident), and keep any international funds separate to other funds. The requirement to verify that a donor is “allowable” through a statutory declaration will place a burden on both the recipient and the donor, and is likely to discourage donations.
The effect of these proposed changes will be corrosive to Australia’s democracy. An active and engaged civil society is essential to a strong and vibrant Australia. Civil society advocates for important policy outcomes, whether that be on homelessness, funding for medical research, animal welfare or environmental protection. Civil society promotes ideas, advocates on behalf of the marginalised, and levels the playing field between ordinary citizens and big corporate interests.
Under this Bill, civil society organisations may have to choose between international philanthropy (for example, from the Bill and Melinda Gates Foundation) and policy advocacy. Additionally, the Bill’s measures will require resources to be diverted to burdensome and costly administration, rather than issues relating to an organisation’s mission.
The Greens are also concerned that this Bill infringes on the constitutional protection of freedom of political communication. Constitutional law experts, including Professors George Williams and Anne Twomey, have said the Bill may be referred to the High Court because of its potential impact on the implied freedom of political communication.
It should be noted that many of the measures in the proposed legislation are entirely unnecessary. The Charities Act 2013 already prohibits charities from having a “purpose of promoting or opposing a political party or candidate”.
The Bill will also unfairly classify some organisations as an associated entity of a political party, even when that organisation is completely independent of the political party. This could create undeserved reputational damage to the organisation or cause it to refrain from exercising a legitimate voice in an election campaign. It defines an associated entity as an organisation that promotes or opposes the policies of one or more political parties in a way that benefits a political party. This definition does not take into account that it is reasonable for independent organisations to support or oppose a party or candidate in a particular election because their policy is consistent with, or undermines, a crucial objective of the organisation.
Independent organisations should not have the label and obligations of an associated entity thrust upon them for engaging in an election campaign. It should be noted that currently third party election campaigners are required to make disclosures to the AEC similar to those made by political parties.
A number of submissions highlighted the inappropriate scope of the changes and the effect they would have on legitimate advocacy work.
St Vincent de Paul argued that the Bill could curtail community groups contributing to parliamentary inquiries:
If this Bill is passed, groups in the future will have to consider whether their contribution to a Parliamentary inquiry will take them over the threshold of being deemed a political campaigner. This may ultimately lead to a reduced number of submissions being made to Parliamentary inquiries, which will in turn reduce the quality of democratic debate and the capacity for informed decision making.
Anglicare Australia argued that the Bill would reduce the capacity and willingness for community groups to participate in public debate:
The Bill is anti-democratic and authoritarian. It is seemingly designed to intimidate common citizens and community representatives, discourage them from using their knowledge and work to inform and influence public policy, and limit their participation in the robust debate of the public sphere. This would make political activity less inclusive; preserving it instead for increasingly unpopular political parties, the staff they employ, and the well-funded lobby groups, industry advocates and associated entities who they regularly – though not always publicly – work alongside.
The Australian Council of Social Services argued that the prohibition on using international funding for advocacy may disproportionally affect certain groups:
Further, migrant communities and organisation may be disproportionately impacted by this ban. Advocacy is an important part of the work of these organisations, and international philanthropy and donations from non-permanent residents are an important feature of their funding.
World Vision Australia argued that the global nature of many issues and debates, and the existing regulation of charities, allowed international philanthropy to make an important contribution in Australia:
WVA considers it important to distinguish international philanthropy given to charities for lawful advocacy on public policy issues, as separate from foreign donations to political parties and politicians campaigning for office. Charities have completely different access to and influence over the political process, as compared with political parties.
In our view, many issues require a trans-national response and it is appropriate for global philanthropy to play a role in that. We believe that Australia’s open and democratic system of government should encourage and foster public engagement and participation.
Oxfam Australia noted that the compliance obligations and potential penalties may discourage groups from advocacy:
The regulatory and compliance burden of registering as a political actor is significant and unworkable so charities may limit their advocacy to ensure that they are not required to register. Further, the effective prohibition on receipt of overseas donations for ‘third parties’ and ‘political campaigners’ will mean that registered entities will not accept overseas donations for important research if there is a risk that the issue to be researched could be an issue in a future election. If entities do wish to undertake such funded research, then they will need to curb their advocacy which would make it difficult for the research to contribute to policy development and legislation. Even if the research were able to go ahead, the proposed legislation would certainly limit public discussion and debate of research outcomes and recommendations for fear of transgressing the $13,500 disclosure threshold.
Election expenditure – impact on small parties
Voters are most engaged with, and best served by a political process in which they have the opportunity to participate in a wide spectrum of political debate. The diversity of political debate in Australia should be reflected in our candidates, parties and representatives. Measures that discourage or disadvantage non-major party participants risks narrowing the political debate and alienating voters.
Additional grounds on which the Bill should be rejected is that it would change electoral funding to political parties from an automatic payment of an amount for each vote received to one based on the amount of election expenditure incurred in the election period. This would mean that minor parties under the proposed funding system will be comparatively worse off than the Liberal/National and Labor parties.
These changes would advantage the major parties, which usually reach their maximum public funding entitlement with advertising expenditure. Minor parties and independents, on the other hand, with a small budget that rules out television advertising, for example, often spend campaign funds on employing a campaign manager, which is one of a number of genuine campaign expenses that are not covered by the definition of electoral expenditure.
Recommendations
1.Future of the Bill
Recommendation
1.1 The Bill should be withdrawn.
1.2
A consultation process should commence with a view to drafting a new Bill and Regulatory Impact Statement which:
Prohibits political donations from foreign entities.
Reduces the potentially corrupting influence of political donations from domestic entities.
2.Response to the Majority Report
The Majority Report in Recommendation 11 did not support the Greens amendment to not include non-partisan issue based advocacy in the definition of political expenditure.
Recommendation
2.1
That the definition of political expenditure not include any aspects of issues based advocacy.
3. Framework for electoral funding reform
The Greens believe that undue influence and perceived or actual corruption arises from unchecked private funding of election campaigns. This view is widely held by the general public and supported by previous statements by the Prime Minister and other senior members of his party.
We maintain our view that the current laws on political donations are unfair and counterproductive to the democratic process.
It is telling that the government’s Bill does not seek to even make modest improvements to the transparency of donations to political parties.
Recommendations
3.1
A ban on donations from for profit organisations, or a very low donation cap on such donations.
3.2
A low cap on the amount of money individuals and not-for-profit organisations can donate each year to a political party or candidates, excluding bequests and MPs’ tithes to their party.
3.3
Modest caps on election expenditure by political parties, candidates and associated entities.
3.4
In relation to third parties the government should undertake wide consultation to help determine a fair system of regulations for all groupings – charities, not for profits, industry associations and businesses.
3.5
Require all donations of $1000 and above to be disclosed on an easy to search, public website in close to real time.
4. Common funding rules for Commonwealth, State and territory elections
Electoral funding rules vary enormously between the Commonwealth and the various states and territories. This is a serious issue when it comes to placing caps on political donations and the disclosure of donations. Efforts at a state level to regulate money in politics have been undermined by the ability of donors to instead funnel money into party federal election bank accounts which are not under the jurisdiction of state election funding laws.
Recommendation
4.1
The federal government to hold discussions between states and the Commonwealth in regard to: political donation disclosure thresholds; time periods for disclosures; the definitions of donations and other incomes that should be disclosed; and donation limits with a view to developing uniform electoral funding laws across all jurisdictions within two years.
5.Interim steps towards full reform
While the Australian Greens support comprehensive reforms to the electoral funding system that would achieve uniform national standards on political donations and election expenditure we recognise that this will require considerable negotiations between state and federal governments. We support a number of interim steps that would increase transparency and public trust in the electoral funding system.
Detailed disclosure of electoral expenditure
Political parties are currently required to disclose an overall amount of expenditure by the party in their annual return to the Australian Electoral Commission, yet there is no requirement for details on what items parties are spending their campaign funds. More information will assist the assessment of appropriate levels of expenditure caps and ensure that any misuse of electoral funding can be identified.
Recommendation
5.1
Political parties be required to disclose how much was spent during the election period on each type of expenditure, such as wages, communications, polling, advertising and printing.
Donation disclosure and transparency
Transparency of the political process was set back enormously when the disclosure threshold was raised to $10,000 indexed to the Consumer Price Index. A much lower threshold is needed and the loopholes that allow donation splitting between related political parties removed. These measures will help restore public confidence in the political process.
In 2017-18 the disclosure threshold had risen to $13,500. This means donors whose contribution to a political party or candidate is under this amount avoid proper scrutiny. This high threshold means a donor could potentially donate well over $1 million to a political party without ever being identified in party disclosures to the AEC. The donor could donate to many of the party's candidates and to various state party branches, with each amount being under the threshold.
Recommendation
5.2
Reduce the threshold for the disclosure of political donations to $1,000 with no indexation and all related political parties to be treated as one body for the purpose of the disclosure level.
5.3
Establish a system for continuous, real time, comprehensive on-line public disclosure of political donations received by political parties, candidates and associated entities on a public searchable website.
Ban on certain sectors
While the Greens support a ban on donations from all for profit bodies we recognise that this will not be immediately achieved without constitutional reform. Bringing in a ban on sectors that have been linked to having a corrupting influence on the political process or are perceived to have such an influence is another way to take meaningful steps to cleaning up political donations.
Recommendation
5.4
Ban political donations from developers, banks, mining companies and the tobacco, alcohol, gambling, defence and pharmaceutical industries.
6.Compliance
A stronger compliance regime is needed to help rebuild public trust in our democratic system. The Australian Electoral Commission has infrequently pursued those who break the rules. Giving the AEC greater regulatory powers needs to be part of any set of electoral funding reforms.
Recommendation
6.1
Increase the AEC’s regulatory powers over political donations, election funding and expenditure, and for these regulatory powers to include sanctions and penalties for breaches.
Senator Lee Rhiannon
Greens Senator for New South Wales