The Bill modernises the enforcement and compliance regime for political finance regulation and expands the penalty regime in the Act.
The Bill also increases the responsibilities of the Australian Electoral Commission (AEC).
The Bill proposes the following criminal and civil penalties:
contravention of sections regarding donations to registered political parties, candidates, Senate groups and political campaigners – criminal penalty of 10 years imprisonment or 600 penalty units or both or civil penalty of 1,000 penalty units;
contraventions of sections regarding donations to third party campaigners and certain political campaigners –criminal penalty of 10 years imprisonment or 600 penalty units, or both, or civil penalty of 1,000 penalty units;
registered charities and organisations using the same account in which foreign donations are received for domestic political expenditure – criminal penalty of 10 years imprisonment or 600 penalty units, or both, or civil penalty of 1,000 penalty units;
soliciting gifts from non-allowable donors – criminal penalty of 5 years imprisonment or 300 penalty units, or civil penalty of 500 penalty units;
registered charities and organisations can solicit foreign gifts as long as they are not used for political purposes.
receipt of gifts from non-allowable donors in order to transfer the gifts – criminal penalty of 5 years imprisonment or 300 penalty units, or both, or civil penalty of 500 penalty units;
formation of a body corporate specifically for the purposes of making an unlawful gift – criminal penalty of 5 years imprisonment or 300 penalty units, or both, or civil penalty of 500 penalty units;
receipt of donations from foreign banks accounts or made while in a foreign country – criminal penalty of 10 years imprisonment or 600 penalty units, or both, or is liable to a civil penalty of 1,000 penalty units;
receipt of donations of at least $250 without appropriate donor information – criminal offence with a penalty of 10 years imprisonment or 600 penalty units, or both, or is liable to a civil penalty of 1,000 penalty units.
There are exceptions where a recipient has sought appropriate donor information and where gifts are made in a private capacity (i.e. personal holiday gifts).
In addition to penalties for the receipt of unlawful gifts, the Bill proposes that any unlawful gifts become a debt owed to the Commonwealth.
The AEC confirmed that the proposed penalties would be the strongest in the Act. Prof. Tham welcomed the proposed increased penalties, submitting that low penalties are a ‘significant shortcoming of current federal election funding laws.’ He stated that the proposed penalties ‘clearly strengthen the deterrence effect of the penalties, thereby promoting compliance.’
Nonetheless, there was concern about the seemingly ‘disproportionate’ nature of the penalties. It was submitted that the penalties may prove to be a business risk to the charity sector. Charities may find it difficult to recruit suitably qualified volunteers or staff to take on roles with such high potential liability.
One proposed solution would be to cap the maximum penalty at twice the amount of political expenditure occurred in the financial year the offence was committed. This would have a deterrent effect while ensuring the penalty is proportionate.
The Committee acknowledges the evidence regarding the proposed penalty regime and concerns about the disproportionality of penalties.
The AEC informed the Committee that there is guidance for legislative drafters in relation to setting the appropriate level of penalty. The Committee notes that the Parliamentary Joint Committee on Human Rights has raised several issues in this regard for further ministerial response.
The Committee is firmly of the view that penalties should act as a deterrent and would be reluctant to diminish this deterrent effect.
Nonetheless, the Committee believes penalties should be reduced to a level more commensurate with the type of breach displayed by an entity, for example being that organisations breaching the conditions of their DGR status should have their status revoked.
As noted in Chapter 1, the Committee has been concerned about the apparent widespread failure by charities to understand existing reporting obligations under the Electoral Act.
The Committee also notes that the Bill imposes serious penalties for registration non-compliance utilising a threshold that is both retrospective and prospective. Organisations may have to undertake some administrative work in order to determine their registration category.
Therefore, the Committee is of the view that there should be a 12 month delay to the commencement of the proposed offence clauses in order to allow all political actors to meet their registration requirements without fear of prosecution.
At the same time both the AEC and the ACNC should undertake a comprehensive campaign to educate all stakeholders on the new requirements.
The Committee recommends that the Government consider reducing the proposed penalties in the Bill, and that penalties be proportionate to the type of breach displayed.
The Committee recommends that the Government consider:
an appropriate legislative mechanism whereby organisations which hold Deductible Gift Recipient (DGR) status which donate funds to another organisation in breach of their DGR obligations forfeit the right to DGR status; and
that any legislation include a mechanism to allow for a warning before removal of DGR status.
The Committee recommends that the Government appropriately resource both the Australian Electoral Commission and the Australian Charities and Not-for-profits Commission to undertake a comprehensive education campaign for business, for industry associations, and for the charity sector on their obligations under the Electoral Act 1918.
Committee comment on AEC resourcing
The Explanatory Memorandum states that the implementation costs are estimated to be $70 million over the forward estimates. The AEC noted that in order to implement the proposed arrangements it would require resources for:
new and improved IT systems;
workforce capability and training; and
The proposals contained in this Bill will place significant additional responsibility on the AEC and the Committee calls on the Government to ensure that the AEC is adequately resourced to undertake these functions, without detracting from its existing responsibilities.
Senator Linda Reynolds CSC
9 April 2018