Many Australians are concerned by the corrupting influence of big money in our democracy. Too often, governments prioritise the private interests of their donors over the public interest.
The High Court has recognised that, in addition to more explicit forms of corruption, there exists a 'more subtle kind of corruption … [where] officeholders will decide issues not on the merits or the desires of their constituencies, but according to the wishes of those who have made large financial contributions valued by the officeholder'.
A number of recent Bills have proposed lowering the threshold for disclosure of donations and improving the timeliness of disclosures. The Australian Greens support those reforms but have consistently noted that simply disclosing the donation does not remove its influence. To achieve that, it is necessary to limit the amount and source of political donations.
As the Australian Conservation Foundation (ACF) points out:
Large political donations are meant to buy access and political influence. While political donations are an important form of political participation, without regulation and appropriate limits, unfettered political donations can lead to a system of political participation where those with the largest wallets are able to wield the most influence.
There is much to be done to strengthen the effectiveness and consistency of political donation regimes across Australia. A recent Transparency International Australia report observed:
Drivers of undue influence continue through ever-increasing pressure for funds, regulated through a fragmented, leaky system where the weakest donation rules set the standard.
For too long, the weakest link has been at the federal level. This Bill is a first step towards the comprehensive reform needed to ensure the integrity, transparency and accountability of the Commonwealth electoral system.
Prohibited industries
The Committee report asserts that there is no rigorous policy research at a Commonwealth level to substantiate the perceived influence of the industries that this Bill seeks to ban from making political donations. This is reminiscent of the Committee's comments in response to Senator Lambie's Commonwealth Electoral Amendment (Donation Reform and Other Measures) Bill 2020:
The committee is mindful to consider whether statements of this nature are merely rhetorical assertions that are popular among political commentators and activists, or whether there is actual evidence – case studies or systemic – of money playing an improper role in the political system.
In fact, there is a considerable volume of analysis supporting concerns regarding the undue influence of political donations. The submission to this inquiry by Professor Peter Miller details a study undertaken at Deakin University regarding the influence of industries reliant on addiction––alcohol, tobacco and gambling. His qualitative research concludes:
From our research it was acknowledged by respondents that political donations do influence how you view the donor and consequently access and influence. The high threshold for donations [disclosure] is easily exploited, especially by industries such as alcohol with many smaller stakeholders.
It is clear from this evidence that the proposal to ban donations from these industries, and a broader ban on donations over $3,000 will be a substantial step forward in reducing the levels of advertising by political parties and the influence that has over elections.
Given that empirical studies are hampered by the lack of transparency under current laws, it is convenient for the major parties to rely on that lack of empirical data to avoid further regulation. The Accountability Roundtable submission emphasises that identification of risk, rather than proof, should be sufficient for action on democratic reforms.
The industries listed as prohibited donors in this Bill are those that have used, or have a strong public perception of using, political donations to influence policy decisions––property developers, banking, tobacco, liquor, gambling, pharmaceutical, defence and mining industries. The list is consistent with recommendations of the Senate Select Committee inquiry into the Political Influence of Donations, and is supported by the vast majority of submitters.
These industries are not donating tens of millions of dollars because they believe in the institution of strong democracy. They are donating because it gets results.
The Tasmanian Election Inquiry submission to this inquiry notes:
One of the unifying characteristics of the industries that are sought to be excluded from making political donations is their impact upon public health…
What is good for the property development industry is not necessarily good for the community or for the health of our democracy. What is good for the gambling, tobacco and / or firearms industries is certainly not good for the health of the general community.
This is echoed by the Human Rights Law Centre, which notes:
[I]ndustries like mining, gambling, guns and alcohol are highly regulated precisely because of their potential to cause harm. The donations and influence of these industries therefore impact not only our democracy, but also our health and our planet.
The most recent Australian Electoral Commission disclosure data confirms that in 2019–20, the usual suspects like gambling, the fossil fuel industry, pharmaceuticals and the banking sector have continued to give generously and been rewarded with grants, contracts, advantageous policy outcomes or, in the case of the fossil fuel industry particularly, advantageous policy inaction.
When the biggest five fossil fuel giants collectively donated over $9 million to major parties and lobby groups in 2019–20, it is not surprising to see a government paralysed on climate action and pushing a gas-led recovery.
After a brief hiatus during the Banking Royal Commission, the big banks have also resumed donating. The banks, financial lobby groups and major insurance and credit firms delivered over $900,000 to the government in 2019–20. This may explain current efforts to relax responsible lending laws.
The Public Health Association of Australia, the pre-eminent non-government voice for public health, noted 'ongoing concern relating to corporate donations to political parties and their impact on the making of health policy in Australia'.
The Australian Council on Smoking and Health submission points to research confirming:
The tobacco industry has a long history of undermining public health policy through donating to major political parties in Australia, with companies targeting their gifts during critical policy debates or immediately before elections.
The High Court has confirmed that prohibiting donations from industries known to skew political outcomes can be justified. We believe there is sufficient justification for prohibiting donations from the listed industries without offending against the implied freedom of political communication.
One submitter to the inquiry highlighted detailed case studies examining the food and beverage industry's successful efforts to influence public policy. We acknowledge this influence on everything from container deposit laws to the implementation of health star rating systems, but note the difficulty in defining the scope of this industry for the purposes of a prohibition. The proposal to cap all donations will assist in limiting the influence of this and other industries in future.
Donation caps
As the High Court recognised in McCloy, uncontrolled use of wealth to influence decision-making compromises equal participation in democracy. Donations made by Clive Palmer's corporate entity, Mineralogy Pty Ltd, in recent elections confirm this disparity.
The Australian Greens have long advocated for donation caps, a position supported by most submitters. We were pleased to see the Australian Labor Party briefly toy with supporting this idea recently and urge them to make good on their commitment.
This Bill would limit all political donations, from individuals or organisations, to $3000 per election term (roughly equivalent to $1000 per year) to level the playing field and avoid those with more money gaining greater access to government. We consider this amount is sufficient to encourage and facilitate political engagement without allowing individual donations to unduly influence political outcomes.
The Bill is not intended to limit donations to third parties for purposes other than electoral expenditure, as set out in s.314AR(6). We note the drafting oversight identified by Professor Twomey and agree that an amendment to ensure that intention is clearly given effect is appropriate.
Definition of gift
The current narrow definition of 'gift' under the Commonwealth Electoral Act 1918, along with the high disclosure threshold, means that a substantial amount of donations and other income are undisclosed. The Centre for Public Integrity recently estimated that 35 per cent of donations made in the past 20 years—approximately $1 billion—fell into this category of 'dark money'. In 2019–20, political parties received nearly $50 million in dark money from undisclosed sources.
These figures are consistent with previous findings from the Grattan Institute.
Money from fundraising dinners or membership fees of political party fundraising bodies are not currently disclosed as donations. Recent analysis by Stephanie Tran found that some of Australia's biggest companies are 'hiding millions of dollars in donations to the major political parties by buying Platinum, Gold and Silver corporate memberships' to Labor and Liberal 'business forums'.
The extension of the definition of 'gift' is intended to close the loophole that has allowed large sources of campaign income to remain undisclosed and unaccounted for, and was generally supported by submitters. The amendment would ensure the public can see who is contributing to political campaigns, irrespective of the mechanism for that contribution.
The Committee report claims that including membership fees as donations will 'create an unreasonable administrative burden for Australians who choose to pay membership fees to various organisations.' However, the proposed definition explicitly excludes membership fees to unions, non-government organisations and political campaigners below $1000 per year in recognition that many people choose to support organisations through membership.
The Accountability Round Table submission observes that this broader definition, excluding small membership fees, is consistent with the Open Government Declaration, to which Australia is a signatory.
Several submitters identified minor amendments to improve the definition of gift and consistency with the objectives of the Bill. We agree that the definition could be strengthened.
Recommendation
That the Commonwealth Electoral Amendment (Banning Dirty Donations) Bill 2020 be passed, subject to minor amendments to:
clarify the exclusion of gifts to third parties and political campaigners for a purpose other than Commonwealth electoral expenditure;
improve the consistency of terminology for 'gift' and 'donation'; and
provide appeal options for determinations relating to prohibited donations.
Further reforms
As noted, this Bill is a first step towards a stronger campaign finance regime.
Several submitters noted that donations caps should be complemented by rigorously enforced caps on election expenditure. These submissions note that limiting the amount that can be spent on a campaign can be a more effective way to level the playing field as donation caps alone do not account for alternative income streams enjoyed by bigger parties and wealthier candidates.
Transparency International Australia notes that '[s]ystems for controlling the "arms race" of political campaign expenditure have improved in several states, but not nationally'. The Commonwealth should follow the lead of NSW, ACT, Queensland and Tasmania and review election spending rules and any necessary implications for public funding.
Other submissions noted the need for a comprehensive, holistic and 'mutually supportive set of reforms'. Transparency International Australia's Blueprint for election finance and campaign regulation reform calls for nationally-consistent, best practice electoral legislation in the following key areas:
universal, workable caps on political campaign expenditure (by parties, candidates and associated entities);
common political donation limits and public election funding rules;
real-time public disclosure requirements for donations; and
enhanced sanctions and enforcement by the Australian Electoral Commission.
Those reforms should be complemented by stronger parliamentary and lobbying codes of conduct and a national integrity commission.
The Australian Greens support these initiatives.
Recommendation
That the Government provide for reasonable real-time disclosure of all political donations above $1,000.
Recommendation
That the Government commence a review of the electoral expenditure and finance framework.
Recommendation
That the Government ensure Australian Electoral Commission funding is adequate to allow monitoring and enforcement of compliance with the political funding and disclosure regime.