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Purpose
The amendments proposed by the Bill to the Commonwealth Electoral Act 1918 represent the Governments legislative response to the 1994 Interim Report of the Joint Standing Committee on Electoral Matters, Financial Reporting by Political Parties. The major amendments will:
. increase the entitlement to public funding for a House of Representatives election from $1.03531 per formal first preference vote to $1.50 (indexed);
. increase the entitlement to public funding for a Senate election from $0.51766 per formal first preference vote to $1.50 (indexed);
. increase the entitlement to public funding for a half-Senate election from $0.77648 per formal first preference vote to $1.50 (indexed);
. require persons who make gifts totalling $1 500 (previously $4 500) to the same political party, or same State branch of a political party, to provide the Australian Electoral Commission (AEC) within 20 weeks of the end of the financial year (previously within 15 weeks of polling day) with details of those gifts;
. reduce the time an agent of a political party, or a State branch of a political party, has to provide the AEC with the requisite annual return from 20 weeks to 16 weeks after the end of the financial year;
. provide that details of a donor to a political party of individual amounts of less than $500 (previously $100) need not be disclosed (Note: Details of a donor will have to be disclosed where the total individual donations which are $500 or more, equals or exceeds $1 500); and
. make entities controlled by one or more political parties, or operated wholly for the benefit of one or more political parties, subject to certain financial disclosure provisions (Note: there is a retrospective element to the amendments relating to such entities).
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Background
Outline of Commonwealth Election Funding and Financial Disclosure
(1) Outline of Commonwealth Election Funding
The Commonwealth Electoral Act 1918 (the Principal Act) provides for funding of election campaigns, disclosure of financial details by registered political parties, and disclosure of donations and electoral expenditure by candidates, Senate groups and other persons taking part in election campaigns. Part XX (section's 287-321) of the Principal Act contains the relevant provisions.
A party or group must be registered in order to be eligible for funding. Funding is made through registered agents, and it is mandatory for parties to appoint agents. Non-party candidates may appoint agents but if they do not they will be deemed to be their own agents. The Australian Electoral Commission (the AEC) maintains registers of parties, and of agents of political parties and candidates.
Claims for funding (or reimbursement or expenditure) must be made within 20 weeks of polling day, and may be made only on the approved form by the properly appointed agents of the State or Territory branches of a registered political party. Claims must be supported by evidence of expenditure in the form of original vouchers such as detailed invoices and accounts, and show expenditure clearly incurred for the election, must be listed on a schedule and be made on the appropriate forms. If expenditure is less than the entitlement, payment will be made up to the amount of the expenditure. Details of allowable election expenditure are summarised in the Election Funding and Financial Disclosure Handbook of the AEC.
Payments are made to the agents of the party, candidate or group. There may be a single claim or up to two interim claims and a final claim. There are no provisions for advance payments. Payments are made only after an election.
Those entitled to receive funding are registered parties whose endorsed candidates have polled at least 4% of the formal first preference votes, or whose endorsed Senate groups aggregate vote was at least 4%.
Similarly, independent candidates or non-party Senate groups are eligible if they poll at least 4% of the total formal first preference votes in the relevant election.
The entitlement for funding is based on the formal first preference votes received by a party or group's endorsed candidates. The amount is calculated by multiplying the number of formal first preference votes by the relevant amount of money per vote for the particular election. This amount per vote from 1 July 1994 to 31 December 1994 was $1.03531 cents for a House of Representatives election, $0.51766 cents for a Senate election held simultaneously with the House of Representatives election, and $0.77648 cents for a half-Senate only election. These amounts are reviewed twice yearly and adjusted in line with movements in the CPI. The amounts do not, however, decrease.
In determining a party or group's entitlement, the votes for any candidate in a House of Representatives election which amounts to less than 4% are not counted, nor are they counted if a Senate group receives less than 4%.
Evidence of expenditure is required in the form of original vouchers being detailed invoices and accounts. These must be listed on a schedule and attached to the claim. An auditor's report in lieu of vouchers is not acceptable, and the Commonwealth, unlike New South Wales, does not require a certificate by an auditor.
No limits have been placed on the amount of expenditure.
(2) Outline of Disclosure Provisions
Since the passage of the Political Broadcasts and Political Disclosures Act 1991, the Commonwealth Electoral Amendment Act 1992, the Electoral and Referendum Amendment Act 1992 and the Commonwealth Electoral (Annual returns by Registered Political Parties) Regulations, registered political parties must furnish an Annual Return to the AEC providing details of all amounts received, all amounts spent and all debts outstanding at the end of the financial year. Returns must be lodged even if there are no disclosable gifts. The AEC has investigatory powers to ensure compliance with the disclosure provisions of the Principal Act. Details of amounts of less than $100 received in the course of fund-raising events, or amounts spent less than $100 do not have to be included, although the amount itself is listed in the return.
The agent of each person (including members of groups) who was a election candidate, and agent of each group, is required within 15 weeks of polling day, make a return setting out the total amount or value of all gifts, the number of persons who made gifts, and the relevant details of all gifts received during the disclosure period. Details must be supplied for gifts made by persons, unincorporated associations other than registered industrial organisations, and by trusts and foundations.
Gifts include money, gifts in kind (to which a monetary value must be ascribed) and services. Disclosure provisions do not apply to volunteer labour, personal gifts, gifts to a campaign committee, inter-party transfers, or gifts of less than $200. Gifts to groups valued at less than $1000 are also excluded. Gifts do not include party subscriptions, or public funding payments. It is unlawful to accept anonymous donations of more than $200 to a candidate or more than $1000 to a group. If an anonymous gift is received, an equivalent amount must be paid to the Commonwealth.
Broadcasters and publishers are required to submit returns of election advertising. These cover all advertising by political parties, groups, candidates and third parties.
(3) Outline of Disclosure by Third Parties Provisions
Third parties include individuals, unregistered political parties, bodies corporate, members of an unincorporated association, the trustees of a trust, and registered industrial organisations.
Third parties are required in some circumstances to furnish disclosure returns. These are required for electoral expenditure and for gifts received, or made to a political party, candidate or other specified persons.
Disclosure is required if there has been electoral expenditure for goods used or services provided during the election period (from the date upon which the writs were issued to 6pm on polling day) of $200 or more, irrespective of the actual date of the expenditure. A return must be submitted on the appropriate form within 15 weeks of polling day.
Disclosure of gifts received is required if a third party incurs expenditure for a political purpose of $1000 or more during the disclosure period, and uses gifts received for such expenditure of $1000 or more. A return must be made within 15 weeks of polling day.
Disclosure is required if a third party donates:
I. to any political party, and the value is $4500 or more;
II. to any candidate in an election or member of a Senate group, and the total value is $200 or more; or
III. to any person or body required by the AEC to make a return and the total value is $1000 or more.
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Returns are not required where the disclosable threshold is not reached and third parties are subject to random inspection by the AEC.
(4) Interim Report of Joint Standing Committee on Electoral Matter - Financial Reporting by Political Parties
The Interim Report of the Joint Standing Committee on Electoral Matters, Financial Reporting by Political Parties, June 1994 has made a series of recommendations relating to the disclosure requirements. The recommendations include:
I. annual returns by registered parties list a total amount of expenditure, rather than individual transactions within that total; 1
II. require annual returns from registered political parties to be lodged within 16 weeks of the end of the relevant financial year; 2
III. $500 be set as the threshold for disclosure of individual amounts received and paid by, on or behalf of political parties; 3
IV. donors to registered parties or State branches not be required to lodge a return with the AEC; 4
V. State agents of registered parties be required to be present at local audits, and be responsible for presenting to the AEC such records for audit as are required; 5
VI. that the same amount of public funding is payable for a Senate vote as for a House of Representatives vote; 6
VII. parties registered on a national basis receive public funding for elections directly to their federal or national offices, via national agents; 7 and
VIII. where parties registered on a State basis do not notify the AEC that they wish to receive public funding on a national basis, those parties continue to receive public funding through their State agents. 8
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The amendments proposed by this Bill to the Principal Act represent the Governments legislative response to the above recommendations of the Joint Standing Committee on Electoral Matters.
Main Provisions
(1) Main Amendments Contained in Schedule to Bill
Item 2: The amendments proposed by Item 2 have the following three main effects:
!!;!*!|!!;!*!|!! . The entitlement to public funding for a House of Representatives election is increased from $1.03531 per formal first preference vote to $1.50 (indexed).
. The entitlement to public funding for a Senate election is increased from $0.51766 per formal first preference vote to $1.50 (indexed).
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. The entitlement to election funding for a half-Senate election is increased from $0.77648 per formal first preference vote to $1.50 (indexed).
The above amendments will have effect on the day the Bill receives the Royal Assent ( clause 2).
Item 10: A new section 305B, dealing with donations to political parties, will be inserted in the Principal Act by Item 10. The proposed section has the following main effects:
. Persons who make gifts totalling $1 500 (previously $4 500) to the same political party, or same State branch of a political party, must provide the AEC within 20 weeks of the end of the financial year (previously within 15 weeks of polling day) details of those gifts.
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. Where a person makes a gift to a person or body intending that it benefit a political party, or State branch of a political party, they will be taken to have directly made a gift to that political party or branch.
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. The information required to be provided to the AEC with respect to each gift must comprise the following:
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- the amount of the gift;
- the date on which it was made; and
- the name and address of the political party or branch.
. The reporting requirements will not apply to gifts made by any of the following:
- a registered political party;
- a State branch of a registered political party;
- an associated entity (the term "associated entity" is defined by Item 1 to mean an entity controlled by one or more political parties, or an entity which operates wholly or mainly for the benefit of one or more registered political parties);
- a candidate in an election; and
- a member of a group.
Proposed section 305B will apply to the financial year ending 30 June 1995 and to all subsequent financial years ( clause 4).
Item 14: The effect of Item 14 is to reduce the time an agent of a political party, or a State branch of a political party, has to provide the AEC with the requisite annual return (the return details such matters as the total amount received by, or on behalf of, the party during the financial year) from 20 weeks after the end of the financial year to 16 weeks after the end of the financial year. Item 14 will apply to the financial year ending 30 June 1995 and to all subsequent financial years ( clause 4).
Item 15: The effect of Item 15 is to provide that details of a donor to a political party of individual amounts of less than $500 (previously $100) need not be disclosed. Note: It should be remembered that details of a donor must be disclosed where the total of individual donations which are $500 or more, equals or exceeds $1 500. Item 15 will apply to the financial year ending 30 June 1995 and to all subsequent financial years ( clause 4).
Item 19: A new section 314AEA, dealing with annual returns by associated entities, will be inserted in the Principal Act by Item 19. The proposed section has the following effects:
. Requires the financial controller of an associated entity (the term "financial controller" is defined by Item 1 to mean the secretary of the company, if the entity is a company; the trustee, if the entity is the trustee of a trust; or the person responsible for maintaining the financial records of the entity, in other cases) to provide the AEC, within 16 weeks of the end of the financial year, with a return setting out the following:
- the total amount received by, or on behalf of, the entity during the financial year;
- the total amount paid by, or on behalf of, the entity during the financial year; and
- if the entity is an associated entity (the term "associated entity" is defined by Item 1 to mean an entity controlled by one or more political parties, or operates wholly or mainly for the benefit of one or more such parties) the total of all debts incurred by or on behalf of the entity during the financial year.[Note: The details/particulars and thresholds for disclosure contained in sections 314AC-314AE (eg. $1 500 and $500) apply in addition to the above requirements.].
. Amounts received or paid out when an entity was not an associated entity need not be reported.
. Where an amount required to be reported to the AEC in an annual return was paid to or for the benefit of one or more political parties, and was from funds generated from capital of an associated entity, the following details about each contribution to that capital must be included in the annual return:
- the name and address of the contributor; and
- the total amount of the contributor's contribution to the capital (either before or after the commencement of this proposed section).
(Note: It may be argued that the above provision contains a retrospective element. That is, where contributors have contributed to the capital of an associated entity, either before or after the commencement of the legislation, then those contributors must be identified as well as the amount of their contribution. It could be argued that the above is an open-ended retrospectivity which could require disclosure dating back a number of years.)
Proposed section 314AEA will apply to the financial year ending 30 June 1995 and to all subsequent financial years ( clause 4).
Item 20: A new subsection 314AG(3), providing that the regulations may reduce the amount of information required to be provided in an annual return by associated entities, is inserted in the Principal Act by Item 20. Proposed subsection 314AG(3) will apply to the financial year ending 30 June 1995 and to all subsequent financial years ( clause 4).
(2) Transitional Provision - Gifts to Political Parties
Clause 5 provides that where a person makes gifts totalling $4 500 or more to the same political party, or the same State branch of a political party, between 12 April 1993 and 31 December 1994, they must provide the AEC before 18 November 1995 with a return listing those gifts. In addition, for each gift, the return must set out the following: the amount of the gift; the date on which it was made; and the name and address of the political party or branch.
Similarly, where a person makes gifts totalling $1 500 or more to the same political party, or the same State branch of a political party, between 1 January 1995 and 30 June 1995, they must provide the AEC before 18 November 1995 with a return listing those gifts. In addition, for each gift, the return must set out the following: the amount of the gift; the date on which it was made; and the name and address of the political party or branch.
In respect to gifts made before 1 January 1995, a person making a gift to a person or body intending that it benefit a political party, or State branch of a political party, will not be taken to have directly made a gift to that political party or branch.
Clause 2 provides that clause 5 will commence on the day the Bill receives the Royal Assent.
(3) Transitional Provision - Returns by Associated Entities
Clause 6 requires an associated entity (the term "associated entity" is defined by Item 1 to mean an entity that is controlled by one or more political parties, or operates wholly or mainly for the benefit of one or more political parties), for the financial year ending 30 June 1995, to provide the AEC with a return detailing:
- amounts received by and on behalf of the entity for the second half of the financial year together with particulars required under section 314AC (eg. particulars of each amount making up the sum received and date of receipt); and
- amounts paid by, or on behalf of, the entity for the second half of the financial year together with particulars required under section 314AD (eg. particulars of each amount making up the sum paid out and the date of receipt).
Clause 2 provides that clause 6 will commence on the day the Bill receives the Royal Assent.
Endnotes
1. Interim Report, Joint Standing Committee on Electoral Matters, Financial Reporting by Political Parties, June 1994, p. 4.
2. Ibid
3. Ibid., p. 5.
4. Ibid., p. 6.
5. Ibid., p. 7.
6. Ibid., p. 9.
7. Ibid., p. 10.
8. Ibid.
Ian Ireland (Ph. 06 2772438)
Bills Digest Service
Parliamentary Research Service
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Commonwealth of Australia 1994.
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Published by the Department of the Parliamentary Library, 1994.