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Tuesday, 3 February 2009
Page: 9


Senator BIRMINGHAM (1:14 PM) —It is my pleasure to rise to make a contribution to the debate on the Tax Laws Amendment (Political Contributions and Gifts) Bill 2008 and I do so not wishing to beat about the bush. Let us be entirely honest: there are grave concerns in the public arena about the nature and operation of political donations in Australia and about our political system and its interaction with those who fund its operation. There is, as some wish to put it, a crisis of confidence—driven, as some say, by almost a cold war spending, arms race type of approach to see who can manage to outraise, outspend and outbid the other side.

That sort of crisis of confidence is certainly not helped by headlines that we have splattered across all of today’s newspapers such as ‘Hong Kong tycoon tops ALP donors’ and ‘Labor at odds over billionaire’s advances’. These are the types of things that hurt public confidence in the system. Then people go on to read the figures that are in the newspapers. They read that some $83.9 million was funnelled through the Labor Party and its state branches around Australia last year. That does not include the $27 million spent by the trade union movement on top of that to help engineer a change of government last year. So we had a $110 million plus spend or funding binge on changing the government, driven primarily by its trade union basis, coming from the Labor Party. Little wonder there are concerns given these types of headlines talking about casino tycoons and overseas investments! These are the things that bring about serious concerns in the public arena, and justifiably so.

What do we have before us today? We have a bill that deals with small contributors—those who donate less than $1,500. Well, whoopty-do! What a great achievement by Special Minister of State Faulkner and the so-called reforming Rudd government, whose members come in here and dare to suggest that this is about cleaning up the Australian electoral system and political donations in Australia! Their claims are rubbish. The media and the public are not concerned about mums and dads claiming a $1,500 tax deduction because they want to support their political party. They are not even concerned about businesses that might be claiming a $100, $1,000 or $1,500 tax deduction to support the political party of their choice. Those are not their concerns. That is not where people think undue influence is coming into the political system. They think it comes from property developers like those associated with the Wollongong council whom Senator Ronaldson spoke about earlier and from the dirty politics that those types of things have seen emanate. They think it comes from casino licence operators. They might see money coming into and money going out of the one political party at the same time—the types of strange arrangements that are like a revolving door at the bank of the New South Wales branch of the ALP. Maybe the new Rudd bank system that is going to help banks to fund commercial property developers could just funnel the money through the New South Wales ALP. That would be a good way to fund property developers. Right now they are all funding the New South Wales ALP, so why not do it in reverse! This legislation does nothing to restore public confidence in the political system. It does nothing to avert the crisis of confidence in public donations that we have in Australia. It tackles the small fry donors. It tackles those who are making a genuine contribution to be involved in politics, rather than those whose contribution could be perceived as having influence over the political process—and that is where people’s concerns lie.

The coalition has been extremely consistent on this. This is, of course, a series of measures that have come before this chamber for the second time. It has already been inquired into by the Joint Standing Committee on Electoral Matters, where the coalition and minor parties, particularly the Greens, made it clear that we stood as one believing that these types of piecemeal reforms should be considered as part of the overall picture and that we needed the big-picture approach to this, not just some piecemeal—‘We’ll pick a little bit off here and a little bit off there’—approach as the government seemed to be pursuing. We heard from eminently qualified witnesses, during the initial inquiry into the initial bill that sought to make these changes, such as Professor Graeme Orr from Democratic Audit of Australia, whose evidence stated:

… it is very premature to do away with a form of encouraging small-scale donating at the same time as seriously considering, in a few months time, the banning of large corporate and organisational donations.

Let us home in on the key word ‘premature’. It is premature to screw down the little guys before you start tackling the bigger ones. That is what this bill does. It is premature to try to tackle these small contributions before you get into where the real estimates and issues are. It is premature because we are waiting for the document I have in my hand, the electoral reform green paper, to reach its final place. I welcome this document. I welcome the government’s commitment to produce this document and I hope that I can take the government on trust that there will be a full and open process that leads to some comprehensive reforms, stemming from the electoral reform green paper, that will actually help to avert the crisis of confidence in our electoral system and actually help to ensure that the public has confidence that money is not having undue influence over it. The problem, though, is that this paper was released only in December last year. It was released after this parliament had finished sitting. There has been no opportunity to consider the changes in this legislation within the context of the comprehensive electoral reform green paper on donations funding and expenditure that the government has released. There has been no opportunity whatsoever.

That is why, when this issue originally came up, the coalition stood as one with the Greens to say it should be part of the big-picture reform process—we still believe it should be a part of that process—and that this reform process should be completed before the next election. We should see reform that restores confidence for all Australians. One hopes that the parties of the government, the opposition and the crossbenches can reach agreement on this reform. If this chamber could reach consensus on true electoral reform rather than the government’s piecemeal approach, that would be a true sign of serious steps forward.

The lack of preparation by the government—the lack of real consideration of what might be done in this regard—becomes evident when you look at the further evidence taken by the Joint Standing Committee on Electoral Matters in its assessment of these measures. The government claims this is a savings measure. It claims there will be revenue savings. Treasury estimates that the bill—in its original form, at least, when it was considered by JSCEM, noting that it is now some time down the track and that it is in a different form—will save $31.4 million by stripping tax deductibility for small contributions to political parties. We asked for a justification for those estimations—how the government came up with a $30-odd million saving—and we got the following evidence provided back to us by the Treasury:

The Australian Taxation Office does not have data on the median deduction claimed for gifts and contributions or the number of taxpayers claiming any deduction.

They do not have any data. The Australian tax office—the people who are processing these claims for deductibility; the people upon whom presumably Treasury and the government have relied on to come up with their $31.4 million estimate—have no data. So we have the government jumping at this, trying to proclaim it as a revenue savings measure when it has absolutely no idea of how the tax office have constructed the figures it is talking about. It has no idea at all.

In his evidence, Professor Orr again highlighted the unreliability of these types of revenue estimates, particularly given the uncertainty around the numbers of members of political parties in Australia. Certainly most of us know that most of the speculation is that those numbers are declining, especially in the major parties. Professor Orr said:

… if you are talking about $10 million per year you are talking about $30 million of donations at, say, a marginal rate of 30 per cent, which is roughly the corporate rate. Thirty million dollars is a lot of $1,500 contributions or party memberships. I do not want to criticise the Treasury modelling without seeing it—

of course, we know that it was based on zero data—

but part of the problem we have is that we have not had a system where it is itemised on tax forms and we do not really have enough data on claiming, on where people’s donations are going and so on.

So Professor Orr was quite clear that the data was not there and the estimate seemed to be grossly overstated given that many of the types of contributions claimed would be political party memberships. Memberships are usually in the order of $50 or $60—maybe a little bit more for some parties, but that is certainly what it is in my home division of the Liberal Party in South Australia. Sometimes there are contributions in addition to that, but we are certainly not talking about everyone making their donation and then making a deduction of $1,500—far from it. I would hypothesise that the overwhelming majority of people making deductions in Australia are making deductions of about $100. These are people who genuinely wish to support a political organisation—who genuinely wish to be involved. I would have thought that, at a time of concern about the level of support and involvement in political organisations around Australia, the last thing a government that might wish to encourage further involvement in the political process would be doing is making it harder and more expensive for people. That, of course, is what this measure does.

In his comments, Senator Ronaldson also struck upon the fact that, if passed, this measure provides certain advantages to some party structures, given their funding base, over others. It provides particular advantages to those who generate and derive large parts of their funding from trade unions, because the memberships and subscriptions to trade unions will remain tax deductible under this legislation. So you will still be able to join a trade union and claim your tax deduction for membership of that union—the union could possibly even increase its fees as a result of the Labor Party losing tax deductibility for membership—and then the union can funnel the money off to whomever they choose to donate to. Of course, we know who they are likely to donate to from today’s newspapers, because we see that there are millions of dollars funnelled annually from the union movement into the Australian Labor Party and its branches around Australia. So we know that this measure, if passed, will allow that to continue unfettered. It will provide a backdoor for people to make donations through the trade union movement. Get the donations deducted and they will end up in the Labor Party coffers, having been deducted from people’s incomes in any event.

No other party is going to benefit from similar sorts of arrangements, I suggest. But the government will. So it is little wonder that, again, they are focused in here on where they can cut out those smaller contributions from individuals, small businesses and corporations. It does nothing to fix the significant multimillion dollar influence the union movement has on the Australian political system. This measure does nothing to address the overseas donors who are splashed across the front pages of today’s newspapers. It does nothing to address donations, ranging into the hundreds of thousands of dollars, from big business, from lobbyists or from developers.

It does not even do anything to address potentially the deductibility to lobbyists’ operations. The government likes to pride itself on the operation of its code of conduct for lobbyists. But a lobbying business, whose area of business is lobbying, can pay as much as they want to attend a stand-up networking function of any political party and claim it as a legitimate business expense. People will still be able to attend Labor Party national conferences as business observers from any number of lobbyist businesses on the governments lobbyist register, and pay their $7,000, $8,000 or $10,000 a head—whatever it is—and that will still be a deductible expense. Mums and dads will not be able to pay $50 to join their local political party branch and claim that as deductible expense. But a lobbying company will be able to claim $10,000 as a deductible expense for attending a political party conference.

The evidence from Treasury officials on this was quite clear:

… yes. If their business role is lobbying, networking and advocacy and they go to a function with political leaders in order to network, advocate and lobby, that will be just a business deduction for their business activity. There is no cap to that expense.

That was Treasury evidence given to the JSCEM inquiry into this matter. So we still get big donors, we still get overseas donors, we still get lobbyists and lobbying companies with unlimited tax deductibility and we still get unions deducting their contributions. All this does is hurt ordinary Australians who wish to join a political party.

This is a rubbish piece of piecemeal legislation designed to target, frankly, the government’s political opponents. There are very clear motives behind this. Nowadays, to be quite frank, the government party, the Labor Party and its branches, is by and large funded by the big end of town—by big contributions, either from the trade union movement or from developers, casino operators or others. It is funded by those groups. The Labor Party knows full well that, as a proportion of income, those smaller parties—Family First, the Greens and others—and the Liberal Party and the National Party receive a higher proportion of their income from smaller scale donors, such as smaller businesses or individuals who choose to be members and who choose to make individual contributions.

They know that this legislation will hurt every other party in this chamber more than it will hurt them. That is the motive behind this. There is nothing holy about this. No matter how much the government want to hide behind their green paper on electoral reform, there is nothing holy about that process if they are jumping the gun and pushing ahead with these types of reforms, reforms that, frankly, will be implemented to the harm of every other political party represented in this chamber.

That is why I urge the Senate to do what it has done before on this measure and to tell the government, ‘No.’ The Senate should say that this is not good enough in isolation and must be part of the holistic approach to electoral funding reform that the government piously say is being undertaken. If they are committed to that holistic approach, they should be happy to wrap this issue up in it. If so, perhaps we can emerge with the type of outcome that gives Australians confidence and ensures that all Australians believe that our political system is free of the type of big-money influence that has concerned so many people. That is why I urge the Senate to reject this bill this time, as it has in the past, and make sure that we undertake a proper process: a wholesale and holistic review that looks at every area of campaign funding and does not just pick on the little guys.