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Transcript of doorstop: Parliament House, Canberra: 28 March 2008: electoral reform.

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Special Minister of State



DATE: 28 March 2008

TITLE: Electoral Reform, Parliament House, Canberra

TOPIC: Electoral Reform

FAULKNER: Well thanks very much for coming along. Today I wanted to announce that the Rudd Government will be introducing legislation in the next parliamentary sitting to fix loopholes in donation disclosure and public funding. Our plan is to introduce legislation in the next session for passage in the next session.

The government will also kick-start a process for a green paper to reform and modernise our electoral processes. The Prime Minister is asking the states and territories to join the Commonwealth in examining electoral issues. In the short-term, the legislation that I've announced will urgently move on five issues.

The first is to set the campaign donation disclosure threshold level at $1,000, reversing the Howard Government's huge increase in the threshold, which as you know took the disclosure limit from $1,500 to $10,000 indexed.

The second measure is to ban donations from overseas or from non-Australian companies. So this will ensure that donations can only be received from a jurisdiction where the AEC can ensure that our laws are enforced.

Thirdly, we are planning to legislate to tie election funding to reported and verified electoral expenditure. In other words, expenditure directly incurred by a candidate or a party in an election. So this will stop any candidate, or any party, making a financial gain from the electoral public funding system.

Fourthly, we are planning to remove the loophole whereby separate divisions of a political party are treated as separate entities. So that enables, of course, would enable large donations from being hidden by paying portions across state or territory branches of the same party.

And finally, we are proposing in this urgent legislation to increase public scrutiny of donations by setting six-monthly disclosure timeframes. These reforms, of course, that I've outlined there are a priority, because I want to ensure that they are in place and so they can be fully effective they must operate by the beginning of the next financial year. That's why legislation will be introduced in the next session for passage during that session.

I also wanted to announce today that the government is going to produce an electoral reform green paper, to be released in two parts. The first looking at disclosure, funding and expenditure issues; that's planned to be released for discussion in July of this year. The second part of the green paper will examine a broader range of options aimed at strengthening a range of other elements of our

electoral laws.

That part of the green paper will be released for discussion in October this year and the plan is, of course, for the green paper to look at issues such as: caps; limitations or bans on donations and

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funding or expenditure; to look at the public funding regime in the broad; to look at the critical issue of the alignment of state, territory and federal electoral laws; and, of course, a range of other issues such as enrolment processes, roll closures, as part of a very comprehensive review of the Commonwealth Electoral Act.

The Australian Electoral Commission, the Department of Prime Minister and Cabinet, and the Department of Finance and Deregulation, have been tasked by the Cabinet to prepare the green paper. The government is very committed to working with state and territory governments on these critically important issues.

The Prime Minister is writing to premiers and chief ministers to seek their cooperation in progressing electoral reforms, asking them to nominate a relevant minister to attend discussions with the Commonwealth, which I will chair, about electoral reforms.

The government, of course, will be asking the Parliament's own Joint Standing Committee on electoral matters to consider the green paper. And I'm hoping that we'll work closely with the Joint Standing Committee on electoral matters as the process of electoral reform moves ahead.

I think it's fair to say that over the past few years there have certainly been a number of retrograde changes to the Commonwealth Electoral Act. And I am very committed, as is the government, to restoring the integrity of our electoral processes; to restoring the integrity of our electoral system in this country.

And I believe the five reforms that I've announced today will make our electoral system more accountable, more open, more transparent, and I'm looking forward to ensuring that these other processes, particularly the green paper process that I've outlined, will also do the one thing that is so critical: that is, to ensure the health of our Australian democracy.

There is a great deal more that we can do, and I would commend these reforms to you; and I'm very happy if I can to answer any questions you might have about them.

JOURNALIST: Senator Faulkner, does the government have any general view about the [indistinct], what is a good mix of public and corporate funding for the electoral process, for the political process?

FAULKNER: Well they are the sorts of issues obviously the first part of the green paper will examine. There's no doubt, when public funding was originally introduced, there was a view that it would limit the number of donations that the political parties would need to receive.

And I think there was also a view that, with political parties and candidates receiving public funding, that there was a consequential need to ensure that the disclosure provisions of the Electoral Act were strong. Well those provisions have been weakened now over a long period of time.

There was a time when I think Australia's Commonwealth Electoral Act was at the cutting edge. If you go back 20 or 25 years, that's certainly the case. It's not the case now. So I believe we are well behind the play. We're not up to speed in relation to, when compared to other Western democracy in relation to our electoral system.

There's a great deal that we have to address. And those sorts of critical issues, Laura, that you raise, are very much going to be front and centre as the, in the first part of the green paper that I've announced.

JOURNALIST: Minister, with regard to the green paper, will it examine the idea of greater transparency with regard to the Labor Party's receipt of affiliation fees from trade unions and the effect of that funding going through to election campaigns?

FAULKNER: Look, there's absolutely nothing off-limits in relation to the green paper. I mean let's be clear, the five reforms that I've announced today for urgent legislative consideration, they will apply equally to trade unions, to companies, to individuals, to any other organisations.

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There's no picking and choosing here in relation to the application of our electoral laws: they apply equally to all organisations and individuals. So of course, in that sense, trade unions are absolutely no different to any other organisation.

JOURNALIST: Senator, there are learned colleagues who might suggest that you're cutting your own throat in the contest against the Coalition?

FAULKNER: Well I would say, not only to my own colleagues but more broadly, that we have a responsibility to restore the health of Australia's democracy. I actually happen to believe it's in the interests of the political process and in the interest of political parties to have strong electoral laws.

I happen to think there's no particular partisan advantage or disadvantage in ensuring that many, many more receipts to political parties are disclosed, that they're disclosed in a more timely fashion, that we don't accept donations from overseas or companies that are not registered or from non-Australian companies.

I don't think it's going to be disadvantageous, the changes in relation to ensuring that we tighten our electoral laws, so the loophole where separate entities, separate divisions or branches of a political party are not treated as separate entities is removed. I actually think these will strengthen the political process, strengthen our political system, and will be to the advantage of political parties. If you have a healthy democracy and you have a good electoral system, I think that actually assists all those who participate in it. And of course in Australia, which is such a strong tradition with its two-party system, it will be advantageous to the major parties as well.

JOURNALIST: Do you think that these changes will stop Pauline Hanson from standing again?

FAULKNER: No, I don't think that these changes will stop any individual Australian standing for any House of Parliament. What these changes do, though, is ensure that any candidate who does nominate for office, and is provided with public funding if they meet the threshold level, any candidate, regardless of who they are, will have to be able to justify expenditure to receive public funding.

In other words, you're not going to be paid taxpayers' money if you haven't actually expended that amount of money on a political campaign. And I actually think that, again, strengthens our political system. It will enhance the integrity of the Commonwealth Electoral Act.

And I want to say this about suggestions that have been made about candidates receiving public funds when expenditure to that level hasn't actually been incurred in an election campaign. That actually does undermine the integrity of our electoral system. And this is something we've known about now for two elections.

It became absolutely obvious to everyone that this was a real issue, a real loophole, in the Commonwealth Electoral Act after the 2004 election and certainly after the 2007 election. And I have said before to some of you, but let me now say it publicly again; we know the loophole exists, it's not good enough just to acknowledge it, it must be fixed, and that's what this legislation will do.

JOURNALIST: What's the mechanism for fixing it there? How hard will it be?

FAULKNER: The mechanism is as an amendment to the Commonwealth Electoral Act which will effectively mean in this area that a candidate will be required to declare their expenditure to the Australian Electoral Commission, that they will be paid public funding on that basis, that any such payment is open to auditing by the AEC.

And if there are found to be any problems with that process, obviously there'll be a recovery process for funds and I will expect that the AEC, as it develops legislation, possibly to be talking to the Attorney-General's Department about possible penalties. But the key thing here is to fix the loophole in the Electoral Act. I don't want to be - I think we're

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much better off ensuring that public funds aren't paid in such a circumstance.

That's the aim of this amendment to the Act. Fix the loophole, fix the problem, ensure that public funds are not paid to a candidate when they haven't actually incurred that same level of expenditure in an election campaign.

JOURNALIST: What advice do you have on the extent to which that's been going on, the number of candidates, the amount of dollars?

FAULKNER: I have received some informal advice on that but this is not a new situation. Let me use, for example, the case of the late Peter Andren, the member for Calare. I'm aware that he received such public funding and it was common knowledge that in that event, he donated those funds to charity, which I thought was a very, very appropriate course of action for him to take, and not surprising, given his strong commitment on these sorts of issues.

But clearly from the Government's point of view, what we want to do is ensure that we have a system in place where taxpayers' funds, public moneys, are not paid to candidates on the basis of them - as public funding when they haven't incurred that level of expenditure.

JOURNALIST: How [indistinct] in the first place? How did it get there? I mean, it's not exactly a major ethical consideration here. If you don't spend it, you don't get it back. How did we get to the position where people were able to harvest at elections?

FAULKNER: Well, the point is, Malcolm, we are there. We are there.

JOURNALIST: Did the previous government do that deliberately to give certain people that…

FAULKNER: I'm not making any such suggestions. All I am saying to you is we have identified for some years now that there is a serious loophole in the Commonwealth Electoral Act where a candidate for public office can be paid public funds, effectively as what is intended to be reimbursement for campaign expenditure when actually that campaign expenditure hasn't incurred. So what I say is how we've got there is obviously through a weakness in the Commonwealth Electoral Act and that loophole, that problem, must be fixed and I do say it hasn't been fixed in the past. It will be fixed if the legislation that I'm announcing today passes the Parliament, which I sincerely hope it does before the first of July this year.

JOURNALIST: Just with your point about reducing the disclosure time transfer from 12 month to six months, under that system, what would be the maximum time between when someone donates and when the public would get to find out about that donation and are you going to require twice yearly reporting or once a year now?

FAULKNER: Yes. We are going to require twice yearly reporting. Let me use an example here, even though there's currently a 12 month disclosure period. I'm sure some of you would be aware of what that means in practice.

We actually have a situation where I could perhaps makes a discloseable donation. Currently that would mean it would be over $10,500 under the Howard Government legislation, to the Labor Party.

If I made that on the second of July this year, 2008, under the current legislation, that means it would be reportable to the Australian Electoral Commission by October of 2009 and it would be made public by February of the subsequent year, 2010. The way my maths works that's about 19 months. So even though it's theoretically a 12 month disclosure period, it is, in fact, 19 months in the case of that donation.

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Now, the plan in relation to the change from reducing the period from 12 months to six months is that would be the reportable period so there'd be twice as many reports for periods half as long.

However, I must be frank with you. There will be a slight lag time and on the best advice I have available to me, that will certainly be no longer than three months by the end of the six month reporting period.

It'll be in the public arena within, definitely within three months and I hope within two months. I mean, I think everyone appreciates there needs a short period of time for parties and candidates to - the political parties mainly in this instance to report and be talking about a few weeks, possibly four weeks, four weeks for the AEC to do all the administrative work.

And then that information should be in the public arena. So it will be a very significant change and I do take account, I do take account of the fact that the current 12 month period can, in effect, be a lot longer than 12 months.

And because of that, trying to ensure the provisions of this new amendment to the Commonwealth Electoral Act mean that that reporting and public announcement of those receipts can be made as quickly as possible.

JOURNALIST: …for an open register that goes all the time rather than report six months now and then six months later. Why not just put it onto a website as it goes along?

FAULKNER: Well, that is certainly - that is certainly an option that in one or two western democracies is the preferred course of action. There's no doubt about that. And that's the sort of issue that we'll see examined in the first part of the Green Paper that I've announced.

But what I'm looking at in relation to these immediate changes to the legislation are important, significant measures that can be moved on immediately to tighten and strengthen our disclosure provisions of the Commonwealth Electoral Act. That's why this process has been announced.

JOURNALIST: Can I just clarify then. In terms of the immediate impact of this, after an election, it shouldn't be any later than about September. Say you had a November election, it shouldn't be later than about August or September the following year that you got the final update on donations in that immediate period before the election. When would we see the first new disclosure under the new regime in the coming financial year?

FAULKNER: If this legislation passes the Parliament, you will see receipts or those moneys received by political parties from January 2008 to the first of July 2008 made public within approximately eight weeks and that is a very, very different situation and a very significantly reduced timeframe on what occurs now.

So the reporting periods, instead of being a full financial year, is half a financial year, periods being from January to June and July to December, which I'm sure you appreciate would be logical and the consequential period and obligations on parties to report within the timeframe I've mentioned approximately four weeks.

For the AEC to complete its administrative work, I think another four weeks or so. So I'm advised by the AEC that they're very confident that this can be done, certainly within a three month period and I believe they're pretty confident it can be done much closer to a two month period, after the end of the reporting period.

You've got to compare this to the situation that applies at the moment where those donations, it's a 12 month reporting period, and you don't see those donations for another eight months.

JOURNALIST: …about the decision to ban donations from overseas and non-Australian companies. Can you talk about more specifically about what's been happening that concerns you that's led you to make that

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FAULKNER: Well, I've been concerned about this for a long time. I've long held the view that overseas donations should be banned. My concern has been that there is no way that the Australian Electoral Commission has the authority, if you like, the jurisdiction, to be able to ensure that such donations can be validated.

I mean, in fact, what can happen with overseas is we can validate a vote, the AEC can do that, but they can't validate a donation. These changes to the electoral laws will mean it'll prevent overseas donors sourcing donations through a local holding or shelf company.

It'll give the AEC the capacity to get behind such donations. In other words, the AEC will be given the power to follow through all paper trails to the source. Again, you've got to compare Australia to so many other countries in the world where it's been longstanding practice for donations, overseas donations, to be banned.

But if nothing else, I think people have to accept the principle in relation to overseas sourced donations, that it is very risky indeed for donations to be allowed to be accepted into our political system where there is no capacity for the AEC to check those donations.

There is no jurisdiction for the AEC to operate at all. So all the auditing process and checking processes they have can't apply. If for no other reason, that is, of sufficient concern, I think, to move on this and move as quickly as we can.

JOURNALIST: …to that extent, Mr Faulkner, that would mean AustChina could not - a company like Aus-China couldn't give money to either political party but it would still leave them open to sponsor travel. Is that your understanding of the rules here?

FAULKNER: Well, I don't know the details about whether AustChina, the company you mention, is an Australian company or not. But if it's not an Australian company, it certainly couldn't donate to an Australian political party or a candidate.

In relation to the issue of sponsored travel that you raise, let me say this, that those matters relate to individual parliamentarians. I assume you're talking about sponsored travel for parliamentarians.

Such travel is subject to full disclosure in both the pecuniary interests register of the House of Representatives and the Senate, assuming that the value of such travel meets the threshold in both cases.

JOURNALIST: …that expenditure, Minister, why didn't you go for - a demand for receipts first up rather than allowing MPs to self-report in the first instance?

FAULKNER: Because this - the approach that has been outlined here is recommended by the Australian Electoral Commission. I must say that I actually happen to share their views that this is the best way of dealing with this issue.

We don't want to - you want a clean, easy to administer foolproof system. The idea here is not to make the provisions of the Electoral Act so burdensome on candidates and parties that you build in unworkability. This is a simple way of doing this. It puts the onus onto the candidate themselves to make a declaration.

And I think you're going to find - I really do think you're going to find - that candidates who nominate for public office, given these circumstances where they're required to make a declaration, where they know there'll be an audit trail behind that, where there'll be a recovery process and, in all likelihood, penalties if a false declaration is made, I think you'll find that it's very likely that you'll get very strong compliance and it will be - it has a real advantage of ease of administration.

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It's certainly the strong view of the AEC that this is the best and simplest way to ensure that we close this loophole in the Commonwealth Electoral Act

JOURNALIST: What would trigger an audit? What sort of thing? What sort of discrepancies?

FAULKNER: Well, that would depend on circumstances. You've probably heard the AEC give evidence in any number of public fora about what triggers action at the moment but it's often just the basis of a complaint, as you know.

The AEC, I know from experience around the Senate Estimates table over very many years, indicating that if people like yourselves write an article that raises concerns or issues, it tends to trigger AEC action. And if people like me tend to say some critical things, that tends to trigger a bit of AEC action, too, and I can't imagine it will be any difference in this circumstance.

JOURNALIST: Senator, just with the fourth of your reforms, where you're talking about removing the loophole with separate divisions of a party being treated as separate entities. How would that work in practice now, the new reporting requirements? Would the Federal Party be required to report the aggregate on all of the donations to each of their state and territory branches?

FAULKNER: Look, where the sum of donations to a related group of parties during a disclosure period exceeds the $1,000 threshold, a donor to a political party must lodge a donor return. Now here, obviously, there's an onus on the donor. It's possible that you could have various branches of a political party not knowing a number of donations had been provided in other branches.

But let me just use an example of the Australian Labor Party - it is only, I can assure you, a theoretical or hypothetical example, but I think it's a good one to use to show you how serious this loophole might be.

At the moment, you'll find that the Australian Labor Party I'm proudly a member of is registered in six states, in two territories, at the national level, as you know, and also Country Labor is registered. So that's 10 separate registrations.

Under the current electoral law - under Mr Howard's electoral law, which has a $10,000 disclosure threshold indexed, as you know, so currently it's $10,500 - you could see to each of those ten entities a $10,000 donation. If my maths is right, that would make $100,000 and not one cent of it would be required to be disclosed.

Now I quickly add, I don't believe this circumstance has occurred, but it gives you an indication of where the problem lies.

JOURNALIST: [Interrupts] Well, will this go down to individual political candidate levels? Because, equally, if I was wanting to donate to your party under your new laws, I could donate nearly $100,000 - or more - by giving each of your individual candidates $999.

FAULKNER: No, you - it goes to registered parties. It effectively goes only to registered parties and it is those parties who - it goes to a related group of parties, is all I can say; in other words, different divisions or branches of the same political party. This amendment is not focused on individual candidates, it is focused on parties.

JOURNALIST: [Indistinct] loopholes

FAULKNER: It is focused on parties.

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JOURNALIST: But if you're not checking what individual candidates are receiving then isn't that a way around your ruling?

FAULKNER: Well, you do have a situation at the moment, there's no doubt, where a person can donate, if they wish, a range of donations to candidates from the same political party. That's why it's critically important to look at this broad range of reforms. That's why it is so important to reduce the disclosure threshold from $10,500 to $1,000. That's why some of these broader issues in relation to the disclosure provisions of the Commonwealth Electoral Act need to be looked at extensively and exhaustively and consultatively through the process of the green paper that I've announced.

JOURNALIST: You've said that the green paper would look at expenditure issues. What sort of expenditure issues do you have in mind? Do you have in mind limitations on how much can be spent on campaigns?

FAULKNER: Well, you'd be aware that a number of people - some in the states and territories, some in coalition political parties, some commentators, even journalists - have raised a range of suggestions about reform to funding, disclosure, expenditure, receipts. Now obviously there is, you know, a critical relationship between receipts to political parties and expenditure, and some people have suggested limitations and bans on funding, and a range of people have also suggested limitations on expenditure, and in a range of other countries you see both of these approaches in practice.

So I don't want to have a situation where we go through a very thorough and exhaustive process with a green paper and don't look at all the options. So I think expenditure is important, as, clearly, are receipts, as is the disclosure and funding regime. There is a relationship between these things. It deserves and warrants proper consideration.

I mean, we do have to give some real thought, as I said before, to the health of our democracy in this country. I think we can do a lot better that we've done over recent years. I think we can improve the integrity of our political system. I think we can improve our electoral processes and we're about doing so.

JOURNALIST: For the electoral roll a number of Labor spokesmen railed against the earlier closure that the Howard Government brought in. Why don't you just put that back out rather than put it under further discussion in the green paper.

FAULKNER: Well, the - it could be done, obviously, but the Labor Party came to government with a very strong commitment in relation to changing those enrolment provisions and, in subsequent legislation, we will be ensuring that those changes are reversed. But there is some time available and I wanted to ensure that this urgent bill deals with funding and disclosure issues - that's what it does.

But I can assure you, in relation to the Howard Government's proposals for early closure of the roll, there is no lack of commitment on my part or the government's part to reverse those changes. We will be proposing legislation to do just that, I can assure you, during the life of the current Parliament.

JOURNALIST: Kevin's Rudd's also talked about four year terms. Is that something the green paper will be analysing?

FAULKNER: Certainly the Prime Minister has talked about that issue and it, again, is something which the Labor Party has a very strong, and now quite longstanding, platform commitment to. But it wouldn't be an issue that would be dealt in relation to these reforms. Let's be clear. These reforms go to provisions of the Commonwealth Electoral Act, so I would see constitutional questions - I don't diminish their significance or importance in saying this at all - but I think we need to be clear that the green paper, in two parts, very much will focus on provisions of

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the Commonwealth Electoral Act.

JOURNALIST: Minister, can I just clarify on that issue of the aggregate donations across the branches. Would the onus be on the party to aggregate those donations and then declare them to the Electoral Commission, or would the onus be on the Electoral Commission to do a sweep of each of the individual returns from the branches and give the public the aggregate total?

FAULKNER: Well, no, there'll be a significant onus on the donors - a significant onus on donors. But the key thing here is to make clear that this is a loophole we intend to close. If this legislation passes to Parliament we will close it and, again, it will enhance the Electoral Act to do so. So I think I've - one last question, Maria, I haven't put my tips in yet. [Laughter]

FAULKNER: Just as well, given my result in the first two rounds. [Laughter]

JOURNALIST: On the overseas donations, does that only apply to companies? It doesn't apply to individuals like Stanley Ho?

FAULKNER: No, it would - it applies to any donations coming from overseas but specifically in relation to companies. It goes - well, it won't actually be limited to donations - I think I should make this point; it will be any category of political expenditure, so that would be to candidates, parties, associated entities, anyone incurring political expenditure and it will go to both companies and individuals. Thanks a lot.


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Media Adviser - Colin Campbell - 0407 787 181

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