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Thursday, 12 March 2009
Page: 2506

Mr TANNER (Minister for Finance and Deregulation) (1:05 PM) —I move:

That this bill be now read a second time.

I am pleased to present a bill that demonstrates the government’s pre-election commitment to undoing the damage done by the previous government’s changes to the Commonwealth Electoral Act 1918 (the Electoral Act) and moving Australia’s electoral laws and processes towards the world’s best practice. The measures contained in this bill deal with the controversial area of political donations and election funding. 

The urgent measures contained in this bill are also part of an extensive—that is ‘extensive’, not ‘expensive’; as the Minister for Finance and Deregulation I am very concerned about things that are expensive—review of electoral laws that had been previously foreshadowed by the government in early 2008. This process includes the development and publication in December 2008 of the first green paper on electoral reform entitled Donations, funding and expenditure. The submissions from the public in response to this green paper have recently been received and published and the process of considering these submissions is now underway. 

The measures contained in the bill incorporate not only the measures in the bill that were rejected at second reading in the Senate but also the measures that were foreshadowed to be included as government amendments to the bill in the Senate in response to the October 2008 advisory report from the Joint Standing Committee on Electoral Matters (JSCEM). There is also a further minor amendment to the categories of ‘electoral expenditure’ against which public funding can be claimed following an election and after consultation in the Senate.

Before turning to the contents of the bill I want to take this opportunity to explain why the government is proceeding with the bill at this time despite the action taken in the Senate.

The government is committed to restoring the integrity of our electoral processes and systems. The contribution of the JSCEM following public hearings has provided further assistance in achieving this goal. The opposition in the Senate have claimed they support campaign finance reform, but have stalled the passage of the bill based on a claim that legislation in this area should encompass all of the complexities that relate to the donations, disclosure and the funding of political parties. However, any such legislation in response to the first green paper will clearly not be straightforward, given the need to balance a range of complex factors including consideration of expenditure caps on candidates and political parties, possible further restrictions on donations, determining the proper rates of public funding and taking into account the constitutional freedom of political communications that has been outlined by the High Court in several decisions. The development of a legislative model that fits the Australian context and the expectations of the Australian community will clearly be a major task.

However, to delay the measures contained in this bill now in anticipation of more complex legislation later will merely ensure that the federal election system remains mired in the past while community concerns about the system of political donations are ignored. It will send the message that the parliament and the political parties both believe that it is permissible to exploit the system and to continue to hide donations. The measures contained in the bill need to commence at the start of a financial year. Otherwise a range of complex transitional provisions will be required. The government wants to pass the bill this fortnight so that these measures can take effect from 1 July 2009. The opposition, based on their vote in the Senate, would clearly prefer the measures to never come into operation. The Australian community would have every right to be concerned about any delays in the passage of this legislation or its failure to pass at all.

The bill that I present today deals with six major issues.

The first group of measures reduces the disclosure threshold for donors, registered political parties, candidates and others involved in incurring political expenditure from ‘more than $10,000’ (indexed annually to the CPI) to a flat rate of $1,000. The aim of this measure is to provide transparency and accountability in the donations and expenditure received or incurred by key participants in the political process. The reduction from the current high level of $10,900 that increases annually with indexation each year to a flat rate of $1,000 greatly extends the transparency of our system and ensures that the scope for any undisclosed gifts will be reduced.

The second group of measures reduces the current time frames for the making of returns and the disclosure of gifts and expenditure relating to an election by individual candidates and members of Senate groups and donors who make donations within the election period from the existing 15 weeks to a period of eight weeks after polling day. In terms of political parties, associated entities, third parties and donors more generally, the previous returns that were required to be provided to the Australian Electoral Commission once every 12 months will now be required to be lodged once every six months. The existing time periods for the lodging of these returns (which are presently 15 weeks for donors, 16 weeks for registered political partes and associated entities, and 20 weeks for third parties who incur political expenditure) will all be reduced to eight weeks.

These changes will ensure that the Australian Electoral Commission (AEC) has in its possession details of gifts, revenues and political expenditure that are more timely and up to date. The publication of this information will also be more timely and will enable the Australian community to fully examine the financial dealings of the main players involved in the political process and to scrutinise the sources of any donations that have been received.

The third group of measures contained in this bill addresses a loophole in the existing donor disclosure laws. One mechanism that is currently available to donors who do not wish to have their identity disclosed is to make multiple donations just below the threshold to the various branches and divisions of the same political party. This bill will remove the loophole, by using an existing definition of ‘related political parties’ found elsewhere in the Electoral Act, to ensure that donations to different branches of a political party are treated as donations to the same party. This will mean that a donor will need to disclose where he or she has made donations totalling $1,000 or more to any combination of the branches and divisions of the party, and in this way it will inhibit the unaccountable practice of donation splitting.

The fourth group of measures in this bill deals with the complex issue of the receipt of gifts from foreign companies. This was one of the issues that was addressed in the September 2005 report of the Joint Standing Committee on Electoral Matters entitled The 2004 federal election. There has been considerable concern that large overseas companies may be able to exert influence through the making of significant and often unreported gifts and donations. The measures in the bill make it unlawful for registered political parties, candidates and members of a Senate group to accept gifts of foreign property.

The bill also makes it unlawful for other key players in the political process, such as associated entities and third persons to receive overseas gifts that are used solely or substantially to incur political expenditure. The policy intent is to ensure that the source of all funds that are used for political purposes is clearly identified, to enable the AEC to have jurisdiction over those donations and to enable the Australian public to scrutinise any possible impact that such donations may have on political decision making.

The fifth group of measures aims to close another loophole in the Electoral Act. Currently section 306 of the Electoral Act prohibits the receipt of anonymous gifts above the threshold by registered political parties, candidates and Senate groups. The original bill included measures that extend the current prohibition on accepting anonymous gifts and donations to all anonymous gifts to these entities and to cover associated entities and other third persons that use those funds for political purposes.

The revised bill that has been introduced today includes measures that respond to the recommendation of the Joint Standing Committee on Electoral Matters that there should be a $50 exception to the prohibition on the acceptance of anonymous gifts. The basis for this recommendation was to remove an onerous record-keeping burden in relation to fundraisers such as raffles, trivia nights and street stalls. The revised bill includes two measures based on the type of activity or event. The first relates to a public activity, such as a fete, where people passing by might, for example, place a donation in a bucket. The second relates to private events, such as a trivia night or paid dinner, where attendees might donate small amounts of money. At both of these activities, the receipt of an anonymous gift will be permitted where required records are kept of the activity, the persons collecting the gifts and the total amount raised. For private events, the total amount raised as anonymous gifts may not be more than an amount calculated by multiplying $50 by the number of people who attended the event.

The bill also contains similar measures that apply to third parties who incur specified political expenditure above the threshold in a reporting period and extends the $50 exception on accepting permitted anonymous donations that are collected for political campaign purposes.

The bill also provides that anonymous donations that are collected in excess of the $50 exception, or that are unable to be returned, are to be paid to the Commonwealth.

The sixth group of measures is aimed at addressing the possibility that some candidates and other groups may obtain a windfall payment of election funding as a result of running for office. This measure will give effect to the government’s announcement that any payment of election funding should be tied to actual ‘electoral expenditure’ that has been incurred. The policy intention behind these measures is that candidates, registered political parties and Senate groups should only receive the lesser amount of either the electoral expenditure that was actually incurred in an election campaign or the amount awarded per vote (currently approximately $2.24), provided at least four per cent of first preference votes have been won. The existing quantum of funding remains unchanged, but the new claims process will require the agent of the candidates, registered political parties and Senate groups to lodge a claim specifying all or part of the ‘electoral expenditure’ incurred in an election campaign for which they wish to receive election funding. This new claims process will still enable claims to be lodged and paid at a 95 per cent level soon after 20 days of polling day, thereby mirroring one of the existing entitlements, with the remainder able to be paid after the final vote count.

The joint standing committee made a recommendation that three additional categories of ‘electoral expenditure’ should be permitted to be claimed for the reimbursement of public funding. The new definition of ‘electoral expenditure’ contained in this bill adds to the existing categories in subsection 308(1) with five new categories. The new categories cover the rent of premises used for an election campaign, the employment of additional election campaign staff, the hire and lease of office equipment used for an election campaign, the costs of running and maintaining that office equipment and travel costs (including accommodation) that could reasonably be expected to have been incurred in conducting an election campaign.

Similar to the existing seven categories of ‘electoral expenditure’, these new categories only apply to expenses incurred during the ‘election period’ (which is the period between the issuing of the writs for an election and the end of polling day). In addition, all of these new categories are subject to a purposive test that requires the claimant to establish that the expenditure was incurred ‘for the primary purpose of conducting an election campaign’. A further requirement that applies to these new categories of ‘electoral expenditure’ is that the expenditure cannot be claimed if the costs are already being met by the Commonwealth through existing allowances and entitlements, other than those relating to remuneration.

To ensure the AEC can implement and enforce these new laws, the bill introduces a range of new offences to the reporting and disclosure regime and generally increases the levels of penalties in the Electoral Act. The existing penalties in the Electoral Act have largely remained the same as when introduced in 1983. The increases involve larger fines for providing false or misleading information as part of a return. In relation to claims for election funding, the levels of penalties have been substantially increased to reflect the seriousness of the crimes and the amount of public funds that are paid following an election. Following the November 2007 election nearly $50 million of public funding was paid to candidates, registered political parties and Senate groups. To have only the existing fines, of $10,000 or less, as the maximum applicable penalties fails to address the risks and potential criminality of false claims.

In addition, the bill extends the existing recovery powers in subsections 306(5) and 306A(6) of the Electoral Act for anonymous gifts and loans to the new prohibition on overseas gifts and other unlawful anonymous and undisclosed gifts.

The government, unlike the opposition, is committed to restoring the integrity of our electoral processes and systems. We believe that the urgent measures contained in this bill will significantly enhance the transparency and accountability of funding and donations to registered political parties, candidates and the other key political players in Australia.

We have taken the step of introducing the bill into the House today, after its rejection by the opposition in the Senate yesterday, because these measures are urgent and should commence from 1 July 2009. Introducing the bill into the House today is also a second chance for the opposition. The opposition should accept this second chance, and pass this bill, demonstrating that they share the government’s belief that our electoral system should be based on the principles of integrity and transparency.

I commend the bill to the House.

Debate (on motion by Mr Hunt) adjourned.