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Thursday, 25 September 2008
Page: 34

Ms PARKE (12:40 PM) —I rise to support the Tax Laws Amendment (Political Contributions and Gifts) Bill 2008, which is being introduced after consideration by the Joint Standing Committee on Electoral Matters, and after being defeated in the Senate at the end of June. This legislation seeks to make good on an election commitment. It seeks to amend three pieces of tax legislation so that donations or gifts to political parties or to independent candidates and members are no longer tax deductible, and no longer receive GST treatments that apply to gift-deductible entities.

As such, this bill is one part of a wider legislative effort to substantially improve the way politics is played in Australia. At the last election, Labor made it clear that it would seek to make a range of changes to the ground rules of the political process. These changes can only be described as pro-democratic because they increase transparency in the political process, particularly where money is concerned; they increase the objective scrutiny of government advertising; and they reduce the value of incumbency. The changes, some legislative and some administrative, to the electoral rules and to the operational practice of government include: re-instating sensible disclosure thresholds for political donations; prohibiting foreign and anonymous donations to registered political parties, candidates and Senate groups; reducing the printing and communications allowances that are available to members and senators; adopting a Lobbying Code of Conduct and establishing a Register of Lobbyists; and releasing new guidelines to govern the content and oversight of Commonwealth government campaign advertising.

These guidelines spring from those developed by the Auditor-General in 1998, and refined by the Joint Parliamentary Committee of Public Accounts and Audit in 2000—the same guidelines that the Howard government studiously and, I think it is fair to say, scandalously refused to implement. The guidelines will ensure that a government cannot advertise as government policy what is in fact a proposed election policy, as happened with the tax advertising campaign in 1998, and they will ensure that all campaigns over $250,000 will be scrutinised by the Auditor-General.

Desperate and flagrant taxpayer funded self-promotion was one of the clearest signs that the Howard government had lost all hope and self-respect in the course of 2007. To place, in 2006, a record $213.2 million worth of government advertising was one thing—an increase of seven per cent on the previous record financial year advertising figure. But in 2007, to spend $368.8 million of Australian taxpayers’ money, an increase on the previous year of not seven per cent but 72 per cent—it also happened to be an election year—was breathtaking in its cynicism, maladministration and sheer waste.

A number of the changes I have described as forming part of the Rudd government’s pro-democratic agenda were contained in the Commonwealth Electoral Amendment (Political Donations and Other Measures) Bill that was introduced in the Senate in May of this year. To put the Tax Laws Amendment (Political Contributions and Gifts) Bill into context, I want to briefly mention a few things about that earlier, as yet unresolved, piece of legislation. The Commonwealth Electoral Amendment (Political Donations and Other Measures) Bill was referred by the Senate to the Joint Standing Committee on Electoral Matters which, at this stage, the opposition has required to report in all apparent haste by 30 June 2009. I understand that Senator Fielding has shown common-sense to move that the joint standing committee report earlier than that. The two most significant aspects of that bill, which the opposition has sent to Coventry for its own reasons, are: (1) to reduce the political donations disclosure threshold from $10,900 back to $1,000; and (2) to prohibit foreign and anonymous political donations.

There was no principle behind the massive increase in the disclosure threshold when it was amended in 2006; there was only political self-interest. Money and democracy will always have an uneasy relationship because political influence is one of those things that we should not be able to buy. The power of each individual’s vote and of each citizen’s voice must be paramount and, in a perfect world, only the freely chosen aggregation of those votes or voices would be capable of creating something stronger than a single vote or voice. But the reality is that communication is not free and, therefore, campaigning costs money. The reality is that money affords certain people more political influence than others, and the only effective countervailing force is the requirement that such influence be there for all to see. Any measure that reduces the transparency of political funding is, for that reason, profoundly anti-democratic.

The prohibition against foreign donations speaks for itself. While I am absolutely the last person to take a Fortress Australia attitude in general terms, there is every good reason to rule out the influence on Australian domestic politics of foreign individuals, companies and political groups; and there is every good reason to require Australian political parties and candidates to rely upon what support, electoral and financial, they can draw from an Australian constituency.

It is now perhaps a constitutional anachronism that an Australian citizen who also happens to hold the citizenship of another nation cannot be elected as a representative in this national parliament. Section 44(i) of the Constitution currently operates to exclude from representative politics at the national level the estimated four million to five million Australians who are holders of dual citizenship on the basis that they are presumed to be subject to an ‘allegiance, obedience or adherence to a foreign power’.

Yet, as it stands, unlimited funds from abroad can be applied in support of an Australian political party or candidate without disclosure to the Australian public. It is a matter of record that in 2004 the Liberal Party received a donation to the tune of $1 million from the British peer Lord Ashcroft. The truth about this substantial treasure chest of political influence was not disclosed until 2006. Like so many things about the Liberal Party and the Howard government that might have been interesting to know at the time they occurred, this was yet another matter that only became clear once a federal election had safely come and gone.

This bill removes the tax deductibility of political gifts and donations. In so doing, it undoes an arrangement by which the Commonwealth and indeed Australia’s taxpayers were effectively underwriting or defraying the contributions that companies and individuals made to political parties and their candidates. It is estimated that the Commonwealth was conceding tax revenue in the order of $10 million per annum under the existing legislation. It is hard to see how that could be justified. We might ask why the taxpayer at large should defray the financial contributions of what is comparatively a very small number of individuals, not to mention companies or unions. We might ask why a pensioner or low-income earner who chooses to donate $100 to a candidate should pay the full $100 out of their limited means while someone who earns enough to put them in the highest income tax bracket would have the same contribution subsidised to the tune of $40 by the government. We might go further and ask: which side of politics would benefit most by subsidising the contributions of those at the highest end of the income scale?

The process through which charities and not-for-profit community organisations acquire deductible gift recipient status is an onerous one—and so it should be. The tax concession involved is not given lightly, and when DGR status is received it makes a big difference. I know that the Leeuwin Foundation, a sail training organisation based in Fremantle that works with disadvantaged and troubled kids, were over the moon when their application for DGR status was recently approved. It will of course help them to attract donations, which in turn will assist in the funding of their important and selfless community based work. I am sure that the Leeuwin folk would agree that political parties and candidates, however important they may be to the functioning of Australian parliamentary democracy, are not quite in the same boat—if you will pardon the pun.

The income tax and GST treatment amendments contained in this bill, in company with the raft of pro-democratic changes I have described and which this government is committed to making, will, in sum, make Australian democracy fairer and more transparent. This bill is another important part of the Rudd government’s pro-democratic program; it is another step in restoring integrity of process to both government and politics in this country. As I have said, this bill has the effect of repealing those aspects of the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997 which currently allow the tax deductibility of contributions and gifts to political parties and to independent candidates. It is worth noting that a monograph issued by the Democratic Audit of Australia in 2004 entitled Australian Electoral Systems: How Well Do They Serve Political Equality? noted with approval the fact that federal income tax deductibility was limited, at that point, to $100 per annum and was explicitly not available to corporations.

That changed—as did so many things—in the Howard government’s fourth term. Indeed, one can look at the period from 2005 to 2007 and make an argument that very few terms of government have seen so much unconscionable anti-democratic change. But democracy is resilient and it is resistant to anti-democratic change. The abuse of democratic structures, rules, laws and practices came back to haunt the Howard government. The unfettered bicameral power of the Howard government was its undoing. On 9 October 2004, with control of the House and the Senate, the Howard government might have thought that politics did not come any sweeter. But history will show that the Liberal Party drowned in honey.

It suits the opposition to run a line that the Rudd government is about symbolism instead of substance. It suits the opposition because the opposition do not have a positive agenda. It suits the opposition because, where they have abandoned principle, they can run a line that principles are only symbolic, that principles are hollow. Based on the incredibly strong response from my constituents in the electorate of Fremantle, I can say with confidence that, with the ratification of the Kyoto protocol, the apology to Indigenous Australians and the ending of the mandatory detention of asylum seekers, there is an overwhelming relief that an Australian government has rediscovered the clinching and foundational importance of acting on principle.

The change that this legislation effects, and the change represented by the other pro-democratic measures I have mentioned, are not to the political advantage of the Rudd government. Some of the provisions and measures they reverse were undoubtedly of political advantage to the Howard government. As I have already noted, a number of them were instituted in the final term of the Howard government when it had turned to burning the furniture against the cold wind of voter discontent. It would do anything, say anything and spend anything to defend its majority.

This government in its first term rests on half the margin that the previous government had, and this change is a change of substance. Like the other changes I have discussed, it is quite possibly to the disadvantage of this government because it involves unwinding a series of provisions that were nakedly designed to strengthen the position of the incumbent Howard government. It is a bill for which we cannot and do not expect much political mileage, but I am sure that those opposite, like Ron Clark lying on the track at the national championships in 1956 when he suddenly found John Landy there to help him up, will recognise that the Labor Party is a party with the courage of its convictions and that the Australian Labor Party has won government on the basis that there is no victory without honour. With this bill the Rudd government continues on its program of making positive and substantial changes to the framework and to the ground rules of politics in Australia.