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Political Influence of Donations
06/11/2017
Political influence of donations

CROSBIE, Mr David, Chief Executive Officer, Community Council for Australia

[10:08]

CHAIR: Welcome. Thank you for appearing before the committee today. If you've got a brief opening statement, I will invite you to make that now.

Mr Crosbie : Thank you for the opportunity to appear here today and thank you for the inquiry. I think it's a very interesting inquiry for a parliament to undertake. I'm presuming people will have read the submission, so I'm not going to go through it. I just want to make a brief opening statement to emphasise the six key points in our submission. The charities that I represent are actually for public benefit, not personal gain. I would argue that much of political donation is directed towards achieving some kind of personal or monetary gain for the people who are donating. There are many ways to support political parties, and donations are just one and often not a particularly significant one compared to what other options are available. Lobbying costs time, money and resources, often things that charities have very little of.

It's also important to note the two big battles for charities. One is against individual interests versus community interests, and the other is distributed benefit versus specific benefit. I'll talk about that for just a minute. The charities themselves are regulated around their political activity by the Australian Charities and Not-for-profits Commission. The example I want to give of distributed benefit is the road toll. In 1980, 3,403 people died. The rate of accidents resulting in fatality was 43.2 deaths per 100,000 vehicles. If we allow for the 18 million plus vehicles we now have, that would be over 7,000 deaths a year through the road toll if we'd continued on the same trajectory. Seatbelts were introduced in the late seventies, so we're not talking about the introduction of seatbelts; we're talking about random breath testing, to which is attributed not only reducing fatalities but significantly reducing accidents. The number of people who died on Australian roads in 2015 was 1,209, so it's beyond contention that thousands of lives have been saved through random breath testing.

There are two issues I want to raise about that. The first is that we don't know who those people are, so it makes it very difficult for them to be strong advocates. Some of us in this room might not be here if it weren't for random breath testing, but we don't know who that is, unlike arguing for specific benefits to specific people. It makes it very difficult. The second thing I raise is that I wonder if that would actually get up now. If we were trying to introduce random breath testing today, could we get it through this parliament or the previous parliament? You think about the kind of forces that were opposed to random breath testing: the alcohol industry en masse, retailers and producers. We had civil libertarians. This was an imposition on everybody to be stopped. In many states in the US, they do not have random breath testing, because it's seen as challenging their freedom. I think we need to recognise that arguing for distributed benefit and public benefit is becoming more and more difficult with the nature of political influence and the capacity of people to engage in direct lobbying and indirect lobbying.

The final point I wanted to make is about the role of charities. Back in the days when the Australian Charities and Not-for-profits Commission had an advisory board that was selected on merit and people had to have knowledge, one of the issues we raised as an advisory board—I was a member of that advisory board—was the issue of political involvement of charities. We asked the Australian Charities and Not-for-profits Commission to come up with a set of guidelines, which they did. I just want to read a couple of things. I'm happy to provide a copy of this fact sheet on guidelines, which is available from the ACNC website:

Can a charity have a purpose to carry out activities which are illegal in order to advocate for a change in government policy or law?

No.

…   …   …

Should a charity support (or oppose) a particular political party or candidate?

No.

…   …   …

Should a charity distribute how-to-vote cards on election day for a particular candidate or party?

No.

…   …   …

Should a charity produce material asking its members or supporters to vote for a particular candidate or party?

No.

…   …   …

Can a charity produce material which compares and ranks the policies of political parties?

Yes.

…   …   …

Can a responsible person of a charity such as a director or committee member support a particular outcome in an election?

Yes—

personally they can.

Can a charity spend money to publi cly express its views on issues?

Yes.

…   …   …

Can a member of a political party or a candidate standing for election appear at an event a charity is running?

Yes.

…   …   …

Can a charity hold an event to debate a matter of law or policy during the election campaign?

Yes.

…   …   …

Should a charity donate money to a particular candidate or political party during an election campaign?

No.

We need to recognise that the Australian Charities and Not-for-profits Commission has a very active role. It investigates over 100 complaints a month in ensuring that charities are there for public benefit and do not engage in the activities of a political party or advocate or support a particular political party or candidate. To do so would mean they would lose their charitable registration. I might stop there.

CHAIR: Thank you very much. I will go to Senator Brockman.

Senator BROCKMAN: Just one question from me. It has always slightly intrigued me how charities handle all this internally. I'm not sure if you use the ranking type of approach to rank one party or one candidate against another. Obviously, you can see how it could become a very fine line if you've got a charitable organisation putting out materials, including at prepolls and polling booths, with one candidate next to them—tick, tick, tick—and another candidate next to them—cross, cross, cross. That's a pretty clear and direct political message. I'd just like you to discuss that issue.

Mr Crosbie : There are two criteria you'd have to meet in order to do that. The first is the issue that you would be comparing the candidates against would have to be directly related to your charitable purpose—that is, you can't just say, 'I like the Greens' or 'I like One Nation' or 'I like the Labor Party.' You would have to be able to show that you are pursuing your charitable purpose.

Senator BROCKMAN: Absolutely. Go on.

Mr Crosbie : That's the first. The second is: was that translated into any form of how-to-vote advice? If you went the next step, you would be losing your charitable status. You are allowed to compare candidates in terms of their policies in support of a particular community or a political issue. I think it's very important here to say that most charities that I know did not start off being advocates and do not seek to have advocacy as their prime purpose. What happens is that you start off trying to address a particular gap or social need or arts need and, in doing so, you end up like the homeless services who, every year, provide blankets for the cold and homeless people on the street. After two or three years of collecting blankets, they might say, 'We should be trying to house these people rather than repeat our collection of blankets each year,' and they become advocates. Many charities are involved in advocacy to pursue their purpose. They don't set out to be advocates. Often, to be honest, they don't spend a lot of time or resources on advocacy, but what they do is very important to them. Our own surveys of members and leaders in the sector suggest that advocacy is an issue of huge concern for all charities. They do want to be able to raise their voice in support of their charitable purpose.

Senator BROCKMAN: Absolutely. I don't think anyone would question raising your voice in support of your charitable purpose. In the example that I just gave, where one candidate is given a series of ticks and another candidate is given a series of crosses, my question was going more to whether that's not getting very close to the border of providing how-to-vote advice.

Mr Crosbie : It is getting close, but I think there's a line and that line is quite clear. The point at which they said, 'You should vote for this candidate' or handed out how-to-vote cards or wrote to members saying, 'We suggest you vote for this party,' they crossed that line. Where they rank people according to the issue that is their charitable purpose, they haven't crossed the line.

Senator BROCKMAN: That's it from me, Chair.

CHAIR: Thank you. Senator Georgiou.

Senator GEORGIOU: In your submission, you make this point:

… national politics often favours the most economic powerful who benefit economically from certain policies.

What evidence can you provide to show that there is a culture which benefits the powerful and wealthy?

Mr Crosbie : I could go to any number. I suppose the most powerful lobby group, according to one survey in Canberra, is the Pharmacy Guild of Australia. This government gives the Pharmacy Guild, as the previous government and the government before that did, at least $4 billion a year. At present, I understand there's a dispute about the up-scheduling of codeine. There has been a rapid increase in the number of deaths associated with codeine. Twenty-six countries around the world have now banned codeine over-the-counter sales. Every college and consumer health forum—groups like Painaustralia—is supporting the up-scheduling. It will mean that pharmacists make less money. So the Pharmacy Guild of Australia, which has hundreds of millions of dollars in its fighting fund, is wining and dining health ministers around the country, pushing to get an exception that would allow its members to effectively prescribe codeine over the counter.

When you look at who is effective in terms of public policy in this country, you cannot ignore groups like the Minerals Council of Australia, who get millions of dollars from their members, or the Winemakers' Federation of Australia—the very many lobby groups that are advocating to make more money for their industry, against people trying to advocate for public health and benefit. We are outgunned on almost every issue.

Senator GEORGIOU: Do you think this is across the board?

Mr Crosbie : Yes.

Senator GEORGIOU: With most ministers and politicians?

Mr Crosbie : Yes. It's a brave politician who would take on the Pharmacy Guild of Australia. I've had that pointed out to me by a whole range of people. It is a brave politician who would take on the wine federation of Australia. It's a brave politician who would take on the Minerals Council of Australia.

Senator GEORGIOU: Are you suggesting that you could take a politician or a minister out for dinner two or three times and influence his decision on certain things?

Mr Crosbie : I don't think it's that linear. I don't think you take people out for dinner two or three times and they'll support everything you want them to support. I think it's about cultivating relationships in which you have access to that politician. People who can't afford to take politicians out to expensive dinners or give them boxes at the football or whatever other benefits you're offering them can't build those relationships and therefore can't get access and therefore can't put their issues in a way that is seen as strong as those who can not only put their issues but do the economic modelling of what those issues would mean for them and their community. They can provide draft legislation. They can do work that a charity, arguing that case, is just simply not going to be able to do.

Senator GEORGIOU: I've just one more question. Can you illustrate or give examples of where charities have been disadvantaged against private investment?

Mr Crosbie : I'm using this example because I know it's going to come up again later today. I think the failure to tax cask wine at a rate commensurate with its alcohol content is a classic example of an industry group going against the public health of all Australians.

Senator GEORGIOU: Any other examples?

Mr Crosbie : I can give you a list. I'm happy to do a follow-up and provide a list from my members. My members are very broad. They're across a whole range of areas. I would feel more comfortable giving examples which I've been directly involved in.

Senator GEORGIOU: Fair enough. Who's the loser in the community, and at what level do you think that is?

Mr Crosbie : I think people die as a consequence of some of those decisions.

Senator GEORGIOU: Made by—

Mr Crosbie : Imagine if we don't up-schedule codeine and we allow pharmacists to provide it over the counter. There will be people die as a consequence of that. There are these decisions about taxing cask wine. Cask wine pays the least tax of any alcohol product, yet it is associated with huge levels of harm. Over a million casks are sold in Alice Springs each year. Why aren't we taxing it according to the harm it does. It is why we have a separate tax on alcohol; it's called externalities. I find some of these decisions breathtakingly self-centred around the vested interests that have a capacity to mount very sophisticated, well-resourced campaigns and get very good access to politicians and their advisors.

Senator GEORGIOU: Thank you.

CHAIR: Thank you. I might just fire off a few questions. Just to be clear: the act that governs charities prevents you from making donations to any political party?

Mr Crosbie : That would mean that you were acting as a political party or in support of a political party, and you can't do that as a charitable organisation. The 2013 definition of 'charity' excludes political activity.

CHAIR: It also prevents you from advocating directly for one political party or another?

Mr Crosbie : You cannot tell people to vote for a political party. You cannot tell people to provide how-to-vote cards.

CHAIR: But you can rank the political parties based on the issue over which your charity advocates?

Mr Crosbie : Yes.

CHAIR: And you can rank the policies and communicate that information to people?

Mr Crosbie : Yes.

CHAIR: So, that's the distinction. I just wanted to make that very clear.

Mr Crosbie : I would just make one other distinction. That restriction doesn't apply to any of the vested interests we've been talking about. That restriction doesn't a supply to the Minerals Council of Australia, the Pharmacy Guild of Australia, the Wine Federation of Australia or any of those interest groups.

CHAIR: What about perhaps expanding on that a little further? When we're talking about those other interest groups, they can obviously do all the things that you as a charity, or a group representing charities, can't do. What about donations to associated entities that are not called donations—for example, an organisation like Progressive Business or the corresponding example within the Liberal Party? We heard, for example, that Woodside gives $110,000 annually so that they can regularly attend forums hosted by ministers and political parties. Is that something you're able to do?

Mr Crosbie : I think we're allowed to participate in meetings with politicians and forums set up by politicians. The problem is that they're usually prohibitively expensive for the vast majority of charities. If you want to be a special guest at the ALP annual conference, there's a fee of a certain amount, and it's in the thousands, I believe. Most charities are not going to spend that money to go, and they can't afford to. This is the problem—that there is no doubt that money buys influence, buys access and buys a capacity to provide a minister with lots of support, research, staffing support, information support, media support—a whole range of support. If you work in charities you don't have that kind of discretionary spend beyond what you're trying to do, and most charities, let alone the average citizen, cannot participate equally in that process.

CHAIR: So, in order to level the playing field at least in terms of being able to participate in the democratic process on a level playing field, would you advocate for, firstly, a restriction on donations and particularly the implementation of caps?

Mr Crosbie : I want to put a caveat here. I haven't gone around to all my members. We didn't arrive at a considered view. So I would say there'd be probably different views amongst my members. Personally, based on my experience, I think capping donations would be a positive step forward. It won't do a great deal but it will be a positive step forward. I think the nature of the political process and the ways in which people can now influence mean that it's one of many avenues that a vested interest may use to advance their cause.

CHAIR: So, perhaps you can talk us through what some of those other avenues are and changes you'd like to see.

Mr Crosbie : I made a list of some of them. I'll just go through these six from my submission. One is conducting research on an issue that's of specific interest to a politician. I've been in the room when this research has been either commissioned or provided—often expensive research, around attitudes to particular policies. I don't know how you ensure that if the Minerals Council goes off and does a survey or research that that should be made public if it's been given to a politician. I'm not sure what kind of controls would work. Another one is funding functions and events that a politician might attend. It is very hard to say whether or not a politician's attending professionally or personally and how much that participation or that event is worth. And then there is providing travel, accommodation, meals and other benefits, I think that's very hard. I don't know how you accurately monitor the extent to which that's happening. We already have significant issues with that.

Another one is providing staff expertise and knowledge at no extra cost. I've been in ministers' offices in the past, in health ministers' offices, where staff were paid for from certain pharmaceutical companies that were actually based in the health minister's office. And there are lots of ways in which you can provide staff expertise and assistance. I wouldn't have your jobs for quids, in a sense, because there's an incredible amount of work and a lack of resources to attend to that work, and if I can come along and offer you staff that can help you do that, do the background—they'll say, 'We're volunteering', but their salary is paid by whoever. I know that's occurred.

You're already talking about third-party organisations. I think that's a significant issue, and I'm not sure how you do that. And engaging in fundraising and other activities under the threshold I think we've already raised previously. All these will continue, but I think we need to be careful that we don't seek to say, 'If it's not going to end every bit of political influence then we won't do it.' I think we need to take steps towards transparency and I can honestly say any step towards transparency would be welcomed by the charity sector.

CHAIR: Finally, what do you make of the proposals to limit or constrain the advocacy work of charities?

Mr Crosbie : It's bizarre. I don't know why anyone who is committed to having the strongest possible country and the strongest possible communities would seek to silence the voice of communities. And the most important input into national policy is often input from the community itself and the communities impacted by that policy. To say that you cannot have input because the Bill Gates Foundation gave you some research money and Bill Gates is an overseas donor and therefore you wouldn't be able to advocate is a kind of bizarre approach to democracy. We saw in Canada, when they tried to do this, that it had a really negative impact on the voice across the community, and they're now reversing it. We saw in the UK, when they asked charities to audit all their activities and political donations in the 12 months leading up to the election, it was agreed that it had a 'chilling impact' on the public voice of charities during the election campaign. If that's what you want, then I would question how Australian we're being—to use a prime ministerial term—in trying to silence those voices.

CHAIR: Just to be clear, you would unequivocally reject any proposition that seeks to restrict donations from foreign entities to the charitable sector and, secondly, that seeks to restrict the advocacy activities of the sector?

Mr Crosbie : I think that would be very damaging to Australia, and I fail to see that there is any justification of any kind. I mean, if people are concerned about particular organisations, they can, if they're charities—and I understand that the organisations people are concerned about are not charities—lodge a complaint. People do, and those complaints are investigated. I would say that more transparency would be helpful. One of the areas where we really lack transparency is: when the Australian Charities and Not-for-profits Commission are investigating a charity for having engaged in political activity, they cannot say they are doing that. They cannot, in any way, report that. I've sat during the ACNC Senate appearances when the commissioners have not been able to answer senators' questions because, currently, all those investigations operate under an ATO-type code of privacy. The only time that the Australian Charities and Not-for-profits Commission can actually talk about any of those investigations is to correct the public record. I think that's grossly inadequate. I think where a charity has been asked to show cause why it has engaged in a particular kind of political activity or crossed the line, I don't think it's unreasonable for that to be reported somewhere. If a charity is struck off for those purposes, I think we should be able to say the charity was struck off for those purposes. At the moment you can't.

Senator KETTER: Mr Crosbie, in terms of foreign donations to charities in Australia, what type of non-profits are receiving foreign donations?

Mr Crosbie : The biggest foreign donations into charities in Australia are for health research. The biggest single donor is the Bill Gates Foundation, which I think accounts for between 25 per cent and 40 per cent of all donations into this country, mostly looking at things like getting rid of contagious diseases and various kinds of medical research. Mostly, it goes to universities and specialty research areas. I'm not sure why you would want to shut down their public advocacy. I don't know of any particular overseas funding or philanthropy that comes into this country that is directed towards any kind of political outcome. It's all directed towards charitable purposes, or it wouldn't be going to those charities. If those charities were to use overseas donations to campaign for a particular political cause, they would lose their charitable status. I'm yet to see what the problem is here that we're trying to get rid of. If someone can show me, I would be interested in seeing. There is absolutely no basis for banning overseas donations to charities in Australia or overseas philanthropy.

The complicating thing here, of course, is that many of our bigger overseas aid charities have mutual funds moving between their head offices and Australia. I'm not sure that people realise. Would you be banning the activities of organisations like Save the Children because they're part of Save the Children globally and sometimes money comes from Save the Children's central office to support particular initiatives in Australia around marginalised children? Why on earth would you do that?

Senator KETTER: What proposals are you concerned about in respect of the reform of foreign donations? Is there something in particular at the moment that you're concerned about?

Mr Crosbie : There are two things. The first is the whole issue of auditing activities and income. All charities have to report to the Australian Charities and Not-for-profit Commission. They have to provide details of their income, their directors, their activities. That's already a fairly significant annual information statement that's on the public record. You and I can go and look them up, and millions of Australians do. The idea that you create another auditing process, as happened in the UK, and that people would have to go back and audit their accounts for a period of time before an election and then have to document their sources of income and their activity, you're talking about charities having another huge impost of red tape and compliance. I'm not sure what the benefit is. Why would you ask charities to do that?

The capacity of charities to do all these audits and provide all this information is limited. So you're effectively saying, 'We don't want you to pursue your purpose. We want you to be doing audits and reporting on your activities.' Some of these reporting requirements are so non-specific as to make a mockery of what you would get, anyway.

Senator KETTER: Do you have any recommendations about any potential laws that might impact on foreign donations to political parties and candidates?

Mr Crosbie : I struggle to understand exactly how foreign donations will be defined. If a foreign based company like an Apple or a Google gives money to a government, is that a foreign donation—if they have an Australian company that they operate through? Many of our biggest alcohol producers are international companies. Are they free to contribute or are they not? How does it work to identify what's an international source of income? I certainly think that transparency around the money that political parties are receiving could be improved very significantly. I don't think anyone questions that. But I'd be more interested, personally, in increased transparency and holding people to account for the fact that they receive money from a particular source, rather than necessarily saying, 'Only these sources are okay,' because my experience is that people with very significant resources can usually find their way around these kinds of restrictions. I'd rather there were more transparency about the fact that that money is going to particular political parties.

Senator KETTER: You've talked a number of times about the ACNC and the fact that it's an extra level of regulation which the charity and not-for-profit sector has in its operations compared with your counterpart for-profit, industry-type bodies that are out there advocating. Can you tell us what you see are the benefits that the ACNC has brought to the sector?

Mr Crosbie : I think the ACNC has, for the first time, made charities accountable, to provide annual information statements. The Australian Taxation Office used to be the regulator of charities. When the ATO data transferred across to the Australian Charities and Not-for-profits Commission, over 13,000 charities were deregistered. So that is 13,000 charities that weren't actually active that were still on the books. So all of a sudden we have a measure of accountability and activity, we have a level of transparency that we've never had before, we have data on the sector about what's happening across the sector that we've never had before and we have a capacity to investigate. I don't know if any of you have ever complained to the ATO about a charity, but there was certainly no evidence that anything happened as a consequence, whereas with the Australian Charities and Not-for-profits Commission, there's an investigative capacity and there's a huge level of education and sector development about what is good practice, including in this area of political activity, which I think has made a huge difference to the capacity of the sector to focus more on its purpose.

Senator KETTER: With the current regulatory settings in this area and how onerous the reporting requirements et cetera are, are you saying they are adequate at the moment?

Mr Crosbie : I think the restrictions on charities are being enforced with a high level of diligence. Whether or not that kind of diligence would ever be imposed on any other group is very questionable. The fact is the charity sector have welcomed that level of accountability, because we trade in trust. Charities rely on trust and transparency with their communities in order to receive their income and continue to do their work.

Senator KETTER: Are you supportive of a public register of ultimate beneficial ownership?

Mr Crosbie : I'm not sure.

Senator KETTER: Is it not something you've considered?

Mr Crosbie : No.

CHAIR: Thanks very much for your evidence today. I'm not sure if we gave you any homework. I think there might have been a couple of things to take on notice. If you could provide that by 23 November, that would be terrific.