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Thursday, 15 May 2008
Page: 1964

Senator LUDWIG (Minister for Human Services) (10:01 AM) —On behalf of Senator Faulkner, I table the explanatory memorandum relating to the bill and move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

I am pleased to present legislation that demonstrates the Government’s pre-election commitment to rolling back 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 review of electoral laws that has already been announced by the Government.  This process includes the development and publication of a Green Paper on Electoral Reform that is to be released in two parts and which will deal with a wide range of issues relating to the enhancement and modernisation of Australia’s electoral laws.

The measures contained in the Bill today deal with 5 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 $10,500 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 8 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 6 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 8 weeks.

These changes will ensure that the Australian Electoral Commission has in its possession details of gifts, revenues and political expenditure that are both 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 address 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 $1000 or more to any combination of the branches and divisions of the party, and in this way inhibits the unaccountable practice of donation splitting.

The fourth group of measures in this Bill deal 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 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 are 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.

This group of measures also 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 Bill includes 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 Bill also provides for anonymous donations that are unable to be returned to be paid to the Commonwealth.

The fifth group of measures are 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 $2.18), provided at least 4% of first preference votes have been won.  The existing entitlement 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% 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.

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 level 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 anonymous and undisclosed gifts.

The Government is committed to restoring the integrity of our electoral processes and systems.  I believe that the reforms 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.  This is the first tranche of electoral reform measures that will restore the integrity of our electoral system and ensure that the health of our Australian democracy is maintained for future generations.

I commend the Bill.

Ordered that further consideration of the second reading of this bill be adjourned to the first sitting day of the next period of sittings, in accordance with standing order 111.