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Joint Standing Committee on Electoral Matters
16/11/2016
Conduct of the 2016 federal election and matters related thereto

TWOMEY, Professor Anne, Private capacity

[14:29]

CHAIR: Welcome. Although the committee does not require you to give evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The evidence given today will be recorded by Hansard and attracts parliamentary privilege.

I now invite you to make an opening statement before we proceed to questions and discussion with the committee.

Prof. Twomey : To save time, I do not really have an opening statement. I am really just here to help the committee on constitutional matters. I assume that lots of different proposals have been raised before you, some of which may indeed involve constitutional issues. So I simply put my expertise on the table and will try to help.

CHAIR: Thank you very much for your written submission.

Mr BUCHHOLZ: I have one question to kick off with. I was asked a question by a person from Queensland before I came here. When the voter goes into the polling booth, why is it that they are asked to fill the ballot paper out with a pencil and not a biro?

Prof. Twomey : You are probably better off asking the Electoral Commission people, but it is actually a practical issue rather than a legal one. The Constitution does not require a pencil.

Mr BUCHHOLZ: There is nothing in the act?

Prof. Twomey : My understanding is it is simply a practical issue, which is that pencils are easily kept functional in the course of the day, whereas pens run out of ink. You can sharpen a pencil easily if it gets blunt, but replacing pens is a pain in the neck. That is my understanding, but I may be wrong. It is simply a practical issue, I believe.

Senator O'SULLIVAN: Is that your only contribution, Mr Buchholz?

Mr BUCHHOLZ: It was Terry O'Hanlon who asked the question of me. Now I have got it on the Hansard.

Mr DICK: Dr Twomey, I have read your submission and I think the committee is very lucky to have your time today, so thank you for coming along. On the issue of foreign donations, I would really like to hear your views on the most practical way. There is a lot of discussion about foreign donations from legal entities, individuals, companies based offshore versus Australian companies that were here and then moved, people based here and those sorts of issues. I think this committee will be having a good look at the best, most practical way to deliver the outcome that some want—the banning of foreign donations—without entrapping people if there were a law in place. So I would be really keen to hear your views in brief. We may need to explore this with you a bit further down the track as well.

Prof. Twomey : I agree it is a really difficult issue, and in some ways the practicality of it is even more difficult than the constitutionality of it. As you have pointed out, 'foreign' can mean a number of different things. It can be a person who is now a citizen here but came from another country and still receives income and whatever from another country. Is their donation regarded as foreign or not? It is even worse with companies, to try and work out where a company is truly based and whether it is an Australian company or not. Companies that manufacture many iconic Australian goods have now been taken over by other companies that have a foreign base. Who do you count?

The best suggestion I have was put in my submission. It comes from the New South Wales law about this. It was focused on two aspects. One is the foreignness but the other is the identification. Identification is actually a really important thing as well in relation to political donations, because if you have ever tried going through those sorts of records it is very difficult to see who is really making the donation. Frequently, particularly in relation to corporations, subsidiaries and all the rest of it, it is very difficult to make that identification.

The New South Wales provision, in section 96D of the act, works on the basis that you can make a political donation if you are on the electoral roll—that is fine—or if you are a permanent resident, or even any kind of resident, so if you live here. The reason for that is the High Court's decision in Unions New South Wales suggested you could not confine it just to people on the electoral roll. The people who live here are affected by the rules of government and therefore should have a say in the way governments operate, even if they do not have a vote. So we have to include them. So there is provision to allow people to provide identification of their residential address to the Electoral Commissioner and therefore be put on a list of people who are allowed to donate.

Then, when it comes to corporations, it is about looking at whether you have some kind of identifying number in Australia—so an ABN or any other kind of identification through ASIC. So you are recognised as a company that operates in Australia. That sort of thing, where there are obvious sources of information through ASIC and formal identification, is probably a good way of doing it. Also, it helps alleviate the constitutional problems if you can show that you are making the distinction on the basis of whether the person or the corporation has some kind of presence in Australia, be it residential presence if they are an individual or some kind of business presence and operation in Australia if they are a corporation. What you would be excluding then are the people who are donors who live outside Australia and corporations that have no real connection with Australia other than trying to influence the election. At least it gets rid of those ones.

Mr MORTON: Thank you for your submission. It was extremely helpful. We have to work our way through a range of issues. It is easy for people to call upon truth in political advertising. It is a very subjective matter. You, like other people, have said it is all good in theory, but in practice it is very difficult. Could you expand a little bit on that? I think it is something worth getting on the record. From my perspective, when people see politicians talking about the difficulty of truth in political advertising, they think we are saying it for our own self-interest, but there is a good body of evidence that it is actually very difficult in practice to deal with.

Prof. Twomey : You are right. It is not a matter of truth being relative. I am not going into a post-modernist view on these sorts of things. Truth is truth. The difficulty is when you are talking about promises and opinions and the like. I can legitimately say that my opinion is X today or I promise to do X tomorrow, but circumstances may change tomorrow and I might not be able to do X. A lot of the complaints people make about promises during election campaigns are that promises are not met, but that does not mean to say that the person who made the promise was not genuinely telling the truth when they made the promise. They did genuinely believe that they would do X and they intended to do X. It is very hard to show that a person is making a promise in a way where they do not believe it and they never intend to do it. Obviously that would be a bad thing to do. My personal experience in terms of working in government—I worked in the cabinet office in New South Wales for a while—is that the then Premier was absolutely desperate to fulfil every election promise. There was a list of them and you had to tick them off, and you had to do your darndest to make sure they were fulfilled. All governments have a strong interest in fulfilling their election promises because they know they will be hit around the head by the opposition if they do not. It is not the case that people want to make promises knowing that they will never fulfil them. That would be stupid from a campaigning point of view. It does tend to frequently be the case, particularly if you have a party in opposition who comes in to government, that promises made by opposition parties are less well informed than promises made by parties that are in government, simply because the party in opposition does not have sufficient support to know all the details. For example, when an opposition party comes in to government, they will have made all the promises and then unfortunately people like me say, 'I'm sorry, you can't do that one. It's unconstitutional,' which they did not realise when they made it. Having said that, someone who is in government already and has advice will know not to make that sort of promise. That is a bit of sidetracking.

In terms of the problems about truth in political advertising, you might well say before an election that there will never be a carbon tax under my government or you might well say before an election, 'We will not cut funding for health or the ABC,' and then after you are elected you discover the financial circumstances are completely different or you are in a hung parliament and you have to negotiate with someone else, and your genuine promises suddenly cease to be able to be met.

Mr MORTON: As an example, 'Only the Black Chair Party will properly stand up for issue X.' There are so many words in there and it really becomes an opinion. Are there any arrangements in Australia or internationally with these matters are dealt with or arbitrated on during the context of a campaign itself? Someone might say, 'That's not true,' but it all hangs around the word 'properly'. What does 'properly' mean? Is there an area where this works?

Prof. Twomey : I do not think it ever properly works. The problem is that it has been tried from time to time, and when it happens you find that these things are just used as bludgeons by one political party against another. One political party will try to torpedo the other political party's campaign by taking them off to—and it depends on what the organisation is—the Electoral Commission or some kind of media body that is supposed to be checking the validity of ads and all the rest of it and will drag them off there to torpedo their campaign so that they cannot get their ads on in the short period before an election.

That is one of the big problems with these sorts of laws. They tend to be used politically in a way to damage your opponent and often the controversy about the particular offending ad is such that you get a huge amount of free publicity for your offending ad by it all being in the news because you have challenged its correctness or not. Then you get massive free publicity for your ad without having to spend money on your campaign. There are all sorts of problems with it: trying to get court injunctions within the time; it does not get resolved within the time; and you only find out later whether it was true or not, if it is a matter of fact that is being disputed, as opposed to matters of opinion. The whole thing is just very messy.

In terms of what happens in other countries, I have not looked at that recently, so I cannot tell you. But in the article I attached to my submission there was a pretty good review of all the times they have tried this in Australia, and so far it has never really worked.

Senator RHIANNON: Thank you very much for the submission. I would like to ask you to expand on some of the points you have raised. Regarding disclosure, you talk about immediate disclosure and for the information to be on a searchable online database. When you say 'immediate', do you mean instantly? I notice that a lot of the political parties are using the term 'in real time', but then real time might mean within a week. Have you actually given a time in terms of what 'immediate' means?

Prof. Twomey : No, because you would need to know more about the practicality of doing it. What I was floating was an idea that I think no-one will accept, particularly not the Electoral Commission. But I still think there is some virtue in it. I raised this before in New South Wales in relation to the New South Wales political donations process. Instead of political parties receiving and processing donations, perhaps we could have a system in which all donations had to be sent into the Electoral Commission with (a) identification, so you knew where it came from, and (b) identification as to which party or candidate it should then be distributed to. If it all went through the Electoral Commission to begin with, you would have actual accurate records and the Electoral Commission on registering that donation would immediately, as part of the registration, put it online, in the same way that you register legislation or you register legislative instruments and all those sorts of things.

The registration, of itself, is what makes it official, and that happens all the time. If you had some kind of a system that did that, and then the money was distributed back to the party, it would also be really helpful if you had a system that involved caps on donations and expenditure, because donations could be rejected by the Electoral Commission if they exceeded a person's cap. Donations could be rejected if they came from a foreign source without the right identification. You would not have the problems of parties accepting money and then realising later that they should not and then not knowing how or where to send it back. All that would be dealt with internally by the Electoral Commission. It would put a big burden on the Electoral Commission up-front, but it would save a lot of time at the other end when otherwise they are trying all the time to rationalise disclosure. There are the disclosures sent in by the donors. There are the disclosures sent in by the parties. They usually do not match—all that mess. You would not have any of that. But there may be real practical problems in terms of receiving donations.

Senator RHIANNON: Have you considered another form of that where donors put their money in and then they are actually donating to the democratic process, not to individual parties and candidates?

Prof. Twomey : Yes, well, that is the thing that sometimes is raised when donors say that they are doing it to be philanthropic and they are not doing it to gain influence. The thing is, I suspect that no-one actually really believes that, and the whole point of donating is not to be philanthropic. If you wanted to you could have a philanthropic pot where money was put in. The difficulty then would be how it gets distributed out of the philanthropic pot and the basis on which you distribute it.

Senator RHIANNON: Well, maybe on the basis that public funding is distributed—a similar formula.

Prof. Twomey : That then gets you down to the difficulties of that as well. You could certainly have a philanthropic pot, but I suspect that the number of donations given in secret to a philanthropic pot is—

Senator RHIANNON: I think Mr Morton wants to get his interjection on Hansard!

Mr MORTON: I said the word 'socialism'—thank you for drawing that to everyone's attention!

Senator RHIANNON: Now, when you talk about a searchable online database, do you mean that you can put in the name of a company, the name of a candidate, the years, and you could instantly see—

Prof. Twomey : Yes. You should be able to put in an ABN or something like that and then be able to see from some identifying feature what that body had contributed.

Senator RHIANNON: I am sorry I had to step out for a little while, but you have detailed in your submission caps on donations. It is correct, isn't it, that that second High Court case found that that was quite legitimate?

Prof. Twomey : Yes, as long as the caps are reasonable. You have to be able to put out there your policies and your political communication in a way that you can reasonably communicate that to people. If you put your caps too low, so that parties were not able to do that, then there would be a problem. The caps, as they were in New South Wales, were not regarded as too low or impeding the political parties from doing that. You also have to be particularly careful with the caps that you put on third-party campaigners as well. It is not unreasonable to make them lower than the caps on parties, but you still do have to do it to such an extent that—

Senator RHIANNON: Why should they be lower?

Prof. Twomey : It is argued by some people that third-party campaigners should not be able to swamp political parties in terms of getting their communications out, and therefore you can have a lower cap. But the other side of that is that you should not have a cap that is so low that third-party campaigners cannot put their point of view out there to the community and influence the political debate. There was a case in the United Kingdom, I think it was, where they had a limit on third-party campaigners that was so absurdly small. I think it was something like 50 pounds. They actually said in the judgement that this would give you an ad 'this big'—one inch in the newspaper—and clearly that was not something that was capable of allowing people to genuinely communicate. So, those issues are considered by courts.

Senator RHIANNON: Moving on to the issues of caps on expenditure, I do not think you came up with an amount, did you?

Prof. Twomey : No.

Senator RHIANNON: I am interested in whether you have thoughts on that, particularly with regard to your New South Wales experience. From what I can see, the caps are not just 'quite high'; some would regard them as very high. Therefore, you can lose the benefit to some extent. So perhaps you could comment on that.

Prof. Twomey : I could not tell you numbers, because, again, I would need to know enormous amounts of information about how much electronic advertisements cost and the like—things that are well beyond my knowledge. However, I do think there are good grounds for saying that a cap on expenditure should be able to bring the expenditure level significantly down. The reason expenditure is high and has escalated is that it is a war between the parties. But it has escalated in an unnecessary way. If your aim is to be able to communicate your policies and the like to the community to try to persuade them to vote for you, you can do that with a lot less, and I am sure the community would be grateful for that.

Senator RHIANNON: Just to go back to that war, the war is largely a war about electronic advertising.

Prof. Twomey : Yes.

Senator RHIANNON: That is the area that soaks up the money.

Prof. Twomey : It is the area that largely soaks up the money. But the aim of the game should be to bring the caps down to more reasonable levels. That would give more room for political parties to fill that cap with limited donations, because there is a cap on donations as well, and leave the rest for public funding. That also then reduces the public funding cost to taxpayers, which is obviously more efficient from an economic point of view as well.

Senator RHIANNON: On public funding, I note that you advocate only the actual amount that is spent on the election. But you would be aware—and I think it is the case with many smaller parties—that they use that money just to run the party, which is also about levelling the playing field. If you go for what you advocate, do you think there should also be money for admin costs for parties so that we do not end up dominated by just a few? Do you think that should come into the equation?

Prof. Twomey : I am not sure about that. In New South Wales there is also—or at least there was; I have forgotten now whether it is still there—a separate scheme that allowed for money for—

Senator RHIANNON: Yes, there was. There is also start-up money for small—

Senator LEYONHJELM: There still is.

Prof. Twomey : Yes, for administration and the like. It is still there.

Senator LEYONHJELM: It was $500,000 for the Christian Democrats and the—

Senator RHIANNON: But there is also money for start-up parties. It is very small.

Senator LEYONHJELM: It is very minor, yes.

Prof. Twomey : But also, if you were a start-up party or something, you also have to raise money to show that you have genuine support. The taxpayer should not be out there giving public funding to political parties that are simply someone's fantasy where they do not have genuine community support. That is the other side of it. The reason for saying that it should be based upon your actual expenditure is that people should not be able to profit simply by running in an election on the basis that they have some kind of a public profile that is big enough to get them votes, even though they are not intending to win and they do not make any expenditure. That is wrong, from my point of view. That is the concern. My view is that political parties should run their own administration on the basis of the donations that they raise from their supporters, because that shows that they have genuine support and encourages parties to get grassroots support. I think in totally publicly funding parties there is a real danger that they become isolated from their own constituencies, so to speak.

CHAIR: I would like to pick up one of the lines of inquiry that Senator Rhiannon was going down, and that is in relation to the conversation you had about caps not just for associated entities but also for third-party campaigners. My personal concern is how we as a committee make sure that we end up with a level playing field for everybody who participates in the political process. An associated entity is quite defined, but on all sides of politics there are now more and more active campaigners who amplify campaigns of particular candidates. How do we bring into the one level playing field everybody who actively engages in political communications to shape election results, so that we do not end up with PACs and super PACs? America has caps, but unintended consequences have created a monster. It is not just one group or another; all sides of politics are now increasingly supported by organisations who are not associated entities but are directly contributing to political party campaigns.

Prof. Twomey : I think that is the hardest nut to crack in the entire issue. Third-party campaigners are the biggest problem that there is. There are two conflicting sides to it. One is the parties themselves creating these third parties or effectively encouraging them in order to avoid the application of caps. That is a real problem, particularly when you do have caps. The other side of it is saying that particular groups, because they are seen to be associated with a political party, should therefore be restrained from campaigning even though they have their own history and their own heritage of campaigning on particular issues. That is also wrong, and the High Court said that in the Unions New South Wales case. It said unions have a very long history of existence and a legitimate interest in putting out their own political views during the course of a campaign, and therefore it would be inappropriate for the law to operate in such a way as to stop them from doing that. The same goes for environmental groups and business groups. If we accept that you should not be banning or limiting business groups, environmental groups and unions from doing those sorts of things, how then do we make sure that they are not operating as fronts or in a concerted way with parties to manipulate the system and undermine caps? That is the nub of the problem. I do not know that anyone has ever really sorted it out.

Senator LEYONHJELM: I do not understand your point, though. What are they manipulating?

CHAIR: Senator Leyonhjelm, I have asked the question.

Senator LEYONHJELM: I know, I am just trying to get an explanation of that answer.

CHAIR: Let Professor Twomey finish her answer.

Senator LEYONHJELM: Did you understand her answer?

CHAIR: Yes.

Senator LEYONHJELM: Good. Explain it to me, then.

CHAIR: Let her finish. It is very clear.

Prof. Twomey : Now I have lost my train of thought. Where were we? I was explaining there is a real problem with it, particularly when you do have caps on party expenditure, if a party just creates some kind of a front vehicle which then has its own cap, and creates 17 of them which all have their own caps. Another problem with it is where those other organisations—be they unions, businesses and the like—are not acting in concert with the party, and they end up taking over the political discourse in a way that does not meet the party's interest. So, all of a sudden, political party A finds itself in a position that is distorted because people campaigning for it are doing so and putting out policies and information that is actually inconsistent with what party A wants to do. So you have two-sided problems in all that.

CHAIR: Given that complexity, can we shift the debate back to first principles to include anybody who is engaged—whether you are a registered political party, whether you are a candidate or whether you are a body who is campaigning for issues, who is actively campaigning in the political process? Can we look at a system where ultimately it does not matter whether you have candidates or not? What matters is you are an organisation that is engaging in the political process to shape public opinion, with the intent of shaping a vote. Is there a way to look at this that is not unconstitutional, as you pointed out, but where there is a level playing field? I think it would be a bad outcome for Australia if we did not crack the difficult nut you have just mentioned. My personal opinion is that you can see how the American political process is being distorted by having all of these PACs that do exactly as you said.

Prof. Twomey : Again, what they have done in New South Wales is to impose caps both on third-party expenditure as well as on party expenditure, and the third-party expenditure is lower. You can also have two levels of doing this so that ordinary people can spend on political campaigning quite a small amount. If you want to spend more than that particular amount then you register yourself as a third-party campaigner. Once you are registered you have higher obligations in terms of things like accountability—so disclosure, those sorts of things. Once you are a registered third-party campaigner then you could look at, for example, the connection between the third-party campaigner and particular parties to see whether or not they should come under the same cap or whether they should be regarded as separate. I do not think you are ever going to get to a point though where you can suddenly try to amalgamate everybody into one.

CHAIR: Or is it more about making all of the actors out there, all three categories—who may or may not, as you said, at any particular time have been working on the same campaign for the same election of the same person or party—have the same rules of transparency and disclosure so they are all on that same footing?

Prof. Twomey : Certainly once you get to the point where you are spending over X amount and you have to register as a third-party campaigner then there should be caps and disclosure obligations and all those sorts of things applying to you as well. I have no problem with that, and that is what already happens in New South Wales. The question then is whether proportionately your cap should be two-thirds of the cap for a party or those sorts of things.

CHAIR: Thank you; that has been very helpful. I have one final question on that. We are looking specifically in our first report at authorisations. We are having a look at how we can standardise it across new forms of technology and simplify it.

Prof. Twomey : Sorry, could you clarify what you mean by 'authorisations'?

CHAIR: The authorisation of political material. It is the authorisation on the bottom of a printed advertisement to say 'authorised by this person, printed by this person' or different forms, because it is very inconsistent at the moment and there are certain things—text messages and others—that are not yet covered under it. So we are trying to standardise and keep up with technology. For third parties, should there be any exemption for people who are sending out a political message of any description, or is that not an issue?

Prof. Twomey : I am just trying to think whether there are any constitutional problems with it. The last time I looked at that sort of stuff was quite a long time ago. I think there had been a question at some stage as to whether people can be compelled to put something on the end of an advertisement saying that they had authorised it or not. I think the view was taken that it was okay.

CHAIR: Can I ask you to take that on notice, only if there is further clarification about it.

Prof. Twomey : I think there is something there. I think I wrote something about it once and maybe there was some small authority on it.

CHAIR: If you would not mind taking that on notice. If there is anything, come back; if not, do not worry about it.

Prof. Twomey : Yes.

Mr GILES: Thank you, Professor Twomey. It has been great to hear from you today. There are three things I want to explore—firstly, your evidence on public funding in response to Senator Rhiannon's questions. I just want to clarify it. There is a statement of principle that parties ought not profit from any public funding regime, and that is something I am sympathetic to, but, moving beyond that—and people like Mr Morton and Mr Dick know more about this than I do—the nature of the operation of political parties is such that their finances are pretty lumpy, as I am sure you can appreciate. So it just seems to me that if we are to give practical support to political parties, through supporting their activities, we would need to be very careful about how that reimbursement mechanism would operate. And it also appears to me—and this is the thing I would like to draw you out a bit further on—strongly arguable that there are wider public benefits in supporting the effective operation of public parties that are divorced from fundraising. You seem to be suggesting this may not be fair—that it would be a good connector of parties to their support base to be engaged in fundraising to support their activities. Or did I perhaps misunderstand?

Prof. Twomey : My concern—and this is an issue raised in New South Wales a couple of years ago—is that if you had full public funding for all political parties it further isolates political parties from their base. We have seen a lot of that in recent years—political parties at the base level, or the ground level, are becoming smaller and smaller because the involvement of people in the party becomes less and less significant. If parties are obliged to raise at least 25 per cent of their funding from their own supporters, and if there are caps on that amount—so instead of chasing three or four or five big fish who can give lots of money you end up having to get small donations from a large number of people, and in the United States we saw that Barack Obama was famously quite good at that—it would put an imperative on political parties to actually connect with and seek the support of the people. And if they did not have any support from the people, if people were not prepared to give them any money, then maybe they should not exist as political parties—if they do not have people who actually are prepared to support them enough to stump up a small amount of money. That is what I am suggesting. I am not suggesting they need to raise everything like that. In New South Wales—again, I am a little foggy on this now—I think it was the case that 75 per cent of your funding came through repayment of electoral expenditure. This was under the old rules, before they changed them. And you had to raise 25 per cent of it yourself, which seemed pretty reasonable, I thought.

Mr GILES: This may not take us very far today, but it appears to me at least arguable that parties being required to engage with people through the prism of getting money out of them may also contribute to people being alienated from the political process, including through their involvement in parties. Having said that I will move on to the questions of law.

On the issue of truth in advertising, do you have any view about whether Evans v Crichton-Brown, in the High Court, is, firstly, likely to continue to be the law, and whether that is an insuperable barrier to the introduction of some form of truth in advertising provision at the Commonwealth level?

Prof. Twomey : It is a bit tricky to tell now, because in the McCloy case the High Court recently changed the test. We have not seen how that operates in any case since—so in the one case that did come up since, the Murphy case, they did not use that. So there is less clarity than there was. The second point is that in a number of cases the judges have taken diametrically opposite views as to whether the implied freedom actually protects things that are wrong, misleading, offensive and the like. A number of judges have said 'No, the implied freedom of political communication is not there to protect statements that are misleading and wrong. It is there to help inform people, inform their vote, and therefore that sort of thing should not be protected.' On the other hand you have judges saying, 'No, the implied freedom is there to protect communications, which may be found later to be misleading or wrong or offensive or all the rest of it.' That is the broader view of freedom of speech—that you have to let it all out there. Because there are quite different views given by High Court judges and there has never been a resolution of it, because there has never been one case where those views have actually come up against each other, we do not know what the answer is. The bottom line is, I do not know, and we will not know until the High Court decides.

Mr GILES: Going back to McCloy—and maybe this is better as a question on notice—could you give us some guidance on the likely markers of proportionality in the Commonwealth sphere?

Prof. Twomey : In relation to what, in particular?

Mr GILES: Both donations and caps.

Prof. Twomey: The McCloy case told us in relation to donations and caps that the court was prepared to accept them. So, we know as a general principle they can work. As I said to Senator Rhiannon, we do need to make sure that those caps are not so low as to prevent genuine campaigns to be had that fully put out the views of the political parties, candidates and third-parties. We know that. We also know that the court has accepted that where there is sufficient evidence to support it, they will contemplate banning certain types of donations—so, in the case of New South Wales, donations from property developers—where there had been a history and a deal of evidence that those sorts of donations raised issues of corruption. As to how far that would go in terms of banning other kinds of donations, like foreign donations and the like, as I raised in my submission, we have to be a bit careful to balance that against the Unions New South Wales view, where the High Court said that people who are not on the electoral roll but do live in this country still have an interest in participating in the system and having political communication.

They are all the clues we have out there. We know that the McCloy proportionality test worked to ensure that caps on political donations and on expenditure survived. So if you are looking at something similar to the New South Wales system you can be reasonably confident that that will survive. On that basis I think that the Commonwealth has, for the first time, much better guidance than they had previously on how the High Court would decide things. I know there was some wariness, particularly after the Unions New South Wales case, about whether or not you could engage in these sorts of things. I think Queensland went back from their earlier position and gave some justification for it on the basis that they were concerned about the constitutional validity of it. I think we have a lot more confidence now that the constitutional validity of caps on both donations and expenditure is able to be upheld, but you do have to be a bit careful about how you do it, and not do it in any political way to damage whoever is against your particular interest, because that is the one thing that really gets the High Court's back up. So you have to be very careful that it is done in an equitable manner and not in a politically-focused manner.

Senator LEYONHJELM: Regarding your comments in your submission about disclosure, I do not have many problems with, but there are a couple of aspects that I am not so sure about. In your submission you state:

One way of dealing with this problem would be to introduce at the Commonwealth level an equivalent provision to s 96D of the Election Funding, Expenditure and Disclosures Act 1981 (NSW).

I have heard you previously in public fora talk about the New South Wales donation legislation. Are you generally in favour of that New South Wales approach?

Prof. Twomey: I think they have done it better than anyone else has so far. All these sorts of things can have tweaks to improve them. I think I was critical of some more recent changes they made, particularly in relation to public funding and the like. But the overall idea of caps on donations and caps on expenditure, I think, has at least the potential to reduce the influence of money in the system.

Senator LEYONHJELM: What evidence is there for that?

Prof. Twomey: A good question. I do not know that there is any objective, empirical evidence in terms of whether it has actually reduced people's influence over political parties. I would hope that it had.

Senator LEYONHJELM: People's influence over political parties?

Prof. Twomey: What I am saying is that I think it would be at least reasonable to assume that a donor who donated $100,000 to a political party might expect to have greater access and influence than a donor who donates $5,000 to a political party. If there are 20 or 30 donors who donate $5,000 to a political party their influence is not going to be greater than the other, whereas if there is one donor who donates $100,000 to a political party then it may well be that they expect greater influence. Indeed, that is the argument that Mr McCloy ran in the High Court; he actually said that the purpose of making the donation was to buy influence and argued that that was protected by the Constitution. The High Court said no, it was not.

Senator LEYONHJELM: I guess that then becomes a question of whether that is the purpose of their donation—to buy influence. We heard from Unions NSW that it was not to do that, and they donated well over $100,000 to the Labor Party. Their argument was—to summarise it—the Labor Party was doing things that they approved of, and they wanted them to do more of it.

Prof. Twomey : That is an argument that, often, people give, and that is a justification; it is perfectly reasonable.

Senator LEYONHJELM: Indeed; I think it is perfectly reasonable. I am curious as to how you know where the limits should be. How do you arrive at your conclusions that what the New South Wales approach is doing, with caps on donations and caps on expenditure, is set at the right level, or that there even should be caps at all. What ill are we trying to avoid here? If there is a plausible argument that we are not really talking about buying off political parties and we are talking about donations based on approval of what is currently existing, how do you know they need to be capped?

Prof. Twomey : We heard in the argument that Mr McCloy gave before the High Court that the purpose of donating was to obtain influence, so there is one example where a donor said that that was why he was doing it. Some donors, in making political donations, give donations to both sides equally, and that often happens. Then there is a question as to why. Sometimes, it is said that they are being philanthropic and just hoping to assist the democratic process, which is possible. But the other argument for why they donate equally to both sides is that they do not want to be disadvantaged when it comes to the way political parties might be influenced by, perhaps, their competitors, if their competitor donated and they did not. It is not necessarily a matter of buying influence; it is a matter of buying protection from being disadvantaged if somebody else bought influence. So there is some evidence that that is a view taken by some political parties. You would probably be better asking a political scientist for the various studies that have been done on this and the influence of political donations. A number of them have been done, particularly in the United States. But we have had a fair deal of evidence in ICAC in New South Wales as to problems arising from political donations.

Senator LEYONHJELM: It is interesting that you raise that—New South Wales and ICAC—because those allegations, those claims, the findings of ICAC and so forth occurred within the context of the electoral donation laws, which you think are the best in Australia. By that logic, you would think the federal election disclosure laws would have led to substantial influence of money. Is there evidence of that?

Prof. Twomey : Yes, but there is no ICAC at the Commonwealth level, is there? I mean, the only reason we know about it at the state level is that there is an ICAC that does investigate. There is no ICAC at the Commonwealth level; therefore, we have no information about the level of it. If there was an ICAC at the Commonwealth level, it is fairly likely we would have political donation laws as in New South Wales because all of the problems would have been revealed. But, as they have not been revealed, we do not have those laws.

CHAIR: Senator Leyonhjelm, we have now gone over time. Do you have many more questions?

Senator LEYONHJELM: Yes, a good number.

CHAIR: Can I ask you to put them on notice for Professor Twomey, because we will be inviting her back to the committee in future. I have no doubt about that with some of the issues. Do you have anything more now that you would like to ask in person, or do you want to follow up some on notice?

Senator LEYONHJELM: Yes, quite a lot. I will carry on, I think.

CHAIR: If you want to ask one final question, and then we will put the rest on notice.

Senator LEYONHJELM: They are not suitable for notice. The question, then, that follows on from this situation, is that what occurred in New South Wales, which was donations by developers and donations by third parties in contravention of New South Wales law would not have been illegal under federal law. What corruption that was occurring in New South Wales was avoided in New South Wales as a consequence of the New South Wales laws, which you think are best in the country? What corruption is occurring at a federal level as a consequence of not having the equivalent of the New South Wales laws at a federal level? That is the point I am getting to.

Prof. Twomey : The first point is that the New South Wales laws and the problems raised in relation to property developers are unique to the state level rather than the Commonwealth level, because obviously decisions about property developments are normally made by state governments and not by Commonwealth governments. So different problems, if they arise, would arise at the Commonwealth level from the state level. It would be silly, for example, for the Commonwealth to introduce a ban on property developers donating, because obviously it is not matching the same sorts of issues at the state level.

Are there problems at the Commonwealth level that would need to be dealt with? The problem is that, because we do not have anyone investigating that, we do not know what the answer to that is. But one can suspect that, if the problems as have arisen in New South Wales are any indicator, there may well be problems at the Commonwealth level. I cannot assert that there are, because no-one has done the investigation into it. If we are looking at trying to make sure that we have the best system possible to prevent corruption—and, indeed, that is the point of ICAC in New South Wales; the reason for creating it was to put in place systems that prevent the possibility of corruption or at least reduce it—if the aim at the Commonwealth level is to have the best system possible to reduce the possibility of corruption then it seems to me a New South Wales system or something of that ilk would be helpful.

CHAIR: Senator Leyonhjelm, I think we will have to conclude it there, but, as I said, you are able to put questions on notice to Professor Twomey and also ask questions in person when we invite her back to appear before the committee. Professor Twomey, thank you very much for your participation here today. You have certainly challenged us with a number of issues, which we will be pursuing further. Did you take anything on notice?

Prof. Twomey : There was something you raised that I might come back to you on, and I have forgotten what it was.

CHAIR: That is all right. We will take that up with the secretariat and get that information to you. Could you have the response back to us by 2 December. You will also be sent a copy of the transcript of your evidence so that you will have the opportunity to request corrections to transcription errors.