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Commonwealth Electoral Amendment (Banning Dirty Donations) Bill 2020

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2019-2020

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

THE SENATE

 

 

 

 

 

Commonwealth Electoral Amendment

(Banning dirty Donations) Bill 2020

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

(Circulated by the authority of Senator Waters)

COMMONWEALTH ELECTORAL AMENDMENT

(banning dirty DONATIONS) BILL 2020

 

 

OUTLINE

 

The Bill proposes amendments to the Commonwealth Electoral Act 1918 (the Act) that will prohibit political donations from certain industries, and impose a cap on all other donations.

The purpose of the amendments is to strengthen the integrity and accountability framework underpinning Australia’s electoral system by preventing certain industries  that have used, or have a strong public perception of using, political donations to influence policy decisions.

Specifically, amendments are proposed to ban donations from:

§   property developers;

§   the tobacco industry;

§   the banking industry;

§   liquor and gambling businesses;

§   pharmaceuticals companies;

§   the mining industry; and

§   representative organisations for these industries.

 

These amendments will improve the electoral system by strengthening the independence of parliament and increasing public confidence that politicians are guided by the public interest when making decisions, rather than the interests of donors. The amendments seek to remove undue influence by powerful industries on policy and funding decisions and enhance individuals’ capacity to take part in public life without those influences compromising their decision making capacity.

The Bill also recognises the potentially corrupting influence of large donations, irrespective of their source, and imposes a cumulative limit on donations from any source (individual, organisation or business) of $3,000 per election term.

The amendments extend the definition of “gift” to include subscription and membership fees and attendance at fundraising events to close the loophole that has allowed these significant  sources of campaign income to remain undisclosed and unaccounted for.

 

 



 

NOTES ON CLAUSES

 

Clause 1 - Short title

Provides for the Act to be cited as the Commonwealth Electoral Amendment (Banning Dirty Donations) Act 2020 .

 

Clause 2 - Commencement

This clause provides for the preliminary clauses of the Bill to commence on the day it receives the Royal Assent. Schedule 1 of the Bill is to take effect on the day following a period of 3 months after this Act receives Royal Assent. This provides a transitional period for entities affected.

 

Clause 3 - Schedule(s)

This clause is the formal enabling provision for the Schedule to the Bill, providing that each Act specified in a Schedule to this Act is amended or repealed as is set out in the applicable items in the Schedule. Any other item in a Schedule to this Act has effect according to its terms.

 

 

SCHEDULE 1 - AMENDMENTS

 

Item 1 - Subsection 287(1) (definition of gift )

Repeals the definition of ‘gift’ and replaces it with the new definition in section 287AAA.

 

Item 2 - After section 287

Inserts a new definition of ‘gift’.

 

Section 287AAA defines gift to include:

§   a gift of money or property;

§   provision of a service for free or less than market-value;

§   tickets or entry fees for fundraising events;

§   membership fees for political parties, associated entities and political campaigners over $1,000; and

§   interest-free loans.

 

Item 3 - After Division 5A of Part XX

Inserts two new divisions, Division 5B - Prohibited Donations and Division 5C - Capping donations, after Division 5A of Part XX of the Commonwealth Electoral Act 1918 .

 

 

Division 5B Prohibited donations

The Bill inserts a new Division 5B relating to prohibited political donations.

 

314AH   Simplified outline

Provides a simplified outline of the Division.

 

314AI   Definitions

Includes definitions of the following entities:

·          defence industry entity

·          financial institution

·          liquor or gambling industry business entity

·          mineral resources or fossil fuel extraction industry business entity

·          pharmaceutical entity

·          property developers

·          tobacco industry entity (including both tobacco and inhaled nicotine products such as vaping)

For each entity type, the definition also extends to close associates of the entity, including directors, officers or significant shareholders (or their spouses), related corporations, stapled entities, and significant unit holders in a trust company.

The provision also defines “prohibited donor” to include each of the defined entities, as well as industry representative organisations where the majority of the organisation’s members are prohibited donors. This is intended to prevent donations being funnelled through industry bodies to seek to influence policies that would impact on industry members.

 

314AJ   Meaning of political donation

This section defines “political donation” as a gift made to or for the benefit of a political party, a State branch (including local branches), a member of the Commonwealth Parliament, a candidate, associated entities, political campaigners, or any gift made for the purpose of allowing another person to make a political donation.

Where a loan would have been a political donation if the money had been transferred as a gift, the loan will be treated as a political donation.

The definition of “political donation” excludes personal gifts (unless used to incur electoral expenditure) and payments made under Division 3 of the Act for election funding. 

 

314AK   Political donations by prohibited donors unlawful

This is the main operative provision making it unlawful for any prohibited donor (or a person on behalf of a prohibited donor) to make a political donation. It is also unlawful for a person to accept a political donation made by or on behalf of a prohibited donor.

The industries included as prohibited donors were identified by the Senate Select Committee on the Political Influence of Donations as key industries exhibiting donation patterns that suggest undue influence over policy decisions and project approvals. The inquiry report of the Select Committee sets out various examples and recommends that these industries be banned from making political donations. This Bill implements that recommendation.

To avoid any collusive schemes to circumvent the ban imposed by this section, a prohibited donor, or a person on behalf of a prohibited donor, must not solicit another person to make a political donation.

Where an unlawful political donation is accepted, an amount equal to the donation can be recovered by the Commonwealth as a debt against the body that received the donation.

 

314AL   Offences—political donations

This section outlines the offence provisions and related penalties for making or receiving unlawful political donations. 

A person who makes an unlawful political donation, whether as prohibited donor or on behalf of a prohibited donor, commits an offence punished by up to 2 years imprisonment and/or a fine of up to 400 penalty units. It is an offence for a political donor, or another person on their behalf, to solicitor someone to make a political donation.

It is also an offence to accept a political donation from a prohibited donor. The defendant will be at fault if she or he knew that the political donation made by or on behalf of a prohibited donor.

The quantum of the penalty is appropriate given the intention to influence decisions and interfere with the political process. A similar penalty exists in the Commonwealth Electoral Act 1918 in relation to bribery offences.

A person who makes or accepts an unlawful political donation is also liable to a civil penalty, being the higher of 200 penalty units or three times the value of the unlawful political donation. This is consistent with offence provisions in other sections of the Commonwealth Electoral Act 1918 .

 

314AM   Offence—scheme to circumvent prohibitions

This section prevents a person from entering into a scheme or arrangement to get around the prohibition on political donations under the Division (whether this was the sole purpose of the arrangement or not). The provision seeks to remove the possibility that donors or recipients will channel funds through other entities to avoid the restriction imposed by the Act.

The penalty of 2 years imprisonment is appropriate given the intention to influence decisions and interfere with the political process and is similar to other existing penalties. For example, section 326 of the Commonwealth Electoral Act 1918 provides for two years imprisonment where a person engages in bribery or seeks to influence a vote or decision. Strategic collusion to avoid measures designed to minimise the corrupting influence of donations should be treated equally seriously.

 

314AN   Electoral Commission may determine that a person is presumed not to be a prohibited donor

This provision recognises the administrative burden that may be imposed for entities that are similar to, but are not, prohibited donors if those entities are regularly asked to demonstrate that they are not a prohibited donor for the purposes of the Act. Equally, some entities will want certainty about their donation status.

An entity satisfied that it is not a prohibited donor can apply in writing to the Electoral Commission for a determination that it is not a prohibited donor. Entities that are not clear whether they fall into any of the categories of prohibited donors can also seek a written assurance from the Electoral Commission that they can lawfully make political donations.

A determination will last for 12 months, unless revoked earlier, and supports a rebuttable presumption that the entity is not a prohibited donor for the purposes of this Division and political donations from the entity are not unlawful. The Electoral Commission must maintain a register of determinations and publish the register on its website.

The presumption may be rebutted if a person demonstrates that the determination made by the Electoral Commission was based on false or misleading information or if the entity’s circumstances have materially altered since the determination was made.

A determination made by the Electoral Commission is not a legislative instrument and will not be subject to disallowance by the Parliament.

 

Division 5C—Capping donations

The Bill inserts a new Division 5C relating to capping donations

 

314AO   Simplified outline of this Division

This section provides an overview of the purpose and provisions of the Division.

 

314AP   Definitions

This section defines “donation cap” to mean $3,000 and “donation period” to equate to a single election term.

“Small contribution” is defined as an amount less than $50, being an amount that could be contributed through small fundraising events such as raffles and are unlikely to exert any influence over decision making.

The section also confirms that references to a State branch include a local division (branch) of the State branch of a political party.

 

314AQ   Capping of political donations

This provision prevents political donations made to, or for the benefit of a political party (including a State or local branch), a member of the Commonwealth parliament, a candidate, associated entity or political campaigner where the cumulative total of the donations exceeds the donation cap in the donation period.

This provision recognises that unfettered freedom to donate significantly increases the risk of corruption through undue influence. Restricting the amount donors can contribute minimises the risk that large political donations will be used to exert disproportionate influence on the political process.

 

314AR   Aggregating political donations

This section provides for the aggregation of donations for the purposes of determining whether the donation cap has been exceeded during the donation period. For the purposes of aggregated caps, donations made to individual members, candidates, endorsed groups or State branches are treated as a donation to the relevant political party.

Similarly, a political donation to a candidate or a member of a group will be treated as a donation to the group for the purpose of aggregating donations.

The intention of the Act is not to capture all donations made to political campaigners that undertake a range of non-electoral work. For example, a large environmental organisation may engage in a wide range of conservation activities as well as some activities characterised as political campaign activities. Only donations or gifts received for the purpose of electoral expenditure will be counted towards the aggregate donations cap for associated entities and political campaigners.

To avoid the unnecessary burden associated with aggregating small amounts of money, such as the purchase of raffle tickets or money contributed informally at an outdoor event, the Act excludes small contributions of less than $50 when aggregating total donations. However, small contributions will not be excluded where the contributions are made as part of a strategic arrangement that seeks to circumvent the restriction on political donations. 

Implementation of these provisions relies to an extent on the introduction of a comprehensive disclosure regime, which the Greens have long proposed and will introduce separate legislation to establish.

 

314AS   Exceeding donation cap unlawful

This section makes it unlawful for a political party, member of the Commonwealth Parliament, candidate, group, associated entity or political campaigner to accept a political donation that exceeds the donation cap, alone or when aggregated with other donations from the same donor, in the donation period.

In recognition of difficulties that may be experienced in timely aggregation of donations in the absence of a comprehensive disclosure regime, this section allows a donation that has been accepted, but which the recipient subsequently discovers has exceeded the aggregate donations cap, to be returned to the donor within 5 business days of the discovery. Where the gift is returned, the receipt of the gift is taken to not be unlawful.

Where an unlawful political donation has been accepted, the Commonwealth may recover an amount equivalent to the donation as a debt. Where a donation has been returned to the donor, no debt to the Commonwealth will arise.

 

Item 4 - Subsection 315A(1)

Amends subsection 315A(1) to include reference to subsections 314AK(6) and 314AS(3) to ensure that the provisions relating to recovery actions apply to the new sections allowing the Commonwealth to recover unlawful donations as a debt.



 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Commonwealth Electoral Amendment (Banning Dirty Donations) Bill 2020

 

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

Overview of the Bill

The purpose of the Bill is to implement two key recommendations of the Senate Select Committee into the Political Influence of Donations:

1.     Prohibiting donations from property developers, tobacco industry business entities, liquor and gambling business entities, financial institutions, pharmaceutical industry business entities, defence industry entities, and mineral resources or mining industry business entities, and industry representative organisations whose majority members are prohibited donors.

2.     Limiting the amount that can be given or received as a political donation from any person or entity in each donation period (being one Commonwealth election term).

The Bill outlines the offences associated with unlawful donations made by prohibited donors, or that exceed the donation cap within the donation period.

 

Human rights implications

The amendments proposed in this Bill engage the following rights under the International Covenant on Civil and Political Rights:

§   the right to freedom of expression (Part III, Article 19, Section 2); and

§   the right to take part in public life (Part III, Article 25).

 

The right to freedom of expression

Under Article 19 of the International Covenant on Civil and Political Rights, everyone has the right to freedom of expression. This right includes the freedom to seek, receive and impart information and ideas of all kinds, regardless of borders, whether orally, in writing or in print, by way of art, or in another way a person chooses.

A Bill to cap or prohibit political donations will ultimately limit the ability of political parties to engage in activities like electoral advertising and promotion, to express their policy positions to the public. Some argue that this could limit the right of prohibited donors to engage in the political process.

However, the right to donate to a political party is not equivalent to the right to freedom of speech or political communication. Prohibited donors retain the right to campaign publicly, to advertise, and to articulate their political views on any issues they wish - they are simply prohibited from donating monies to political parties.

 

The sectors identified as prohibited donors have demonstrated a frequent nexus between their operations and public policy, and the strong public perception of impropriety associated with political donations and decision making. The Select Senate Committee on the Political Influence of Donations sets out clear examples of this nexus and the extent to which the proximity of donations from key industries to policy or project determinations that advantage that industry suggest undue influence.

Consistent with the majority judgment in McCloy v NSW , any burden on the implied freedom of political communication will be acceptable if it is for a legitimate purpose and a proportionate response to the corruption risks presented by the prohibited donors. The nature of the business activities undertaken by the prohibited industries identified in the Bill make it very likely that they will seek to influence policy outcomes in their collective self-interest. Banning political donations from these industries is a proportionate response to achieve the legitimate aim of more representative democracy.

 

The right to take part in public life

Under Article 25 of the International Covenant on Civil and Political Rights, every citizen has the right, and is to have the opportunity, to -

(a)   To take part in the conduct of public affairs, directly or through freely chosen representatives;

(b)   To vote and to be elected at genuine periodic elections which shall be by universal and equal suffrage and shall be held by secret ballot, guaranteeing the free expression of the will of the electors;

(c)   To have access, on general terms of equality, to public service in his country.

 

The Bill only restricts the ability of prohibited donors to participate in political debate in one way - by restricting their ability to donate to political parties. Individuals will still be able to vote and corporations will still be able to publicly engage in the debate in every way possible, aside from making donations to political parties.

The decision in McCloy v NSW supports the view that capping donations seeks to achieve the legitimate end of preventing and reducing corruption and undue influence by preventing the payments of large sums of money through political donations. The majority judgment notes (at [45] - [47]):

“[t]he risk to equal participation posed by the uncontrolled use of wealth may warrant legislative action to ensure, or even enhance, the practical enjoyment of popular sovereignty”.

Banning donations from key industries and capping donations across the board for all other donors seeks to level the playing field and avoid those with more money gaining unequal access to government.

 

Conclusion

This Bill is compatible with human rights because it advances equality in the protection of freedom of expression.