Title Commonwealth Electoral Amendment (Donation Reform and Other Measures) Bill 2020
Database Explanatory Memoranda
Date 03-12-2020 12:32 PM
Source Senate
System Id legislation/ems/s1244_ems_3ea7bfd2-34aa-4d93-b5bf-f2367305417b


Commonwealth Electoral Amendment (Donation Reform and Other Measures) Bill 2020

 

2019-2020

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

SENATE

 

 

COMMONWEALTH ELECTORAL AMENDMENT (DONATION REFORM AND OTHER MEASURES) BILL 2020

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

(Circulated by authority of Senator Jacqui Lambie)


 



 

COMMONWEALTH ELECTORAL AMENDMENT (DONATION REFORM AND OTHER MEASURES) BILL 2020

Purpose: Amends the Commonwealth Electoral Act 1918 to:

·       define reporting entities as political entities, campaigners, associated entities and third parties;

·       lower the disclosure threshold for gifts provided to reporting entities;

·       require disclosure by reporting entities and donors when the sum of the gifts provided by the same donor to the same reporting entity is greater than the disclosure threshold;

·       require disclosure by reporting entities and donors within 7 days of a reportable gift (a ‘trigger gift’) being made, and require disclosure within 7 days of subsequent ‘post-trigger’ gifts until the end of the reporting period;

·       require reporting entities to lodge half-yearly returns with details of the nature and source of all reportable donations and other receipts;

·       require reporting entities that engage in electoral expenditure to hold an electoral expenditure account with an ADI (authorised deposit-taking institution), from which all electoral expenditure must be paid;

·       increase the monitoring and investigatory powers of the Australian Electoral Commission (AEC); and

·       provide for infringement notices and civil penalty provisions for entities or persons that fail to meet their disclosure obligations.

GENERAL OUTLINE

1.      The Commonwealth Electoral Amendment (Donation Reform and Other Measures) Bill 2020 (the Bill) makes consequential amendments to the Commonwealth Electoral Act 1918 to strengthen transparency and accountability measures in relation to the disclosure of political donations (‘gifts’) at the Commonwealth level.

 

2.      The Bill introduces a number of measures to increase the transparency of political donations made and received by persons and entities, including:

 

·      lowering the disclosure threshold for political donations, so that gifts of $2,500 or more must be disclosed every six months (from $14,000 a year);

 

·      requiring aggregation under the threshold, so that multiple gifts from the same source to the same recipient must be disclosed if the sum of the donations is greater than or equal to the disclosure threshold;

 

·      requiring that revenue from the sale of tickets to fundraising dinners or related events be reported as a political donation by expanding the definition of a ‘gift’, and including membership fees to parties or associated entities in the definition of a gift;

 

·      defining a ‘trigger gift’ as a gift made by a person or entity when the sum of all gifts made by that person or entity to the same recipient is greater than or equal to the disclosure threshold for the relevant reporting period;

 

·      requiring donors and recipients to disclose trigger gifts within 7 days after the gift is made, and requiring subsequent gifts that are not permitted anonymous donations or gifts of $100 or less (‘post-trigger gifts’) to be disclosed within 7 days until the end of the reporting period;

 

·      requiring reporting entities (political entities, campaigners, associated entities and third parties) to provide half-yearly returns detailing information on all income and receipts over the disclosure threshold (aggregated by source);

 

·      requiring reporting entities to provide additional information in relation to a receipt that is not a gift (an ‘other receipt’); and

 

·      providing for permitted anonymous gifts received at events, which must be valued at $500 or less per person per event.

 

3.      The Bill also introduces a number of compliance measures to increase accountability in relation to political donations disclosures, including:

 

·      requiring that reporting entities establish and maintain an electoral expenditure account;

 

·      requiring that all electoral expenditure must exclusively be paid from the entity’s electoral expenditure account;

 

·      requiring that the only person or entity able to transfer funds to an electoral expenditure account is the AEC;

 

·      establishing the AEC Disclosure Portal, through which disclosures must be lodged and made publicly viewable, and deposits into an entity’s electoral expenditure account must be made; and

 

·      providing for inspectors within the AEC, who would monitor and enforce the provisions in this Bill and related offences in the Crimes Act 1914 and the Criminal Code.

Context for the provisions

4.      The provisions included in this Bill address significant deficiencies in the current regulatory framework for political donations. The current framework has high thresholds for disclosure, infrequent reporting, and does not require comprehensive disclosure of donations or other receipts. In addition, weak compliance measures limit the incentive for donors and recipients to meet their disclosure obligations. These issues create the potential for corruption, and fuel public scepticism about Australia’s democratic processes. The measures proposed in this Bill address these problems by bringing Commonwealth provisions for the disclosure and monitoring of political donations in-line with best practice in the States and Territories.

 

FINANCIAL IMPACT STATEMENT

 

5.      Nil. It is anticipated that any additional expenditure required of the AEC will be met from within existing appropriations, and offset against savings from improved efficiencies relating to the new automation of disclosures and simplified reporting regime.

 

 


 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

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

 

6.      The Commonwealth Electoral Amendment (Donation Reform and Other Measures) Bill 2020 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

7.      The object of the Commonwealth Electoral Amendment (Donation Reform and Other Measures) Bill 2020 (the Bill) is to enhance transparency and accountability measures in relation to donations (gifts) given and received for the purposes of communicating electoral matter at the Commonwealth level.

 

8.      The Bill amends the Commonwealth Electoral Act 1918 to respond to community concern about the influence of political donations on the operation of federal political processes and decision-making. It increases the integrity of the Commonwealth political donations disclosure regime by requiring more frequent and more detailed disclosures of receipts by gift recipients and donors. It strengthens compliance measures by requiring electoral expenditure to exclusively be paid for via an electoral expenditure account, which may only contain funds that have been appropriately disclosed. It also increases the monitoring and investigatory powers available to the AEC in relation to serious contraventions of Part XX of the Act.

Human rights implications

9.      The Bill may burden the implied right to freedom of political communication (and associated rights protected under Articles 17, 19 and 25 of the International Covenant on Civil and Political Rights) by strengthening the disclosure requirements relating to political donations.

 

10.  However, the implied right is not an absolute freedom, but a qualified limitation of legislative power. Legislative change that burdens the implied right is constitutionally valid if the law’s purpose is legitimate to the maintenance of representative government provided for in the Constitution, and the law is reasonably appropriate and adapted to advancing that legitimate purpose. 

 

11.  The provisions in this Bill mirror similar laws in the States and Territories, with the purpose of improving the Commonwealth political donations regulatory framework. Increased disclosure of political donations and stronger compliance measures relating to money in politics will make greatly needed improvements to the integrity of Commonwealth political processes, and bring Commonwealth laws in line with other jurisdictions in Australia. The Bill is therefore appropriate and well adapted to maintaining representative government, as provided for in the Constitution.

Conclusion

12.  The Bill is compatible with human rights and freedoms.

 

 

 


 

NOTES ON CLAUSES

Clause 1 – Short title

13.  This is a formal provision specifying that the Bill, once enacted, may be referred to as the Commonwealth Electoral Amendment (Donation Reform and Other Measures) Act 2020 (the Act).

Clause 2 – Commencement

14.  The table in this clause sets out when the provisions of the Bill commence.

Clause 3 – Schedules

15.  This clause of the Bill provides that legislation that is specified in a Schedule is amended or repealed as set out in that Schedule, and any other item in a Schedule operates according to its terms.

SCHEDULE 1: DISCLOSING GIFTS

16.  This schedule increases the disclosure requirements for gifts (donations) under the Commonwealth Electoral Act 1918.

 

17.  Item 2 reduces the disclosure threshold from $13,800 to $2,500.[1]

 

18.  Items 3 and 5 amend subsection 287(1) to expand the definition of a gift. The new definition includes: an amount paid by a person or entity as a contribution, entry fee or other payment to entitle that or any other person or entity to participate in or otherwise obtain any benefit from a fundraising venture or function; and an annual or other subscription paid to a registered political party or associated entity (including affiliation fees).

 

19.  Item 4 adds further definitions to subsection 287(1), including defining a reporting entity as: a political entity; an associated entity; a political campaigner; or a third party. It also defines the reporting period as a period of 6 months beginning on 1 January or 1 July in each year, sets out references to other definitions.

 

20.  Item 6 provides a simplified outline of the Division (S302V).

 

21.  Item 7 sets out civil penalty provisions for failing to lodge a disclosure in accordance with this Part, and the information that must be disclosed in a disclosure return.

 

22.  This item provides for the new section 305B and 305C, which define a ‘trigger gift’ and ‘post-trigger gift’ for the purposes of this Act. A trigger gift is a gift made by a person or entity when the sum of all gifts made by that person or entity to the same recipient is greater than or equal to the disclosure threshold for the relevant reporting period.

 

23.  For instance, a donor would be making a ‘trigger gift’ if they donate $600 to a reporting entity and they have already contributed $2,000 to the same reporting entity during the same reporting period. Permitted anonymous donations and donations under $100 are not required to be aggregated for the purposes of calculating whether a gift is a trigger gift. Excepting permitted anonymous gifts and gifts of $100 or less, all subsequent gifts (post-trigger gifts) from the same donor to the same reporting entity must be disclosed until the end of the reporting period.

 

24.  The new section 305A, inserted by Item 7, would require donors and recipients to disclose the sum of gifts made by the donor to the entity 7 days after a trigger gift is made. The disclosure return must include details about the source and recipient of the gift(s).

 

25.  Subsection 305A(3) exempts registered charities that are third parties or political campaigners from the real-time disclosure provisions. This is to limit unnecessary real-time disclosures of donations that do not serve a political or electoral purpose. Registered charities that are third parties or political campaigners will still be required to disclose donations and other receipts that were used for the purposes of electoral expenditure every six months under Division 5A of this Bill (Schedule 3, Item 1).

 

26.  Items 8, 9 and 10 make small changes to provisions requiring the repayment of gifts where corporations have been wound up within a year of making a gift.

 

27.  Item 11 makes minor technical changes.

 

28.  Item 12 requires the Electoral Commissioner to publish relevant returns within certain timeframes.

 

29.  Item 13, 14, and 15 make minor technical changes.

SCHEDULE 2: AEC DISCLOSURE PORTAL AND THE ELECTORAL EXPENDITURE ACCOUNT

30.  Schedule 2 strengthens compliance measures in relation to the disclosure of political donations.

 

31.  Item 1 outlines relevant definitions for this Part.

 

32.  Item 2 establishes the AEC Disclosure Portal. The portal would have an electoral expenditure purpose, and a disclosure purpose.

 

33.  The electoral expenditure purpose would provide the sole mechanism for entities to transfer receipts to their electoral expenditure account, care of the AEC. The disclosure purpose would require disclosure of the source and nature of the receipt before the receipt is transferred.

 

34.  The disclosure purpose of the AEC Disclosure Portal would provide a digital mechanism for reporting entities and donors to keep track of gifts. It would mitigate the impact of any increase in administrative burden associated with stronger disclosure requirements, by allowing reporting entities and donors to lodge records of gifts made or received prior to these records being made public. It would automatically consolidate financial records for the purposes of calculating whether a gift is a trigger gift, and notify reporting entities and donors when a public disclosure is required. Gifts that must be declared under Section 305A will be made publically viewable on the portal.

 

35.  There are disclosure portals in Queensland and South Australia that are used to facilitate real-time donations disclosure requirements in those states.[2]

 

36.  Item 2 also provides that reporting entities would be required to hold an electoral expenditure account. Receipts into the electoral expenditure account must only be transferred by the AEC, after the source of the income has been properly disclosed via the AEC Disclosure Portal. Reporting entities that engage in electoral expenditure must pay for that expenditure exclusively from their electoral expenditure account.  The regulations will specify what information needs to be provided for the transfer of amounts that have not already been disclosed according to Section 305A and/or Division 5. For instance, the regulations could specify that entities can transfer amounts from existing assets if they provide information about the largest contributors to those assets over the previous financial year.

 

37.  The electoral expenditure account acts as a compliance measure, by ensuring that all electoral expenditure is funded using receipts that have been properly declared according to this Act. Similar measures are in operation in NSW. Entities that engage in electoral expenditure in NSW must establish a campaign account,[3] from which payments for the purposes of electoral expenditure in NSW must be paid. The campaign account allows the NSW Electoral Commission to conduct compliance audits in relation to an entity’s disclosure and electoral expenditure requirements. One way to monitor the use of the electoral expenditure account at a federal level would be to conduct regular audits of electoral expenditure that has been authorised under Part XXA of this Act.

SCHEDULE 3: RETURNS BY REPORTING ENTITIES

38.  Schedule 3 improves the regular reporting requirements relating to reporting entities’ gifts and other receipts.

 

39.  Item 1 replaces Division 5A of Part XX of the Act. The new Division 5A provides that reporting entities must provide a return in accordance with this section within a month after the end of a reporting period. Failure to lodge a return will result in the higher of: a civil penalty provision of 120 units, or 3 times the undisclosed amount if there is sufficient evidence to determine that amount.

 

40.  Receipts that are not a gift (‘other receipts’) must be categorised on the return as either: a commercial loan; income from an investment; or other (with a description). Additional details about the receipt may be required. For instance, if the amount is income from an investment, the entity must provide details about that investment. If the source of a receipt is a trust or unincorporated association, the return must also provide details on the trustees or executive committee of the association. Other receipts under the disclosure threshold must be declared by the reporting entity if the sum of those receipts from the same source is more than the disclosure threshold.

 

41.  Certain receipts to certain entities or persons would not be required to be declared. For instance, amounts received by registered charities that were not used during the reporting period by the entity to incur electoral expenditure do not need to be disclosed.

 

42.  Item 2 provides that the AEC will publish the returns as soon as reasonably practicable.

SCHEDULE 4: MONITORING AND INVESTIGATION POWERS

43.  Schedule 4 allows the Electoral Commissioner to appoint an inspector and bestows additional monitoring and investigatory powers on the AEC.

 

44.  Item 1 provides definitions relevant to this Part.

 

45.  Item 2 adds Division 5B to Part XX, which provides additional monitoring and investigative powers to the AEC. Section 314AH provides that the Electoral Commissioner may appoint a person to act as an inspector, if the Commissioner believes the person has the knowledge or experience to properly undertake this role.

 

46.  This item also adds Sections 314AJ and 314AK, which provide authority for the Electoral Commissioner and an inspector to monitor and investigate potential compliance issues relating to donations disclosure requirements under the Act or related offences against the Crimes Act 1914, or the Criminal Code. The inspector has the investigative powers set out in the Regulatory Powers (Standard Provisions) Act 2014, and may issue infringement notices where necessary.

 

47.  Item 3 provides for significant civil penalty provisions (300 penalty units) for disclosures that are deliberately false or misleading.

SCHEDULE 5: ANONYMOUS GIFTS

48.  Schedule 5 provides for permitted anonymous gifts.

 

49.  Item 1 provides definitions relevant to this Part.

 

50.  Item 2 provides for permitted anonymous gifts. Permitted anonymous gifts may be received at public or private events. In either case the amount of the gift must be $500 or less, and organisers at the event will be required to record details of the event and the persons receiving the gifts.

 

51.  If the gift is received at a general public activity, a person involved in the organisation of the activity must also make a record of the date location and nature of the activity, as well as the total amount of anonymous gifts received by or on behalf of the recipient at the activity. Multiple anonymous gifts from the same donor are not permitted at the same public event.

 

52.  If the gift is received at a private event, a person involved in organising the event must record details of the event as well as the number of people who attended the event. If the total amount of anonymous gifts received by or on behalf of the recipient at the event is greater than $500 times the number of people who attend the event, the excess must be returned within 6 weeks of the event.

 

53.  Item 2 provides that it is unlawful for political parties, candidates and political groups to receive anonymous gifts unless they are permitted anonymous gifts. Section 307AE sets out who would be liable for unlawful receipts of anonymous gifts. Section 307AF sets out when it would be unlawful to incur electoral expenditure using income from an anonymous gift that was not a permitted anonymous gift.

SCHEDULE 6: TRANSITIONAL PROVISIONS

54.  Schedule 6 makes provisions for the Minister to make rules prescribing transitional measures relating to repeals or amendments made by the Bill. Any such rule would be made through a legislative instrument. The transitional period for the Bill is 2 years.

 

Senator Jacqui Lambie



[1] Note that item 4 shortens the reporting period for donations disclosure from a year to six months. As a result, the maximum amount that could remain undisclosed in a year is $5,000.

[3] See: https://www.elections.nsw.gov.au/Funding-and-disclosure/Campaign-accounts/What-is-a-campaign-account. In NSW party agents are responsible for transferring funds to the campaign account.