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More evidence of why donation disclosure laws are hopeless

For several years now Crikey has engaged in the ritual denunciation of our Commonwealth electoral donation laws every February when the Australian Electoral Commission does its annual release of donations data.

It’s worth repeating: at the Commonwealth level, the laws about electoral donations are a complete disgrace. That we are only finding out 17 months after the 2010 election who donated to the major parties is a blight on our democracy — one the mainstream media, normally quick off the mark to denounce any lack of political transparency, seems to ignore.

That blight is there because the Coalition and Steve Fielding blocked reforms proposed by John Faulkner during the Rudd government that would have significantly accelerated the reporting cycle for donations, as well as reducing the reporting threshold back to $1000, rather than the current $11,500 threshold created by the Howard government.

To its credit, Labor reports according to the $1000 threshold. The Coalition — complying with the law — does not.

One of the key elements of the current law that does work, however, is that donors and parties are required to submit returns on donations. Parties are also required to report other forms of funding as well, including tax refunds and payments from government.

Having donor and party required to report donations enables some cross-checking, so we’re not reliant on political parties only for information on who is giving them money. The result, invariably, is that several donors are found out as having not submitted returns by the deadline of  November 17 after the end of the relevant financial year, potentially exposing themselves to fines by the AEC.

Austereo appears to be one such. It hasn’t donated since the 2007 election, but gave $197,788 as a “gift in kind” to the Liberals — presumably radio airtime — and a $150,000 donation to Labor, without submitting a declaration (the company was unable to respond by deadline; its reponse will be posted once it’s received). Chinese tycoon Chau Chak Wing, a prolific donor and philanthropist in Australia, yet again failed to submit a return for his $50,000 donation to the Liberals.

A $100,000 donation to the Liberals by fund manager Pacific Road Capital Management was also not reported; CEO Paul Espie told Crikey he’d made the donation personally and had asked his accountant to find out why it hadn’t been reported. Terry Jackson, a WA property developer who is a massive donor to the WA Liberals, had only recently lodged his return for a $500,000 donation the party, citing ill health. Then there’s several individual donors who failed to lodge returns for their donations over $11,500.

But other discrepancies point to the need for an overhaul of the reporting system. Queensland coal miner New Hope Corporation’s $100,000 donation to the Liberals was reported separately by its ultimate owner, Washington H. Soul Pattinson. Macquarie Telecom appears not to have filed a return for its $120,000 donation to the ALP –- but in fact it did, for 2009-10, because it donated to Labor on June 29, 2010, and Labor appears to booked that in the 2010-11 financial year. The same applies to Straits Resources, which gave $100,000 to the Liberals.

The lack of clarity around what a donation is and what a payment is, when both serve the same purpose of fund-raising, also adds to the confusion, because donors are not required to report the latter. If a company purchases a seat at a party fund-raiser and gets access to a minister, that isn’t counted as a donation for the purposes of Commonwealth laws, and therefore donors don’t have to report it, although some companies, such as Macquarie Bank, scrupulously report everything. GE Real Estate Investment, a Sydney company, gave over $93,000 to the Liberals but didn’t have to report it because it wasn’t a donation. Raytheon gave the Liberals $30,000 in “other” funding.

Add to that the layer of state disclosure requirements, which vary enormously (NSW requires reporting of non-donation contributions, for example), and you begin to see why companies, particularly large ones that operate nationally, can get confused about what they’re supposed to report, to whom and when.

It’s rare that donors actually want to hide their donations — “I don’t need to hide my light under a bushel,” said one big Liberal donor. There’s no reason why companies and parties couldn’t report donations instantly, or within a matter of days, rending moot the whole process of looking back 17 months and checking different financial years, thereby significantly improving real-time accountability.

That’s exactly what the Joint Standing Committee on Electoral Matters recently recommended for donations over $100,000, with a 14-day reporting requirement, as well as a six-monthly reporting timeframe for other donations.

Predictably, however, the Liberals indicated in their dissenting report that they opposed lowering the reporting threshold to $1000, and amazingly also opposed a recommendation that Commonwealth laws be amended to require donors to report non-donation funding such as attendance at party fund-raisers.

With the Greens holding the balance of power in the Senate, however, it’s time for the government to move fast on disclosure reform.

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  • 1
    Edward James
    Posted Friday, 3 February 2012 at 2:07 pm | Permalink

    The laws are certainly a joke. Because we should know who donated how much to which politician or political party, before the election not eighteen months after the vote has been counted. That means donations would be in and registered weeks before the ballot is called. Is that complicated? No it is bloody not! Edward James

  • 2
    Fran Barlow
    Posted Friday, 3 February 2012 at 3:58 pm | Permalink

    Austereo appears to be one such. It hasn’t donated since the 2007 election, but gave $197,788 as a “gift in kind” to the Liberals — presumably radio airtime

    Perhaps there should be a “deeming” regime so that undercharged ads for non-charitable organisations are deemed to have paid the broadcaster the rate they would have charged for a commercial spot. This should be easy enough to work out by simply comparing all like broadcasters at like times and deriving a “mean”. Tax would then be paid on these ads.

  • 3
    John64
    Posted Friday, 3 February 2012 at 4:37 pm | Permalink

    Why would you pay ‘tax’ on ads? You pay tax on income, not expenditure. And the easy way around your stupid tax on under-paid ads (because, how terrible?) is the radio company donates $150,000 to the party and the party then pays the radio company $150,000 for the airtime - all agreed to before-hand of course.

    Probably of greater issue are third party campaigns (for example, the mining industry’s campaign, the pokies ads along with groups like “Say Yes Australia”) who aren’t required to disclose who’s behind them, who donated or how much. Not quite as bad as the American Super PACs but already those campaigns have had a much more profound impact on politics in Australia than the political parties themselves.

  • 4
    Andybob
    Posted Friday, 3 February 2012 at 5:19 pm | Permalink

    At one stage it was thought you could donate $11,500 to the Federal party and then a further $11,500 to each State party for use in supporting the Federal campaign, without triggering a disclosure obligation. Does anyone know if that is still possible ?

  • 5
    AR
    Posted Friday, 3 February 2012 at 9:24 pm | Permalink

    The political pusillanimity of the MSM is well known (bread buttered/honeyed/caviared) but there IS an exception to the mainstream media, normally quick off the mark to denounce any lack of political transparency, when it was the $1.6M given to the Greens. Announced AT THE TIME, by both recipient & donor, but the shock horror from the RR & its enablers was deafening!
    The Greens policy is there should be NO large donations from disguised sponsors. That doesn’t prevent their being traduced with claims of hypocrisy - credible only only to the semi sentient, who unfortunately are compelled to vote - when they abide by what is legal, are openly transparent, unlike tuthers, and still campaign that the law is a malignancy on (our soi disant) democracy.

  • 6
    Edward James
    Posted Friday, 3 February 2012 at 10:01 pm | Permalink

    JOHN64 Don’t we pay Goods and Services Tax on expenditure? Edward James

  • 7
    Schnappi
    Posted Friday, 3 February 2012 at 11:36 pm | Permalink

    People who go into politics these days are frauds,you cannot tell me me that a kid like wyatt roy at 21 years of age has the life experience to influence even my pet rat.
    The guy will get a pension for life at age 29 and all the perks for sitting on a backbench doing nothing but warm a seat and smile at someone who has not even taken his picture.Yet a serviceman has to do 20 years ,probably shot at ,even wounded and will get far less than roys pension
    Not an attack on wyatt roy personnally ,just on a system that allows frauds to be elected on an alleged principle to their constituents and then immediately desert their constituents and be muzzled by someone like abbott with opportunistic goals for him personnally.

  • 8
    Fran Barlow
    Posted Saturday, 4 February 2012 at 12:26 am | Permalink

    John64 said

    Why would you pay ‘tax’ on ads? You pay tax on income, not expenditure.

    You’d be paying tax on artificially reduced income. This arrangement is really an attempt to embezzle the public purse. Private citizens can’t make tax deductible political donations. Business apparently can.

    And the easy way around your stupid tax on under-paid ads (because, how terrible?) is the radio company donates $150,000 to the party and the party then pays the radio company $150,000 for the airtime - all agreed to before-hand of course.

    Firstly, your hypothetical arrangement might qualify under the tax act as a tax avoidance scheme. There are penalties for that. Also, politically, it would play very poorly in public. Not going to happen. The arrangement also has the advantage of increasing effective taxation on cross promotion — such as in elite sport. No bad thing, IMO.

    If media companies are backing political parties, they should do it transparently. ‘In kind’ is sneaky.

  • 9
    deft descender
    Posted Sunday, 5 February 2012 at 3:16 pm | Permalink

    Watching Clive Palmer on Late Line with Tony Jones he said he could only donate $5000 as a company to a political party but a union could donate $500K. Jones didn’t challenge that statement.

    If true then no wonder the Libs treat any ALP political donation reform proposals as another reason to say no.

  • 10
    deft descender
    Posted Sunday, 5 February 2012 at 3:19 pm | Permalink

    Palmer was talking about QLD.

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