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Federal

Feb 2, 2016

Why we're groping in the dark on political donations

The state of our political disclosure regime means that we're only getting part of the picture on who is trying to influence our political parties.

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While there was plenty of data to dig into yesterday from the Australian Electoral Commission’s annual party funding returns for 2014-15, we’re not doing much more than reading the tea leaves on the financial arrangements of the major political parties and their links with donors. As always, we’re only getting a part of the story — and that part requires careful interpretation. Here are the tricks, lurks and loopholes that parties and donors exploit:

The credibility gap between declared income and total income

Declared income is the amount of revenue of political parties for which we know the source: donations, payments, public funding, property or other asset sales, donations in kind — the parties are required to give a total for all amounts received over the reporting threshold ($12,800 in 2014-15). But in most cases — except for Clive Palmer — the amount of declared income falls well short of their total revenue. As Crikey reported yesterday, nearly 40% of the major parties’ income falls into this credibility gap.

The least transparent party is the Liberal Party, which refuses to disclose contributions below the reporting threshold. Less than 60% of Liberal branches’ revenue can be identified, and just 42% of the Liberal National Party’s. Both the federal Liberals and NSW Liberals had a smaller gap than usual in 2014-15 — they are at 76% and 74% respectively. But nearly 95% of federal Labor revenue can be identified — reflecting its willingness to report all donations down to $1000 — and 73% of NSW Labor’s revenue.

For smaller parties and smaller branches of the major parties, the gap is bigger, because they rely more on smaller donations that may even be below the $1000 threshold to which most Labor branches adhere. The Greens overall report less than 30% of identifiable payments; the federal Nationals, 33%; South Australian Labor, 30%, the West Australian Liberals, 24%.

Disclosure rules

The basic rules on disclosure are that parties must report all payments above the reporting threshold and a total revenue figure. But donors only have to report donations — strictly defined — above the threshold; payments for goods or services, whether above or below the threshold, are not required to be disclosed by donors, even if they’re transparently a form of donation, like buying a seat at a fundraising dinner. This means far fewer donors disclose their payments than are listed by the parties — with a consequence that if you donate under the threshold to the Liberals, no one will ever know, and only a search of the parties’ returns will reveal a payment that is above the threshold but not a donation.

So, for example, it’s only by searching the federal Liberal Party’s return that you’ll find the ASX and Coles both paid over $100,000 to the party, but in neither case is it identified as a donation, so neither had to make a return to the AEC. And checking a party’s return document is more laborious for, say, time-pressured journalists than searching the AEC’s user-friendly system under “Donors” — assuming they know that you should check the return as well.

And as the parties shift more and more away from outright donations to good/service-based contributions systems such as fundraising dinners and membership fees for fundraising fora, the number of donors who are reporting their contributions will fall. Consider the 2014-15 federal Labor return, for example: page after page of “Other receipt”, with only a handful of actual donations that are reportable by the donors.

To their credit, a number of companies are taking the approach of disclosing everything, whether reportable or not — a commitment to transparency begun by Macquarie Bank, which has long disclosed every contribution to parties. Aspen Medical, for example, made a series of contributions to Liberal Party branches totalling over $20,000, none of which it was required to report, but it disclosed them anyway. KPMG disclosed both reportable donations and tiddlers like $65 given to the Liberals.

But lobbyists who attend party fundraisers report that many companies they see around them at such events never report their contributions, because they can be justified as payments for goods or services, rather than donations (though under NSW law, as opposed to Commonwealth laws, such contributions have to be reported by donors). Still other donors simply don’t file a return at all. Despite making donations to the Liberal Party totalling nearly a million dollars in 2014-15 — and their being classified by the party as donations — mining magnate Paul Marks doesn’t appear anywhere in the donor returns, nor does one of his companies, Brunswick Property, which provided $600,000 to the Liberals.

And, as usual, foreign donors were less than diligent in their returns: Chau Chak Wing’s HK Kingson Investments failed to make a return despite donating $200,000 to the WA Liberals; mystery property businessman Jiandong Huang gave $100,000 to the federal Liberals without making a return.

Enforcement

Foreign donors need not be too concerned; nor, for that matter, domestic donors. As Bill Shorten demonstrated last year, there is virtually no penalty for non- or extremely late disclosure of donations. Courtesy of the trade union royal commission, Shorten and the Victorian branch of the ALP were caught out having failed to declare a contribution of what was initially thought to be $40,000 but — after Labor’s rushed effort to lodge an amendment — turned out to be over $65,000 in 2006 and 2007.

But Shorten was a rare example of a late or amended return attracting attention. Smart operators know that the media only really focuses on political donations on February 1. Slip an amendment or a late return to the AEC after that date and chances are it won’t get much coverage — although that’s changing: in 2014 the NSW Liberals were spotted quietly amending a return involving a fundraising body for Tony Abbott from four years before.

It’s all part of a rotten system that prevents us from seeing who is funding our political parties, keeping voters in the dark and leaving parties or donors who choose to do the right thing and act transparently at a disadvantage.

Bernard Keane — Politics Editor

Bernard Keane

Politics Editor

Bernard Keane is Crikey’s political editor. Before that he was Crikey’s Canberra press gallery correspondent, covering politics, national security and economics.

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10 comments

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10 thoughts on “Why we’re groping in the dark on political donations

  1. 2bobsworth

    Consider the unabashed $30M political interference in Australian politics by an American businessman , Rupert “he who must not be named” Murdoch, ,who uses The Australian Newspaper to champion the compliant conservative LNP just like his US FoxNews channel, is used as an extension of the US Republican Party,
    For some reason this paper runs at a $30M loss to perform this political hobby horse for Rupert.
    In the USA FoxNews reaps huge profits from advertising the Conservative agenda.
    Apart from nobbling the Commercial threat of the NBN the loss is surely another form of political donation by Rupert via the sheeplike News Corp shareholders.

  2. drsmithy

    The real problem here is that Crikey has decided that all political donations are corrupt or potentially so. This is demonstrated by Rourke (1) being unable to contemplate anything other than corrupt motives for the ASX donating to a political party. There is no recognition that our civic life needs to be funded and no suggestion about how it might be done.

    Good lord, that’s even more absurd than your usual collection of straw men.

    Offer a practical alternative to the current method for funding our civic life or please talk about something else.

    Political campaigning is not “civic life” any more than bribesdonations are “free speech”.

  3. klewso

    What’s wrong with anything over a grand?
    [It’s not as though someone’s going to kidnap your kids for that, like they are “if you’re paying a whole lot of tax” – so that ‘reasoning’ goes?]

  4. AR

    Any chance of a Royal Commission into Political Funding?
    No, I didn’t think so either.
    Whichever “side” sits on the Treasury Benches.
    Vote Independent & Green.

  5. Duncan Gilbey

    @David Hand

    “Offer a practical alternative to the current method for funding our civic life…”

    A simple, inexpensive “practical alternative” would be to ban political advertising.

    As for “funding our civil life”, that is not the purpose of political donations. Their purpose is to fund election advertising (see previous point).

    The funding of the Labor party by unions is hardly surprising considering the historical origins of that party.

    The question is, who is providing the “hidden” 40% of Liberal Party funding (and by implication what do they want in return)?

  6. Dogs breakfast

    It get worse. I want to know everyone who meets with Ministers, the PM etc.

    Contrary to Mr Hand’s assertions, with modern technology it is actually pretty easy to keep track of both donations and meetings. Did your branch not give receipts to people?

    A simple spreadsheet is all that is required for that, and an open diary for all Ministers meeting anyone other than other politicians, or security personnel, would be sufficient.

    You would be surprised how much data is easily available if the will is there.

    The will is not there, however.

    And yes David, I would also like to know how many people in the unions are ostensibly working for the ALP.

  7. Kevin Herbert

    Nice piece Bernard.

    The current system is rotten & needs urgent attention.

  8. Venise Alstergren

    The way political parties manoeuvre their way past, legal- or otherwise- niceties is sickening. This afternoon in Question Time a Liberal member threw a Dorothy Dixer of MT’s visit to the Middle East. Immediately Turnbull went into the tired old routine, “I know all Australians are proud of our young men who served in Afghanistan, etc, etc.” (not his exact words.) The voice going into sing song mode and the smile of awe that actors in ‘American tits and togas’ stories when talking to God/Jesus/whoever, used to use.

    Is the electorate so stupid it can’t sort out fluff from wheat? Malcolm Turnbull seems to think so.

  9. David Hand

    Memo to Bernard.
    The $1000 threshold is designed to make such donations administratively manageable. When the NSW ALP government introduced draconian disclosure laws requiring donations of $50 up to be disclosed, my Liberal branch simply stopped collecting donations. All branch bank accounts were closed as Labor achieved its objective of strangling grass roots donations while it sat pretty under the largesse of the AWU and the CFMEU et al.

    O’Farrell changed that by limiting donations to registered voters to try and push the balance the other way.

    The real problem here is that Crikey has decided that all political donations are corrupt or potentially so. This is demonstrated by Rourke (1) being unable to contemplate anything other than corrupt motives for the ASX donating to a political party. There is no recognition that our civic life needs to be funded and no suggestion about how it might be done.

    There is also the complete blind spot of Union funding of the ALP, such as how many Union employees are working full time on getting ALP politicians elected and how many are working in MP’s offices. I expect to see a massive Union funded TV campaign during the year which will coincidentally be aligned with ALP policies but I don’t expect Bernard to lose very much sleep over that.

    I would have thought that the great proportion of donations not being disclosed because they are so small should reassure Bernard that there are thousands of people on all sides of politics willing to make a donation to a political party that they think best represents them. This is how our civic life has been designed.

    Offer a practical alternative to the current method for funding our civic life or please talk about something else.

  10. Rourke

    I must be thick, but why would the ASX need to pay the Liberal Party $110,000 for services rendered? What came back the other way?

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