Précis of Political Donations & Safeguards Code
By Neil Freestone
Most Australians cannot participate in their democracy under the current political donations laws. The ‘Political Donations & Safeguards Code’ has been developed to provide a pathway towards addressing this problem.
“The current proportion who believe that it makes a difference who is in power, at 43 per cent, is at an all-time low.” (Source: ANU-SRC Poll: Changing views of governance: Results from the ANU poll, 2008 and 2014, Professor Ian McAllister, ANU College of Arts and Social Sciences, Report No. 17, August 2014 at page 8: politicsir.cass.anu.edu.au); and
“ . . . there was no real difference between the two major parties.”
(Source: http://www.abc.net.au/news/2014-08-11/poll-data-reveals-waning-interest-in-politics/5662568 – 11 August 2014)
Interpreting the results from the ANU-SRC poll, in the seven years to 2014, there has been a drop of 25% in the proportion of Australians believing it makes a difference who is in power. As noted above, in 2014, this proportion had dropped to 43%.
What is underlying the view – now held by the majority of Australians – that there is no real difference between the two major parties or who is in power?
- 7% of donors contribute 57% of donations
The Australian Electoral Commission (AEC) figures indicate that a small percentage of donors to political parties donate most of the funding. For instance, in 2009-2010, a mere 7% of the donors contributed 57% of the donations.
- Many donors donate to both sides of politics
AEC figures show that many donors donate to more than just the one political party. Interpreting the AEC information for the 2013-2014 period, it appears that at least seventy-seven donors donated to both Liberal and Labor.
- Large donations come from Australian and foreign individuals
AEC figures for the 2013-2014 period show evidence of large donations being made by individuals from both within and outside Australia.
- Foreign corporations donate to Australian political parties
Many of the entities donating to Australian political parties are corporations that have their roots outside Australia. Many more have shareholders who are not Australian nationals. In the US, foreign nationals are prohibited from making contributions that might influence American elections. The impact foreign donations may be having on Australian sovereignty is concerning.
- Public funding of elections has failed
The introduction of public funding in 1983 was aimed at reducing the influence of lobby groups and others who were prepared to put substantial sums of money towards campaign funding reserves in order to influence policy decisions by politicians. As the then Minister of State in 1983, Mr Beazley noted:-
“It is simply naive to believe that no big donor is ever likely to want his cut sometime. The price of public funding is a small insurance to pay against the possibility of corruption.” (Mr Beazley – Second Reading speech 2 November 1983)
Using 2007-2008 election year figures as a base, public election funding had grown by 18.53% by the 2013-2014 election year. In the same period, the growth in political party receipts increased by 29.54%. This rate outstripped the public funding increase by 11.01%. Public funding has not curbed the appetite for donors to donate. Even with some improvements to disclosure rules, public funding has made little if any impact on the problems that Mr Beazley spoke of in 1983.
In the light of the evidence, it is easonable to conclude that changes to the current system of political donations are required if Australians are to be permitted the right to meaningfully participate in the government of their country.
So how do we change the current system? What form should such changes take? Can we make such changes?
It is my contention that it is possible to bring about major, meaningful and long-lasting change to this important area of the law. The ‘Political Donations & Safeguards Code’ sets out a new model – a Code – of how political donations and political expenditure might occur in Australia.
Central to the success of the model, the Commonwealth’s exclusive powers under the Australian Constitution (the ‘Constitution’) would need to be expanded to ensure that the Commonwealth would have the clear authority to make electoral laws for all jurisdictions in Australia.
Of equal importance, a ‘Code’ that encompasses the cornerstones of the new laws would need to be developed and it would need to be referred to in the Constitution to bring the new laws into operation.
To this end, I have drafted the changes that I believe would be required to the Constitution and I have drafted the proposed Code (which takes the form of a piece of draft legislation).
The Code provides a model of the ‘nuts and bolts’ of the proposal. Although it may be a little technical, it has the benefit of moving the discussion from a collection of general principles to one more focused on just how such a new system might look and work.
The draft Code provides for a system where:-
- The rights to freedom of speech, of expression, of association, of political communication, and the right and freedom to equally partake with other Australians in the election of Australian citizens to public office in Australia, are to be upheld and that the provisions of the Code in respect to political donations and political expenditure and the associated matters share the objective of respecting, protecting and upholding such rights.
- The system would apply to all levels of government and to all jurisdictions across Australia. It would also apply to by-elections, to pre-selection or nomination processes relating to a potential candidate, to any election or by-election in respect to any position within a political party, associated entity or third party, and it would relate to any poll in respect to any referendum or plebiscite;
- Only eligible voters shall be permitted to make political donations;
- Eligible voters must be Australian citizens;
- Corporations, unions and any other entities shall NOT be permitted to make political donations;
- Foreign persons or entities shall NOT be permitted to make political donations;
- Political donations shall be subject to a yearly cap;
- The yearly donation cap for each eligible voter shall be equal to the average weekly wage for the particular year;
- Political expenditure shall be subject to a yearly cap;
- The yearly expenditure cap is calculated on a ‘per-candidate’ basis and shall be equal to the average annual wage for the particular year;
- All political donations would be made through the AEC.
- All political expenditure would be made through the AEC;
- Associated parties and third parties would only be permitted to obtain their funding from eligible voters – and caps also apply;
- The AEC would set up a unique trust account for every eligible voter. The AEC would also set up unique trust accounts for every candidate, political party, associated entity and third party. The AEC would manage each such account by receiving instructions in writing and applying the terms of the Code to each transaction in real time;
- The AEC would disseminate some election material for all candidates free of charge. Subject to the other provisions of the Code, candidates would continue to be permitted to directly deliver their own election material to eligible voters;
- The numbers of persons required to nominate candidates shall be capped;
- The registration fees payable by candidates to the AEC shall be capped;
- A donation made by an eligible voter shall not be part of the public record nor shall it be made known to the recipient of the donation unless the donor advises the AEC to the contrary in writing;
- Candidates, political parties, associated entities and third parties shall all make such disclosures as would be expected by a reasonable person to be required by the AEC so that the AEC may make an assessment that the Code is being complied with;
- A ‘Commonwealth Electoral Disputes Arbitration Commission’ shall determine disputes arising under the Code at no cost to the applicant and subject to the right of appeal to the High Court;
- The operation of the Code shall be subject to periodic and random audits by the Commonwealth;
- The Code also provides for other safeguards, including anti-avoidance provisions that are general and specific in nature and where the test in respect to particular conduct is not the intention of the person involved, but rather what the view of a reasonable person might be in respect to what has occurred. Some of the specific anti-avoidance provisions include:-
- Disclosure by a candidate or a candidate’s relations of any financial or other interests, where a candidate’s relations include (apart from relatives) business partners, accountants, solicitors, stock or share brokers, financial advisers, political advisers, bankers, fund managers, and any other professional adviser or assistant of the candidate where such assistance has been provided within four years prior to an election, or during an election zone, or within four years after an election;
- Preventing the use of confidentiality agreements in respect to certain court and other settlements;
- The re-direction of any awards regarding the reputation of a candidate or a candidate’s relations to the Commonwealth for payment to one or more registered charities of the Commonwealth’s choosing;
- Except for reasons of national or domestic security, prevent the use of confidentiality clauses or agreements where the expenditure of public monies is involved in the award of any tender;
- Preventing situations where a conflict of interest may arise between a candidate’s duties of public office and his or her private interests;
- Preventing the payment of inducements;
- Preventing candidates from receiving payments for a period of fifteen years after they cease to hold public office that may be related to how they conducted their responsibilities while they occupied public office;
- The deeming as corrupt behaviour the holding of foreign accounts by a candidate where there is no just reason for doing so (and disqualifying the minimisation of tax or other similar payments as being just reasons);
- The cancellation, without compensation, of a contract to expend public money where a candidate corruptly influenced the award of that contract; and
- Causing candidates guilty of corrupt behaviour to be personally responsible for appropriate compensation.
- The establishment of a ‘Commonwealth Independent Commission Against Corruption’;
- Measures to ensure all political parties adopt a set of model rules, where all voting is by secret ballot, and where the office bearers of such parties must adhere to similar obligations (where relevant) that apply to office bearers of corporations;
- Measures to ensure relevant Commonwealth departments and public servants are protected from the possibility of political interference;
- Offence provisions providing for disqualification from involvement in politics, substantial financial penalties and imprisonment for offenders; and
- Transitional provisions provide for a period of between one and two years for compliance, with transactions after the end of the transitional period being overseen by the AEC.
The public funding for the federal election in 2013 absorbed $58.1 million of Australian government funds. It would be more advantageous to the Australian community if this funding were re-directed to the AEC to assist it in defraying some of the increased administrative costs that would arise under the operation of the new model.
The model Code has not as yet undergone the constructive process of independent review. It is clearly acknowledged that the Code must submit to such a process before a final format of the model can be settled upon.
There are circumstances where a majority of senators (that is, 39 of our 76 senators) may be able to have our Governor-General cause the required changes to go to a referendum. If this were to happen, it would then take around 6 out of every 10 Australians to make the changes a reality.
NEIL FREESTONE is a barrister and solicitor
This new book (self-published on 3 June 2016 – ISBN 9780994606952 ebook version) is 65 pages long and is available free from the author’s website for private use (and for public discussion). The author’s website is www.neilfreestone.com.au