The government has left a significant hole in the new campaign finance laws that will enable political donors to avoid caps on donations — and the disclosure of them. And it sheds light on why the Coalition — otherwise inexplicably — waved through laws that exempted trade union affiliation fees that only benefit Labor.
One of the few good things about Labor’s bill is that it brings to an end one of the great lurks of our existing donation disclosure process — the distinction between money that is donated and money that is given to a political party in exchange for access to politicians. If you look at the annual returns of political parties, the actual amount of donations is relatively small; they get a lot more money from something called “other receipts”.
That’s because a lot of political fundraising isn’t soliciting for donations, but selling access to decision-makers, which is far more problematic from a democratic point of view. And currently, money used to purchase a spot or a table at a fundraiser isn’t disclosable by the donor — only by the party, and only if it’s above the current disclosure threshold, now nearly $17,000.
Over the past decade, both sides of politics have systematised such donations by offering annual subscriptions, for which you might get free access to several fundraisers. Under the draft legislation introduced this week, those subscriptions are now clearly defined as gifts, must be disclosed if above $1,000, and are capped.
So, tick for Special Minister of State Don Farrell in ending that silly loophole.
Except, in order to exempt trade union affiliation fees from the new caps on donations, the government has explicitly excluded membership and affiliation fees for both party branches and associated entities. New section 287AAB of the Electoral Act which will define gifts, as currently drafted, excludes membership and affiliation fees for parties and their associated entities unless they are then handed to the federal branch of the party for use as campaign spending.
Nothing prevents that money from being used by state branches as they see fit, or being used by federal parties for non-campaign activities.
This complements the perpetuation in the new bill of an existing flaw, as Anne Twomey has pointed out: the donation caps apply per jurisdiction, so anyone can donate separately to individual state branches, and the federal branch of a party, up to a total of $180,000 each year.
While the Greens have state and territory branches, and many independents have associated entities for fundraising, it’s the major parties that are best placed to take advantage of this — they can simply move their existing “subscribers” to a model of affiliation with their associated entities, shift the money obtained from affiliation fees to their federal accounts up to the legal donation limit, and distribute the rest to other branches or use it for non-campaign purposes. And while the Liberals and the Nationals don’t have trade unions queueing up to affiliate with them, there’s no reason why businesses can’t similarly affiliate with a Liberal or National fundraising vehicle.
Collectively, that means an awful lot of wriggle room for the major parties and donors to exploit.
Like the original loophole that made donations reportable but exempted payments for access, this skews the political financing system against democracy by perpetuating the ability of powerful vested interests like trade unions and corporations to continue to purchase access and influence within the major parties. A more democratic approach would have been to ban affiliation fees outright and ban the selling of access to MPs, making straight, capped, donations the only acceptable form of contribution to political parties. But that would have violated the sacred bond between unions and the parliamentary ALP, to which we’re all apparently required to genuflect.
It would have had the bonus, for politicians, of ending the much-loathed fundraising system in which frontbenchers consume a rubber chicken dinner while having their ears bent by vested interests. They hate it. Many donors hate it as well but feel compelled to participate because their competitors do. And it’s bad for democracy. Why keep it in place?
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