There is more than a little yellow peril in the latest political donations debate, which began with Labor senator Sam Dastyari’s acceptance of payments from companies, some of which had links to the Chinese government.
Distractions abound but here is the bottom line. Never mind race. Everyone donates for a reason. Often that reason is access or influence. If we all agree that undue influence over the political system is a bad thing, change needs to happen.
But how hard is it really? Three professors of law, Graeme Orr of the University of Queensland, Anne Twomey of the University of Sydney and George Williams of the University of New South Wales provided their opinions.
What are the limitations?
The NSW Liberal government tried to ban donations from all but individuals on the electoral roll (an option still favoured by Malcolm Turnbull). This was struck down in the NSW Unions case as constitutionally invalid by the high court in 2013 on the basis it breached the implied freedom of political communication in the constitution.
Twomey says the judges took the view that there were many in the community who are not electors, but who are governed and affected by the decisions of government.
“[The view was] they have a legitimate interest in governmental action and the direction of its policy and may seek to influence the outcome of elections,” Twomey said.
“This includes unions and corporations. Any ban at the commonwealth level would face the same constitutional problems (unless the high court were to change its approach).”
But in a later case, the high court upheld the validity of the NSW ban on political donations by property developers and the imposition of caps upon political donations.
“This tells us that where there is a legitimate reason to do so (for example a serious risk of corruption), the parliament may enact laws to ban donations from particular groups,” Twomey said.
“Hence, a ban on foreign donations may be permissible, if it is seen as being supported by a legitimate concern about foreign influence over Australian elections.”
While the Coalition has resisted any donations reform thus far, Labor has called for a ban on foreign donors, so let’s start there.
Foreigner money flows
There is an oft-quoted claim – I have reported it in the past – that 66% of the world bans all foreign donations. But Orr says many countries included in that 66% regulate donations but do not have an outright ban.
“For example, France only bans contributions from foreign states or foreign parties,” Orr said. “Sweden’s rule just criminalises money from foreign states attempting influence. Canada explicitly permits permanent residents to donate.”
So the world is not at one on this.
But while we recently discovered UK and American investors are the biggest buyers of our agricultural land – well ahead of China – there is no telling who are the top 10 foreign donors to Australian political parties because we do not classify them. Foreign and domestic donations are treated the same.
That is, parties and donors have to declare but all we see is a name or company name, an address and a phone number.
This creates an extraordinary opaqueness in the financial disclosure list, which is broad but shallow. Transparency would be a start.
Orr says while the law reaches outside our borders to limit activity affecting Australia, if a foreigner breaches such a law, enforcement is difficult.
He believes banning foreigners is like banning property developers. “It’s too piecemeal,” Orr says. “Comprehensive reform would cap donations and expenditure.”
It’s all about the domestic donation system
While the Coalition has argued the Dastyari case is about payment rather than a donation, a number of Coalition MPs (transport minister Darren Chester, trade minister Steve Ciobo and Craig Kelly) have been open to the Turnbull option to ban all donations from anyone other than on the electoral roll.
But after the two court cases, is it constitutionally possible?
Williams says no.
“This is ruled out by the 2013 high court decision in the Unions NSW case,” he said.
Orr says “maybe”.
“I believe the court would uphold a Canadian model where only citizens and permanent residents can donate and then subject to caps,” Orr said.
“Without caps, a [Gina] Rinehart or [Clive] Palmer could wield even more influence.”
Third parties or the GetUp clause
Turnbull also wants to rein in third-party activists like GetUp. In answer, Liberal senator Cory Bernardi has started Australian Conservatives. He claims more than 50,000 potential foot soldiers have registered online but his effect on the next election remains unclear. Other third-party campaigning examples include the unions’ campaign against WorkChoices, the mining industry’s against the mining tax, or the clubs’ campaign against poker machine reform.
Williams says while a ban on third parties would probably not work, limiting their contributions is possible.
“The key here is to bring about a regime that creates a fair and level playing field,” Williams said. “To ban third parties from participating in this way in the process would likely be invalid, but on the other hand appropriate limits and caps could be imposed.”
Twomey also says the high court would be likely to strike down laws banning third parties from campaigning.
“However, placing caps on their campaign expenditure would probably be valid, as long as the caps were not so low that they could not reasonably participate in political communication,” said Twomey.
Orr says regulating “third parties” is only fair, even though it is complex.
“But it is constitutionally OK provided the caps are reasonable and the regulated ‘election period’ is not too broad,” Orr said.
“This ‘period’ is harder to fix without a fixed election date nationally but the UK manages it.”
Put a lid on it
If there is a clear consensus on political donations, it is around limits on funding rather than outright bans.
Twomey says upholding caps on donations is important because “it is hard to acquire influence if your donation is only as valuable as that of hundreds or thousands of others”.
“One effective way of lessening or eliminating undue influence through donations is by capping it at a relatively low level ($5,000 in NSW) so that the donation of a large company or union of $5,000 is worth the same as the donation of any individual or small business of $5,000,” Twomey says.
Williams says for this complex area of law, there is a clear way through which will produce an effective and legally viable regime to regulate political donations.
“The answer is not to ban corporate and union donors, but to limit donations from all sources to a reasonable level, say $5,000,” Williams said.
“This would limit the ability of any donor to exercise undue influence. It is possible to ban certain donors, but only where it can be shown that there is a danger that donations from that source may corrupt or otherwise damage the political process.”
Facts, says Orr, more facts and basic principles.
“Most of all, we need a discussion of principles – the need to balance equality, integrity and liberty whilst resourcing politics,” says Orr.
“And then modelling of the effect on different sides of politics, and of the need for extra public funding. The freedom of association of Labor/unions is a big hurdle for bipartisan reform here. And while public funding is ‘clean’ money, taxpayers have to be convinced the medicine is needed.”
