The Minerals Council has warned against “arbitrary” caps on political expenditure, despite academics arguing controls on political donations would be ineffective without them.
The dean of the University of New South Wales’ law school, George Williams, told a Senate inquiry the Coalition’s proposed ban on foreign political donations would be “easy to evade” and caps were needed because otherwise money would flow into the system.
In December the Turnbull government introduced a bill to ban donations by non-citizens or non-residents.
On Tuesday Williams told the Senate inquiry into the influence of political donations that he did not think foreign entities had a legitimate interest in influencing Australian politics and so the proposed ban was justified.
But Williams said the system was easy to evade because foreign entities could donate through a dual-national or “set up a $200 shelf company”. “Any foreign donor can push through that – it’s very simple to avoid it.”
The Melbourne University professor Joo-Cheong Tham has submitted to a separate inquiry the ban is not justified by controversies surrounding two high-profile Chinese donors, Huang Xiangmo and Chau Chak Wing, because one is an Australian citizen and the other an Australian resident.
Williams said it was widely accepted among experts that the donation system was broken because “people can spend money to get access well beyond what the public would regard as appropriate”.
He labelled this a form of “soft corruption” where money did not lead directly to legal changes but was “given with an expectation of a return”, developing “relationships that may or may not give rise to undue influence” and leading to more favourable regulation and government decisions.
“Money will find a way to evade any system unless it’s holistic in dealing with the myriad opportunities to influence politics.”
Williams said that, in addition to banning foreign donations, the federal government should adopt a NSW-style electoral finance system with caps of $5,000 on donations, real time disclosure and caps on political expenditure.
Australian Electoral Commission witnesses conceded they did not know what proportion of political donations were below the $13,500 threshold because parties were not required to disclose them and it did not have powers to investigate them.
The Greens leader, Richard Di Natale, noted that, due to the practice of donation splitting between state and federal bodies, the threshold meant donors could pay as much as $100,000 without disclosure.
Colleen Lewis, adjunct professor at the National Centre for Australian Studies, said a federal anti-corruption body was “absolutely essential” to investigate probity in donations as the opposition leader, Bill Shorten, told the National Press Club that Labor would introduce one if elected.
Di Natale thanked the Minerals Council for its frank submissions after it admitted in December that it made political donations and paid to attend fundraisers to gain access to members of parliament.
The Minerals Council’s interim chief executive, David Byers, defended lobby groups’ ability to put their view in the public domain, noting it “requires expenditure” to pay for expensive ad campaigns, including on TV.
“Parliament should exercise a high degree of caution about putting an arbitrary cap on expenditure,” he said.
Byers said that was because spending on advertising “could be regarded as freedom of speech”, which the high court had “observed as a constraint” on regulation.
Williams said that high court authorities suggested it was “permissible to ban certain kinds of donations” as well as to cap donations and expenditure.
Beyond the proviso that the government cannot limit donations only to people on the electoral roll, there was “enormous scope for reform”, he said. It was a lack of political will, not legal impediments, that stood in the way.
Under questions from senator Barry O’Sullivan, associate professor Luke Beck noted Centrelink welfare recipients were required to disclose income within 14 days so it should be feasible for political parties to comply with real-time disclosure requirements.
