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Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017 (Cth)
Two objectives in 2ndReading Speech, Senator Mathias Cormann, current Special Minister of State:Reform is necessary to support the integrity of Australia's electoral system, and Australia's sovereignty, by ensuring that only those with a meaningful connection to Australia are able to influence Australian politics and elections through political donations.. . .The Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017 will improve the consistency of the regulatory treatment of all political actors. This includes political actors that have emerged in the Australian political landscape, who neither endorse candidates nor seek to form government, yet actively seek to influence the outcome of elections through their campaigning activities.
Key elements of the Bill
Introduction of registration regime for ‘third party campaigners’ and ‘political campaigners’Change in definition of ‘associated entity’ and introduction of registration regimeChanges to disclosure returnsChanges to amount of election funding of registered political partiesRestrictions relating to ‘foreign’ political donations
Democratic principles
Proposed in Tham,Money and Politics: The democracy we can’t affordandTowards a More Democratic Political Funding Regime(2010 report for NSWEC):1) Protecting the integrity of representative government (including preventing corruption);2) Promoting fairness in politics;3) Supporting political parties to discharge their democratic functions;4) Respecting political freedoms (in particular, freedom of political expression and freedom of political association).Endorsed by NSW Joint Standing Committee on Electoral Matters,Public Funding of Election Campaigns(2010) as object clauseEndorsed by then NSW Electoral Commissioner, Colin BarryReflected in section 4A (Objects of the Act) ofElection Funding, Expenditure and Disclosures Act 1981(Cth)
An integrated scheme for regulating political expenditure of organisations
Why regulate third party political spending?
Protecting the integrity of representative government (including preventing corruption)Third party spending as potential corrupting force:e.g. Pharmacy Guild of Australia:"There's always been a fear that if they ran a campaign they could bring a government down"e.g. Banks and Royal Commission2) Promoting fairness in politicsNot just concerning who is elected or fairness amongst competitors but also concerns agenda-formation and fairness amongst participants:e.g. ACTU’s Rights at Work; Mineral Council’s campaign against mining tax; Same-sex marriage plebisurvey3) Supporting political parties to discharge their democratic functionsRegulating political parties but not significant third parties undermines party system through hydraulics effect (e.g. US system)4) Respecting political freedoms (in particular, freedom of political expression and freedom of political association)A close connection with fairness
The justification for regulating third party spending:McCloy
High Court of Australia 2015 decision upholding caps on political donations and ban on property developer etc decisions:Majority:Quid pro quo and clientelistic corruption threaten the quality and integrity of governmental decision-making, but the power of money may also pose a threat to theelectoral process itself. This phenomenon has been referred to as "war- chest" corruption. This form of corruption has been identified, albeit using different terminology, as a matter of concern both in Australia and in other liberal democracies of the common law tradition.InR (Animal Defenders International) v Secretary of State for Culture, Media and Sport, Lord Bingham of Cornhill said that in a democracy it is highly desirable that theplaying field of public debate be so far as practicable leveland that:"This is achieved where, inpublic discussion, differing views are expressed, contradicted, answered and debated. … It is not achieved if political parties can, in proportion to their resources, buy unlimited opportunities to advertise in the most effective media, so that elections become little more than an auction.” (emphasis added)
The justification for regulating third party spending:Animal Defenders International
R (Animal Defenders International) v Secretary of State for Culture, Media and Sport(2008 UK House of Lords) upholding ongoing ban on political broadcasts:Baroness Hale:there was an elephant in the committee room, always there but never mentioned, when we heard this case. It was the dominance of advertising, not only in elections but also in theformation of political opinion, in the United States of America. . . Attempts to regulate campaign spending are struck down in the name of the First Amendment: “Congress shall make no law . . . abridging the freedom of speech, or of the press”: see particularly Buckley v Valeo (1976) 424 US 1. A fortiori there is no limit to the amount thatpressure groupscan spend on getting their message across in the most powerful and pervasive media available.In the United Kingdom, and elsewhere in Europe, we do not want our Government orits policiesto be decided by the highest spenders. Our democracy is based upon more than one person one vote. It is based on the view that each person has equal value.
Justification for regulating third party spending:Harper
Attorney-General of Canada v Harper(2004) (Canadian Supreme Court): in upholding third party spending limits:The Court's conception of electoral fairness as reflected in the foregoing principles is consistent with the egalitarian model of elections adopted by Parliament as an essential component of our democratic society. This model is premised on the notion thatindividuals should have an equal opportunity to participate in the electoral process. Under this model, wealth is the main obstacle to equal participation . . . Thus, the egalitarian model promotes an electoral process that requires the wealthy to be prevented from controlling the electoral process to the detriment of others with less economic power.. . .the State can restrict thevoices which dominate the political discourseso that others may be heard as well. . . by regulating electoral spending through comprehensive election finance provisions.These provisions seek to create a level playing field for those who wish to engage in the electoral discourse. This, in turn, enables voters to be better informed; no one voice is overwhelmed by another.. . .What preventsmost citizensfrom effectively exercising their right of political free speech . . .is a lack of means, not legislative restrictions.(emphasis added).
Differences b/w political parties & third parties
From Tham,Establishing a Sustainable Framework for Election Funding and Spending Laws in New South Wales(2012):Political parties (or more accurately their candidates) stand for office but not third parties.Political parties are wholly political organisations whereas third parties tend not to be.Political parties tend to rely upon donations to fund their campaigns whereas third parties have more varied sources of income.The campaigns of political parties are invariably electoral campaigns (campaigns directly aimed at influencing voters and electoral outcomes) whereas third parties tend to engage in electoral and non-electoral campaigns.The electoral campaigns of political parties tend to be based on express party and candidate advocacy whereas the electoral campaigns of third parties tend not to take such a character but rather comprise provision of electoral information and/or issue advocacy.Because of their multiple organizational purposes, varied sources of income, and the fluid and multi-dimensional character of their campaigns, third parties tend to face a more acute challenge of identifying which funds and spending which are regulated by political funding laws.
‘Political expenditure’ and ‘political purpose’
In proposed section 287(1) of theCommonwealth Electoral Act 1918(Cth):political expendituremeans expenditure incurred for one or more political purposes.political purposemeans any of the following purposes:(a)  the public expression by any means of views on a political party, a candidate in an election or a member of the House of Representatives or the Senate;(b)  the public expression by any means of views on an issue that is, or is likely to be, before electorsin an election(whether or not a writ has been issued for the election);(c)  the communicating of any electoral matter (not being matter referred to in paragraph (a) or (b)) for which particulars are required to be notified under section 321D;(d)  the broadcast of political matter (not being matter referred to in paragraph (c)) in relation to which particulars are required to be announced under subclause 4(2) of Schedule 2 to theBroadcasting Services Act 1992;(e)  the carrying out of an opinion poll, or other research, relating to an election or the voting intentions of electors;except if:(f)  the sole or predominant purpose of the expression of the views, or the communication, broadcast or research, is the reporting of news, the presenting of current affairs or any editorial content in news media; or(g)  the expression of the views, or the communication, broadcast or research, is solely for genuine satirical, academic or artistic purposes.Definition of ‘political purpose’ mirrors elements in section 314AEB (annual returns relating to political expenditure) (as amended byElectoral and other Legislation Amendment Act 2017(Cth) through insertion of underlined text)Section 314AEB enacted byElectoral and Referendum Amendment (Electoral Integrity and Other Measures) Act 2006(Cth)
Recommendations relating to registration scheme for ‘third party campaigners’ and ‘political campaigners’
Recommendation One:The Bill should be amended so that a person or entity be required to register as a ‘third party campaigner’ when ‘political expenditure’ of more than $100,000 (indexed) in a financial year or in any one of the previous three financial years has been incurred.Recommendation Two:The Bill should be amended to require a person or entity to register as a ‘political campaigner’ when ‘political expenditure’ of more than $2 million (indexed) in a financial year or in any one of the previous three financial years has been incurred.Recommendation Three:The Bill should be amended to define ‘political expenditure’ as expenditureonany of the following . . .
Change to definition of ‘associated entity’: proposed section 287H(5)
(5)  Without limiting paragraph (1)(b), an entity is, for the purposes of this Part, taken to be an entity that operates wholly, or to a significant extent, for the benefit of one or more registered political parties if:(a)  the entity, or an officer of the entity acting in his or her actual or apparent authority, has stated (in any form and whether publicly or privately) that the entity is to operate:(i)  for the benefit of one or more registered political parties; or(ii)  to the detriment of one or more registered political parties in a way that benefits one or more other registered political parties; or(iii)  for the benefit of a candidate in an election who is endorsed by a registered political party; or(iv)  to the detriment of a candidate in an election in a way that benefits one or more registered political parties; or(b)  the expenditure incurred by or with the authority of the entity during the relevant financial year is wholly or predominantly political expenditure, and that political expenditure is used wholly or predominantly:(i)  to promote one or more registered political parties, or the policies of one or more registered political parties; or(ii)  to oppose one or more registered political parties, or the policies of one or more registered political parties, in a way that benefits one or more other registered political parties; or(iii)  to promote a candidate in an election who is endorsed by a registered political party; or(iv)  to oppose a candidate in an election in a way that benefits one or more registered political parties.
Recommendation relating to ‘associated entity’ provisions
Recommendation Five:The Bill should be amended so that:An entity is required to register as an ‘associated entity’ only when it is controlled by one or more registered political parties, or operates wholly (or to a significant extent) for the benefit of one or more registered political parties;An entity is presumed to be an ‘associated entity’ when the expenditure incurred by or with the authority of the entity during the relevant financial year is wholly or predominantly political expenditure, and that political expenditure is used wholly or predominantly:to promote one or more registered political parties, or the policies of one or more registered political parties; orto oppose one or more registered political parties, or the policies of one or more registered political parties,in a way that benefits one or more other registered political parties; orto promote a candidate in an election who is endorsed by a registered political party; orto oppose a candidate in an election in a way that benefits one or more registered political parties.‘Political expenditure’ includes the provision of gifts to registered political parties, Senate groups and candidates.
Restrictions relating to ‘foreign’ political donations
Different meanings of ‘foreign’ with different rationales:1) Donations originating from overseas sources2) Donations from foreign governments; and3) Donations from those seen as lacking a legitimate basis for influencing the political process.
Restrictions relating to gifts from foreign bank accounts
Rationale:risk of money-laundering (e.g.allegationsinvolving NSW Minister Chris Hartcher and off-shore accounts)Recommendation Nine:The Bill should be amended so that its prohibition relating to gifts from foreign bank accounts:Extends to:gift recipients which are ‘associated entities’ (as defined in Recommendation Five); andgift recipients which are ‘political campaigners’ and ‘third-party campaigners’ registered under theAustralian Charities and Not-for-Profits Commission Act 2012(Cth) or theFair Work Act (Registered Organisations) Act 2009(Cth) in relation to their political expenditure; andDoes not apply when the gift recipient has adduced evidence to the satisfaction of the Australian Electoral Commission that the named donor is the true source of the funds.
Restrictions relating to ‘allowable donors’
287AA   Meaning ofallowable donor(1)  A person or entity is anallowable donorif:(a)  for an individual who makes a gift—the individual:(i)  is an elector; or(ii)  is an Australian citizen; or(iii)  is an Australian resident, unless a determination is in force under subsection (2) determining that Australian residents are not allowable donors; or(b)  for an entity that makes a gift:(i)  the entity is incorporated in Australia; or(ii)  for an entity that is not incorporated—the entity’s head office or principal place of activity is in Australia; or(c)  for a person or entity that is a trustee of an unincorporated trust fund or unincorporated foundation, out of which a gift is made—the person or entity is an allowable donor within the meaning of paragraph (a), (b) or (d); or(d)  the person or entity is in a class of persons or entities prescribed by the regulations for the purposes of this paragraph.Australian residents(2)  For the purposes of subparagraph (1)(a)(iii), the Minister may, by legislative instrument, determine that Australian residents are not allowable donors.Foreign political entities(3)  Despite subsection (1), an entity is not anallowable donorif the entity is:(a)  a body politic of a foreign country; or(b)  a body politic of a part of a foreign country; or(c)  a part of a body politic mentioned in paragraph (a) or (b); or(d)  a foreign public enterprise.
Restrictions relating to non-allowable donors that are foreign governments
Rationale:threat to national sovereigntyApplies to all foreign governments:Prime Minister Malcolm Turnbull: ‘interference is unacceptable from any country whether you might think of it as friend, foe or ally’Recommendation Ten:The restrictions in relation to non-allowable donors that are foreign governments under the Bill should be enacted.
Restrictions relating to non-allowable donors other than foreign governments
Most important recommendation:Recommendation ElevenThe Bill be amended so as to remove all its restrictions relating to non-allowable donors that are not foreign governments.Above restrictions will deeply undermine Australia’s democracyReasons for recommendation:They are not justified on the basis of publicised cases of donors with alleged links to the Chinese Communist Party government;The justification based on ‘meaningful connection to Australia’ is based on an excessively narrow understanding of such connection;The complexity and onerousness of these restrictions will place a disproportionate compliance burden (especially on smaller organisations);There are doubts as to the compatibility of these restrictions with implied freedom of political communication; andThe problems relating to ‘foreign’ political donations are better addressed through general measures such as caps on political donations and election spending.
Does the Bill address ‘foreign’ interference in Australian politics through political donations?
Yes if donations made directly – but that is unlikelyYes if made through intermediaries (e.g.allegationsinvolving NSW Minister Chris Hartcher and a promise of $2 million to NSW Liberal Party)No when made by sympathetic donors (e.g. allegations involving Chau Chak Wing and Huang Xiang Mo) (part of practices of CCP’s United Front? see submission byHamilton and Joske)
Does the Bill stifle the political advocacy of charities?
Seehttp://www.handsoffourcharities.org.auStrong push for exemption for registered charities: e.g. Philanthropy Australia; Oxfam; World Vision; Law Council of Australia; ACTU(traced back to HRLC,Defending Democracyreport (June 2017))Partly based on exaggerated impact of Bill (‘gag’; ‘ban’; ‘silenced’)But substantive arguments are thatregistered charities should not be regulated by the Bill because:Argument OneThey are acting in the public interest when engaging in political advocacy.Argument TwoTheir advocacy – typically issue advocacy – is not ‘political’.Argument ThreeThe Bill wrongly labels them as ‘partisan’.Argument FourThe Bill will result in a diminishing of political advocacy by charities.
Argument OneRegistered charities acting in the public interest when engaging in political advocacy
Strongly implicit in various submissions:Philanthropy Australia:Advocacy is an important approach that charities often use to achieve change in a wide range of areas such as poverty, homelessness, mental health, disability, biodiversity and many others. The focus of such advocacy is to address the systemic causes of our social and environmental challenges, rather than just ameliorating their symptoms.Law Council of Australia:The charitable sector plays an essential role in identifying and raising awareness of issues affecting society, often especially relating to the most disadvantaged.Non-sequitur as:Political actors – including political parties - typically acting upon their understanding of public interest;Fairness in the contest over different understandings of the public interest part of rationale for regulation.
Argument TwoAdvocacy of charities (issue advocacy) not ‘political’.
Human Rights Watch: ‘Such provisions risk stigmatizing organisations that are apolitical’.Oxfam:Advocating in furtherance of an organisation’s charitable purpose is not a political act. TheCharities Actdefines ‘charity’ and ‘charitable purpose’- and to be a charity, the organisation must have a charitable purpose for the public benefit . . . The Act defines ‘charitable purpose’ to include ‘the purpose of promoting or opposing a change to any matter established by law, policy or practice in the Commonwealth, a State or Territory or another country’ as long as the promotion or opposition is done to advance one of the other charitable purposes.Australian Conservation Foundation: ‘A foreign donation to an Australian charity cannot corrupt the political process because that charity cannot at law act with a political purpose’.Odd argument that seems to turn on understandings endogenous to the charity sector (as influenced by ‘disqualifying purpose’ under theAustralian Charities and Not-for-Profits Commission Act)Stop Adani Mine campaign not ‘political’ or ‘apolitical’?‘Political’ advocacy can be reasonably understood to include advocacy seeking to influence political processes (including governmental processes, agenda-formation in elections and policies of political parties)
Aid/Watch Incorporated v Commissioner of Taxation(2010 High Court)
Treated issue advocacy is ‘political’ because ‘"agitation" for legislative and political changes’ politicalcommunication under constitutionally-prescribed system of government‘(I)n Australia there is no general doctrine which excludes from charitable purposes "political objects"=> Charities can have a ‘political’ purpose
Argument ThreeThe Bill wrongly labels them as ‘partisan’
Transparency International Australia: ‘definition of ‘political expenditure’ blurs line between issue and partisan advocacy’Arnold Bloch Liebler: ‘The Bill is simply wrong to conflate the community education and advocacy activities of NFPs and charities with the campaigning and electioneering of political parties’.Salvation Army:there is a risk the term political campaigner will be misunderstood by the wider public, suggesting that the charity/not-for-profit has an overt political agenda or is another ‘arm’ of a political party and thereby compromising the public trust of the organisation.World Vision:‘We believe it would be inappropriate to categorise our activities alongside those of political parties. This will give people the wrong impression and delegitimise charities like WVA as partisan political actors.’Difficult to see why a definition withdistinctelements results in an equation/conflation – why satisfying one element implies satisfying anotherAgain seems to largely turn on meanings endogenous to charity sector

Argument FourThe Bill will result in a diminishing of political advocacy by charitiesVarious strands – see table
A Bill intended to stifle the charity sector?
St Vincent de Paul Society National Council’s submission:Organisations, such as the St Vincent de Paul Society, that campaign on issues of poverty are nearly always critical of certain policies of the government of the day. This is because our front-line charity work makes us sensitive to issues of justice that need to be addressed. As such, there is always a temptation for governments to curtail the voice of charities.We believe that this is one of the disguised agendas at play in this Bill(emphasis added).
Does the Bill stifle the political advocacy of charities?
Yes through:imprecision of definition of ‘political expenditure’prohibition relating to non-allowable donors other than foreign governmentsreliance of the charity sector on ‘foreign’ funding.But none of the above justifies complete exemption from political finance lawsAn exemption will set a dangerous precedent for not regulating third party spendingIf charities to be exempted, why not other groups?why not businesses?General measures can sometime more effectively address specific concerns:Recommendations re much higher thresholds and not proceeding with restrictions relating to non-allowable donors other than foreign governments will go very long way to address concerns re impact on charities

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Electoral Legislation Amendment (Electoral Funding and ...