4.1 From the commencement of the disclosure scheme in 1984 until 1990, political parties were only required to submit returns of federal election donations and expenditure, the same as is still required of candidates. With the passage of the Commonwealth Electoral Amendment Act 1992, however, this fundamentally changed. Election returns were replaced by a requirement to disclose all receipts, payments and debts on an annual (financial year) basis. Annual returns require the totals of receipts, payments and debts to be disclosed, along with the name and address details of any person for whom transactions under any of those headings total $1 500 or more.
4.2 The Commonwealth Electoral Amendment Act 1995 made a number of other amendments designed to simplify disclosure, in response to concerns expressed by political parties that compliance was unnecessarily difficult and expensive. The amendments meant that receipts and payments were no longer to be split over a series of categories and that, for persons subject to more detailed disclosure, individual transactions did not need to be listed. The other significant change was that parties were only required to count individual transactions of $500 or more when determining whether an individual had reached the $1 500 threshold for detailed disclosure in the return. The potential loophole that could have allowed persons making numerous donations of less than $500 to go undisclosed was avoided through the introduction of annual returns by donors, to which the $500 threshold does not apply.
4.3 All transactions by, or on behalf of, a political party, must be included in these returns. All levels of the party down to local branches and committees, therefore, must be consolidated into the party's return. Disclosure includes donations received; federal, state and local election transactions; ongoing administration; membership; business transactions; and non-monetary 'gifts-in-kind'.
4.4 Annual returns are placed on public display at the AEC's central office in Canberra and at each of its State and Territory head offices on the first working day in February each year. There is always considerable interest from journalists and political parties, particularly in relation to donations. Donations, however, are not separately identified from other receipts in the returns. This can lead to confusion and, in some cases, misreporting by journalists (in one instance a disclosure of the maturity of an investment was reported as being a donation from the bank involved in the transaction). It also complicates the task for the AEC when attempting to identify donors who are required to lodge disclosure returns.
In their annual returns, political parties be required to identify donations separately from other receipts.
4.5 For disclosure to be effective, the returns lodged with the AEC must be accurate and complete at the time that they are placed on the public record. While the Act contains penalty provisions for persons knowingly lodging incomplete returns, this cannot guard against genuine errors. It has been the AEC's experience that some errors have not been advised to it or uncovered as part of its audit program until some time after the public release of the returns thus effectively, albeit inadvertently, avoiding public scrutiny.
4.6 It is well beyond the AEC's current resources to undertake audits of returns in the period between their receipt and public display. There is a strong public interest argument that disclosure returns of political parties (and perhaps associated entities) should carry some guarantee that they are free from errors and omissions at the time that they go on display. Requiring parties to submit disclosure returns which have been certified by a registered auditor would address this concern.
Political party annual returns be accompanied by a report from an accredited auditor.
4.7 The failure to lodge a return at all, of course, is an even more serious undermining of disclosure. In the case of political parties, such failure should be treated as a grave neglect of the responsibilities of federal registration. While the Act provides penalties for the late lodgement of returns, this can involve expensive and possibly lengthy legal action having to be undertaken by the AEC. The possibility of de-registration would be a more appropriate means of ensuring compliance.
The failure by the agent of a political party to lodge a disclosure return within 12 months of its due date be grounds for de-registration of that party.
4.8 An important responsibility when preparing party annual returns is the consolidation of transactions throughout all levels of the party, including local branches and campaign committees. The 1995 amendments to the Act have considerably simplified this task for both party agents and party unit treasurers. For the majority of party units, only total figures of receipts and payments need to be reported and consolidated into the party return.
4.9 Major difficulties are being experienced by party agents, particularly those with a large number of decentralised units, in obtaining the necessary information from all sections of the party. In some instances this has resulted in delayed and/or incomplete submission of returns, leaving party officials – many of whom are voluntary office holders – open to criticism. Prosecution action has not been undertaken to date and the AEC anticipates that as parties, agents and treasurers become increasingly familiar with the disclosure requirements, more timely compliance will be achieved. The AEC is closely monitoring the situation and doing all that it can to assist parties in meeting their disclosure responsibilities.
4.10 Section 306 of the Act defines an anonymous donation as one for which either the name or the address of the person or organisation making the donation is not known at the time the donation is received. The Act makes it illegal to receive anonymous donations where the total of such donations from a single source equals or exceeds $1 000 in the case of a political party or Senate group and $200 for a candidate. Anonymous donations are payable to the Commonwealth.
4.11 For ease of understanding and compliance, these threshold amounts should be linked to the disclosure threshold of donations/receipts, i.e. $1 500 for political parties, $200 for candidates (or $1 000 if Recommendation 4 is implemented) and $1 000 for a Senate group.
The threshold for recovering 'anonymous donations' to registered political parties, candidates and Senate groups be the same as the disclosure thresholds.
4.12 The AEC is aware of instances where, when a question has arisen as to the possible anonymity of a particular donation, party officials have maintained that donor details were in fact known at the time the donation was received but had since been lost. It has proven difficult in such circumstances for the Commonwealth to recover donations that, on the face of it, appear to be anonymous. Given that the objective of the legislation is to prevent persons from going undisclosed by not providing their details at the time of making the donation, a truer test would be whether a donor actually ends up being disclosed. A provision requiring the full details of donations received to be fully disclosed in a return lodged with the AEC, or else be deemed 'anonymous', would be more effective.
The definition of an 'anonymous donation' be revised from the name or address not being known at the time of receipt to not being known at the time of disclosure.
4.13 Donations sourced from outside Australia have been the subject of discussion, from time to time, as being avenues through which donations could be channelled without being disclosed. The AEC is concerned that the current legislation is not adequate to ensure full disclosure of the true source of donations received from overseas.
4.14 The 1995/96 annual returns of political parties, which cover the 1996 federal election and the first year of disclosure by associated entities, did not show any significant donations as having been received from overseas sources. Nevertheless, the potential exists for political parties to channel donations, originating in Australia, through overseas bodies and thus avoid disclosure requirements. The AEC's jurisdiction, obviously, is limited to Australia and it is simply not possible to verify the true source of donations from overseas.
4.15 The Parliament may wish to explore options with regard to overseas donations. Options could include banning the receipt of overseas donations (as is the case in some other countries, notably the USA), placing limits upon receipts, or making such donations subject to forfeiture to the Commonwealth if the true source is not disclosed (somewhat similar to provisions applying to anonymous donations).
4.16 The 1995/96 financial year saw the first year of disclosure by associated entities (such as companies, trust funds and foundations) which are closely associated with registered political parties. Associated entities are required to disclose in the same detail as political parties but with the additional requirement to disclose deposits of capital received which have been used to earn income subsequently passed on to political parties.
4.17 The Act defines an associated entity as being an organisation that either:
4.18 Some organisations have questioned whether they fall within the definition of associated entity and have supplied legal advice supporting their view. These opinions, along with advice obtained by the AEC, demonstrate that there are some areas of dispute in the wording of the Act's definition which should not be allowed to become sources of confusion or loopholes. While it is not yet possible to conclude whether there are any definite problems with the Act's definition, the AEC will monitor developments and assess the need for any possible future legislative amendments that may be necessary. The AEC meanwhile is actively following up on disputed cases to ensure that all disclosure obligations are fulfilled.
4.19 In some cases, though, the AEC is unable to determine whether an organisation should disclose as an associated entity because of the unavailability of the necessary documentation to make such a decision. To date the AEC has relied upon the cooperation of organisations in engaging in discussions as to their status, but there is nothing to prevent them from simply claiming that they do not meet the definition of an associated entity and refusing to supply any justification for their stance. Such a situation could give the appearance of disclosure only by consent and has the potential to undermine public confidence in the disclosure system.
4.20 In the public interest, disclosure should not be able to be avoided through a simple refusal to cooperate. The AEC believes that it is best placed to decide in a consistent and impartial manner whether an organisation needs to disclose as an associated entity. To do so, the AEC would require the power to inspect relevant documentation of organisations which it believes may fall within the Act's definition of associated entity. To help allay the possible concerns of some organisations that such a power may be inappropriately used, the provision to appeal against a notice served upon it for this purpose could be included.
The Australian Electoral Commission be empowered to serve a notice upon officers of an organisation for the purpose of ascertaining whether that organisation has an obligation to disclose as an associated entity. An organisation be provided with the right to appeal against a notice served upon it for the purpose of ascertaining whether that organisation has an obligation to disclose as an associated entity.
4.21 Donors to political parties have been required to lodge disclosure returns since the inception of the disclosure scheme. Originally they reported on a per election basis, but as part of the 1995 amendments this was changed to an annual basis, the same as for political parties. The 1995/96 financial year saw the first full year of annual disclosures by donors to political parties.
4.22 Donors to political parties must disclose donations totalling $1 500 or more to the one political party. Once the $1,500 threshold is reached, the amount and date of each separate donation must be disclosed along with the name and address of the recipient party.
4.23 The due date for donor returns is 20 weeks after the end of the financial year, four weeks later than for political parties. The earlier deadline for party returns enables donors to be identified from those returns and given advance notice to assist them in meeting their disclosure obligations by the due date. The AEC is also looking towards computer systems which have been developed to assist it in the substantial task of cross-referencing donor and party returns.