4.1 Political parties, on an annual, financial year basis, are required to lodge returns disclosing the totals of all their receipts, payments and debts. Detailed disclosure must also be made of persons and organisations for whom receipts or debts aggregate to $1 500 or more. When preparing their disclosure returns all transactions by, or on behalf of, parties must be consolidated into these returns, including local branches and committees. No transactions are excluded from the returns, with even non-monetary, gifts-in-kind having to be disclosed.
4.2 The requirement for a political party (or an associated entity) to lodge an annual return is triggered by the end of a financial year on 30 June. But this trigger means that there is no provision for disclosure by a political party in the financial year that it is deregistered. This omission would appear to be a simple oversight in the legislation that should be corrected. Political parties and their associated entities should lodge final disclosure returns upon deregistration and/or cessation of operations.
The party agent or, in the absence of a registered party agent those persons who currently form or last formed the party's Executive Committee, be required to lodge an annual return within 16 weeks of the date of deregistration of the party covering the period from 1 July until the date of deregistration.
The financial controller of an associated entity should be required to lodge a return covering the period up to the deregistration of the political party that it was associated with, or the period up to when the associated entity ceases operations, as the case may be.
4.3 The Act requires persons who make or obtain records which may contain information required to be disclosed in a return to the Commission, to retain those records for three years. Failure to retain such records is punishable by a fine of up to $1 000. The Act does not, however, place any obligation upon persons to maintain financial records to a standard that allows them to fully comply with the disclosure requirements of the Act. There is no requirement for persons to initiate records, such as documenting donations received, or to obtain records, such as receipts for monies paid, or to keep a set of accounting records.
4.4 Allowing persons handling financial transactions to not make a record of those transactions weakens disclosure. To be fully effective the current obligation for persons to retain records must be underpinned by a requirement to firstly initiate and obtain appropriate records which allow that person to fully comply with the disclosure provisions of the Act.
Persons who fail to make or maintain such records as enables them to comply with the disclosure provisions of the Act be subject to the same penalty provisions as apply to persons who fail to retain records.
4.5 The Act defines an associated entity as being an organisation that either:
4.6 Organisations continue to ask whether they fall within the definition of associated entity. Some entities submit disclosure returns accompanied by a disclaimer that it is not to be interpreted as an acceptance of their legal responsibility to do so. These disagreements in interpretation between the AEC and some organisations are in part due to the imprecision in the Act's definition. In particular the terms 'controlled', 'to a significant extent' and 'benefit' need to be clarified, but without limiting their general meaning.
4.7 The Electoral and Referendum Amendment Act 1999 has broadened the definition of associated entity from being one that 'operates wholly or mainly for the benefit of one or more registered political parties' to 'operates wholly or to a significant extent for the benefit of one or more registered political parties'. While the intent of this change seems to be to further prevent organisations from structuring their affairs to avoid disclosure as associated entities, the AEC is concerned that it adds yet further imprecision to the definition which ultimately may only be able to be resolved before the courts on a case by case basis. The AEC believes that the aims of the legislation can be better realised by clarifying the existing definition of associated entity to remove arguments over interpretation.
The definition of an associated entity be clarified by inserting the following interpretations into the Act:
4.8 In its 1996 Report the AEC sought a new power to inspect relevant documentation of organisations for the purpose of ascertaining whether that organisation has an obligation to disclose as an associated entity. This power was granted to the AEC in July 1998 as part of the amendments included in Electoral and Referendum Amendment Act 1998. The AEC is conscious of the perceived intrusiveness of this provision, with the result that it has so far exercised this option sparingly. It remains the AEC's objective to act cooperatively wherever possible when administering the disclosure provisions of the Act and the simple existence of the inspection power assists the AEC in this regard.
4.9 An 'anonymous donation' is a donation where either the name or the address of the person or organisation that made the donation is not known at the time the donation is received. It is illegal for political parties, Senate groups and candidates to receive anonymous donations that exceed set thresholds. It is not, however, illegal for associated entities to receive anonymous donations.
4.10 The anonymous donation provision is important to the goal of full disclosure by preventing the receipt of gifts from unknown and therefore undisclosed sources. The introduction of detailed annual disclosure by associated entities was also aimed at helping ensure full disclosure by preventing political parties channelling transactions through third parties with limited disclosure obligations. The current provisions, however, still allow an avoidance of disclosure of the source of funds to political parties by allowing associated entities to accept anonymous donations of any value and then pass them on to a party, candidate or Senate group.
4.11 This would appear to be an oversight in the legislation. The necessity to prohibit the receipt of anonymous donations by political parties is equalled by the necessity to prohibit their receipt by associated entities.
The prohibition on the receipt of an 'anonymous donation' be extended to associated entities on the same basis as for those made to registered political parties.
4.12 Donors to political parties must disclose donations totalling $1 500 or more within a financial year made 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.
4.13 Donors are required to lodge their disclosure returns within 20 weeks following the end of the financial year on 30 June. This is the latest deadline for lodgement of an annual return, being four weeks later than for political parties and associated entities. The staggered deadline is intended to provide the AEC time in which to identify possible donors who have not already lodged returns from the listings of receipts disclosed by political parties and associated entities and then be able to give donors sufficient notice to allow them to meet their lodgement deadline. This is a tight schedule and in reality it is impossible in many cases for donors to be given adequate notice because most of the larger political parties rarely ever lodge their returns before their deadline of 16 weeks, and many are lodged late.
4.14 A complication remains in that party and associated entity disclosure returns do not separately identify donations from general receipts. This necessitates the AEC approaching persons without a disclosure obligation querying whether they have in fact made a donation.
4.15 The AEC continues to witness instances of apparent cases of donation splitting to avoid disclosure. Instead of a single large donation being made to a party, the donation is split into a number of donations each falling below the disclosure threshold of $1 500. The donations can be split between family members and a family business and also across the various State and Territory branches of a party, each of which is treated as a separate party for disclosure purposes.
4.16 The Act already demands that related companies be treated as a single entity for disclosure purposes. The AEC does not believe that any such deeming provision is possible to overcome the scenarios outlined above. The only practical deterrent to donation splitting is to maintain a low disclosure threshold.