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The Electoral Amendment (Electoral Funding and Disclosure Reform) Bill 2017
On 7 December 2017, the Government introduced the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017 (the Bill). On introducing the Bill, the Minister for Finance (Senator Cormann) said “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”.
Broadly speaking, the Bill introduces registration requirements and disclosure and reporting obligations on organisations that spend money on a “political purpose” or organisations that are “associated” with registered political parties. It also introduces new restrictions on organisations in relation to donations. There are significant penalties for breach of the provisions, including criminal offences (with up to ten years imprisonment in some instances).
If passed in its current form, this Bill is likely to have a significant impact on many not-for-profit organisations.
Will the Bill impact my not-for-profit organisation?
If the Bill is passed it is likely to have varying degrees of impact on not-for-profit organisations (including those that are not incorporated) and registered charities (with the ACNC) that:
- spend more than $13,500 a year on “political expenditure” (see below for what this means), or
- have some kind of connection with registered political parties (such as being controlled by, financially contributing to, having voting rights in or operating for the benefit of a registered political party).
It will also impact not-for-profit organisations based overseas that make annual donations over $250 to organisations in Australia caught by this Bill.
But remember – this is still only a Bill. It was introduced into Parliament on 7 December 2017 and has been referred to the Joint Standing Committee on Electoral Matters (the Committee). The Committee is due to report on 2 March 2018. The Government will then respond to the report and may make changes to the Bill. If the Bill is to become law it then needs to pass through both the Senate and the House of Representatives.
What are some of Not-for-profit Law’s key concerns?
Not-for-profit Law has a number of concerns with this Bill and intends to make a submission to the Committee by 25 January 2018 outlining these concerns in greater detail.
Not-for-profit Law believes the broad definition of “political purpose” coupled with the low threshold amounts for “political expenditure” means many not-for-profits will be captured by the Bill. Broadly speaking, we are concerned about the administrative burden that will be placed on these organisations, the duplication in reporting requirements (much of the information is already being provided to regulators), the severity of enforcement provisions, and ultimately the negative impact this Bill may have on the ability of organisations to undertake and fund their advocacy work.
If we are caught by the Bill how could it impact my organisation?
There are four key ways not-for-profit organisations might be caught by this Bill, depending on whether they are a political campaigner, a third-party campaigner, or an associated entity. This will depend on the some of the key concepts within the Bill such as “political expenditure” “political purpose” “gift”, “allowable donor” and “allowable amount”.
1: A not-for-profit organisation could be deemed to be a “political campaigner” if they:
- incur $100,000 of political expenditure in the financial year or any of the previous three financial years, or
- incur $50,000 or more in political expenditure in the financial year and the political expenditure represents 50% or more of the organisations 'allowed amount' in the previous financial year.
Under the Bill “political expenditure” means expenditure incurred for one or more “political purposes”. “Political purposes” is very broadly defined and includes (amongst other things) ‘the public expression by any means of views on an issue that is or is likely to be before electors in an election (whether or not a writ has been issued for the election)’ and 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’. This could include, for example, organisations that advocate on an issue of significant public interest by making submissions to Government, releasing media statements or by making comments on a political party’s policy platform.
2: A charity registered with the Australian Charities and Not-for-Profits Commission Act 2012 or a union under the Fair Work (Registered Organisations) Act 2009 can also be deemed a “political campaigner” under the above circumstances, but slightly different rules will apply (see the below table for more detail).
3: A not-for-profit organisation not deemed to be a “political campaigner”, but incurs more “political expenditure” than the “disclosure threshold” ($13,500 indexed) per financial year could be deemed a “third party campaigner”.
4: A not-for-profit organisation could be deemed an “associated entity” if (amongst other things) it operates “wholly or to a significant extent, for the benefit for one or more registered political parties”. This means that:
- organisations (or officers of the organisation) that make statements (by any means) in a public, private or professional setting that indicate they operate to the benefit of one or more registered political parties or candidates in an election
- organisations (or officers of the organisation) that make statements (by any means) in a public, private or professional setting that indicate they operate to the detriment of one or more registered political parties or candidates in an election, in a way that benefits one or more registered political parties (this does not have to be intentionally beneficial to a political party)
- organisations that predominantly incur “political expenditure” where that expenditure is used predominantly to promote one or more registered political parties, a registered political party’s policies or an endorsed candidate in an election, or
- organisations that predominantly incur “political expenditure” where that expenditure is used predominantly to oppose one or more a registered political parties, a registered political party’s policies or an endorsed candidate in an election in a way that benefits one or more registered political parties (this does not have to be intentionally beneficial to a political party)
could all be deemed to be an “associated entity”.
The following table sets out the key obligations of “political campaigners”, “political campaigners” that are registered as a charity with the ACNC, “third party campaigners” and “associated entities”. In summary, not-for-profit organisations caught by the Bill will at a minimum need to appoint a “financial controller”, register with the Australian Electoral Commission and provide annual returns. Some organisations will not be able to accept donations of $250 from certain sources. In addition, not-for-profit organisations will need to make sure they have systems in place to support these obligations.
Before reading through the table, it is important to understand the definition of “allowable donor”. An “allowable donor” is (amongst other things) an Australian citizen or permanent resident or an organisation incorporated in Australia or has its head office or principal place of activity in Australia. The very nature of this definition excludes foreign individuals, organisations and governments from being an “allowable donor”.
It is possible to be registered as an associated entity and either a political campaigner (including a political campaigner registered with the ACNC) or a third-party campaigner at the same time. However, no-one will be registered as both a political campaigner (including a political campaigner registered with the ACNC) and a third-party campaigner.
What can I do if I am concerned by the impact of the Bill?
Submissions to the Inquiry into the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017 closed on 25 January 2018. You can find details of the Inquiry here (including submissions). Our submission is below.
You could contact your local Member of Parliament or Senator and raise your concerns with them.
The sector’s response
Pro Bono Australia has published a short online survey, Have Your Say: Will You Be Impacted By The Proposed Foreign Donations Bill? to better understand how charities feel they could be affected by the proposed foreign donations bill.
St Vincent de Paul has published a fact sheet on the changes and what they mean for the sector.
The Human Rights Law Centre said it was focusing on 'making sure the proposed legislation does not pass in its current form. However, if it does, it will likely be challenged in court'. Constitutional law experts, Anne Twomey and George Williams have also warned the bill is vulnerable to challenge in the high court because of the implied freedom of political communication.
The Community Council of Australia has published a useful online list of recent media coverage on the impacts of the proposed changes. The most recent media includes:
- Foreign Donations Bill 'Likely' to be struck down by the High Court, 20 Feb
- Mathias Cormann concedes Coalition may have to change foreign donations ban, 8 Feb
- Only one in five Australians favour proposed limits on charitable advocacy, 7 Feb
- Charites Unclear and Concerned over Foreign Donations Bill, 1 Feb
- IPA Echoes Charity Sector Push to Redraft Foreign Donations Bill, 1 Feb
- Donations will hamstring community advocacy, Law Institute Journal, 31 Jan
- Charity Sector welcomes Gary Johns comments on Foreign Donations Bill, Pro Bono News, 30 Jan
- Electoral Disclosure and Funding Reform: An Explainer, Pro Bono News (Prolegis Lawyers), 23 Jan
- Charities Urged to Have Their Say on Foreign Donations Bill, Pro Bono News, 22 Jan
- Foreign donation and charity law changes ‘likely’ to face high court challenge, The Guardian, 12 Jan
- St Vincent de Paul Warns Foreign Donations Will Mute the Voice of Charities, Pro Bono News, 11 Jan
- Charities warn Australia’s foreign donation laws will strangle advocacy, The Guardian, 11 Jan
- As politicians we must lift our game and respond to the frustrations of Australians, Andrew Giles MP, Deputy Chair of the Joint Standing Committee on Electoral Matters, The Guardian, 2 Jan
Our submission to the Inquiry