LINDY EDWARDS. There is much we don’t know about political donations.

The big story about this week’s political donations disclosures is how little they really tell us. Over the last decade the major parties have routinely only transparently disclosed 10-20% of their incomes as donations.

There is another 20-35% of their incomes that fall into a grey area, where dodgy accounting enables them to conceal the source of the money. Then there is another 50-70% of their incomes which we know absolutely nothing about.

This year the precise numbers are:

Liberal Party Private Income    
Donations  $ 7.6m 18%
Other Reciepts $7.4m 17%
Undisclosed $28.3m 65%
Total Private Income $43.3m

 

Labor Party Private Income    
Donations  $             4.1m 11%
Other Reciepts  $           13.3m 34%
Undisclosed  $           21.5m 55%
Total Private Income $38.9m

This is able to happen because the Australian federal government has some of the most lax political donations laws in the developed world.

Under the Australian system, the political parties only have to disclose payments over $13,200. They are requested but not required to distinguish between ‘donations’ and ‘other receipts’.  There are no caps on how much people can give, or who can give. And the disclosures are only released annually, in February each year with no more than a name and address attached.

This might not sound too bad, but it is actually a system full of holes, that can be exploited to hide where the parties’ incomes are really coming from.

The first problem is what the parties declare to be ‘donations’ and what they declare to be ‘other receipts’. In many cases the parties claim more than half of the payments they receive over the threshold are ‘other receipts’ even though the payments come as round numbers from those you would expect to be lobbying government.

One journalistic analysis found 80 cases where the donor had declared a payment as a donation only to have the party claim it as an ‘other receipt’. Academic analysis have concluded that most other receipts should be treated as donations for analytical purposes. But for any journalist you have to be careful because there are some legitimate ‘other receipts’ in the mix such as union fees, share dividends and proceeds from property sales.

There are also some crafty schemes that parties use to make donations technically qualify as ‘other receipts’. They hold fundraising dinners, charging people large sums to attend, then report the payments as a fee for a service rather than a donation.

The second problem is that the parties use fundraising bodies to effectively launder the donations they receive.  Donors give the money to a fundraising body, that then gives the money to the party, making it difficult to work out where the money originally came from.

Thirdly, the very high disclosure thresholds enable the parties to engage in ‘donation splitting’. This is when a large payment is split into smaller amounts and paid to different party branches so as each payment comes in under the reporting thresholds. The parties don’t even need to aggregate payments made on different days.

Technically, the donors are supposed to declare their payments if the combined value of their donations is over the threshold. However, they don’t have to disclose payments to fundraising bodies, and if a donor doesn’t disclose, there is no way to know that a disclosure is missing. The disclosure laws are notoriously weakly enforced.

Finally, the donations data is released in one huge data dump on one day a year. Thousands of lines of data are released. The data cannot be meaningfully sorted or tallys that mean anything easily calculated.

In this resource starved media environment, journalists are reduced to identifying the biggest payment that hasn’t been split or concealed, and attempting to make hay of those unsophisticated enough to have allowed themselves to stand out.  The story fades after a day or two and the real secrets of who is funding our political process remains buried.

Perhaps the most insidious aspect of the disclosure process is that the payments are only revealed months after they were made. While small businesses have to pay tax quarterly, and the ATO has apps that enable us to collect our receipts in real time, the politicians only have to release their accounts annually. This means we only get to see the money that changed hands between stakeholders in the midst of major policy battles months after the issue has disappeared from the headlines.

The annual February festival of lampooning the largest visible donor lulls Australians into a false sense of security that there is a functioning political donations disclosure regime in place. Few people realise how ineffective our political donations disclosure regime is, and how badly it is in need of reform.

Lindy Edwards is a Senior Lecturer in politics at UNSW.

This article first appeared in The Conversation.

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One Response to LINDY EDWARDS. There is much we don’t know about political donations.

  1. J Knight says:

    The quick fix for this is an independent donation authority. Live donations are made, recorded in a public trust account. Receipt from any other sources are illegal, and all election expenses are recorded and payable from the funds held and accorded by the taxpayer on the per vote basis, though that’s unfair to new parties alas!

    Spend more than you have in the kitty or receive and then you need a to furnish a please explain.

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