To the seasoned observer of political donations in Australia, the most remarkable thing about the recent NSW Labor scandal is that is has been exposed and people are being pursued. At the federal level this behaviour would have gone under the radar.
The recent NSW scandal has seen allegations that a Chinese property developer delivered $100,000 cash in an Aldi bag to the NSW ALP branch headquarters. The donation was illegal because property developers are banned
from donating, and the maximum donation at the time was $5700.
It is alleged that Labor then attempted to cover it up, passing off the donation as proceeds from a fundraising dinner. The $100,000 was broken down in to $5000 lots and recorded as having been paid by eleven separate
people to either NSW Labor or Country Labor.
As the public expresses outrage at this behaviour, the reality is that exactly the same behaviour would could have occurred with complete impunity at the federal level. To understand why it is necessary to grasp just
how weak the laws at the federal level are.
Firstly, the cover-up would not have been exposed because the $5000 payments would not have to have been disclosed at the federal level. The payments would have fallen below the $13,800 reporting threshold, and there
would have been no legal requirement for there to be a publicly disclosed paper trail that the payments even existed.
Secondly, at the federal level it is likely that the Chinese Friends of Labor would have reported the income from the fundraising dinner as an ‘other receipt’ and not as a donation. Again there would have been no requirement
to make disclosures that would have alerted authorities to anything awry.
Thirdly, even if the donation had been disclosed, there are few legal limits on who can give or how much at the federal level, so there is nothing to constrain this behaviour.
While NSW, like many other jurisdictions, have bans on donations from industries known to be a high corruption risk, there are no such bans at the federal level. The only limitations on who can give at the federal level
are some limits on overseas donors.
Similarly, NSW had maximum donation cap of $5700, which prevents the parties receiving unduly large donations. However the $100,000 donation would also not be a problem at the federal level, where there are no upper
limits on the amount that can be given.
Finally, it is alleged Labor attempted to hide the payment by breaking it down and paying different amounts to the different Labor organisations, as well as recording the payments against different names. There are no
rules against payment splitting in this way at the federal level.
Most importantly of all, there is no anti-corruption body at the federal level that has the powers to investigate the compliance with political financing laws or to conduct the kind of investigation we are seeing in
New South Wales.
At the federal level political donations disclosures are released in a huge data dump once a year. No one has responsibility or is given resources to comb through the thousands of lines of data and examine it for anomalies.
As far as I know, no one has ever been prosecuted for violating the federal political donations laws.
To make matters worse, the weakness at the federal level undermines all the good work that is being done at the state level to improve their donations regimes. Donors ‘jurisdiction shop’, where they make payments in which
ever jurisdiction has the weakest laws. The parties can then shuffle the money internally to where it was intended to go.
The result is that the lack of a strong federal system is undermining the integrity of our governments across the country.
The ICAC investigation in NSW should be celebrated as a sign that good political finance regimes can work, and we need to be pressuring the Federal Parliament to implement similarly robust laws.
Dr Lindy Edwards is the author of the forthcoming book ‘Corporate Power in Australia’. She is a political scientist from the University of New South Wales. Her other books include ‘The Passion of Politics: the Role of
Ideology in Australia’ Allen & Unwin, ‘How to Argue with an Economist: Re-opening Political Debate in Australia’ Cambridge University Press. Her website is lindyedwards.com