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Labor and Greens reject electoral donations legislation they warn will create 'back door' for donors
Labor and the Greens have hit out at electoral funding legislation they say could override state laws restricting donations and allow donors to funnel more money through the political system.
A Coalition-dominated parliamentary committee has backed a range of changes to landmark legislation on foreign political donations and third-party political groups, including amendments that could undermine state and territory laws that cap donations and ban certain types of donors.
While Labor MPs on the committee supported most recommendations in a new report into the Electoral Funding and Reform Bill, they expressed concern that two sections of the amended bill would allow certain donors to make financial contributions and avoid stricter disclosure caps if there is a connection to federal electoral spending.
But the Coalition has dismissed the concerns, with committee chair James McGrath saying the changes would ensure "state-based restrictions on donations apply in full where those amounts are used for state elections, but that state laws do not go further than they should to regulate federal donations".
In the dissenting report, Labor MP Andrew Giles, the deputy chair, said the sections were not related to the original intent of the bill and there had not been enough time to scrutinise them. He urged the government to reconsider the measures that risked "unduly interfering with state arrangements" restricting the role of money in politics.
"This is a really important matter which goes to the heart of trust and integrity in politics. It's not a matter upon which the Commonwealth Parliament should lightly, if ever, seek to override state jurisdictions who have considered these matters and made laws. It is deeply concerning that such a provision is proposed here," Mr Giles said.
The Greens have rejected the bill outright, calling it "deceitful" and demanding changes to introduce sweeping new restrictions on money in politics.
"What hypocrisy that a bill that purports (yet fails) to restrict the influence of money in politics actively facilitates donors avoiding state restrictions on political donations," wrote Greens senator Larissa Waters in a separate dissenting report.
Labor MP Andrew Giles.Credit: Alex Ellinghausen
She told Fairfax Media the provisions would be a "back door" for donations and said they had been "snuck in" by the government.
"On Wednesday when this bill comes before the Senate, the Greens will move to strike out those parts of the bill that seek to override state limits on donations, and we expect Labor’s support. The government will have to dump that part of their bill or see the whole bill go down, unless they can wrangle the crossbench," Senator Waters said.
Senator McGrath said the provisions were intended to make sure state and territory laws apply to those elections only, without affecting federal donations.
"It would not be tenable for the new laws to come into effect without clarity about which laws operate in which jurisdiction," he said.
Finance Minister Mathias Cormann said the provisions were "intended and necessary" to clarify the relationship between the federal and state laws.
"If these amendments were not made, there would be ambiguity for regulated entities, and, in the light of recent court decisions, overlap between various state, territory and Commonwealth laws on political donations," Senator Cormann said.
"Any ambiguity and overlap would increase the regulatory compliance burden for affected entities, with multiple laws in different jurisdictions applying to the same financial transaction."
The government will seek to get the bill through the Senate next week following "further final refinements" to the proposed amendments.
The Labor and Greens concerns echoed those expressed by several constitutional experts who submitted evidence to the inquiry. Sydney University professor Anne Twomey said the potential loopholes for donors contained in the federal legislation appeared "singularly inappropriate and potentially also unconstitutional".
Professor Twomey warned the legislation should be tightened up because it could carry the unintended consequence of allowing donors banned at the state level to make financial contributions without conditions and allow them to be used for state purposes.
The amendments state that Commonwealth laws override state laws where donations "may be used" for federal election purposes.
The Greens also want curbs on corporate donations, real-time disclosure of political donations above $1000 and caps on donations and political parties' spending.
The 12 recommendations in this inquiry into the legislation follow another 15 made previously.