Electoral Funding and Disclosure Reform Bill would impose high administrative burden on Unions; big fines and jail time for non-compliance

26 April 2018
Activist organisations and charities have been campaigning hard against the government’s Electoral Legislation Amendment (Electoral Funding as Disclosure Reform) Bill 2017 (‘the Bill’). But unions should also be concerned about the significant administrative burdens the Bill would place on them if passed into law, and the extreme penalties imposed for non-compliance – including lengthy jail terms.

Disproportionate impact on organisations with large donation base

The Bill would place a far higher burden on organisations funded by a large number of small value donors, such as unions and charities, than it would on lobbyist and other business campaigners, which operate on the donations of a small number of high value donors. In doing so, the Bill would allow for continued lobbying and political campaigning by big business but restrict, punish and penalise organisations which seek to represent and advocate for millions of Australians.

What’s in the Bill?

New status for organisations that engage in public advocacy

The Bill requires registration with the Australian Electoral Commission by all entities which incur at least $13,500.00 (‘third party campaigner) or $100,000 (‘political campaigner’) in a financial year in publicly expressing their views on political parties, on issues that are (or are likely to be) before electors in an election (regardless of whether an election has been called ie – at any time), and/or by conducting opinion polls.

The Bill also significantly broadens the definition of ‘associated entity’ to catch entities whose expenditure is predominantly political, when that political expenditure is mainly to promote or oppose one or more registered political parties or their policies.

Registration requirements and penalties

Individuals, groups and organisations that meet the definition of ‘political campaigner’, ‘third party campaigner’ or ‘associated entity’ would be required to register as such with the Australian Electoral Commission within 28 days, and would be prohibited from incurring further political expenditure while unregistered.

For every day that political expenditure was incurred while unregistered, a significant penalty ($50,400 for political campaigners and associated entities, $25,200 for third party campaigners) would be imposed. It is unclear whether this ban on incurring political expenditure would continue in the time period between applying for registration and registration being confirmed.

Classification of allowable and non-allowable donors

The Bill also creates the concept of an “allowable donor”. For individuals, this means an Australian elector, citizen or resident. However, entities only need to be incorporated in Australia, or have a head office in Australia, to be an “allowable donor”.

The Bill imposes significant limitations on the value of donations organisations can accept from non-allowable (ie international) donors. This means that organisations which take money from businesses, such as industry groups and lobbyists, will be able to accept far more donations originating from international entities than organisations that derive most of their donations from individuals, such as charities and unions.

International Donations

The Bill would significantly limit the types and amounts of donations that unions could accept from international donors.

The rules regarding donations vary depending on whether an entity is a political campaigner, third party campaigner or associated entity. They then further vary for registered unions and charities.

For unions that accept donations (not including union fees), the ability to accept international donations will be limited and strictly regulated, with significant administrative obligations to establish compliance.

Administrative burden

Non-FW RO unions

Non FW-RO unions would be required to obtain a statutory declaration from each allowable donor of $250 or more in a financial year (regardless of whether the amount was received in one go or in pieces over a year) to confirm the donor was “allowable”.

RO unions

While RO unions would not be required to collect statutory declarations from allowable donors, the only allowable defence in the Bill to a charge of taking a political donation of $250 or more from a non-allowable donor is to establish that the defendant:

  1. Obtained a statutory declaration from the donor declaring they were an allowable donor; and
  2. Did not know, and did not have reasonable grounds to believe, the donor was not an allowable donor.

Penalties

Contraventions of these provisions would, in most instances, be an offence, with a potential penalty of 10 years imprisonment, or 600 penalty units (currently $126,000) or both. There may also be a civil penalty imposed of up to 1000 penalty units ($210,000).

Reporting

The Bill would also impose significant annual reporting requirements on political campaigners, third party campaigners and associated entities. All entity types would be required to lodge an annual return with the AEC which sets out:

  1. Amounts received by the entity, including details of all donors of more than $13,500 in that financial year;
  2. Total amounts paid by, or on behalf of, the entity to political campaigners, political parties and political candidates;
  3. Total amount outstanding of all debts incurred, and details of all lenders of over $13,500; and
  4. Details of registered political party membership of all senior staff.

Political campaigners would also be required to go to the expense of obtaining an auditor’s report prepared by a registered company auditor. 

Conclusion

If passed it is likely that most, if not all, unions which engage in any form of advocacy or public commentary on behalf of their members will have to quickly take steps to register with the AEC or risk significant daily fines.

The Bill would have a chilling effect on fundraising mechanisms regularly used by unions, charities and grass roots campaigners such as online donation pages, bucket collections and door knocking campaigns.

Given the significant fines and jail time imposed for contraventions of this Bill, many organisations may feel they have no choice but to significantly limit their fundraising activities. However, even if unions chose not to accept donations from any person or organisation, they would still be required to register and comply with the annual reporting and auditing requirements.

Finally, the penalties for non-compliance are significant and onerous. That a person could go to jail for 10 years for accepting a donation of $250 from a person living outside of Australia is outrageous and is likely to have a chilling effect on public debate in Australia. Unions, charities and advocacy organisations play a vital role in Australia’s public discourse. All should be concerned by the government’s latest attack on freedom of speech.

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