How could 94% of the millions which made their way to political parties be deemed, not to be ‘Donations’, but instead ‘Other’? Is it a joke? Luke Stacey and Michael West investigate the bad joke which is dark money in Australian politics.
Prime Minister Scott Morrison chose an interesting day this week to deliver his address on the future of the nation; it was Monday, the one day in the year when the Australian Electoral Commission (AEC) releases its annual data dump of political donations.
It was a convenient diversion, some might say a spot of marketing flair, because this is the one day of the year when we get to see who is paying who in politics.
There were some familiar names featured, including $900,000 to the Labor Party (Queensland) from Labor Holdings Pty Ltd, the Greenfields Foundation gifting $450,000 to the Liberals, the likes of embattled casino operator Crown Resorts giving large licks, as well as ‘generous donations’ from billionaires such as Anthony Pratt’s Pratt Holdings, Dick Honan’s Manildra Group and Shaun Bonett’s Precision Group. And let’s not forget Clive Palmer giving $10m to Clive Palmer.
All of these donations appear on the AEC’s Transparency Register. The records are made public as part of the Commonwealth disclosure scheme which was introduced in 1983.
The register classifies the money gifted to the major parties and their associated entities as either ‘donation received’ or ‘other receipt’. These are disclosed by the recipients in the Detailed Receipts.
‘Donation received’ simply means that the parties and/or their associated entities have disclosed to the AEC that they received a donation. ‘Other receipts’, however, are another thing.
For 2019/20, the total payments made to recipients including political parties, campaigners, associated entities and lobby groups such as the Business Council of Australia was $587 million, with 94.3% listed as ‘other receipts’.
From the overall total, $118.5 million was given to the major parties, with only $14.7 million – or 12.4% – disclosed as donations. The remaining funds are listed as ‘other receipts’.
If that sounds weird – just 12.4% of private funding for political parties being disclosed as donations, and the rest just ‘other’ – it is. Just like most things to do with money in politics. For a start, many observers reckon these AEC figures capture only about one-third of the dark money which makes its way to political parties. Further, by the time we see it, the data is between 7 and 19 months old, the threshold for disclosure is far too high and the data is absolutely riddled with irregularities.
Then of course there is the issue of whether they are donations anyway, or rather bribes and protection money. A feature of charitable donations is that nothing is expected in return. A feature of political donations is that they are given to get something in return, as evinced by the fact that most donors give to both major parties.
The system is in drastic need of reform. It is corrupt and it is increasingly corrupting our democracy. Yet, in any case, the feature of this story is to investigate the mysterious ‘Other’.
What is an ‘other receipt’?
The nature of the receipt varies from payment to payment, yet the AEC bundles them all under the one category with no further detail.
According to the AEC, ‘other receipts’ are amounts that do not fit the definition of “gift” as outlined in the Commonwealth Electoral Act 1918 (Electoral Act). Put simply, a gift is defined as money intended for political gain.
A spokesperson for the AEC has previously told MWM that, “Whether a disclosed transaction constitutes a ‘gift’ or an ‘other receipt’ is a matter for the party or the entity to determine.”
When asked why it was not a governing body such as the AEC who determined what constituted a gift, they merely reaffirmed that this is conducted by the donor or their recipient.
This liberty extends to the entities not having to specify the details of the ‘other receipt’.
Michael West Media has questioned the AEC as to why it does not enforce either the donor or recipient of an ‘other receipt’ to provide details of the payment.
The AEC responded by declaring that their responsibilities for administering the Commonwealth disclosure scheme lie solely within Part XX of the Electoral Act.
In September last year, the Australian National Audit Office (ANAO) published a report following their audit of the “AEC’s management of financial disclosures required under Part XX of the [Electoral Act], including the extent to which the AEC is achieving accurate and complete financial disclosures.”
The audit, which covered financial years 2015/16 to 2018/19, found the AEC’s management of financial disclosures to be “partially effective.”
The ANAO concluded that the current systems put in place by the AEC to govern the disclosure scheme “are limited in their effectiveness as:
- across the four year period examined, while the AEC has obtained 5882 annual and election returns, as at 30 June 2020, 75 returns have not been obtained. there have also been delays with the submission of returns to the AEC with 22% of annual returns and 17% of election returns lodged after the legislated due date;
- the AEC does not make effective use of the available data sources to identify entities that may have a disclosure obligation that have not submitted a return;
- there is insufficient evidence that the returns that have been provided are accurate and complete;
- there is limited analysis undertaken of returns that are obtained; and
- risks to the financial disclosure scheme are not managed in accordance with the risk management framework.”
On this basis, it could be construed the ANAO was being kind when it said “partially effective”.
It is true that many of these funds disclosed as ‘Other’ do not fit the definition of a gift.
For example, big four bank Westpac gave $500,000 to the Labor Party on two occasions in the 2019/20 financial year. These are listed as ‘other receipts’. It is safe to conclude though that money of this size from one of the biggest banks in the country is not a political donation, rather a loan with interest. Again, this is merely conjecture as the AEC provides no additional detail regarding the payment aside from what type of receipt it is.
Other myriad examples may include a dinner held by one of the major parties with guests paying a fee for a table, or a builder purchasing government-owned land.
Considering the first Monday of February is the official release date for donations covering the previous financial year, the AEC could have as long as 19 months or as little as 7 months to collate the data.
However, the current legislation allows entities to submit their disclosures up to 16 weeks after the end of the financial year. This means that even if an entity makes a donation in July 2019, they do not have to disclose the transaction until October 2020.
According to the AEC’s financial disclosure guide, the commission “has no legislative discretion to extend this deadline.”
The need for real-time reporting was pushed by cross-benchers in 2019. Centre Alliance MP Rebeckha Sharkie drafted legislation to the Lower House to enforce a five-day deadline on political donations disclosures.
The bill would have ensured entities provide the AEC with a description of the donation in addition to the other required information i.e. names and amounts. It would also give the AEC ample time to amend the administrative issues uncovered by the ANAO audit.
Yet the legislation was left to die. And instead, the government – through bipartisan agreement with the Opposition – elected to weaken political donations laws surrounding property developers in 2020.
The transparency register also has a Donor Returns database which shows donations entities gave to political parties and their associated organisations, as well as to peak bodies and lobby groups such as the Business Council of Australia.
According to the Donor Returns, billionaire Andrew Forrest and his Fortescue Metals Group claim they have not made any political donations in the 2019/20 financial year. However, the Detailed Receipts for the year show that Fortescue gave $77,000 to Labor and $15,000 to the Liberals. The majority of these payments are classified as ‘other receipts’.
Michael West Media is not saying the payments made by Fortescue are necessarily political donations. However, when the Electoral Act gives the donor and/or recipient the authority to determine that a fund is not a donation but simply an unidentified payment, it is worthy of note.
Revisiting the political dinner hypothesis, if Fortescue paid $15,000 for a set of tables for the night, yet it only cost the political party $10,000 to cater for them, the party could in theory pocket the residual $5,000 and claim to the AEC that the money was given to them as payment for the dinner.
Even if this were the case, they would still not be required to declare the $5,000 thanks to the high disclosure threshold for political donations.
The loophole sees contributions in the 2019/20 financial year below $14,000 go undisclosed by the major parties. What’s more, the threshold has been increased by an additional $300 for the current financial year.
Discrepancies with ‘other receipts’
Considering the Detailed Receipts outlines amounts received in donations and the Donor Returns shows an entity’s donations disclosures, one would expect harmony between the two sets of data.
Yet, in many instances the numbers don’t match.
The AEC attributes this anomaly to the disclosure threshold. A spokesperson for the Commission told MWM that a donor “must lodge a return that discloses the details [of] all gifts made to a political party regardless of their value”, whereas a political party is exempt from reporting anything below the $14,000 threshold.
If the Electoral Act requires donors to disclose every payment regardless of the amount, why should the political parties and their associated entities enjoy this exclusive deal?
However, this would still not explain every discrepancy found on the register. For example, billionaire James Packer’s Crown Resorts Limited disclosed $184,556 in political donations for FY 2019/20. Of Crown’s total donations, $137,750 was above the disclosure threshold, yet the Detailed Receipts shows only $46,191 in political donations received from Crown. The remaining figures are considered ‘other receipts’.
Further, Dick Honan’s Manildra Group disclosed $71,650 in political donations between Labor and the Coalition, yet Labor determined these payments were not donations.
The AEC explained to MWM that this is because “donors and parties can – and often do – categorise transactions in different ways, and that is another reason why figures do not always correspond.”
Additional reporting by Stephanie Tran and Callum Foote