Dozens and potentially several hundred major donors to the Tasmanian Liberal Party in the 2014 financial year remain hidden from public view because of Australia’s weak national disclosure standards and the absence of any Tasmanian electoral disclosure law.

How many of the invisible donors have business interests in the state is unknown.

In the latest return to the Australian Electoral Commission (AEC) Sam McQuestin, the State Director of the Tasmanian branch of the Liberal Party of Australia, disclosed the name of just 13 donors who contributed over the $12,400 disclosure threshold in the 2013/14 financial year.

All up the 13 donors contributed just over $223,000 to the Tasmanian Liberals that year. (The actual return lists 15 sources of income: however, a $13,000 transfer from the Australian Electoral Commission – a refund of candidate deposits – and $310,858 from the Federal Liberal Party – believed to be largely the part-reimbursement from public election funding paid to the federal party, have both been excluded from this analysis. Tasmanian Times sought to check the details of the transfer from the Liberal Party’s national office with McQuestin but he did not respond to this question.)

Who contributed the remaining $3.69 million to the party in what was an election year remains shrouded in secrecy. While some would be membership fees, most would be donations. (Tasmanian Times asked McQuestin how many current financial members the Tasmanian Liberals have but he did not respond to this question.)

In the last decade alone the Tasmanian Liberal Party has received over $15.2 million in income. However, the origins of just $2.7 million of the party’s political war-chest – under one-seventh – have been disclosed to the Tasmanian public.

Tasmanian Liberal Party state director Sam McQuestin declined to respond to specific questions from Tasmanian Times on the donors and fundraising activities.

Instead, in an emailed statement McQuestin wrote the Liberal Party “fully complies with its legal obligations in relation to donations and disclosure and our Members of Parliament must comply with our strict Fundraising Codes.” Tasmanian Times does not suggest any laws have been breached or that donations have directly influenced Liberal Ministers’ decision-making.

The invisibility of Tasmanian Liberal donors is the fruit of the party’s 30 years-long opposition to comprehensive donor transparency laws.

How many donors are invisible?

In early December 2005 the Howard Government weakened the strict disclosure requirements which had been in place for over 20 years by raising the threshold for disclosure of donations from $1500 to $10,000 and indexing the base rate to the Consumer Price Index. (This financial year the disclosure threshold stands at $13,000.)

Before this change the details of who was donating the bulk of the funding for the Tasmanian Liberals was made public, albeit up to as much as 19 months after a donation was actually made.

Back in the 2004-05 financial year, with the $1500 threshold in force, the Tasmanian Liberals reported just over $808,000 in revenue. Of that, over $609,000 or three-quarters was disclosed as originating from 82 donors.

Among those showering funds on the Tasmanian Liberals were Gunns, a number of other Liberal Party branches, Macquarie Bank, the Australian Food Group, Tasmanian Seafoods, Giameos Constructions and Developments, the Free Enterprise Foundation, the Tourism Council of Tasmania and a smattering of bit-part players.

The setting of a high threshold has dramatically reduced the level of transparency of just who is donating to the Tasmanian Liberals. In the year the threshold changed, the Tasmanian Liberals revealed that there had been 41 donors over the $1500 disclosure threshold even though income had climbed to over $962,000. As the threshold changed after five months of the financial year, the radical effect of the changed threshold was largely masked.

However, the following year – the first full year of the higher threshold – the shutters came down. The Tasmanian Liberals may have raised a whisker under $900,000 but only had to disclose the identity of just three donors who contributed a total of just $35,200.

The following year – the 2007/08 financial year – the Tasmanian Liberals raked in $1.57 million but only had to disclose the identity of just 11 donors.

The year after, a year with neither state nor federal elections, just one donation was disclosed at all even though the party raised just short of $690,000. (The one donation was from Clive Palmer’s Mineralogy.)

In the years since the Federal Liberal Party raised the threshold the number of disclosed Tasmanian Liberal donors didn’t reach double figures until its fundraising boom-time in the 2013-14 election year.

If the Tasmanian Liberals disclosed 82 donors when the disclosure threshold was $1500 and their income was one-fifth of the current level, could the party now have several hundred major donors?

Tasmanian Times asked Tasmanian Liberal Party State Director Sam McQuestin if a fair estimate of the number of major donors contributing over $1500 was over 3-400. He did not respond to the question.

The disclosure tug of war

Where donation thresholds are set has been a fiercely contested issue for over 30 years.

Australia’s national political donations’ disclosure regime was introduced following a September 1983 report by the Federal Parliament’s Joint Select Committee on Electoral Reform (JSCER) soon after the election of the first Hawke Government. In the unimaginatively titled First Report the committee summarised the Australian Labor Party’s position as being:

“disclosure of party income as an essential corollary to public funding and as necessary for the minimisation of the potential for corruption. The Labor Party argues that the long-term viability of the democratic system depends on public confidence in the legitimacy and public integrity of the political process and that any hint of corruption undermines public confidence.”

The Labor Party proposed any donation of over $1000 to a party or $200 to a candidate be disclosed.

The Liberal Party opposed any disclosure outright.

The report of the committee – which included Liberal Party members – stated

“The Liberal Party put forward the view that disclosure of donations for political parties is a grave infringement of civil liberties. The Liberal Party saw the concept of the secrecy of the ballot as extending to the giving of donations to political parties. The Liberal Party argued that any disclosure of donations exposes the political sympathies of individuals and therefore violates privacy. The Party argues the only disclosure it would support would be to the Commission of Taxation if donations were tax deductible. The Liberal Party also argued that disclosure of donations could lead to victimisation of individuals particularly by certain trade unions. The Liberal Party proposed that should disclosure provisions be introduced only donations above $10,000 should be disclosed by the candidate or party receiving the donation and that any party which declined to receive public funding not be obliged to disclose donations.”

Despite the opposition of the Liberal Party a sweeping package of electoral reforms including political donations disclosure was adopted by the Federal Parliament. However, the threshold was set at $1500.

For over two decades donations over the threshold were required to be disclosed.

As the years went by the Liberal Party’s in-principle opposition to any public disclosure gave way to a more pragmatic argument about where the threshold should be set. In more recent years it has also sought to have the disclosure standards apply to third-party advocacy groups such as GetUp!.

A low threshold ensured that the bulk of donations were made public and pushed political donors from the shadows into the limelight. Hard verifiable data on donations – provided by both the political parties and donors themselves – has fuelled a stream of media stories on possible conflicts of interests between corporate donors and the governments they were seeking to court.

A higher threshold, as preferred by the Liberal Party, has the effect of shielding donors from public scrutiny, deflating public debate over potential conflicts of interest and stifling investigative journalism.

The establishment of a national disclosure regime – along with other electoral reforms – also had the spin-off effect of raising expectations that states too would address the seemingly never-ending series of scandals involving political donors.

However, Tasmania and Victoria remain the holdouts.

Drawing the curtains closed

While increased transparency of political donors has been the long-term trend in Australia, the Federal Liberal Party has relentlessly advocated far less transparency.

Lifting the disclosure threshold was near and dear to the heart of the Howard Government. In late 1998 it proposed lifting the disclosure threshold but, after this was delayed in the Senate, the bill lapsed when the election was called later that year.

For a few years the Howard government largely let sleeping dogs lie. However, just over two weeks after the September 11 attacks in the US, the Parliamentary Secretary to the Minister for Finance and Administration, Peter Slipper, introduced a bill which proposed increasing the political donation disclosure thresholds from $1500 to $3000. The changes, he told the House of Assembly , would “improve the integrity of the electoral process.”

Despite the government’s intent to draw the curtains closed once more to block most political donors from public view the bill lapsed when Parliament was dissolved for the November 2001 election.

In the following term the Howard Government avoided the issue but, after winning the 2004 election, was back for one more try.

In early December 2005 the government introduced the Electoral Integrity and other Measures Bill which included a provision to lift the disclosure threshold to $10,000 and index it to the Consumer Price Index.
In Senate debate on the bill in June 2006 the then Minister for Fisheries, Forestry and Conservation and Tasmanian Senator, Eric Abetz, argued that donors “need protection from those people who would seek to intimidate them because of their donations.”

This time, the Liberal changes passed.

When Labor regained office federally in 2007, electoral reform was on the agenda once more. The following year it introduced a bill to lower the donations disclosure threshold to $1000. The bill stalled, was revived the following year and passed through the House of Representative but lapsed before the Senate voted on it.

After the 2009 election Julia Gillard’s agreements with the independents Rob Oakeshott and Tony Windsor and the Australian Greens included electoral financing reforms. Once more the lowering of the disclosure threshold to $1000 and removal of the CPI indexing was a real prospect.

A bill to give effect to the agreements was introduced in 2010 and passed the House of Representatives. However, once again it stalled in the Senate. The proposals for electoral reform were referred to the Joint Standing Committee on Electoral Reform which, in 2011, recommended the disclosure threshold be lowered from $11,900 to $1000.

However, the Liberal Party objected. In its dissenting report the Liberal representatives on the committee claimed the proposed change to the disclosure threshold:

“will significantly impact the ability of individuals to give donations to political parties without the potential for intimidation and harassment. The Coalition believes in participatory democracy and that individuals should be allowed to contribute to the political process, however, the proposed reduction in the disclosure threshold will greatly hamper the ability of individuals and firms to contribute.”

While the committee recommended change, the report’s recommendations were ignored. Ultimately the bill died a quiet death when the 2013 election was called.

The normal procedure with parliamentary committee reports is for the government of the day to respond and explain which recommendations would be implemented and any which wouldn’t. However, the Abbott Government didn’t even bother to respond to the 2011 report.

In mid-October this year, cross bench Senators frustration at the lack of a response from the government boiled over. With support from Labor and the Greens they gained sufficient support for the Joint Standing Committee on Electoral Reform to once more inquire into political donations. In particular, they are demanding a response from the Turnbull Government to the recommendations of the committee’s 2011 report. While the committee is scheduled to report by March 2016 it has not yet been determined whether the committee will call for public submissions or hold public hearings.

Will cash from Newcastle have a ripple effect in Tasmania?

While the view of the new Turnbull Government on political donations is not yet evident, controversies over political donors rage on.

In New South Wales the Independent Commission Against Corruption (ICAC) ‘Operation Spicer’ is inquiring into allegations that some members of parliament and others gathered – but failed to disclose – political donations including some from donors banned from contributing under the Election Funding, Expenditure and Disclosures Act 1981..

To date the Operation Spicer investigation has resulted in 10 State Liberal Members of Parliament resigning from parliament or resigning from the party to sit on the crossbench.

Former Newcastle Mayor Jeff McCloy, who is now a property developer, is one of those subject to investigation. In evidence to an ICAC hearing McCloy stated he had given envelopes containing $10,000 in cash to Liberal Party candidates before the 2011 election. McCloy also complained to ICAC that he felt that he was treated by politicians as though he was a “walking ATM.”

In a legal challenge before a full bench of the High Court of Australia McCloy’s legal team argued the NSW legislation banning donations by property developers was inconsistent with the Australian Constitution’s implied freedom on communication on governmental and political matters.

In October this year the High Court of Australia rejected McCloy’s challenge to the validity of the ban on developer donations.

In his decision Justice Stephen Gagelar noted the Election Funding, Expenditure and Disclosures Act 1988 had as one of its objects to “help prevent corruption and undue influence in the government of the State.”

He observed:

“Undue influence has different meanings in different contexts. Influence is a matter of degree; whether or not influence is undue is a matter of judgment; and judgment is a matter of perspective. The perspective here is the effect on the integrity of government. The influence which comes with the preferential access to government resulting from the making of political donations does not necessarily equate to corruption. But the line between a payment which increases access to an elected official and a payment which influences the official conduct of an elected official is not always easy to discern.”

However, without an effective disclosure regime which allows most major donations to be subject to scrutiny, there is no way of knowing what influence may be at work in a myriad of government decisions.

Back in the June 2006 debate in the Senate Abetz argued lifting the donations disclosure threshold from $1500 to $10,000 would have little effect as – in the 2003-04 year – “88 per cent of all donations disclosed by both Labor and the Liberal Party were donated in amounts of $10,000 or more.” (It should be noted that Abetz cited 2003-04 data when several months before his speech data for the 2004-05 year had been made publicly available.)

Based on the data he selected, Abetz claimed:

“So, really, only 12 per cent of current donations might not be disclosed. If people are saying that that 12 per cent is going to somehow create undue influence on the body politic of Australia, I would say with great respect that I do not think you are right.”

However, the opposite has proved to be the case, at least in the instance of the Tasmanian branch of the Liberal Party. After eight full years since the threshold was lifted the data reveals the Tasmanian Liberals have on average disclosed the origins of just 13 per cent of their income.

Millions of dollars of donations to the Tasmanian branch of the Liberal Party remain hidden behind a veil of secrecy.

In the absence of a lower federal disclosure threshold or the introduction of Tasmanian legislation requiring real transparency of political donations, voters are being prevented from judging for themselves whether or not the decisions made by the Hodgman Government are being shaped to suit the interests of major party donors.

Bob Burton is a Hobart-based Contributing Editor of Tasmanian Times.

Tasmanian Times (TT) is free – always has been, always will be. If you like what TT does, please make a donation.

EARLIER in this series of articles on TASMANIAN TIMES …

• October 27: The private pathology industry emerges as major Tasmanian Liberals donor

• October 28: Who’s a Liberal donor gonna call? Rentbusters!

• October 29: What happens if a major political donor doesn’t disclose?

• phill Parsons in Comments: Only a whisker above the brown paper bag payment … undisclosed donations reek of corruption of process. How can the public believe that decisions by government are free of favour when the chain of evidence is held secretly. Time for changes like limiting maximum donations and increased public funding to level the parties to their ideas and remove the taint of favour to special and vested interests.

• Pat Synge in Comments: Thank you, Bob Burton, for reminding us all of this sad history and the Liberals determination to reduce transparency in this important area. It will be interesting to see if Turnbull is any different in this regard. I would be surprised if he were.