Last week the NSW Parliament passed the Election Funding and Disclosures Amendment Bill 2010. The Bill gained assent yesterday.
This is the first legislation in any Australian parliament to cap political donations and electoral expenditure. The Act commences on 1 January 2011.
It is the outcome of a joint standing committee established by the Government in March of this year to ‘inquire into a public funding model for political parties and candidates to apply at the State and local Government levels’.
The Bill is available here.
For donors, the new laws mean:
- Political donations from individuals, registered political parties and other entities will be capped at $5,000 to registered political parties or groups and $2,000 to candidates or elected members in a financial year;
o Note - elected members and candidates endorsed by the same party or group will be considered a single entity for the purposes of the donation cap.
- The new requirements of the bill also apply to corporations that are related to each other under the definition in the Corporations Act, as if they were a single corporation. This means that a single corporate group cannot avoid the caps by donating through different companies or by setting up new shelf companies for that purpose.
- Third parties may not receive more than $2,000 from each donor in a financial year;
- Donors will be limited to no more than three donations of up to $2,000 each to third parties in a financial year. The Government acknowledges without a limit to the number of donations to third parties, there will be a risk third parties will be established in order to harvest more donations and avoid expenditure caps.
- The ban on developer donations will remain in place.
- There will be a ban on donations from tobacco companies and profit-driven liquor or gambling business entities.
Under the act, a reportable political donation is political donation of or exceeding $1,000 made to or for the benefit of a party, elected member, group, candidate or third-party campaigner.
Individuals who donate $1,000 or more are defined major political donors.
This $1,000 reporting figure is unchanged from the current regime, although the reporting period is now every 12 months as opposed to the previous system of every 6 months.
Compliance and enforcement
- Interstate transfers of funds for State election purposes will be subject to the new laws.
- In addition, the Election Funding Authority has been granted increased powers and resources to administer these laws.
- A tiered penalty scheme will apply and powers of the authority will include injunctions and compliance agreements.
- The new laws will be subject to a statutory review following the 2011 NSW State election.
For political and third party expenditure, the laws mean:
- A candidate’s campaign expenditure will be capped at $100,000 per electorate during a regulated period if they are endorsed by a party, or $150,000 if they are not endorsed by a party. (For the 2011 State election, this regulated period will commence on 1 January 2011 and for each election thereafter this regulated period will commence on 1 October in the year prior to the election); Expenditure by political parties will be capped at a total of $100,000 multiplied by the number of electorates they contest.
- Within this total cap, expenditure by political parties will be capped at $50,000 per electorate for material that relates to a particular electorate (in addition to each candidate’s expenditure cap);
- Expenditure by political parties contesting only the Legislative Council will be capped at $1.05 million;
- Membership fees will be capped at $2,000 and registered political parties will be prohibited from using them for campaign purposes;
- Affiliation fees will be prohibited from use for campaign purposes,
- Third parties may not spend more than $1.05 million where registered by 31 December in the year before an election or $525,000 where registered on or after 1 January in the year of the election.
- Third parties may not spend more than $20,000 per electorate.
A new public funding model will reimburse parties, groups and candidates for actual expenditure on a progressive basis up to their maximum entitlement.
Public funding has been increased as caps on donations may naturally limit the resources parties, groups and candidates may have to contest elections and engage in debate on political matters.
- To be eligible for public funding candidates contesting a Legislative Assembly seat will need to receive at least 4 per cent of first preference votes or be elected.
- Ungrouped candidates in a Legislative Council election will need to receive at least 4 per cent of first preference votes or be elected.
- To be eligible for public funding parties will need to receive an aggregate of at least 4 per cent of first preference votes in those Legislative Assembly electorates in which they endorse candidates.
- Parties or groups not endorsing Legislative Assembly candidates will need to receive an aggregate of at least 4 per cent of first preference votes in a Legislative Council election or have a member elected to the Council.
- For those who qualify for public funding, reimbursement would only be paid for actual electoral expenditure, and further reimbursement would be in accordance with a diminishing sliding scale, so that public funding of electoral expenditure reduces as a candidate or party spends closer to their electoral expenditure cap.
An administration fund will be established to enable parties with endorsed elected members to fund administration costs.
Payments from the Administration Fund will be calculated at $80,000 per member of the Legislative Assembly and member of the Legislative Council up to a maximum of $2 million.
The bill also establishes the Policy Development Fund. This is implemented in response to concerns that capping donations may have an adverse impact on the development of new parties.
A party would be eligible for policy development funding only if it was not eligible for administration funding.
The bill provides that a new party would be eligible for policy development funding of at least $5,000 for the first eight years. To maintain transparency disclosure requirements will be maintained. The current disclosure threshold of $1,000 is retained.