Tony Smith (Casey, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

This is not the first time this House has seen this proposal from the government to abolish tax deductibility for political contributions and gifts. At present, as members opposite will know, the limit is $1,500. It was proposed earlier in the year in a tax law amendment bill—the first tax law amendment bill of this year, back in February—that tax deductibility for contributions up to $1,500 be abolished in entirety and that there be no lower limit. We at that point expressed our opposition. That has not changed; we oppose the Tax Laws Amendment (Political Contributions and Gifts) Bill 2008. This proposal by the government highlights its hypocrisy on issues of campaign finance reform. The position consistently articulated by the opposition is that all of these issues should be considered through the Joint Standing Committee on Electoral Matters, and that is precisely what is happening at present. The government itself has commissioned a green paper, which the public has yet to see and which is due sometime before the end of the year, and the comprehensive report of the Joint Standing Committee on Electoral Matters will arrive sometime after that and will do so with the committee having considered all of the issues relating to political donations, elections and campaign finance in a holistic way. A proposal to cherry pick one item at the start of the year, before that process has occurred, highlights the true intent of those opposite.

I will take just a small amount of the time of the House to go through the history of the issue of tax deductibility for political contributions or donations, because that history highlights very strongly the hypocrisy of those opposite. If we listen to the Assistant Treasurer and other ministers responsible for this measure, we would think that the Labor Party has always opposed tax deductibility for political donations. Tax deductibility itself was introduced not during the term of the Howard government but rather during the Labor government of Bob Hawke and/or Paul Keating—because it was in December 1991 that tax deductibility first came into existence in this country. The level then was $100, and the reason for that introduction was to promote public involvement in the political process, to promote and broaden involvement in our democracy. All parties thought that was a good thing as a matter of principle.

In 1996, in its consideration of our electoral laws and the election that had just passed, the Joint Standing Committee on Electoral Matters had another close look at this issue and, having looked at the operation of tax deductibility for what would then have been about five years—I think my colleague will know—the Joint Standing Committee on Electoral Matters thought that this was operating so well that tax deductibility should be extended. It would have considered a whole range of levels in its deliberations. The Joint Standing Committee on Electoral Matters normally takes about a year to conduct a comprehensive review of our electoral laws. It does so every three years. It is the primary inquiry into the operation of our electoral laws in this country. So in 1996, after five years or so of the operation of tax deductibility, the committee had a close look. And what did that committee find? It found that the level of tax deductibility, far from being abolished, should in fact be increased—not to $200 or $300 but to $1,500, which is precisely the amount it is today. This was not a year or two ago; this was in 1996, just after the election of the Howard government. The committee stated its reasons for that proposed increase as being to encourage small to medium donations, thereby increasing the number of Australians involved in the democratic process, and decreasing parties’ reliance on a smaller number of large donations.

What was most compelling about this report from the Joint Standing Committee on Electoral Matters with respect to tax deductibility for political donations was that that recommendation was unanimous—that is, with a change of government back in 1996 all of the members of the Joint Standing Committee on Electoral Matters considered the electoral landscape, considered the operation of tax deductibility, which had been in for just a few years, and determined unanimously that the level should be increased to $1,500. It is quite insightful that those members of that committee who are now part of the government recommended in the cold light of day, without any politics involved, that $1,500 was the sensible measure that ought to be introduced. They included the deputy chair of the committee, Senator Stephen Conroy, now the Minister for Broadband, Communications and the Digital Economy, Mr Laurie Ferguson, now a parliamentary secretary, and the Hon. Robert McClelland MP, now the Attorney-General. The Attorney-General, the communications minister and a parliamentary secretary in this government were the first people to recommend the tax-deductibility threshold be increased to $1,500, and now they hold the view that the tax-deductible limit should not be $100, as it was back then, but should be zero. That sums it all up. That reveals the motive of those opposite. That highlights their utter hypocrisy on this issue.

The level of $1,500 was introduced in 2006, precisely 10 years after the recommendation was first put forward. At that time those opposite opposed this, although years before, as I have just outlined, they had strongly advocated it. They opposed it for political reasons. They opposed it because, in my view, they came to the view that encouraging members of the public to be involved in our democracy was not something that suited the Australian Labor Party. They are more than happy with tax deductibility for trade unions. There is no problem with that; there is no rush to deal with that issue. In 1996, the now Attorney-General, the now Parliamentary Secretary for Multicultural Affairs and Settlement Services and the now communications minister might have considered what was best for Australian democracy, but now they are in government they are considering what is best for the Australian Labor Party—that is the difference. And so what we have here is a partisan measure.

There is a wide-ranging review going on into all aspects of campaign finance. As the new opposition, we have said we are happy to look at everything but everything should be looked at together. The Joint Standing Committee on Electoral Matters has a comprehensive review underway. There is a green paper that no-one has seen as yet, and what we now have is this measure—

Duncan Kerr (Denison, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Link to this | Hansard source

He said he was only going to go for five minutes. We are getting the full lecture!

Tony Smith (Casey, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The honourable member opposite has motivated me to explain the history to him in great detail. It is fine for the government to seek to ignore the opposition members on that committee, but what is really revealing is they are ignoring their own members of the Joint Standing Committee on Electoral Matters and bringing in this legislation without allowing them to have a say on it. Why would they do that? They are fearful that the members on the committee might do what they did back in 1996—they might do the right thing.

We opposed this bill in a different form back in February. We are going to oppose it again. The history of this episode highlights utterly the hypocrisy of those opposite. This bill should not be before this House. We will oppose it. The measures in it should be considered as part of a wider review.

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to hear the member for Casey speak so strongly about the need for us to engage in a full review of the issues before we cherry pick, and I am looking forward to him raising that matter in his own caucus next time the opposition speak about pensions. The Tax Laws Amendment (Political Contributions and Gifts) Bill 2008 is an important little bill and it is sad to see it bouncing backwards and forwards between this House and the Senate. I did not speak on it the first time it reached this House, but I am taking the opportunity to do so this time.

Blocking bills in the Senate is a very powerful act. The world we live in is not about politics; it is about governance. I fear that the behaviour of the opposition in the Senate over the last few months has been more about politics than governance. It is a very powerful environment in which to play that game. If you look at the range of bills which, it is threatened, will bounce backwards and forwards, you will see that we have issues such as the alcopops tax, the luxury car tax, Fuelwatch, the Medicare levy surcharge and now political donations. The member for Stirling, in his speech to this House the first time the legislation passed through, let the cat out of the bag by confirming that this is very much about protecting donations to the Liberal Party; it is clearly very much a political issue and not one of governance.

At a time when families have been struggling under the pressure of back-to-back interest rates for the last seven years—in fact, we have just had the first decrease in interest rates in seven years—and at a time when keeping a strong budget surplus is absolutely essential for the people in my electorate, as well as those around the country, the behaviour of the Liberal Party in blocking budget measures is quite extraordinary. At a time when families need relief and at a time when we need to keep downward pressure on interest rates we see them blocking this $10 million revenue measure. We also see them retaining the loophole in the alcopops tax, also blowing a hole in the surplus, and retaining the luxury car tax at pre-election levels, also contributing to a growing hole in the budget surplus. When families need relief, we see the opposition fighting against Fuelwatch so that families cannot find out every day the cheapest price for petrol. And yesterday we saw the blocking of the Medicare levy surcharge changes, which would have provided individuals and families with an opportunity to decide for themselves whether to take out private health insurance.

The opposition are attempting to blow a hole in the budget surplus. Let us hope we can stop them from doing that at this most important time. They would blow a hole in a surplus that is doing exactly what we need that surplus to do: keep downward pressure on inflation and therefore on interest rates. They are also doing something quite extraordinary in that they are blocking the government from doing things that we committed during the election to do. We went to the election on this issue. We announced it prior to the election and the people voted. We had an absolute mandate to remove the tax-deductible status from political donations. Like blocking bills in the Senate, voting down something that a government has a mandate on is a very serious business. There might be times when any one of us might need to do that—and I can imagine issues on which I might like to do that—but this is not one of them.

The opposition clearly has a different view. Having read all of the speeches that were presented the first time this bill came around in this House and those made in the Senate, I have to say the opposition’s opposition to this measure cannot be taken seriously. Remarkably, it has been over the top. For example, we heard from the member for Wentworth, who said:

This is a big moral issue. It is not just a financial issue; it is not just a political issue. It goes to the very heart of our democracy.

We have heard that it is an assault by the Australian Labor Party on democracy itself. We have heard that it is poisonous to democracy itself. We have heard that what is at stake here is democracy itself. Those are extraordinary over-the-top statements. In fact, you would think it was the end of democracy, as we know it, because we are proposing to remove tax-deductible status on donations up to $1,500.

But it is worth pointing out to the House that, prior to 2006, the deduction limit was $100. The previous Howard government increased that threshold to $1,500 in 2006. They expanded the deduction to include donations to Independent candidates and members and to donations made by business. If this is the end of democracy as we know it, then democracy only started in 2006, and before that time it was clearly the democratic Dark Ages. Some of us would think that the period from 1996 to 2006 was the Dark Ages, but I know that is not what those opposite are referring to. I can imagine people in 2006, just two years ago, waking up in the morning, rubbing their eyes, walking outside, and thinking, ‘Thank goodness John Howard increased the tax-deductible threshold for political donations to $1,500. Democracy is here.’ How did democracy survive before 2006?

Let us have a look at exactly what we are doing. Let us put the overblown rhetoric aside and the ridiculous notion that returning this nation to a situation similar to what we were in before 2006 would somehow end democracy as we know it. The government is reintroducing legislation to remove tax deductibility for contributions and gifts to political parties, Independent candidates and members. This measure was an election savings commitment. We promised to do it. The measure was originally introduced into parliament on 13 February 2008 in the Tax Laws Amendment (2008 Measures No. 1) Bill 2008, before being referred to the Joint Standing Committee on Electoral Matters. Although the committee recommended that the measure be passed by the Senate unamended, the measure was voted down in the Senate on 26 June.

We on this side of the House introduced the bill quickly because it was an election commitment and because it applied from 1 July 2008. It was a clear part of the Labor Party’s election campaign. It is not a new commitment of the Labor Party. We have been consistent on this issue for 10 years. We argued against tax deductibility each time the previous government tried to introduce it. In all, they tried to introduce it three times. They tried firstly in 1998, and that particular measure lapsed when the 1998 election was called. Then they tried again after the 1998 election and it was rejected in the Senate. In 2006 they tried a third time and, third time lucky, with control of the Senate, they succeeded.

The Labor Party opposed those measures and campaigned at the last election with a clear policy of removing the tax deductibility of election donations. We were clear on this with the people of Australia. We clearly said that Australian taxpayers were already subsidising political parties through the electoral funding procedures. They already provided money to political parties for the democratic process, and that was a transparent process with parties treated equally.

We do not believe that they should provide more for the election process through tax deductions for individuals and businesses. We clearly said that we do not believe it is appropriate that Australian taxpayers subsidise donations to political parties—that, just because someone wants to make a donation to a political party, other taxpayers should be required to put their hands in their pockets and pay even more in public funding than they currently do. But since 2006, when the previous government finally got its legislation through, Australian taxpayers have been putting their collective hands in their pockets and contributing effectively an additional $10 million per annum to political parties. We are seeking to remove that loophole, providing an efficiency gain to the Commonwealth. I would have thought that anyone in this House would see that as a responsible course of action.

I say to the opposition: there is considerable cynicism out there about what we do in this place and the way we behave. One responsibility of each of us as custodians of the important positions that we hold is to leave those positions in better shape than we found them. There are many things that we can do better. One very important thing which we on this side of the House are doing—and it should be a very basic thing for all elected governments but unfortunately it has not been—is to honour our election commitments in full. Another thing is to be honest with the Australian people about how and how much they pay for us and to be careful about what we ask taxpayers to pay for in the way we operate. The government have already taken a knife to some of the excesses of the previous government. We have cut back on printing budgets, which increased dramatically in the last years of the previous government. We have reduced our capacity to carry funds over. We have introduced responsibility into our own offices and new rules for government advertising. We still have a long way to go, and the measures in this bill are part of that.

If the opposition want the taxpayer to pay more for the political side of the democratic process, they should be honest and say so. If you are asking the taxpayer to pay $10 million more to political parties so that they can spend even more on television advertising, have the guts to put a big sign on your chest, or at least a big header on your press release, and say so. This is $10 million of taxpayers’ money. I know the opposition are concerned about all those people who might not now make donations to the Liberal Party because they will not get a tax deduction. That is fine. That may happen to both sides. But we should also show concern for all the taxpayers out there who do not want to give any more of their money to the political process and who do not want to be dragged into bigger taxpayer contributions by the donations made by others under tax-deductible status.

This is a sensible measure. It is honest and a sound budget measure. It undoes something that has only been part of our democratic system since 2006. The fearmongering on this—that this is the end of democracy as we know it—is beyond belief. It is sound policy, and I commend the bill to the House.

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

The Tax Laws Amendment (Political Contributions and Gifts) Bill 2008, which we now see in this place in a different form but really for the second time, goes to matters that are quite dear to my heart—not because I am terribly fascinated with the inner workings of these types of issues but because it goes to the heart of what we need to do in this country to ensure that we protect our democracy from the excesses of campaign finance and fundraising that we are seeing at a state level and a federal level. If we look to the evidence and experience of what is happening overseas, particularly in the United States, we see it is not something we want to happen here in Australia. In our democracy we do not want the same sort of excessive spending in elections and we do not want corruption in the way donations are handled, particularly in relation to members who sit in this place.

Our objection to this bill is its timing. Currently, a significant review of these matters is being undertaken, and what we have seen from those opposite is the cherry picking of issues of campaign finance reform. They have been finding little bits and pieces here and there and looking to sneak them through before they are subjected to the full force of a comparative assessment of all measures in one go.

The coalition parties, in contrast, have a deep and genuine commitment to addressing what I believe is a crisis of confidence. Those opposite like to talk about crises. I will offer one crisis that they should think about: the crisis of confidence in the Australian political system caused by revelations involving ALP donors and ALP councillors on Wollongong council. To address this we must put our campaign finance regime under the microscope at both state and federal levels. There are two things I think we need to take into account when we do that. There need to be sufficient authorities, investigatory powers and enforcement measures in the future to prevent such illegal acts as we have seen in Wollongong. Secondly, we need to remove weaknesses in our legislative and regulatory frameworks that may give rise to an environment where such illegality could take place in the future. We should not delude ourselves that what took place in Wollongong was necessarily the fault of something such as tax deductibility. Of course it was not. We are talking about illegal acts. People are appearing before inquiries and ultimately before courts because of illegal acts. There is an issue of illegality at play here, and we need to ensure that, when we look at the overall system of campaign finance, we look not only at the framework and the regulatory structure but at how these matters are enforced.

The coalition successfully referred the matters relating to campaign finance to the Joint Standing Committee on Electoral Matters when the government failed to take the initiative. After an election it is common practice for the government to make a reference to the Joint Standing Committee on Electoral Matters, but when the government did it on this occasion they refused to make any reference to the issue of campaign finance. Being aware this was the government’s intention, Senator Ronaldson put forward in the other place a reference to the Joint Standing Committee on Electoral Matters that put on the table all the issues relating to reform of campaign finance.

Not only was it not good enough for the government to fail to go there themselves, but the motion to refer these matters to the joint standing committee was actually opposed by the government. They did not want to have a warts-and-all look. This government like to take a good look at a few things but they were not too keen on having a good, hard look at what was happening with our system of campaign finance reform. They want to have this committee talk about all sorts of matters relating to squeezing in votes where numbers are not put in correctly, and have long debates on those sorts of issues, but one thing they did not want to have a good look at when they put forward this reference was campaign finance reform.

To the great credit of the committee—and I pay tribute to the committee chair, the member for Banks, who agreed with other government committee members—it agreed that this reference provided from the Senate should be taken concurrently with the reference from the Special Minister of State. We do have, as a result of the goodwill that exists in the Joint Standing Committee on Electoral Matters, a genuine and very serious inquiry going into the matters of electoral reform.

By contrast, in putting forward these measures, the government has taken a very piecemeal approach. There is also going to be a green paper. We look forward to that green paper. I look forward to it with a lot of enthusiasm because it is my sincere hope that the Special Minister of State will be taking these matters seriously and putting serious measures of reform on the table. Why we are looking at individual items in this place in advance of a green paper where we can look at these matters altogether continues to puzzle me.

My colleague the member for Casey made some points about the real origin of the measures in this bill. He made reference to a previous gathering of the Joint Standing Committee on Electoral Matters that had actually been in favour of having tax deductibility where it currently rests. The previous speaker, the member for Parramatta, indicated this was an election policy commitment. I am a keen observer of politics and campaigns but it was a very quiet morning when that press release was put out. It did not tend to get the coverage which most major election commitments are given. As a result, I think it is a bit rich for the government to stand there and say: ‘This is our mandate. We have a mandate for this and it is going to save all of this money.’

The real origin of this measure was the ALP’s policy platform at the national convention in Sydney in 2004. That is when the decision was made by the Labor Party to walk away from a bipartisan commitment to improving these arrangements. They walked away in 2004, and there was no discussion in that context of savings measures or how much money would be saved by removing tax deductibility. No, it was all about trying to entrench an advantage. What we have here is a bill which effectively implements the decision of the Labor Party delegates, more than half of whom are from the union movement, who decided that political donations made by people who pay taxes and who are contributing to the political party of their choice should not be tax deductible but—of course—union fees, levies and so on should continue to be.

No reference was made to revenue savings at that time. The government has definitely failed to demonstrate the urgency of this matter and why it should be treated in isolation. That is not just my view. In the course of the inquiry it was not only the view of the opposition members on that committee that this matter should be dealt with concurrently with all the other matters before the committee but also the view supported by Associate Professor Graeme Orr from the Democratic Audit of Australia, who said:

… it is very premature to do away with a form of encouraging small-scale donating at the same time as seriously considering, in a few months time, the banning of large corporate and organisational donations. That is going to lead to serious questions as to where parties get the money from and deductibility, or matching funds, is something that needs to be kept in the mix.

In other words, we should not proceed with these measures in isolation. We must assess the comparative benefits or otherwise of these measures.

But there are other defects with this bill. The estimates of revenue savings are overstated and, at best, represent a bold guess. In their appearance before the committee, Treasury officials confirmed that the costing comprised two components: (1) savings achieved by the removal of deductions for party membership subscriptions and (2) contributions. According to officials, the membership component of the costing is $4.3 million in each year, yet in evidence, Treasury officials qualified the veracity of these estimates, saying:

… the thesis … is that parties do not give out numbers, because membership may be declining and they do not want to reveal that. I do not know whether that is true or not.

That is how confident Treasury officials were in the estimates of savings to be achieved regarding memberships. Furthermore, in response to questions by the government chair of the committee about the $4.3 million figure used by Treasury being based on estimates of a 90 per cent claim rate, Treasury was unable to provide any evidence as to what that 90 per cent claim rate was based upon. In fact, in response to a question on notice inquiring as to the behaviour of taxpayers in relation to making claims for political deductions, Treasury officials confirmed:

The Australian Taxation Office does not have data on the median deduction claimed for gifts and contributions, or the number of taxpayers claiming any deduction.

In relation to donations, Treasury officials confirmed in evidence the difficulties of estimating revenue savings relating also to the claims for gifts and donations:

In the data we have from the Australian Electoral Commission website for 2003-04 and 2004-05, the $1,500 disclosure threshold was already in place, and there were very few donations disclosed below that level; therefore, we have had to make assumptions about what the potential level of donations below that level was in order to take up that distribution to probably being about the actual size that it was.

In other words, Treasury had no knowledge of the amount or value of donations less than $1,500, which is the subject of this bill. They derived an estimate based on a series of assumptions to arrive at a figure. While I do not doubt the internal logic of Treasury’s reasoning, the result is totally arbitrary as it relies completely on the base data, which in this case was completely nonexistent.

Treasury officials similarly acknowledged this point by drawing attention to their qualifications noted in the officially published release of the election costings, namely:

Given the range of implicit and explicit assumptions used to produce these revenue estimates it should be noted that actual outcomes may vary from these estimates if assumptions or behaviour change from our expectation. In particular, data on political party membership fees received is poor, and data on donations below the AEC disclosure threshold is also poor.

So Treasury officials have basically made it very clear that they frankly have no idea how much money this is going to save. The previous speaker made quite a point of saying that these measures would add $10 million a year to the surplus, but they cannot justify the claim for one cent of that saving. This is what has been put forward as the cause for urgency to bring in this bill. The bill does contain measures that should be considered as part of a very serious and broader inquiry, and there are, I believe, some very genuine bipartisan and cross-party efforts to try and arrive at a better system. But, no, those in the executive ranks do not want to allow that process to be given too much air. ‘We need to get these measures in quickly, so we’ll trump up some idea of saving $10 million a year that even the smart minds of Treasury cannot substantiate.’ I have to tell you, Mr Deputy Speaker, I listened to the Treasury evidence about this bill and they were trying very hard to give some substantiation to the figures in the bill—and they were shuffling, not through any lack of capacity on their part but because the savings which are projected here are basically fiction.

Arguments were also advanced—as the reason why tax deductibility should be abandoned—that tax deductions confer greater value to people on higher taxable incomes and are generic and not specific to this measure. Such arguments could be used to argue against every single tax-deductibility measure that sits within the tax act. So the reason we have to abolish tax deductions for political donations is that a tax deduction is of greater value to someone on a higher income? If that is what the government seriously think, they should remove every single tax deduction from the tax act—which is an absolute nonsense. This is a further pretext for bringing this bill into this place at this time which is exposed as being complete nonsense.

The bill fails to deal with the real issue of the culture of fostering influence and influence procurement, preferring to penalise small business donors while allowing unions and other non-taxpaying entities to channel funds, tax free, to their political parties of choice. The nature of illegal activity involving donors and councillors from Wollongong City Council will not be impacted on by the measures in this bill. The bill will have not a jot of influence on these types of activities—not one. Those are the issues that I believe are creating the crisis of confidence out there, but this bill is not seeking in any way to address that crisis of confidence. Treasury officials confirmed that those involved in the business of securing influence with this government—lobbyists—will continue to be able to claim deductions under the general provisions, while small businesses who are not seeking to procure such influence will be denied.

Senator Birmingham asked, in the committee inquiry into schedule 1 of this bill:

If a lobbying company attends a function with the Prime Minister or a premier—

and plenty of them are doing that around the country—

are they able to claim as an expense the entirety of that cost and up to what reasonable limit?

The response from the witness, Mr Hardy, was:

Basically, yes. If their business role is lobbying, networking and advocacy and they go to a function with political leaders in order to network, advocate and lobby, that will be just a business deduction for their business activity. There is no cap to that expense.

So Treasury have confirmed that this great initiative to introduce greater transparency and participation and remove the culture of influence that allegedly exists with political donations continues to have a provision which actually allows those whose business it is to procure influence to continue to claim a tax deduction. The mum or dad who makes a contribution of $200 to support a candidate that they believe is doing a good job will be denied that opportunity. But when the big Labor lobbying firms come to Canberra and they nosh up over in the Great Hall, they will be able to claim every single cent as a tax deduction.

Michael Keenan (Stirling, Liberal Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

Hawker Britton.

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

Hawker Britton will be filling out the claims now in their massive accounts departments as their business has grown with the influence of this government.

The other matter I wish to draw the House’s attention to is that Treasury also confirmed that, while the bill will deny business tax deductibility for donations, non-taxpaying entities such as unions and charitable organisations will be permitted to secure contributions from taxpayers on a deductible basis and pass these resources on to a political party, non-capped and tax free, in the form of a donation. So they still get the money from their mates through their lunches, they still get their money from the unions and they are able to procure that money in a way that does not offend the tax act, but we are going to clamp down on those who are simply trying to make a donation to the political party or candidate of their choice.

These issues are incredibly serious and I am, frankly, offended by the way that the executive of the government is bringing these matters into this House without allowing a proper assessment really to be done to look at all of the measures that need to be on the table. We need to deal with the real problems in our campaign finance system, and this bill does not address them. One of the most fundamental truths in modern politics—and I would be surprised if any member disagreed with this statement—is that political parties enjoy raising money to fund their campaigns about as much as the public enjoys being subjected to them. Being able to provide support in our political process is a democratic right, whether it is through voting, volunteering or donating. This is far better than the alternative—just ask anyone living in Zimbabwe; however, no such rights are ever absolute, especially when they compromise the broader liberty of our system. While some believe the answer is just in greater transparency and banning certain donations from people they do not like, I believe that these measures simply do not go far enough. On their own, they fail to deal with the real problem: the need for so much money. They are part of a solution, arguably, but they are certainly not the solution.

A former Federal Director of the Liberal Party and a person of great standing in the Australian community, Lynton Crosby, once told me that money alone can never buy you an election, but not having enough money can certainly lose you one, in the context of campaigning. That used to be true in Australia, because in New South Wales I have seen the most comprehensively incompetent government re-elected on so many occasions it defies belief. They did it on the back of a $12 million fund in 2003 and a $16 million fund in 2007. The Labor Party of New South Wales have demonstrated you can buy any election you want if you can raise enough money. Labor’s big money club in New South Wales certainly does that. Then there was the $30 million war chest delivered by the unions to the current Prime Minister and the ALP at the last federal election. These experiences demonstrate a very unhealthy thirst for funds in our political process.

It is important that we consider real measures to address these campaign finance reforms. Foremost amongst those is the idea of a cap on election expenditure, as applies in Canada, and the registering of third parties to ensure that they are similarly involved in a cap and have to disclose where they get their money from. It is not good enough for just a political party to disclose donations; those channelling funds into the parties, particularly the union movement, need to disclose where they are getting their money from also. We cannot afford to go down the American road. This bill does nothing to stop us from going down that road. I call on the government to put some serious reform on the table.

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

This bill is part of the Rudd government’s comprehensive program of campaign finance reform. It fulfils an election commitment that we made to remove tax deductibility for political donations. It also ensures that the GST treatment of political parties is not affected by income tax amendments. The bill opens the door on the issue of campaign donations and breathes even more life into our democracy. There is an old joke in Washington, DC that congress is the best that money can buy. That is a cause for concern in Australia, as the inquiry to which the member for Cook referred was told.

The Howard government failed to implement the reforms that we have proposed. In fact, during their final term in office, electoral laws were changed so that people could donate up to $10,000 without being publicly identified. In fact, after they did that, there was a more than 85 per cent reduction in declared donations. That is an indication of the transparency that the Howard government believed in. We also saw a real decline, vis-a-vis our growth in population, in the number of people who cast valid votes at the last election. It was more difficult to vote at the last election by reason of the Howard government’s changes to the electoral laws. Those opposite do not have a great record when it comes to this. Sometimes I wonder, when I hear those opposite talk about electoral reform, whether they hark back nostalgically to the old days, when there needed to be a property entitlement before someone could vote. Certainly historically the conservatives in the UK, Canada, Australia and New Zealand opposed the democratisation of their countries. That is a fact. They opposed it, just as they oppose the legislation here today. I think it is quite sad that they have done so.

This bill, the Tax Laws Amendment (Political Contributions and Gifts) Bill 2008, amends the A New Tax System (Goods and Services Tax) Act 1999, or the GST act, and the Income Tax Assessment Act to ensure that individual taxpayers will no longer have the ability to claim a tax deduction in respect of political party membership fees paid on or after 1 July 2008. Further, the bill denies tax deductions to corporate taxpayers and individual taxpayers in relation to contributions or gifts to political parties, members of council, candidates, parties and Independents on or after 1 July 2008. Interestingly, employees or office holders will continue to be entitled to claim tax deductions for those amounts incurred in earning their taxable income.

Currently, the maximum deductibility for corporate taxpayers and individual taxpayers is $1,500 per annum if the contribution or gift is paid to a political party registered under the Commonwealth Electoral Act. Before 22 June 2006, the maximum amount was $100 per annum and only for gifts or contributions made to parties registered under the Commonwealth Electoral Act.

Earlier this year, the House passed identical legislation to the bill here today. However, on 19 March 2008 the Senate referred the bill to the Joint Standing Committee on Electoral Matters for inquiry and report by June 2009. On 26 June 2008 the Senate voted down the legislation. The committee tabled an advisory report on schedule 1 on 16 June 2008. I will speak about that report a little later.

The Labor Party first announced its position on these matters as early as 3 October 2006. It was announced by the then Leader of the Labor Party and Leader of the Opposition, Kim Beazley. It was re-announced by the now Minister for Finance and Deregulation, Lindsay Tanner, during the last election campaign. Labor’s election commitment was to deny tax deductibility for gifts and contributions for political purposes. The estimated financial impact of this bill is that it will benefit the Australian government’s revenue by about $31 million over approximately three years. This is a considerable saving. I think the average person in my electorate of Blair would consider $31 million to be a lot of money.

The Joint Standing Committee on Electoral Matters, to which I referred, made some recommendations in its advisory report, but I accept that there was division along party lines. The committee supported the discontinuation of tax deductibility for political donations and recommended that schedule 1 of this bill effectively be passed by the Senate without amendment. Regrettably, there was a minority report in relation to this matter and the opposition has steadfastly opposed these reforms. So the majority of the committee supported the removal of tax deductibility for contributions and gifts made to political parties, members and Independent candidates and made the recommendation that the bill should be passed.

The committee went through a long process, with much advertising, with respect to this matter. In fact, they announced the inquiry on 28 March 2008 and advertisements were placed in the Australian newspaper on 2 April 2008. Correspondence was sent to all political parties and others who might be interested in the issue. Ten submissions were received and a public hearing was held on 29 April 2008. So the Australian public was told about this and stakeholders and interested parties were given the opportunity to respond in relation to it. As I said, there were a number of submissions, which I have looked at.

Tax deductibility can be viewed as part of a matrix of campaign finance funding. Currently in the law there are two ways political contributions and gifts can be deemed deductions. Firstly, there is the general deduction, which any person might have for expenses incurred in earning assessable income—and there is no limit to that general deductibility concerning political gifts and contributions. Secondly, there is the specific deductibility for gifts greater than $2 but less than $1,500 in any single year. It is in relation to the second that deductibility applies separately. It is possible that an individual personally can make the full deductible claim of $1,500. That individual, if they have a corporate structure which they use to run their business, for example, could then also make the claim of $1,500, effectively allowing a $3,000 deduction. This is a double dip, a double claim, on taxpayers’ funds. In 1991, after Senate amendments, the House of Representatives passed legislation including the tax deductibility for contributions of $2 or more to parties registered under the Commonwealth Electoral Act, with a further amendment setting a maximum deductibility of $100. That is where it stood until 2006. In 2006, the Howard government increased the threshold from $100 to $1,500. Further, it allowed deductibility for contributions made to political parties registered under state and territory legislation. Thirdly, it permitted deductibility for payments to members and Independent candidates. Fourthly, it extended deductibility for payments from companies.

This bill allows the continuation of the general deductibility for individual taxpayers. It prevents businesses from claiming deductibility for donations in relation to the general deductibility provision. It amends the capital gains tax provisions to ensure that types of expenses do not form part of its cost base or reduced cost base for capital gains purposes. The Joint Standing Committee on Electoral Matters found that about 2.1 million individual taxpayers in 2005-06 had a taxable income of less than the tax-free threshold of $6,000. These more than two million individual taxpayers would receive no benefit from tax deductibility for political donations. However, presently if a person is paying 40c or 45c in the dollar—perhaps earning an income in excess of $80,000 or $180,000—they can claim the full deductibility. If they have the benefit of a corporate structure, they can claim up to $3,000. Mr Deputy Speaker, you can see there is an equity argument in these circumstances. It is a matter of fairness and treating individual taxpayers the same.

There are some very good arguments for the removal of tax deductibility in this bill. First, as I said, it is discriminatory. It treats taxpayers differently depending on their circumstances—their socioeconomic status and their ability to contribute financially to political parties and individuals. The tax deductibility favours those who have high incomes and can therefore afford to pay large donations to political parties and candidates. It allows them to adjust their financial affairs to minimise their tax and yet contribute to political parties they love or support. In addition, there is an opportunity cost. As I said before, my constituents would consider $31 million a very large sum. Tax money given back to individual taxpayers who earn high incomes and is given by way of tax concession could be used for public purposes. Think of what that money could do for education, health, roads and the community sector—all of which require considerable amounts of money and all of which we are contributing to after many years of neglect. So there is $31 million worth of taxpayers’ funds which could be put back and given out to help my community and other communities around Australia.

There is another argument. If tax deductibility is given in this way, what about not-for-profit organisations which may not have a charitable purpose or be registered under tax legislation as charities? Why don’t they get the same treatment and the same benefit as political parties? There is an argument that they should if we are going to maintain the tax deductibility. It could be argued also that tax deductibility increases the likelihood of individuals or businesses being involved in the political process. That is the argument that has been put by those opposite—and I have heard that argument before—but I am not convinced of that because I do not think there is any cogent evidence to that effect. Businesses donate for a whole range of reasons, and the committee made that point in its report. It said in paragraph 2.41:

Businesses donate to political parties for a range of reasons including altruism, management self promotion, corporate social responsibility, to express political free speech and to maximise profit.

There is a whole host of reasons why they do it. In the circumstances, I am not convinced that the tax deductibility should remain. It provides an opportunity for high-income earners to gain a deduction in circumstances where the average Australian—struggling to pay their mortgage, pay their rent, pay their food costs, clothe their children and pay for sporting and cultural events their children are involved in—just does not have that sort of income. That is an unfairness in our system that should not be maintained in all circumstances. For a lot of corporate entities, paying money to political parties is all about self-interest. It is about access. It is all about ensuring that they have a seat at the table and that they benefit. Sometimes it is given with a hook involved. Sometimes it is altruism. But often it is so they get a benefit that other taxpayers would not enjoy.

The Rudd government’s position is to remove tax deductibility, and I think it remains as the best policy option to promote honesty, transparency and integrity in our polity. It is a very good thing if it is allied with a reduction in the threshold for disclosing political donations.

It is interesting that one of the organisations that made a submission to the standing committee’s inquiry was the Democratic Audit of Australia. I think they made a very cogent argument in support of the Rudd government’s now position on removing tax deductibility. They noted, contrary to what the member for Cook said, that removing tax deductibility for donations was in line with the Rudd government’s pre-election commitment. In the circumstances I agree with the Democratic Audit’s electoral reform agenda in relation to tax deductibility. As the Democratic Audit stated, corporations are not holders of political rights. Why should they be treated in a more preferential way than individuals who do have the right to vote? I do not think it is fair that proprietors of businesses could effectively have an annual tax-deductible donation of $3,000. Corporations also claim business donations for political access and they often sponsor sessions at conferences and the like.

The minority coalition report is that removal of deductibility should be deferred until such time as the committee has had the opportunity to conclude a broader inquiry into the 2007 federal election. I think there should be a broader inquiry into the 2007 federal election, because it concerns me that, as our population grows, we are not seeing commensurate parity with those on the electoral roll and those who are actually casting votes. That is of great concern for the Australian political system. I encourage the state governments and the federal government to think about changing their systems when it comes to making it easier for people to register and to vote, because it is the hallmark of any democratic system that people who are eligible should be able to vote and should be able to vote without feeling pressured to do so. They should not have obstacles placed in their paths to vote.

It is important for our long-term political democracy that people learn more about our political system. I am pleased that this year the Rudd government had a roundtable conference and a report in relation to constitutional law reform. But one thing that really concerns me as a federal politician is that a lot of people do not understand the federal system of government, the way our political structures have evolved over many years and the importance of those. In the short time I have been here I have observed that politicians on both sides of the House generally work very hard. In my experience I have come across very few politicians who do not aspire to serve their constituents to the best of their ability—even if I disagree with their political philosophy.

This particular bill is about improving where we go as a country in terms of the integrity, transparency and honesty of our political system. I think this is a just and fair bill. I think it is fulfilment of the Rudd government’s pre-election commitment. The coalition should reconsider their position and support the Rudd government’s proposals in this bill and consider again the folly of so much of what they did in the last few years under the Howard government to make it more difficult for people to enrol, to vote and to be involved in the political processes. I support the bill and I commend it to the House.

Michael Keenan (Stirling, Liberal Party, Shadow Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

I rise, like previous speakers, to address the Tax Laws Amendment (Political Contributions and Gifts) Bill 2008. This bill, I think rather strangely, reintroduces measures that have been very recently defeated in the Senate. The coalition, as well as other members of the Senate, opposed these measures in the past because they represent a piecemeal approach to what should be a significant issue facing this parliament—that is, the rather vexed issue of campaign financing. The bill amends the Income Tax Assessment Act 1997 and the Income Tax Assessment Act 1936 to remove tax-deductible status for contributions or gifts to political parties, independent members and independent candidates.

The Senate referred these measures to the Joint Standing Committee on Electoral Matters for investigation and report. That committee has also been asked, as they are after every election, to investigate and consult with the community and stakeholders before providing a report on the whole of the campaign finance system or, in this case, on the whole of the conduct of the election. It has always been the case after every election that the Joint Standing Committee on Electoral Matters scrutinises the conduct of that election and recommends changes to improve our system. This has allowed our system to evolve and it allows us to address changes in the Australian political environment. Australia has one of the world’s oldest and greatest democracies. The system of review that we have established for the conduct of elections has served us extraordinarily well. It is one of the great strengths of our vibrant democracy.

It is a grave mistake to cherry-pick issues outside of that process—like we see with this bill today—particularly one, as I said, about campaign finance, which I think is an issue that warrants more respect and deeper consideration from this parliament. It is ludicrous to introduce this bill, which is aimed at making ill-considered changes to the campaign finance system, without the benefit of allowing the joint standing committee to actually report on the conduct of the election.

The current law affords tax deductibility status for contributions—gifts of money or property—to political parties, independent members and independent candidates to a maximum value of $1,500 in any financial year. These provisions are subject to the conditions of the Commonwealth Electoral Act 1918 and other relevant state or territory legislation. This bill reverses that and allows for no tax deductibility status for political donations.

I want to turn to the heart of what I have to say today, and that is campaign financing. This is an issue that is a great challenge for this House. It is an issue that, if handled badly, could lead to the perception that our great democracy is somehow for sale. I also think that, if it is handled badly, it has the ability to undermine people’s faith in our democratic processes. All members would be aware that there is some cynicism about politics in the community. I think the reality is that there is less cynicism in Australia than there is in some comparable countries. Although cynicism can be healthy, there is a point where it becomes unhealthy. If we do not have our house in order when it comes to how we fund campaigns, we will be giving the public greater cause to have less faith in political processes in Australia—which should actually be celebrated as one of the greatest democracies on the face of the globe.

My views on campaign financing have evolved considerably over the past few years. If you had asked me a couple of years ago, Mr Deputy Speaker, what I thought about campaign financing, I would have said that any limitation on your ability to raise money is an infringement on your rights and your freedom of expression and that that would be a completely unwarranted intrusion from this parliament. But, having watched and, of course, actively participated in the process of campaign fundraising, I have, very reluctantly, formed the view that our system is broken and in dire need of reform—and not reform by piecemeal measures such as this. What we need to do is have a wholesale look at how political parties fund campaigns in Australia. We need to look at how comparable jurisdictions do it. The member for Cook very wisely suggested that we look at the Canadian model. Members will know that the Canadian model arose after significant campaign finance scandals within Canada. I think all members here and political parties generally around Australia have a reluctance to talk about campaign fundraising, and that says something in itself. When we are reluctant to talk about it, we know that there is a problem with it.

Before I go any further down this track I want to make it very clear that I am not coming to this debate from a position of moral superiority. I am not trying to say that I have not been involved in fundraising—of course I have. I have done it extensively, and I will continue to do so until we have wholesale reform of this issue from the parliament. So I am not pretending to be holier than thou; I am not coming into this chamber pretending that I have not participated in fundraising, because of course I have.

I think it is important that the House think about what is in the interests of our democracy. It is clear that political parties need to fund their campaigns, but we need to do it in a way that takes away any perception of conflict of interest. We are very alive to the issue of conflict of interest when it comes to executive responsibilities. For instance, if the Minister for Resources and Energy were to hold even just $500 in a resource company and he were to make a decision that benefited that company, even though most sensible people would say, ‘I’m sure he didn’t make that decision just so he could make $100 or something on his share parcel,’ we all know that that would be considered to be a substantial conflict of interest. But we do not seem to be as concerned about the conflicts of interest that may arise if that resource company paid to sit down with that minister—and I am not singling out that particular minister for any reason; I am just using him as an example—at a lunch or a dinner, and I think this parliament should be.

That is what I find so absurd about this bill. The government have raised this prospect of looking at campaign financing. They said they are concerned about it; they said they want to look into it. Yet the first thing they do is reintroduce this isolated measure into this parliament. They want us to have a look at it in isolation from other campaign funding issues. Like so much about the Rudd government, there remains an enormous gap between their rhetoric and what happens in reality.

There is a green paper process underway into campaign financing. Of course, nothing is truly on the agenda of the Rudd government unless there is a green paper process or some such inquiry. The coalition will be waiting to see what comes out of that process, but I have to confess I do not hold high hopes for it, considering what we see in this bill. What we see is a piecemeal approach when we should see a wholesale approach, an approach to campaign financing that benefits the government at the expense of other political parties or independents in Australia. So we will oppose these measures. We do not believe in this approach. We believe that we should take a holistic approach to campaign finance reform that will truly benefit our democracy.

It is no surprise that public confidence in campaign financing has been severely reduced. I think the member for Cook outlined a good example: the corruption that has occurred in the Wollongong City Council. Instead of addressing the issues that arise from those events, the Labor government believes that it is more important to go after the funding sources of other parties while leaving their own primary source of funding—the union movement—intact.

It is absurd that Mr Rudd and the Labor Party believe that this measure—this rather minimal measure—to reduce tax deductibility is more important than addressing the serious allegations of misconduct and corruption that have led to this loss of confidence in our campaign finance system. I have heard some members—and the previous speaker, the member for Blair, was among them—talking about this measure as a justified savings measure. But those claims were clearly demolished when the Senate looked at this measure. I will not go through those claims again, but they were amply highlighted by the previous coalition speaker, the member for Cook.

The reality is that the measures contained within this bill are drawn straight from the change that was made to the Labor Party’s policy platform at the national convention that was held in 2004. When that resolution was passed, no reference at all was made to revenue savings and its impact on inflation being the driving force behind this policy change. This is a policy that is aimed solely at securing the Labor Party’s advantage over other parties and Independents when it comes to campaign financing.

In contrast with their own policy to undertake wider consultation before introducing tax bills, this very arrogant government have not undertaken any consultation in relation to this bill. The coalition believe that campaign finance reform should be broad ranging and bipartisan in order to protect Australia’s system of democracy—a system that, as I said, is the envy of the world. That is why we have the Joint Standing Committee on Electoral Matters process, a process that has served us incredibly well. We strongly believe that any reforms to campaign finance should be beneficial to our community and should impact equally on all political parties, large and small. In contrast, we have seen that the Rudd government are only interested in campaign finance reform when it benefits their own political ends.

The measures in this bill do not remove any of the deductibility entitlements that relate to how the Labor Party operate the majority of their campaign financing. These measures secure the campaign finance support that the Labor Party receive from the union movement whilst denying funding sources available to other political parties, independent members and independent candidates. During the inquiry by the Joint Standing Committee on Electoral Matters, the committee received a number of submissions. I would like to draw the attention of the House to a particular submission that was made by Professor Graeme Orr of the University of Queensland. He provided the following evidence, which I think is very good advice for the House. He said:

We particularly recommend that deductibility be not abolished altogether until the government and/or JSCEM settles proposals for any revamping of the broader system of political finance.

Other evidence provided to the committee overwhelmingly supported the view that these tax-deductibility measures should not be considered in isolation of other aspects of campaign finance reform. I think it is clear from the measures in this bill that the Labor Party have absolutely no intention of undertaking any serious campaign finance reform that is in Australia’s interests.

The party system is, of course, integral to Australia’s system of democracy. All political parties, along with independent candidates, perform a crucial role within our democratic system. We support campaign finance reform and we support a sensible discussion in this place and the other place on campaign finance reform. We should not be doing this in a piecemeal way; we should be doing it in a wholesale way. Australia’s system of democracy will benefit from us taking that approach, and I would urge all members of this House to protect Australia’s democracy system by opposing this bill and by endorsing an approach that looks in a wholesale way at campaign financing in Australia, so that we can look the Australian people in the eye and know that we have done everything we can to protect our own integrity when it comes to financing our own political campaigns. I urge all members to reject this bill and consider the approach that I have outlined.

Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

The Tax Laws Amendment (Political Contributions and Gifts) Bill 2008 abolishes income tax deductions for political contributions and gifts. It was an election commitment of the Labor government to remove tax deductibility for donations made to political parties. Indeed, this measure was introduced earlier this year as part of the Tax Laws Amendment (2008 Measures No. 1) Bill 2008, which was rejected by the opposition parties in the Senate. The introduction of this bill provides an opportunity for the new Leader of the Opposition, Mr Turnbull, to show that he understands that there has been a change of government, that he is not leading a government in exile, thinking and behaving as though they are still running the country and that the election of November last year simply did not happen. This provides an opportunity for the Leader of the Opposition to show he understands that and to support this bill.

This bill implements Labor’s election commitment to improve the transparency, accountability and integrity of the Australian electoral system. It addresses the problems caused by the large increase in the deductibility threshold introduced by the Howard government, which raised the level of tax deductibility from $100 to $1,500—a 15-fold increase. The coalition changes also allowed corporations and other large entities to deduct the full amount, whereas the previous laws were confined to individual persons—real person donors. Labor took a strong stand against these changes when they came before the parliament when we were in opposition. Indeed, we further opposed these changes in our Labor Party national platform. Clause 49 of that platform from 2007 says:

Labor will abolish the tax-deductibility of political donations, and reverse the Howard Government’s attempt to hide donations by lifting the disclosure threshold from $1500 to $10,000.

So our position was made clear at the national conference, it was made clear in the parliament, and it was made clear through pre-election announcements.

Further to that, the public policy grounds in support of this bill are clear. The Democratic Audit of Australia, for example, said in its 2006 paper that the Howard government’s changes:

… can also have regressive effects and hence, undermine political equality. The present system of tax relief, for instance, favours the wealthy because, having more disposable income, they are more able to take advantage of the subsidy. Further, for the same amount of political donation, the wealthy, being subjected to higher income tax rates, receive a greater amount of public subsidy.

I believe that donations from individuals to political parties should be genuinely philanthropic and that an additional inducement from the taxpayer is unnecessary and unjustifiable. I do not believe that taxpayers should subsidise individual donations in this way. Further, removing tax deductibility is a good policy option for promoting integrity in the political system. It is a reform which could well have a beneficial impact on the not-for-profit and charitable sectors; these are areas which attract tax deductibility status and may turn out to be a more attractive option for philanthropic donors as a result of these reforms. I believe this is a measure which will improve the integrity of the electoral system.

The amendments intend to abolish income tax deductions for political contributions and gifts. We have a situation where the previous government expanded the deduction, in terms of both its quantum—from $100 to $1,500—and the range of people who could take advantage of it, extending this from individuals to corporations. The coalition changes allowed corporations and other large entities to deduct the full amount. The existence of the high threshold that we have now skews political influence, provides financial advantage to those who are wealthy, is regressive in nature and undermines political equality. It is fundamentally corrupt. It has no place in Australia’s democracy. I further note that it has a cost of $10 million per annum to Australian taxpayers, which is money that would be better spent by taxpayers themselves. We are told that removing tax deductibility for contributions to political parties will save an estimated $31.4 million over the forward estimates and that this forms part of the government’s savings plan and response to inflationary pressures in the economy by reducing government spending and lifting the budget surplus.

The government believes that removing tax deductibility is an important policy option for promoting integrity in the electoral system. It is similar in intent to Labor’s more rigorous donation disclosure reform, which has been introduced into the parliament but was regrettably thwarted by the Liberal Party. The government is committed to delivering greater electoral transparency and progressing electoral reform. Let me point out to the House that this includes the commitment made by the Prime Minister last year when in opposition to hold a referendum calling for the introduction of four-year fixed terms for the federal parliament. I believe that that is the kind of reform which we need. It provides stability and responsibility. I think it is unfortunate that we have seen governments of different political persuasions over the years calling elections opportunistically and damaging public confidence in the electoral process. We should not have arbitrary, partisan or capricious election dates. Professor John Quiggin of the University of Queensland has said:

If elections are intended as the primary democratic check on executive power, it seems counterproductive to allow the executive so much freedom to manipulate their timing.

We also note that governments, as well as seeking to manipulate election dates, are also keen to engage in taxpayer funded advertising. Prior to the parliament rising in 2007, we saw the amount being spent on taxpayer funded advertising rising to $1 million a day. I note that the average period between federal elections since 1901 has been 945 days, or 31½ months, which is well short of the three years provided by the Constitution. I further note that fixed terms are an accepted feature of a number of states and territories in Australia. We have recently had elections in the Northern Territory and in Western Australia which were called early. I think we have observed the consequences of that. The Northern Territory Chief Minister, to his credit, announced after the Northern Territory election that the government would introduce fixed four-year parliamentary terms to provide more certainty to the electoral process. He said:

The decision to go to an early election has been shown to be a concern to many Territorians.

I think he has learnt from the experience of the early election. I note also that the opposition leader in the Northern Territory welcomed the announcement, saying it was a ‘good day for democracy’. He also said that fixed parliamentary terms will save Territorians ‘time and money’ by ending opportunistic early elections. The specific deduction provisions in division 30 of the Income Tax Assessment Act currently allow deductions for contributions and gifts to political parties, independent candidates and independent members up to a maximum of $1,500. These provisions will be repealed. Also, to ensure that deductions are not available to business taxpayers, they will no longer be able to deduct a contribution or gift to political parties, candidates or members under general deduction provisions. Taxpayers will be unable to claim deductions for political party membership fees.

I note that the Liberal and National parties have been opposed to this bill. I know that other political parties—the Greens and Family First—have been supportive of this bill. It is clear to me that the coalition parties are more interested in ensuring that they can receive donations from supporters than in either responsible fiscal management or transparency and disclosure. This is of a piece with the other decision made by the Liberal Party in opposition to greater integrity in electoral laws where it sent the Commonwealth Electoral Amendment (Political Donations and Other Measures) Bill 2008 off to a parliamentary committee and gave it a year—until 30 June 2009—to report. This was a deceitful tactic designed to let the Liberal Party avoid any vote on the bill and to hide their unwillingness to support greater openness, accountability and fairness in our electoral laws. No genuine review or consultation on this bill could possibly require a full year or more.

In terms of the passage of the Tax Laws Amendment (Political Contributions and Gifts) Bill 2008 being delayed, political donors will continue to be able to hide their identities while donating up to $10,500 to candidates or political parties—or, indeed, more, if they exploit the loophole which enables them to donate to the state branches of the same political party. This bill would reduce the donation disclosure threshold from the current $10,500 to $1,000—that is, reversing the previous government’s efforts to cover up donations of thousands of dollars. Just to point out the impact of this: in 2004-05, when the threshold was $1,500, there were 1,286 returns lodged. So there were many donor returns. In 2006-07, the number of submissions plummeted to just 194—so something like 10 per cent of the number of donor returns we had been able to see before the previous government lifted the disclosure threshold.

I believe the community has a right to know who is giving what to whom. In contrast, the Liberal Party wants to keep donations hidden in the shadows. Now we have a delay which is allowing candidates and parties to continue to be able to make a profit from public election funding. It is extraordinary that the opposition is prepared to allow this rort to continue and is not willing to vote with the government to close this practice down. Other urgent reforms which have been sent into legislative limbo include the banning of overseas and anonymous donations and a twice-yearly disclosure and reporting obligation on political parties.

In so many ways the opposition has shown that it is not interested in campaign finance reform. It is not interested in greater transparency and accountability, and it is all too willing to continue with the policies it introduced in government which damaged accountability and transparency. In this debate, we have had the member for Casey say that these issues should go to the Joint Standing Committee on Electoral Matters. So he urges delay. But the point is: this is an election promise. The Liberal Party should respect the will of the voters. The member for Casey also said that tax deductibility for campaign donations was an initiative of the Hawke government. Indeed, it was. But, in its original form, it was limited to $100. It was a minor matter. It was dramatically opened up, by the previous government, to $1,500. That created a completely different scenario and opened up opportunities for influence-buying, particularly by corporate interests. So it became not simply a small matter for individuals who could donate up to $100 but a significant capacity for corporations to seek to influence our political process through campaign donations. I do not think that this issue should be allowed to raise the risk and prospect of influence-buying and, as a result, I do not think we should have tax deductibility for election donations.

The member for Casey said that everything should be looked at together. That is nonsense. We have an express election commitment here. We are entitled—indeed, it is our obligation—to bring this election commitment to the parliament. The opposition say, ‘We need to link this up with all the other electoral matters’—this is among some of the things I have been discussing. But there are two problems here. The first is: what is their position on these matters? Frankly, in terms of election disclosure, they are trying to block those things as well. In terms of the piecemeal approach, I notice that what they are arguing for here is absolutely at odds with their position on pensions where they say: ‘We’ve got no interest in a thorough review. We’ll just go for the stunt.’ This is yet another case of the Liberal Party blocking a budget measure. This is a small one but there are other more serious holes that they are seeking to blow in the budget.

In support of their position, the Liberal Party makes outrageous claims, such as: ‘What is at stake is democracy.’ That is laughable. People will still be free to make donations to political parties to their heart’s content. All Labor is saying is: ‘If you make a campaign donation, it ought to be transparent. People ought to know about it. If you’re going to make a donation, do it with your own money. Don’t do it with taxpayers’ money.’ Labor’s position is not something which endangers the health of Australian democracy. On the contrary, it is something which strengthens the health of Australian democracy. We are fortunate to have a very healthy, robust democracy, but one of the blots on it is the influence of campaign donations—particularly corporate campaign donations.

The member for Cook suggested in his contribution that the basic objection to this was around the issue of timing. He spoke in favour of campaign finance reform. If you are sincere about campaign finance reform, vote in favour of this bill. It is very hard to believe his contention that the only problem is the problem of timing when other speakers speak about this as an attack on democracy, when the Liberals have voted down this measure in the Senate before and, indeed, it was the Liberals who introduced this measure during the last parliament in the teeth of Labor opposition.

The member for Cook said, in response to Labor’s observation that we are implementing an election policy commitment, that we had been pretty quiet about it. He said that there had been just the one press release. That is absolute nonsense. When the former government introduced the Electoral and Referendum Amendment (Electoral Integrity and Other Measures) Bill back in 2005-06, we spoke and voted against it. Quoting myself takes me into the realms of Malcolm Turnbull, but I take the House back to March 2006—

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Order! The honourable member ought to refer to the Leader of the Opposition by his title.

Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

The Leader of the Opposition, Mr Deputy Speaker. I said in March 2006:

To make matters even worse, the Liberal Party also plans to deliver a huge tax break for campaign donors, lifting the amount that can be claimed as a tax deduction from $100 to $5,000. Why should someone get a tax break for donating to a political party?

So I said it very clearly back then: you should not get a tax break for donating to a political party. As I said:

Tax deductibility for political donations should be abolished, not increased. … it is naked, shameless self-interest—the Liberal Party putting its own political advantage ahead of the national interest and a clean, corruption-free political system.

That was in the debate in March 2006. The then Leader of the Opposition, the Hon. Kim Beazley, in October 2006 announced the Labor policy to abolish tax deductibility. That was reconfirmed by the shadow minister for finance as part of an election commitment in March 2007. It appeared in Labor’s national conference decisions and announcements. So we have been very clear about this. We have been on the record all the way through as saying we oppose the tax deductibility.

The member for Cook says the problem is the need for so much money to fund election campaigns. And he is right about that; that is quite true—it is a problem. We are acting here to reduce the amount of money available for spending on election campaigns, and the member for Cook is opposing that. That is regrettable. The member for Cook and the member for Stirling claim to be supporting campaign finance reform but their actions speak louder than words.

Australia has an A-grade democracy. We should give thanks every day of our lives that we live here. But that does not mean that it is perfect. We should not be complacent; we can do better. We should safeguard our democracy against attack. I believe that the previous legislation was corrosive of our democracy. What we are doing here to restore transparency and accountability is absolutely right and it ought to be supported by members opposite.

Debate (on motion by Ms Roxon) adjourned.