Daryl Melham (Banks, Australian Labor Party) Share this | Link to this | Hansard source

On behalf of the Joint Standing Committee on Electoral Matters I present the committee's report, incorporating dissenting reports, entitled Review of the AEC analysis of the FWA report on the HSU, together with the minutes of proceedings.

In accordance with standing order 39(f) the report was made a parliamentary paper.

by leave—In this report the committee makes 13 recommendations to improve Australia's disclosure arrangements and enhance the transparency of the flow of money through our political system.

During this inquiry the committee reviewed the Australian Electoral Commission's (AEC) analysis of the Fair Work Australia (FWA) report on the Health Services Union National Office. It also considered a list of matters provided by the AEC as possible measures to improve the operation of the Commonwealth Electoral Act 1918 (Electoral Act).

The committee's focus was on disclosure obligations under the Electoral Act. It was not the committee's role to forensically examine internal HSU authorisation processes, or to adjudicate on alleged contraventions against the Fair Work (Registered Organisations) Act or other alleged fraudulent behaviour. This was outside the committee's terms of reference. A number of other processes are underway to address those matters.

The committee acted responsibly in only releasing publicly available information that was relevant to its terms of reference. The committee did not support using this inquiry as a fishing expedition for matters in the FWA report and investigation that are outside the terms of reference.

As with the Senate Education, Employment and Workplace Relations Committee, the electoral matters committee carefully considered what should be released into the public domain. It would have been irresponsible for this committee to authorise a blanket release of all documents pertaining to the FWA investigation, when those matters are still under consideration by other agencies.

The committee was mindful that other investigations are underway that do not directly relate to whether Mr Thomson, the HSU or a political party met their obligations under the Electoral Act. In fact, the committee provided the BDO Kendalls report, annexure J to the FWA report and transcripts of interviews undertaken by the FWA delegate to the AEC. It confirmed that the additional information did not change its analysis of the report or the 17 possible measures provided to the Special Minister of State.

In its inquiry, the committee examined the relevant sections of the FWA report and relevant material against the AEC's analysis. It did not find any grounds to challenge the analysis.

The committee then moved on to consider what problems or gaps in the current arrangements this situation had served to highlight, and how these matters could be addressed in the future.

The committee considered 17 possible measures provided by the AEC for consideration and supported most of these measures. A number of the recommendations made in this report have been made in previous reports, including to:

Changes to the penalties for breaches of the Electoral Act are also needed. The committee has recommended introducing administrative penalties for straightforward breaches, such as a failure to lodge a return by the due date. This will enable the AEC to deal more effectively with these types of offences. The committee has also recommended strengthening the penalties for the more serious offences, including those involving fraud.

In this inquiry it was clear that the category of 'associated entities'—which requires disclosure by certain organisations with close links to political parties—is confusing and is not operating as effectively as it should. To address this, the committee recommends clarifying the definition of an 'associated entity'.

A significant reform the committee is proposing is to deem registered parties as bodies corporate for the purposes of the Electoral Act, to better focus the responsibility for breaches on the parties. It is intended that this will encourage political parties to ensure that the person tasked with lodging its returns is suitably qualified to perform the role, and that effective systems are in place to ensure a complete and accurate return is lodged.

Another gap in the current arrangements is in the current disclosure period for new candidates, which only commences from their pre-selection or nomination. The committee has recommended introducing a requirement for new candidates to disclose relevant donations and gifts received and money spent in the 12 months prior to their pre-selection or nomination.

There were certain measures that the committee did not support, which were:

In developing its recommendations, the committee aimed to strike the right balance between the goals of transparency and accountability, and the administrative realities for the parties, organisations and individuals with reporting obligations. The committee believes that these recommendations strike the right balance.

On behalf of the committee I thank the organisations and individuals who assisted the committee during the inquiry through submissions or participating at the public hearings in Canberra and Melbourne. I also thank my colleagues on the committee for their work and contribution to this report, and the secretariat for their work on this inquiry. I commend the report to the House

Mrs Bronwyn Bishop (Mackellar, Liberal Party, Shadow Minister for Seniors) Share this | Link to this | Hansard source

In the remarks the Chairman of the Joint Standing Committee on Electoral Matters made in tabling this report on the Australian Electoral Commission analysis of the Fair Work Australia report on the HSU, he has merely compounded the problems with one of the most disgraceful hearings I have ever been associated with in all my time in the parliament. The chairman of the committee, the member for Banks, used his powers, with the Labor Party and the Greens together, to censor the Fair Work Australia report, which we were supposed to be looking at in terms of the AEC having done an appraisal of it.

It was in the course of our listening to the general manager of Fair Work Australia that we found out that annexure J, which is the annexure from Slater & Gordon-BDO Kendalls, forensic accountants, had not been given to the AEC or to anybody else in the committee. I asked for that document, which we were given and which has been censored by the Labor Party and Greens numbers on that committee. It was censored for the very simple reason that much of it covered the activity of Mr Thomson. Indeed, the report itself had said it should have been given to the AEC but in fact it was not given to the AEC because it was thought it might prejudice Mr Thomson. The bottom line is this: that forensic accountants' report, censored by the chairman and his ilk, says very straightforwardly:

The ACTU Circular recommended that YR@W activities, whilst political expenditure would not be characterised as a gift or donation to a political party or candidate. We again concur. This is of course to be contrasted with:

(a) Expenditure directly contributed to an electoral campaign or to a political party; and

(b) Union staff working directly (during working hours) on the campaign of a particular candidate for election or political party.

Both would be gifts warranting disclosure under s305A and/or 305B.

None of those disclosures have been made.

At no time did we ever take evidence on any of these issues which the chairman has thought were so important, like lowering the threshold to $1,000, down from over $10,000. The fact of the matter is that the amount of money was not the thing that was at issue; it was the fact that no disclosure was made in respect of the gift of money from the HSU to Mr Thomson, spent on his campaign during the relevant disclosure period from the time of his endorsement as the candidate to the time of the election. During that period, for instance, he continued his practice of withdrawing money from the HSU, around $500 every three or four days. During that period he withdrew something in excess of $13,000. During the whole period of his tenure he had withdrawn over $101,000 from HSU accounts, and none of those payments had been authorised by the HSU under the rules under which they operate. That testimony was given by Mr Williamson, who has just been arrested for his behaviour with regard to cover-ups in the HSU—and there are more things to be discerned. Yet we have Mr Thomson, the member for Dobell, crowing that the AEC's appraisal of the Fair Work Australia report—they admitted they had not seen all of it—cleared him and made it absolutely fine for him. Well, it did not.

Finally we got hold of the rest of the annexures to that Fair Work Australia report, which constituted something like three boxes of thousands of pages of evidence. But the chairman refused to have another hearing to consider this material. Indeed, he would not have another hearing with the AEC to put questions to them once we had received the Slater & Gordon-BDO Kendalls forensic accounting report. The chairman up there slaps his hand. Goodness gracious me—it requires more than a hand slap, sir. You were a disgrace in this hearing. As I listened to you stand and wail this afternoon in defence of the Speaker, you were simply adding to your disgrace. The member for Banks, the chairman of this committee, said in his speech that he had sent that annexure of the Slater & Gordon-BDO Kendalls forensic accounting report to the AEC. Yes, he did—after we received it, on his own recognisance and without allowing there to be a further hearing, which we on this side of the House required. It was after the event, and when you read our dissenting report you will find once again this process was a whitewash full of perhapses and maybes and ifs and buts.

The bottom line is that the AEC has refused to do its work. It has had the power under the Electoral Act, under section 316(2A) to go in and do compliance audits. In the 256 compliance audits or compliance investigations it has done—'reviews', it chooses to call them—it has investigated things relating to all the political parties, including the Blue and White Committee of the Liberal Party, with expenditure of $3,000 and an income of $120, or the Lady Wilson Bequest Fund. But did the auditor go in and review any trade union? No, not one in the five years it has been operating. Do you know what sort of pathetic response we got? Unions are looked after by Fair Work Australia—but we cannot see all the findings of Fair Work Australia because that would not be relevant to the Electoral Act. As I said, it was the most appalling performance I have ever seen.

Let us look at what Mr Thomson has failed to do and let us look precisely at the act. We had evidence from Mr Pirani, the chief legal officer, who tells us he seeks his legal advice from the DPP when we all know that the their job is to receive a brief of evidence from an agency and then determine whether a prosecution should lie. It is no good seeking advice from them—they do not give it. Nonetheless, this was always his excuse. He told us with regard to Mr Thomson that they would not use their coercive powers under a different section of the act which would allow them to go in and investigate a trade union activity—that is, the national office of the HSU. Latterly, months after the scandal of the member for Dobell arose, we found that suddenly Mr Pirani was writing to Ms Kathy Jackson as, 'Dear Kathy, please would you send in the returns because I might be asked questions in estimates'—not because it was the right thing to do, and these returns were now two years late. Was there any penalty applied? No. Is there a penalty in the act that can be applied? Yes. Did the AEC do its job? No. Does the AEC simply act as a lickspittle for the Labor Party? Yes. Hence those pathetic recommendations put in as an annexure to its appraisal—and it was not a report but a mere appraisal.

Let us ask the question. Mr Thomson received, by way of a credit card, thousands and thousands of dollars that were never disclosed. The report put forward by this chairman and his supporters is simply a blueprint for how to avoid disclosure under the Commonwealth Electoral Act. Just give them a credit card; they can charge up what they like and there is no disclosure—because the Electoral Commission said it was not interested in whether or not any of the money was authorised by the national council of the HSU.

'That is not our concern,' they said. They were not concerned that, during the election period, Mr Thomson took out money which was clearly disclosable in a donor report. These gifts should in fact have been disclosed in Mr Thomson's own report, which was filed by his agent. They should have been disclosed together with, as the Slater & Gordon-BDO report makes quite clear, the salaries and activities of Ms Criselee Stevens and Mr Burke, both of whom worked for the member for Dobell prior to the election and during the election campaign. Ms Criselee Stevens was clearly being paid by the HSU but was hired only by Mr Thomson himself—not authorised by the HSU. Yet none of this was disclosed because the AEC was simply not interested.

Then we get to the question of Mr Burke—he was an interesting one—who was again engaged by Mr Thomson. He ceased to work for Mr Thomson but then went to work for the duty ALP senator. The duty ALP senator, however, then lent Mr Burke back to Mr Thomson to work for him during business hours every day, whilst Mr Burke remained on the payroll of the Commonwealth—as well as remaining in possession of the HSU credit card and spending money for the benefit of Mr Thompson.

The AEC puts out guidelines for the disclosure of gifts and donations. Those guidelines say:

Gifts are broadly defined to include any transfer or disposition of property or services for which no payment, or an inadequate payment, is received. Political donations come within the scope of this definition.

Donations may be in cash, credit card transactions, cheque, or ‘gifts-in-kind’. They may be received directly by the candidate, Senate group or agent, or received by some third party acting on their behalf, or with their authority.

…   …   …

Wages or salaries (including on-costs) incurred by an employer whose employee works for a candidate during normal working hours while continuing to receive salary or wages from the employer—

that fits the bill, particularly for Ms Stevens and the credit card activities of Mr Burke—

… Free or discounted use of a motor vehicle, or provision of free fuel or servicing of a motor vehicle …

That was all charged up to the HSU credit cards. This is a blueprint for how to make a laughing-stock of all the disclosure laws. Yet all we hear is the Labor Party bleating, 'We'd better have a lower threshold because that way we will see more donations as they are made.' Really? Not if they are done using a trade union credit card.

On this side of the House we get small donations, such as that from the Blue and White Committee, which, with its $3,240 in donations, has been audited by the AEC. But then we get the failure of the HSU East to file its returns. Initially it filed returns showing $22,000 in relevant expenditure for the 2010 election year. But it later made three amendments to that return, ending up showing total expenditure of $24 million in support of the Labor Party. That is a big jump—from $22,000 to $24 million—and it was also then late. Did the AEC take any action to impose a penalty? No. Are there penalties available under the act? Yes. Yet the AEC has the hide, the audacity, to ask for more powers when it does not use what it has. The bottom line is that the AEC has been in lockstep with this government, helping them to bring about the outcomes they want, and it does not do the job it has been set up by legislation to do.

In fact the AEC virtually gave evidence that it totally ignored the amendments passed prior to the last election—because, it said, 'We did not get enough resourcing.' So it went on auditing people such as, as I said, the Blue and White Committee and the Lady Wilson trust. But it did not touch a trade union until that thrice amended return forced it to look at HSU East. The AEC had the ability to go in and look at the national office of the Health Services Union up until the time it accepted a letter from Kathy Jackson saying that they were not an associated entity within the meaning of the act. If that is the case, it means there is poor drafting in the act. Did the AEC choose to test that argument? No, it simply accepted it.

The bottom line is that the AEC should, in its review or its analysis, have said that the provisions in the act relating to associated entities needed to be changed. The AEC said it did not need a lot of Mr Thomson's expenditure to be declared because a political expenditure return had been filed. What the AEC failed to say was that that does not relieve you of the responsibility to file a donations return in addition to a political expenditure return—and this was not done.

At every turn, this report is an absolute damnation of the cynical way this parliament is manipulated. Today we had a debate in which we saw the Prime Minister defending the impossible behaviour of the man who was the Speaker and who has just resigned. We heard the chairman of this committee—

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

Order! The member for Mackellar was given leave to speak on this report. I suggest she keep her comments to this report.

Mrs Bronwyn Bishop (Mackellar, Liberal Party, Shadow Minister for Seniors) Share this | Link to this | Hansard source

This report is based on a so-called analysis of the Fair Work Australia report into the Thomson affair, a report the Special Minister of State asked the committee to examine. Neither the AEC nor the committee was given the full report at the beginning of the inquiry. It was only because I asked the general manager of Fair Work Australia at the hearing that we received one of the annexures. When I asked Mr Nassio for his draft report, he said, 'Oh, I thought you would have it.' That is annexure M, and the annexures to M are, as I said, three boxes filled with thousands of pages of material—which the AEC has not had to this day. It pretended that it could analyse the Slater & Gordon-BDO Kendalls forensic report in 48 hours. Mr Nassios took just under three years to produce his report on the Thomson affair. The AEC took eight days to do a so-called analysis of the incomplete report. The committee chair, in his tabling speech, tried to mislead the House by saying that he had given that annexure to the AEC. It was after the event. We had no ability to ask questions of the AEC because he refused to call for a further hearing with the AEC.

This report, with the exception of the dissenting report, is not worth the paper it is written on. And, if the government pretends that this is somehow a justification for introducing anything that is in the annexed suggestions, as the AEC commissioner called them, it would be an absolute disgrace, because at no stage did the committee take evidence on any of those issues—none of them. It was all about trying to get to the bottom of what Fair Work Australia said.

Now, the KPMG report that came in, which the government put around and touted, said that this somehow diminishes the report of Mr Nassios from Fair Work Australia. If what that report said is applied to the AEC, then you see just how deficient the work of the AEC is at the present time. So this government should get off the back of the AEC and insist that it do its work properly—and, if it has political points to wage, it should do so on its own and not try to bring in a government agency which itself has an act that it should probably administer.

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

I inform members that I took the view that the deferred division should not be proceeded with until the member speaking at 8 pm had completed her speech and so I did not interrupt the member for Mackellar.