David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Hansard source

I move:

That the Senate take note of the report.

I rise to speak on the Joint Standing Committee on Electoral Matters, Interim report on foreign donations. That report recommended prohibiting foreign donations to political parties.

The Manchurian Candidate is a story about a cunning foreign power pulling the strings in domestic political affairs. It is a work of fiction, but it seems a lot of people think it was a documentary. They imagine foreign bad guys seeking to control Australian politics, and they cast themselves as the hero stamping out the foreign threat with a patriotic flurry of regulation. The truth is a whole lot more boring and is not the stuff of a Hollywood movie. Regulating just because something sounds bad, without knowing whether it is, is wrong. A ban on foreign donations is a solution in search of a problem.

I am a participating member of the Joint Standing Committee on Electoral Matters. I heard the evidence it received in relation to foreign donations. Various people and organisations argued in favour of prohibiting foreign donations, but none against it. However, several urged considerable caution—including the Liberal Party and the Australian Labor Party. This is interesting, as the leaders of both parties have declared their opposition to foreign donations. What is significant is that both parties were keen to warn against doing more harm than good. Among the points they raised were the following. How should a foreign donation be defined? Is it a donation from a foreign entity? That is, a person or organisation that is not Australian. What about permanent residents or dual citizens? What about domestic branches of foreign entities, such as international environmental groups or businesses? Then there is compliance. How could a party, particularly an Independent candidate or minor party, possibly know whether a donor is an Australian citizen or company? And what about an Aussie who sources funds from overseas before donating them to an Australian political party?

Another option was to define a foreign donation as one from a foreign source—in other words, a bank account not in Australia. There are problems with that too. Expatriate Australians who would like to donate to a political party but have not retained a domestic bank account while living overseas might be affected for example. Some argued that only voters on the electoral roll should be permitted to donate. That is the approach taken by the New South Wales government. The High Court decided it was unconstitutional, declaring that democracy involves more than just voters. New South Wales still has the most stringent laws on political donations in the country, and they are a compliance nightmare, as the Liberal Party submission noted. And yet, is New South Wales the least corrupt jurisdiction in the country? Eddie Obeid and Ian Macdonald might be the only ones to say so.

The fact is that foreign donations are insignificant. To the extent there is any data at all, it shows that foreign donations typically amount to only about one per cent of all the funds Australian political parties receive. And that data shows it is not increasing. The bulk of political funding comes from taxpayers, not donations. But rather than deal with this realistic story, we get foreign bogey men, and patriotic regulation to stop them in their tracks. The truth is that the committee heard no evidence that would support specific prohibition of foreign donations. It heard no evidence to validate the claim that there was any significant community concern about foreign donations. Senator Dastyari's use of a foreign source to pay a private bill is not about foreign donations to political parties.

Even if there was widespread community concern about foreign donors exerting influence, imagining mischief does not make it a reality. Not a single instance of a foreign player using donations to influence domestic policy was heard. No witness outlined how foreign donations could influence domestic policy. No reasoning was provided to suggest that foreign donations could be problematic in the future, where they have not been in the past. No witness was able to indicate how a substantial foreign donation may have a detrimental effect on Australia's democracy.

There were assertions that major domestic donors secure privileged access to senior members of the government, but no-one could point to specific benefits that a donor might receive. There was zero mention of why this is relevant to minor parties and others, which are never likely to form government. The committee did not explore the distinction between a foreigner donating to a party so as to amplify the party's longstanding and strongly held policies, and a foreigner donating to a party in an attempt to change the party's policies. The former motivation may be the predominant one, and may be of little concern to the Australian community. Many Australians care about American politics, and may consider it acceptable to have donated to either the Hillary Clinton or Donald Trump campaigns. If this is the case, they may also consider it acceptable for a foreigner to take a similar, arms-length interest in Australian politics.

Some witnesses raised concerns about donations by foreign governments. This could be countered by specifically banning donations from foreign governments, although a foreign government could still funnel donations via private entities. And what exactly are we trying to stop?

The committee was informed by International IDEA, a group that monitors political transparency issues internationally, that many countries restrict or prohibit foreign donations. And yet that group acknowledged that there is a lack of correlation between political corruption and the regulation of foreign donations. In other words, the evidence does not show that restricting foreign donations reduces corruption, which raises the question: why bother?

Most of those seeking to prohibit political donations prefer public funding of political parties. Support for increased public funding is inherent in arguments to restrict avenues for private donations. However, the committee heard neither a theoretical argument for suggesting that democracy is enhanced by public funding nor empirical evidence confirming that such an outcome is achieved.

There is a further aspect to consider, and that is whether bans on foreign donations should also apply to others seeking to influence electoral outcomes. Should businesses, industry bodies, unions, charities, universities and social issues groups—but not political parties—be able to campaign for particular electoral outcomes with the assistance of foreign donations? In the USA, donations to political parties are strictly controlled, while those to third parties are not; hence the growth of political action committees, or PACs. Is that what we want?

There is a better way. Donations, domestic or foreign, only matter if they have an impact on democracy. Since this is determined by voters, all that is needed is for voters to be aware of donations before they vote so they can take them into account when deciding how to vote. If voters are indifferent to donations, either in general or in a particular case, voting outcomes will not be affected and the fact of the donation is irrelevant. If voters disapprove of any particular source or type of donation, they can take this into account when they vote.

It is remarkably patronising and reflects nanny-state thinking for governments to assume that voters are incapable of deciding for themselves whether a recipient of a donation deserves their support. It is also inherently antidemocratic. If voters are assumed to lack the competence to form a judgement about donations, it follows that they must also lack the competence to form a judgement about party policies generally.

Democracy simply requires voters to be adequately informed. Disclosure of donations should occur at an appropriate time so voters can take it into account when casting their vote. The only regulation needed for this is to prohibit donations made so close to the election that they cannot be disclosed in time.