Political party donations — what we know and what we should know

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Just one example of a rich multinational gaming the system. Alan Austin identifies many, many more. (Image via @CFMEU)

We don’t know much about donations to political parties in Australia, but what little has been revealed is disturbing. Alan Austin lifts the lid on the lurks, dodges and rorts.

TRANSURBAN is a great Australian company. Its operations over the year to June 2015 were extraordinary. Revenue from ordinary activities – building and running toll roads – increased 61.7%. Dividends rose 14% over the previous year to the highest payout in seven years. The share price soared.

So a profitable company? Not at all. Due to ‘significant transaction and integration costs (including stamp duty) related to the acquisition’ of another company, Transurban recorded a huge loss. Hence it paid no tax and actually gained a credit from the tax office.

It did manage, however, despite this vast loss, to donate $17,940 to various branches of the Liberal Party.

The release by the Australian Electoral Commission (AEC) of information this week about political party donations uncovers several intriguing secrets.

Things are not always as they seem.

Companies paying politicians instead of tax

Nickel miner Panoramic Resources had a tough year in 2014-15 with the drop in the nickel price. It recorded a hefty loss, paid no tax, but maintained its steady dividend to shareholders, as well as high executive salaries. It also managed to pay $22,881 to the Liberal Party.

We don’t know yet how many companies made political donations in 2015 but paid no tax. We have the AEC disclosure for 2014-15, but not the revealing list from the Australian Tax Office which shows company tax paid — or not paid. That is still about ten months away.

But we do know that 14 companies that paid little or no tax in 2013-14 were generous party donors in 2014-15. These include Bluescope SteelChevron Australia, Healthscope Limited and Foxtel Management.

Party overview

According to the declared figures, the Liberals received $75.9 million in donations and other receipts in 2014-15, Labor $65.8 million, the Nationals $11.2 million, Palmer United $10 million and the Greens $9.4 million.

Clive Palmer

Palmer United Party (PUP) received by far the largest amount from a single donor – $5,947,720 from Queensland Nickel Pty Ltd, a mining company owned by Clive Palmer. Since that company was placed in receivership in January, various questions have been raised. Total debts of the company are reported to exceed $110 million, including $16 million owed to sacked employees.

The only other declared donors to PUP were three other Palmer-owned businesses – $3,628,345 from Mineralogy, $191,113 from the now-closed Coolum Resort and $7,775 from Palmer Leisure Australia – plus $2,000 from Mr Clive Frederick Palmer himself. No-one else, it seems, chipped in.

Tobacco companies

The Nationals continue to accept tobacco money, receiving $10,780 from Phillip Morris in 2015. Labor refused tobacco money in 2004. The Liberals followed in 2013.

Labor policy is to continue to raise the rate of tobacco excise to add further disincentives to potential smokers. The Coalition remains opposed.

The big donors

Largest donors to the Liberals include: $4,460,000 from Cormack Foundation Pty Ltd, $600,000 from Brunswick Property, $340,000 from Paul Marks and $315,451 from Vapold Pty Ltd.

Largest donors to Labor include: $2,950,000 from Labor Holdings Pty Ltd, $664,580 from Labor Services & Holding Pty Ltd, $636,272 from Progressive Business Association and $190,000 from the Shop Distributive & Allied Employees Association.

The Greens disclose only two donors. They are $20,000 from Mr Duncan Turpie and $18,692.00 from Ms Rosemary Knight.

Although this transparency is intended to keep politics corruption-free, the system is still rorted.

Dodges and lurks number one: The reporting threshold

The AEC’s disclosure threshold for donations after July 2015 is $13 000. This is indexed, so it rises every year. Therefore, for a large company to donate a million dollars secretly, it just needs 77 directors or employees to send off $12,999 each.

Time consuming, but it could be done. Is it being done? Almost certainly.

Crikey claims about 40% of party donations are not disclosed. The Liberals are the least transparent, it suggests, with between 42% and 76% of contributions disclosed. Labor in contrast, voluntarily reports all donations over $1,000 and hence identifies nearly 95% of donors.

Dodges and lurks two: Payments for services

Only "donations" above the threshold must be reported, not payment for services. Hence a company that paid $22,000 for an executive to access Joe Hockey in 2014 need not disclose that contribution.

A company providing this perk for 23 executives and senior staff would effectively be donating half a million dollars — disclosure free.

Dodges and lurks three: Definitions of "other"

Oil and gas giant Santos Ltd declares in its 2014-15 return that it donated $82,483 to Labor, $62,939 to the Liberals and $23,320.00 to the Nationals. Looks quite even-handed.

But if we trawl laboriously through the AEC documents, we find Santos also paid the Liberals $27,500, for what is described as "other" rather than "donation".

Companies which also gave "other" to the Liberal Party include Coca Cola Amatil $55,000, ASX Limited $110,000, Coles $165,000 and Woodside Energy $127,500.

Yes, these are disclosed, but buried in long PDFs and not declared as political donations, which in the absence of further details they probably are.

Dodges and lurks four: Fundraising forums

The Liberal Party Victorian branch return reveals a $100,000 donation from Kooyong 200 Club, a Liberal fundraising body. Federal Liberals received another $50,000. Who actually gave the $150,000 remains unknown. All major parties have such fronts to conceal the identity of secret donors.

Dodges and lurks five: Non-compliance

Companies and individuals have been known to make large donations without reporting them to the AEC. Even if found out, the penalties are minimal.

The federal Liberal Party return to the AEC shows "donations" of $325,000 by Paul Marks. But there is no return filed with the AEC by anyone by that name.

Future reform

According to both Transparency International and Heritage Foundation, Australia’s corruption-free reputation has been steadily eroded over the last three years. Hence reform of the current disclosure regime is urgently needed.

As long as the major parties benefit from the status quo, and as long as the majority vote for the major parties, there seems little chance of this. Such is Australia’s doom.

You can follow Alan Austin on Twitter @AlanTheAmazing.

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