Explainer: Tasmania’s new laws for council candidates to disclose their donations

Tasmania is set to consider legislation to require all council candidates disclose donations. Other states have responded to damaging corruption scandals and adopted tough disclosure measures.

Will Tasmania set the standard with Australia’s best donations disclosure regime for local government candidates? The indications from the government are not promising.

Here is what you need to know.

What is the issue?

Tasmania is the only state in Australia with no donation disclosure requirements for all local council candidates.

In April 2020 the state government committed to amending the Local Government Act to require all candidates to “declare gifts and donations received during the electoral period”, with the new scheme to be administered by the Tasmanian Electoral Commission.

When will more details be available?

It is not clear. Tasmanian Inquirer was recently told more details on a draft bill will be made available “in the near future”. But the government has been promising that since early 2020.

What is required of current councillors? 

Tasmania has good basic disclosure. Since August 2018, the state’s 263 councillors have had to disclose donations and gifts received with a cumulative value of at least $50 from a single donor in a financial year.

Councillors must provide details of donations, including their relationship with the donor, to the council’s general manager within 14 days. The council is required to make the register of donations and gifts available on its website and update it at least monthly.

“The line between a payment which increases access to an elected official and a payment which influences the official conduct of an elected official is not always easy to discern.” 

High Court of Australia Justice Stephen Gagelar.

What is behind the push for the change?

There are two key elements. Ahead of the October 2018 elections there was public concern about the lack of disclosure of campaign donations by candidates.

As the regulations only apply to sitting members, a cashed-up challenger would not have to disclose any donations. Not surprisingly, sitting councillors want the same standard of disclosure to apply to all candidates.

Why does the disclosure of donations matter?

Donation disclosure is a basic accountability measure aimed at avoiding potential conflicts of interest that could undermine public trust in government decision-making. Pre-poll disclosure allows voters to make an informed judgement and, after the election, to scrutinise any policy decisions which may benefit donors.

In a landmark High Court of Australia judgment in 2015, Justice Stephen Gagelar warned:

“The influence which comes with the preferential access to government resulting from the making of political donations does not necessarily equate to corruption. But the line between a payment which increases access to an elected official and a payment which influences the official conduct of an elected official is not always easy to discern.”

Do Tasmanians support tougher disclosure standards for council candidates?

Research has been limited but a snapshot online survey (p. 18) of 482 people undertaken by the Department of Premier and Cabinet in 2020 found 96 per cent of respondents either strongly agreed or agreed with the proposition that “all local government electoral candidates should be required to disclose gifts and donations”.

The government said donations “received during the electoral period” will be disclosed. What does that mean?

Candidates for councils must report all electoral advertising costs incurred for and during the “relevant period” for the election. This is narrowly defined as being the period between 30 days before the notice of the election is issued through to the close of polling. So expenditure disclosure covers about 76 days.

Is that a potential loophole?

Yes. Defining the “relevant period” the same way it is used to cover campaign expenditure could create a huge loophole.

The danger of this sort of loophole was illustrated in 2008 when then Treasurer, Mike Aird, raised $22,000 for his Legislative Council re-election campaign at a secret $2000-a-head dinner attended by major donors including Federal Group executives and property developers.

Ten thousand dollars of the proceeds was for campaign expenditure outside the regulated expenditure period. None of the donations had to be disclosed. (See “Comment: The $22,000 ‘Aird loophole’ lives on as Tasmania fails to come to grips with donations transparency” for details.)

Loopholes like this benefit donors and recipients but undermine transparency.

Why does the disclosure threshold matter?

The lower the threshold, the greater the transparency.

Tasmania’s current $50 disclosure limit in a financial year ensures a very high percentage of donations will be disclosed.

The impact of a higher threshold can be seen after the Howard government lifted the federal disclosure threshold in late 2005 from $1500 to $10,000. In the space of two years, the origin of donations to the Tasmanian Liberals plummeted from more than 75 per cent of its income to a little more than 3 per cent.

Why did NSW ban property developers from donating?

After a string of scandals relating to land development projects, in 2009 NSW banned donations from property developers.

In a 1990 report into one land development scandal, Independent Commission Against Corruption (ICAC) Assistant Commissioner Adrian Roden noted:

“A lot of money can depend on the success or failure of a lobbyist's representations to government. Grant or refusal of a rezoning application, acceptance or rejection of a tender, even delay in processing an application that must eventually succeed, can make or break a developer. And decisions on the really mammoth projects can create fortunes for those who succeed. The temptation to offer inducements must be considerable.”

The problem was not restricted to donors offering funds to candidates.

The Newcastle property developer, Jeff McCloy, told ICAC that aspiring Liberal candidates came to him requesting campaign donations ahead of the March 2011 state election. “I feel like a walking ATM some days,” he said.

How much are Tasmanian councillors paid?

The risk is exacerbated by the gulf between the big budgets of development projects and the comparatively low levels of pay for councillors.

Tasmanian councillors are paid between $9777 and a little more than $38,000, depending on the municipality. Extra allowances for deputy mayors and mayors range between $10,300 and just over $95,000.

Have other industry sectors been banned from donating?

NSW has also banned donations from the tobacco industry, for-profit liquor or gambling industry business entities and any industry representative organisation that has a majority of members that are either prohibited donors or close associates of a prohibited donor.

Is the Tasmanian government proposing to ban donations from property developers?

No.

What is the Integrity Commission’s view on local government donations disclosure?

The Integrity Commission said in 2016 it had “substantial input” into developing the current local government donations disclosure regime. However, the commission made no comment on political donations in its February 2019 submission to the review of local government legislation despite the issue being flagged as one of the topics under review.

The commission’s chief executive, Michael Easton, told Tasmanian Inquirer it “strongly supports any changes to the legislative framework in Tasmania that contributes to increased government transparency and accountability, particularly during election periods”.

What are the top 12 features of a good donations disclosure system?

The best elements of existing donations disclosure regimes in Australia for local government candidates include:

Low disclosure threshold: Tasmania’s current $50 disclosure is the lowest of any state.

Prompt disclosure: Queensland requires disclosure within seven business days of a donation being received, reduced to one day in the last week of an election campaign.

Broad definition of a donation: NSW and Queensland include donations, loans, in-kind gifts and in-kind services in their definition of a donation.

Limited donor eligibility: In NSW, donors must be individuals on the electoral roll, business entities with a Australian Securities and Investments Commission (ASIC) business number or a donor pre-approved by the NSW Electoral Commision.

No cash and a cap on donations: NSW bans cash donations over $100. It has a cap of $3100 from a single donor to a candidate and $6700 to a registered party or group of candidates.

Donor details: NSW requires the donor's name, address, ASIC business number and the date and purpose of the donation. Queensland goes further, requiring details of whether the donor has an interest in a local government matter, their occupation and the terms of any loan.

Queensland also requires business donors to provide the details of directors and executive committee members, any holding companies and a description of the business. Trusts, foundations and unincorporated associations are required to provide details of key personnel.

Extended disclosure period: Queensland requires candidates who have stood at the preceding election four years earlier to disclose all donations received from 30 days after the last poll to 30 days after the current polling day.

New candidates - defined as someone who hasn’t stood for election in the preceding five years - are required to disclose donations from the time they announce their candidature or submit their nomination to 30 days after the election. South Australia has a similar provision.

Donor bans: Donations have been banned from industry sectors identified as problematic: property developers and their close associates (NSW, Queensland and the ACT); gambling, tobacco and for-profit alcohol (NSW). In NSW industry associations where a majority of its members are banned donors are blocked from making donations. Queensland has a similar provision for organisations representing property developers.

Stiff penalties: Queensland has fines of up to $53,380 or two years imprisonment for a banned donor contributing to a candidate or party and up to $200,175 or 10 years imprisonment for those who knowingly seek to circumvent a ban on prohibited donors.

Online disclosure: This is proposed in Tasmania. Queensland, South Australia, NSW and Victoria require donation disclosures to be published on the internet.

Responsibility resting with electoral agency: This is proposed in Tasmania. It would bring it into line with NSW and Queensland.

Donor disclosure on development applications: In NSW, anyone making planning applications or submissions on planning applications must disclose details of donations of $1000 or more made to a councillor or council employee in the two years prior.

Failure to disclose donations with development applications or submissions can lead to penalties of up to $22,000 or imprisonment for 12 months, or both.

How does Tasmania’s proposal line up?

On the details available, the Tasmanian government’s proposed disclosure regime is likely to be weak.

It means that the effectiveness of the disclosure scheme will ultimately depend on the positions adopted by the independent and Labor members of the Legislative Council, who will have to vote on it - and the strength of representations from the community that helps shape where they line up.