Doubts over government bid to ban foreign donations

Finance Minister Mathias Cormann, Prime Minister Malcolm Turnbull and Attorney-General George Brandis address the media during a joint press conference at Parliament House in Canberra on  Tuesday 5 December 2017. fedpol Photo: Alex Ellinghausen
Finance Minister Mathias Cormann, Prime Minister Malcolm Turnbull and Attorney-General George Brandis address the media during a joint press conference at Parliament House in Canberra on Tuesday 5 December 2017. fedpol Photo: Alex Ellinghausen

At first blush, a ban on foreign political donations should make it more difficult for the major parties to raise funds. But the financial impact of the Turnbull government's crackdown on overseas influence remains far from clear, with some lawyers claiming it may even be unconstitutional.

While academic analysis of foreign donations made in previous elections suggests the proposed changes could cost Labor and the Coalition millions, party insiders say it will not make a significant difference to their coffers, given the vast majority of donations come from domestic sources.

A breakdown of donations over six previous federal elections by University of Melbourne Associate Professor Joo-Cheong Tham suggests foreign entities account for well under10 per cent of total donations.

In the 2013 election, the latest disclosures available, donations from foreign addresses came to $5.1 million, or 6.1 per cent of total revenue, according to the analysis.

"The value would be larger under this ban," Associate Professor Tham said, saying it would capture more donations.

The party insiders argue that new rules restricting third party "political campaigners" such as charities and activist groups, including GetUp!, represent a more significant change.

Under the government's sweeping foreign interference and influence package, donations from "foreign bank accounts, non-citizens and foreign entities" would be prohibited.

A spokeswoman told Fairfax Media this would see donations above $250 allowed only from "a voter on the electoral roll, an Australian citizen or an Australian corporation or entity with a head office or principal place of activity in Australia".

Announcing the bill, Finance Minister Mathias Cormann said: "Only Australians, Australian businesses, Australian organisations should be able to influence Australian elections via political donations, whether that is through political parties, candidates, Senate groups or indeed significant political campaigners."

But one Liberal Party source said "the really big dollars are held elsewhere".

Another party insider said there would certainly be some effect but insisted it would not have a dramatic effect on operations.

The foreign influence laws will need to pass Parliament and could be liable to a legal challenge, with constitutional experts warning that the donations ban could be "highly problematic" as it potentially breaches the constitution's implied freedom of political communication.

Associate Professor Tham warned the newly announced ban comes close to a NSW government attempt to confine political donations to people on the electoral roll, a change that was struck down by the High Court in 2013.

Upholding the implied freedom of political communication, the court said there are many people and entities in the community affected by the decisions of government who have a "legitimate interest" in policy direction and "may seek to influence the ultimate choice of the people as to who should govern".

"Based on the High Court decision, I would have serious doubts about whether key parts of the ban are constitutional," Associate Professor Tham said.

With the legislation yet to be released, Associate Professor Tham cautioned the "devil was in the detail".

University of Sydney Professor Anne Twomey expressed surprise at the government's statement on who would be banned, saying that went "very close to the constitutional line and probably well and truly over it".

Professor Twomey said the proposed legislation would face severe constitutional risks on multiple fronts, including the removal of community members' right to political communication and placing an unreasonable administrative burden on smaller political groups.

Shadow attorney-general Mark Dreyfus warned the implied freedom of political communication must be protected.

"Until we see the detail of the legislation, it's not possible to comment on whether or not it has been drafted in a constitutional way. I'm hoping that it has been, because Labor supports a ban on foreign donations," he said.

A spokeswoman responded that the government is confident the legislation is constitutional.

"Many of the same experts predicted that the Australian Marriage Law Postal Survey would be found to be unconstitutional. It wasn't," the spokeswoman said.

This story Doubts over government bid to ban foreign donations first appeared on The Sydney Morning Herald.