What the AEC’s political donation data dump doesn’t tell us

It’s ostensibly a nod to political transparency and probity in federal politics, but experts in governance and law have long said serious shortcomings attend the Australian Electoral Commission (AEC) data published annually under federal donations laws.

“Every year, there are large pools of money, the origin of which is not identified,” said Bill Browne, the director of democracy and accountability with the Australia Institute.

“It could be perfectly innocuous — many small donors, for instance — but the lack of transparency means we can’t answer questions about whether there is some deeper problem going on with these funds.”

More than $3 billion in income has flowed to political parties over the past two decades, with the origins of more than one-third of that sum obscured or cloaked in secrecy.

Last year alone, nearly 40% of party income, or $68 million, was of unexplained origin.

According to the Centre for Public Integrity, it’s a circumstance enabled by a series of weaknesses and loopholes in disclosure laws passed with bipartisan support.

Among the most obvious of these is the high disclosure threshold for political donations, currently set at $14,500, allowing donors to conceivably make multiple undisclosed donations under that threshold.

This same high threshold also applies to a larger, broad-sweeping category of income called “other receipts”, described by Browne as “really problematic” due to its tendency to disguise the ultimate source of the cash.

The category, he said, can include anything from returns on investment from so-called “associated entities” as well as public funding, loans received, payments for services and dividends on shares.

“The thresholds for disclosing donations and income are too high,” he said. “It means Australians never get a full picture of the money that’s funding our political parties and candidates and how influence is operating.”

Other gaps flagged include the narrow definition assigned to “gifts” or “donations” under disclosure laws, which do not extend, for example, to donations made at party fundraisers, commonly priced at up to $20,000 per person.

Rightly or wrongly, these factors fuel arguments around state capture and the perception that the game of politics is weighted against the public interest.

On Wednesday, the AEC published data revealing that the Liberal-National parties had disclosed more than $116 million in funding for the 2021-22 financial year, Labor $124 million, and the Greens more than $10 million.

Analysis undertaken by the Centre for Public Integrity suggests just a small handful of donors comprise around three-quarters of all donations.

“Given the reliance that the major parties have on these top donors, there is a real risk that they receive special access and yield undue influence on our decision-makers,” former NSW Court of Appeal judge Anthony Whealy KC told The Age.

“We urgently need a cap on political donations so that an average voter can match the donations of millionaires.”

But Browne said care would need to be exercised on this front, lest any reform inadvertently entrench the dominance of the two major parties to the detriment of independents or minor parties.

“Political donations caps are worthy, but they would need to be carefully designed to avoid unfairly disadvantaging challengers or independent candidates as opposed to incumbents,” he said.

“What the annual AEC data dump really reminds us is that we get information on political contributions very late, often months and months after the contribution has been made.

“If we had real-time disclosure [laws], voters would be able to weigh up the merits of these contributions at the time they occur and how they might influence political parties and politicians.”

The federal government has indicated it will likely reduce the disclosure threshold for donations and contributions to $1000, bringing it in line with thresholds set in many states across Australia.

And while it is also considering the merits of real-time disclosures, bans on large political donations appear to have been ruled out for the foreseeable future.