By Christopher Knauss, originally published in the Guardian 1 February 2021.

Australia’s weak donation laws are allowing political parties to hide the origins of $1bn in income and giving mega-donors the ability to exert disproportionate influence over the system, new analysis suggests.

The Australian Electoral Commission will on Monday release the latest tranche of donations data for the 2019-20 financial year, which will show the largesse shown to parties in the wake of the last federal election.

Ahead of the data’s release, the Centre for Public Integrity released an analysis estimating the volume of dark money – income with an unknown source – given to the parties in the past 20 years.Australians trust government to handle Covid but not corruption, report findsRead more

It finds about 35% of contributions, or about $1bn, came from unknown sources in the two decades since 1999.

The opaqueness of the system is allowed by Australia’s weak disclosure threshold, which currently allows the source of donations below $14,300 to be hidden from public view, even if a single donor splits up a larger donation into multiple instalments below that amount.

The analysis also finds five donors have contributed 25% of all money given to the political parties since 1999. Those donors are Clive Palmer’s Mineralogy, which made 40 donations worth $101.1m, including huge contributions in the lead-up to the last election.

The next biggest donor was the conservative funding vehicle the Cormack Foundation, which made 39 donations worth $61.4m, mostly to the Liberals, but also to Family First and other conservative parties.

Labor funding vehicles ALP Holdings and John Curtin House were the next largest donors, with 145 donations worth $56.8m and 50 donations worth $47.6m respectively. The Shop, Distributive and Allied Employees’ Association was the fifth-biggest donor over the two decades, giving 318 donations worth $31.2m.

The federal system has no cap on donations from individual donors. That contrasts poorly with Queensland, New South Wales and Victoria, which all cap donations at varying levels.

It’s not the only area where the federal system trails behind the states’.It’s not that there’s no time for a federal Icac. There’s simply no willAdam BandtRead more

Queensland discloses donations to the public in close to real-time, and all other states and territories make disclosures within one or three weeks during election periods.

Federally, the public is forced to wait more than a year in some cases to find out who has bankrolled the various parties.

The delay often robs voters of the information prior to casting their votes. Donations made in the lead-up to the May 2019 election, for example, were not disclosed until February 2020.

“The commonwealth government has the weakest political finance laws in the country,” the analysis says.

“The enormous gaps in Australia’s regulatory framework make it easy for wealthy companies and industries to use money to influence decision-makers. Lax disclosure rules mean that these donations can often be made while avoiding scrutiny.”

The Greens plan to use the release of the donations data to announce a new bill to ban those bidding for government work from donating. Those seeking environmental approvals would also be banned.

Larissa Waters, the party’s Senate leader and democracy spokeswoman, said the reform was “modest” and there was no legitimate reason for the major parties not to support it.

“Surely not even the big parties could stand in the way of such a common sense reform, that would begin the process of cleaning up politics and removing the influence of big money from decision-making,” Waters said.

Enforcement of the laws, weak though they are, is also a problem.

In September, the auditor general found the AEC was not doing enough to punish political donors that break the rules and was failing to ensure donors were providing accurate and complete financial information.

It found the AEC, in the preceding four years, had failed to obtain key records from some donors, including 75 annual returns, which detail a donors’ contribution in any given financial year.AEC not punishing political donors that break the rules, damning audit findsRead more

Donors were being allowed to submit huge volumes of records late, in some cases by more than a month, and the AEC was doing little to check that the information it does receive is accurate and complete, the audit found.

The Centre for Public Integrity director, Professor Joo Cheong Tham, said the federal disclosure scheme was shrouded in secrecy.

“That the most significant level of government has the weakest political finance laws is a grave weakness of Australian democracy,” Tham said.