In this second article of our series on the Local Electoral (Implementing Stage 1 of Belcarra) and Other Legislation Amendment Bill 2018 (Bill) we focus on the other major issue that arose out of the Crime and Corruption Commission’s (CCC) investigation into the 2016 council elections - prohibition of political donations from property developers.
The CCC recommended:1
“That the Local Government Electoral Act, the Local Government Act and the City of Brisbane Act be amended to prohibit candidates, groups of candidates, third parties, political parties, associated entities and councillors from receiving gifts from property developers. This prohibition should reflect the New South Wales provisions as far as possible, including in defining a property developer (s. 96GB, Election Funding, Expenditure and Disclosures Act 1981), making a range of donations unlawful, including a person making a donation on behalf of a prohibited donor and a prohibited donor soliciting another person to make a donation (s. 96GA), and making it an offence for a person to circumvent or attempt to circumvent the legislation (s. 96HB)...”
The Bill creates new offences in the Electoral Act 1992 and Local Government Electoral Act 2011 in relation to political donations by property developers and related industry representative organisations at both the local and State levels. Importantly, these prohibitions will apply retrospectively in order to cover the last State election period.
Meaning of a ‘prohibited donor’ and ‘property developer’
A ‘prohibited donor’ is defined as a property developer or an industry representative organisation (a majority of whose members are property developers).2 What constitutes a ‘property developer’ is broad. It will cover:
- any corporation engaged in a business that regularly involves the making of planning applications3 by, or on behalf of the corporation in connection with the residential or commercial development of land and with the ultimate purpose of the sale or lease of the land for profit;
- a close associate of a corporation mentioned in paragraph (a).
A ‘close associate’ of a corporation includes, amongst other things:
- a related body corporate of the corporation;
- a director or other officer of the corporation;
- a person with more than 20% of the voting power in the corporation or related body corporate of the corporation; and
- a spouse of an individual of each those mentioned circumstances.
There is the ability to apply to the commissioner to receive a determination that an entity is not a ‘prohibited donor’.4 However, the commissioner will only make such a determination if it is satisfied that the entity does not fall within the ambit of paragraphs (a) and (b) above.
Meaning of a ‘political donation’
A ‘political donation’ will mean any of the following:5
- a gift made to or for the benefit of a political party, an elected member, or a candidate in an election;
- a gift made to or for the benefit of another entity to enable that entity (directly or indirectly) to make a gift mentioned in paragraph (a), or to reimburse that entity for making a gift mentioned in paragraph (a), or to incur electoral expenditure;
- a loan from an entity if that loan would be a gift mentioned in paragraph (a) and (b).
This will not include gifts that are made in a private capacity for the recipient’s personal use and where the recipient does not intend to use the gift for an electoral purpose.6
Put simply, a ‘gift’ in the realm of political donations can be understood to be the giving of value (be that property or a service) in exchange for either payment that is less than market value, or no payment at all. It includes, amongst other things, a fundraising contribution which exceeds $200.
Offence to make political donations
The Bill makes it an offence for:7
- a prohibited donor to make a political donation;
- a person to make a political donation on behalf of a prohibited donor;
- a person to accept a political donation that was made (wholly or in party) by or on behalf of a prohibited donor;
- a prohibited donor to solicit a person to make a political donation;
- a person to solicit, on behalf of a prohibited donor, another person to a make a political donation.
The maximum penalty is $50,460.00 for an individual and $252,300.00 for a corporation, or 2 years imprisonment. There are also other offences for persons who participate in a scheme to circumvent the prohibitions, and also persons who provide false and misleading information to the commissioner in seeking a determination about whether the person is a ‘prohibited donor’.
Recovery of prohibited donations
The Bill provides a mechanism for the State Government to recover prohibited donations.8 If a person accepts a prohibited donation which he or she knew was unlawful to accept, he or she will be required to repay the State Government an amount equal to twice the amount or value of the prohibited donation. The Bill provides that otherwise (i.e. if the person did not know it was unlawful to accept the donation), a person must repay an amount equal to the amount or value of the prohibited donation. Given the level of attention this prohibition has received in the press, it will be difficult to plead ignorance upon receipt of such a donation.
Importantly, the Bill will have retrospective effect from the date it was introduced. Donations made on or after 12 October 2017 that would have been unlawful for the recipient to accept after the commencement of the Bill will need to be repaid to the donor within 30 days of the commencement.9
The use of the term ‘property developer’ in the Bill is somewhat misleading. While it captures those companies who are ‘property developers’ within the ordinary meaning of that term, the Bill’s definition is wider than just those companies. The definition could extend to consultants involved in making planning applications for those companies, even though the consultants themselves are not ultimately profiting from the development. If this was not intended by Parliament, the definition of ‘property developer’ needs to be revisited, and perhaps specific exclusions should be provided.
There are also potential unintended consequences for industry organisations in relation to the Bill’s broad definition of ‘gift’. By way of example, if an industry organisation hosts an elected member at an event, which is sponsored and for which attendees pay an admission fee to the organisation; is it arguable that this amounts to the provision of a service by the industry organisation for the benefit of the elected member or political party that is within the definition of ‘gift’ and therefore a prohibited political donation?
Another example is the advocacy functions of industry organisations, particularly before and during election campaigns. Could it be argued that the activity of advocating (being a service provided by the industry organisation) is a gift made for the benefit of an elected member or a political party, where a position taken by the industry organisation favours one political party over the other? It surely cannot be the case that Parliament intends to preclude industry organisations from undertaking advocacy on behalf of their memberships (particularly where there does not seem to be any restriction on other types of organisations that might advocate on behalf of their members) or from carrying out their day to day activities, such a holding seminars and events that might be attended by elected representatives or candidates but where no ‘gift’ is provided within the ordinary meaning of that term. Again, if Parliament does not intend for the Bill to have that effect on industry organisations, any broad or vague drafting should be amended to put the issue beyond doubt, particularly given the serious consequences in the case of breach.
As a final matter, the Bill is also arguably discriminatory in that it does not preclude donations to political parties, elected members or electoral candidates from those who generally oppose property development.