Committee: AEC return to Election Funding Inquiry

Joint Standing Committee on Electoral Matters

Inquiry into the funding of political parties and election campaigns, Tuesday 1 November 2011

Appearance of Australian Electoral Commission officials:

• EDGMAN, Mr Brad, Director, Funding and Disclosure Section, Compliance, Australian Electoral Commission
• KILLESTEYN, Mr Ed, Electoral Commissioner, Australian Electoral Commission
• PIRANI, Mr Paul, Chief Legal Officer, Australian Electoral Commission

Partial transcript. Full transcript available here.

Senator RHIANNON: Thank you very much for appearing before us today. On page 7 of your submission with regard to disclosure you state: 'There would appear to be no logical reason why the disclosure obligations should be different depending on the status of the candidate.' And there is a quote from the member for Lyne about the situation that he experienced where he believed there was considerable spending by a major party that was actually not reflected in the returns: 'Major parties can bury their figures in some sort of global expenditure at the end of the year.'

It would appear that this trend is becoming quite a challenge. In the New South Wales recent election, in Port Macquarie, Dubbo, Upper Hunter and Tamworth there were similar allegations made. So, considering you have given coverage to this, could I ask what advice you would give so there can be consistency, particularly in these electorates where you have Independents up against major party candidates?

Mr Pirani: This material was provided in response to the question that was raised by Senator Xenophon at the last hearing, and we were not aware of the specific issue that he had raised about the different treatment between independent candidates and endorsed candidates, but we clearly were aware of the issue that had been raised by the member for Lyne in the House in relation to the disclosure of actual campaign expenditure.

Since 1996, the AEC has not obtained—and there was no requirement in the legislation for us to obtain—amounts of electoral expenditure that had been incurred by the political parties and endorsed candidates. So the act, as it stands at the moment, has a different requirement that applies to independent candidates from that that applies to endorsed candidates. We were merely raising that for the committee's consideration, and just raising: is that the policy that the committee would still wish to adopt? But that is clearly the position that is currently in the act.

Mr Killesteyn: It would suggest that if you are designing a new system that you would require the political parties to allocate or to apportion expenditure according to electorates, which is further detail that would be required by the parties. It has some difficulty, particularly when you are looking at broadbrush advertising.

Senator RHIANNON: Yes. That is why I wanted to ask. Do you have any experience from overseas jurisdictions or from your own work in this area how that can be disclosed, and where the limit should be put?

Mr Killesteyn: We have not done any particular study on it. But as I said, there is a simple solution, or what appears to be a simple solution: to record expenditure according to a particular campaign—if it is a by-election, for instance. It appears simple, but when you take it across the board, particularly in a general election, when you have expenditure that covers a whole state or, indeed, a whole country, I suspect how you apportion that according to electorates would be quite difficult. It would not be terribly meaningful, I would suggest.

Senator RHIANNON: When you say 'terribly meaningful' is that in terms of—

Mr Killesteyn: In terms of comparisons between level of expenditure by parties versus level of expenditure by individual candidates.

Senator RHIANNON: Is it something that you think would actually be too hard to put limits on, or at least to provide meaningful figures in disclosure to show a comparison between candidates?

Mr Killesteyn: I do not think it would be too hard. I guess it depends how you define the legislation. The question would be if you took overall expenditure by a party on a particular item would you divide it by 150 and, if you did, is that a particularly meaningful figure to record for expenditure in a particular seat? I do not think so.

Mr Pirani: And then you have the additional issue about what to do with the Senate, when that is not done on a divisional basis. It is done on a whole state basis, so are we going to aggregate that information or disaggregate it? How is that to be recorded?

Senator RHIANNON: Yes, it is a huge challenge—if it is achievable.

In your submission 19.3, you cover issues to do with resources for disclosure models, and you say:

The AEC is aware that one of the mechanisms that have been successfully used overseas relates to the requirements to maintain campaign accounts from which electoral expenditure can lawfully be incurred.

Could you expand on what you have found there and how that works?

Mr Pirani: Our understanding is that both in Canada and the United States they actually maintain separate campaign accounts. They have to be created and they have to be disclosed to the relevant commissions there, and the only expenditure that can be incurred in electoral campaigns has to come from those accounts. That way they have an audit trail and they only have a single bank account which has to be reported against. Particularly when you are dealing with third parties, you do not have to trawl through all the bank accounts that a third party might have which will have a whole lot of information that is not relevant to expenditure that is incurred in an election campaign.

Senator RHIANNON: When you say that they have one bank account, do you mean for the whole country? Or for each seat—per candidate?

Mr Pirani: Our understanding is that they have it per candidate and per electorate, and they may also have a national account for a national campaign.

Mr Edgman: And that is because the candidates get a separate expenditure cap to the party as well. So if they want to spend part of their expenditure cap my understanding is that they have to have their own separate electorate account, which is then disclosable—reportable—to the electoral authority. Those accounts include the 'ins'—all the donations in as well as the expenditure out. Both sides of the equation are in that one account.

Mr Pirani: There are some jurisdictions where you can only put money into the account, whether it has come from an electronic transfer or a credit card. That way you do not have issues and you are able to do the tracing—it makes it easier for them to do the tracing of where the money has come from.

Senator RHIANNON: No cash?

Mr Pirani: No cash.

Senator RHIANNON: Does that mean that in some of the experiences you have looked at that that information is then available online? And is it in real time?

Mr Pirani: Certainly, at places like the New York Campaign Finance Board it is online in real time.

Mr Killesteyn: In fact, we do not think that a system of contemporaneous disclosure could work unless you had a facility like a campaign account which showed both revenue coming in and expenditure going out.

Senator RHIANNON: Do you think that, for that to work for us, it would have to be credit cards or online donations, no cash?

Mr Pirani: Certainly, if you are dealing with amounts that are material, then perhaps there could be a threshold above which it could only be done by credit card or electronic transaction, similar to what is proposed for anonymous donations up to $100, which is in the bill that is still before the Senate. Again, whenever you are dealing with cash, there is the potential for loopholes.

Mr Killesteyn: The problem with cash, ultimately, is that there is an inherent delay between the receipt and the posting in an account somewhere—assuming that it is actually posted.

Senator RHIANNON: When we have these discussions we often come up with the issue of resources that are available in terms of how we advance these systems. Would it be the case that, once the IT system is set up, so this form of online disclosure can be undertaken and maintained, the costs would actually drop away considerably? There would probably be enormous cost setting it up but, once we are all into the system, the costs that would be incurred would drop?

Mr Killesteyn: I think that is the case. There are the investment costs in building the system and then, assuming that system lasts for many years, ultimately the investment is defrayed over many years. That applies both to the AEC as well as to parties and other organisations that would have to adjust their systems to enable that online disclosure to occur.

Mr Pirani: There will be a certain level of ongoing business costs and also ongoing staff costs. But certainly the significant costs would be the initial establishment of the system.

Senator RHIANNON: When you have looked at these overseas experiences, have you collected any assessments of the costs in setting up the system?

Mr Killesteyn: No, we have not. But I am happy to pursue that if the committee wishes.

Senator RHIANNON: Thank you.