Australians should be able to see who donates to political parties, but our political donations laws fall far short of this ideal. Recent reforms in New South Wales and Victoria mean that voters will have much better information about who is donating. But when it comes to donations at the federal level, voters remain largely in the dark.
Money in politics is regulated to reduce the risk of interest groups “buying” influence. Explicit quid pro quo is probably rare: as the saying goes, “you never bribe someone when you need them”. But the risk is in more subtle influence: that donors get more access to policymakers, or their views are given more weight.
Publishing information about larger donors creates a public check on this behaviour. Voters are able to see who political parties rely on for funding, and MPs are more accountable for their subsequent decisions.
States are improving transparency
The trend in the states is promising. Victoria and NSW both increased the transparency of political donations last month.
In Victoria, donations of $1,000 or more will have to be disclosed to the Victorian Electoral Commission within 21 days. Anonymous donations of $1,000 or more are banned. Victoria even capped donations at $4,000 and increased public funding for election campaigns, which might help reduce the reliance of parties on larger contributions (but also comes with other risks).
NSW’s already extensive donations regime was tightened from July 1 this year. NSW political parties are now required to disclose donations of $1,000 or more within 21 days during election campaigns (as in Victoria), and within six months otherwise.
When it comes to transparency, Queensland does one better: the 2017 state election was Australia’s first with “real time” disclosure. Donations of $1,000 or more are lodged through an online portal and are made public within seven working days. The Queensland Electoral Commission even provides interactive maps of donations by electorate.
Most other states also have decent disclosure requirements. In South Australia, parties are required to disclose donations of $5,310 or more every seven days during an election period (and every six months otherwise). The disclosure threshold in Western Australia is $2,300.
Tasmania is the only state with disclosure laws as weak as the Commonwealth’s.
These laws mean voters can know, before they go to the ballot box, who is funding parties’ election campaigns.
The Commonwealth has a long way to go
The states are taking political donations reform seriously – and that’s a good thing. But state reforms are limited by state boundaries. Until the Commonwealth catches up, we won’t be able to “follow the money” across all jurisdictions.
Under Commonwealth regulations, it can take up to 19 months for donations to be made public. That’s why Prime Minister Malcolm Turnbull’s $1.75 million donation to the Liberal Party in the lead-up to the 2016 election was not officially made public until the start of this year.
Only donations of more than $13,800 are required to be disclosed. And there is no requirement to aggregate donations, which means an individual donor can make a series of donations below $13,800 without disclosure.
The result is a huge amount of money in the federal system that we know nothing about. Parties received more than $100 million from undisclosed sources in the two financial years spanning the 2016 federal election. Without this information, it is difficult for public scrutiny to provide a “check” on the possibility of donor influence.
Some of this money no doubt came from “mum and dad” donors contributing $100 to their preferred party. But some is probably the result of “donations splitting”, where people or organisations make multiple donations below the threshold. Some might also be income from fundraising dinners and business forums, for which attendees pay thousands for an opportunity to “bend the ear” of elected representatives.
Donations can also be filtered through associated entities of the parties. This makes money (and influence) even more difficult to track. These entities – unions, investment funds, or fundraising organisations – occasionally frustrate donations restrictions by taking money on behalf of “their” party.
In a particularly egregious case, investigations uncovered that hundreds of thousands of dollars in unlawful donations had filtered into NSW Liberal Party accounts through a federal associated entity.
Growing public cynicism about special interest influence is partly born of secrecy. Simple changes could vastly improve what we know about money flowing to Commonwealth political parties.
The disclosure threshold should be lowered as the states have done. The current threshold of $13,800 is well above the amount that a regular voter could afford to contribute to a political cause. A lower threshold of around $5,000 would still protect the privacy of small donors while improving transparency and accountability.
Disclosure of donations should be much quicker. Queensland and South Australia now have “real time” disclosure during elections; the Commonwealth can clearly do better than a 19-month turn-around. Disclosure within three weeks – as in NSW and Victoria – would be far superior to the current system.
The states’ political donations laws aren’t perfect, but they are heading in the right direction. It’s time for Canberra to catch up.
Academics in Australia might reflect on the fact that scholarly books critical of the Chinese Communist Party are now shunned by publishers. Scholars who work on China know that continued access to the country requires them to play by Beijing’s rules, which for most means self-censorship – the dirty secret of China studies in Australia.
Despite refusing to publish my book, Silent Invasion, I am privileged in my access to free speech in a way that most Chinese-Australians are not.
In February, Alex Joske, my researcher for the book and of Chinese heritage himself, wrote in the New York Times that as Beijing’s interference in Australian society intensifies:
… the voices of the Chinese-Australians alarmed by Beijing’s encroachment are being drowned out by an aggressive Chinese government campaign to silence critics here.
Once quite vocal, pro-democracy activists, supporters of Tibetan autonomy, and Falun Gong practitioners are barely heard nowadays. In my book, I describe how this marginalisation has been carried out.
Examples are legion. The New York Times recently reported that Taiwanese workers at restaurants in Sydney have been sacked because, when asked whether they believe Taiwan belongs to China, they say “no”.
It only takes a few examples like this to send a signal to all Taiwanese in Australia to keep their views to themselves if they go against Beijing. This kind of violation of democratic principles — not to mention employment law — has for years been ignored by the mainstream.
Soon after Allen & Unwin pulled publication of my book, a retired businessman phoned. For years he has been taking in Chinese students as lodgers. Recently, he was walking through the CBD with one of those students when they came upon a Falun Gong practitioner collecting signatures on a petition. When he said “let’s go over”, she begged him not to. She kept walking while he signed the petition.
Two weeks later, the student’s parents back in China had the Ministry of State Security knocking on their door. They were warned to keep an eye on their daughter, who was creating trouble in Australia.
Think about that. Chinese authorities in Australia are monitoring Falun Gong practitioners on the streets of Sydney and Melbourne, photographing anyone who interacts with them. They can identify any ethnically Chinese person and put them on a watchlist.
In the course of researching my book, I spoke with pastors at Chinese churches in Australia who believe their congregations and community groups have Communist Party agents spying on behalf on the consulate. Some Chinese-Australians cannot even go to their places of worship without Beijing’s vast security apparatus watching and reporting on them.
Few religious groups of modern times have experienced more coercion and violence than practitioners of the peaceful spiritual practice Falun Gong. Working through the consulates, the sinister 610 Office has harassed, threatened and bullied Falun Gong practitioners in Australia and frightened off sympathetic politicians.
Last year, Feng Chongyi, an associate professor at the University of Technology Sydney, was forcibly detained in China for a week while doing research on human rights lawyers. China does not like what he is uncovering and wanted to send an unambiguous message that he should change what he works on in Australia.
It’s important to understand that the effect of Beijing’s suppression of critical voices in the Chinese-Australian community is not confined to pro-democracy and Tibetan autonomy activists. The dominant narrative in the community is now one that supports the Communist Party view of the world.
Leading Sinologist John Fitzgerald has shown how the once-diverse Chinese-language media became overwhelmingly pro-Beijing. Chinese-language media in Australia is subject to Beijing’s censorship regime. Chinese-Australians who speak about human rights violations or complain about Beijing’s interference in Australian politics are vilified.
A young Chinese-Australian who wants to enter politics knows that any criticism he or she may make of, for example, party influence operations in Australia will result in bad press and pressure from “community leaders”. If they were to persist, family members in China may receive intimidating visits from state security. It’s much easier to stay out politics.
This is a denial of their democratic rights. It means that Chinese-Australians critical of the Communist Party have no representation in parliament. Who will speak up for them if their family is threatened, or if their business in Australia is sent broke by a boycott organised by the consulate?
Enabling the silencing
Instead of giving these critics of the Communist Party a voice, some of our political leaders have collaborated in their silencing. They shun them, even condemning them when they protest outside the Sydney consulate, while mixing with and responding to “community leaders” who typically head United Front organisations guided by the party through its network of agencies that operate in Australia.
In February, Shadow Treasurer Chris Bowen expressed outrage in parliament because Cambodian Prime Minister Hun Sen had threatened violence against any Cambodian-Australians who staged a protest during his visit to Australia. Bowen declared he would defend the right of Cambodian-Australians to protest and would not allow peaceful protesters to be harassed and bullied.
Good for him. But where is Bowen when Chinese-Australians are threatened and intimidated by China’s state security apparatus in Australia? Where is he when supporters of Tibetan autonomy are drowned out and intimidated on the streets of Sydney?
Bowen is a prominent member of the New South Wales Right faction of the Labor Party and accordingly has been the recipient of largesse from wealthy Chinese businessmen close to Beijing. He has been flown to China at the expense of the Communist Party and an organisation run by Huang Xiangmo, the businessman ASIO warned the major political parties to avoid taking money from.
Bowen has been a patron of the Australian Council for the Promotion of Peaceful Reunification of China, the peak United Front body closely associated with Huang Xiangmo.
As my book appeared in the bookshops, the big beasts of the NSW Right came out to monster me because I have said they are too close to Communist Party front groups and agents of influence. Bob Carr, Paul Keating and Graham Richardson attempted to trash my reputation and make me out as a Sinophobe and closet racist.
They are embarrassed when anyone draws attention to the evidence of the deep penetration of the Chinese state into their part of the Labor Party. They should know that the more they try to shut down critics, the more we will ask what they have to hide.
Like others, I have puzzled over the astonishing level of naivety in this country about what China is doing here.
It doesn’t seem enough to speak, as some have, of being blinded by the money or referring to the natural openness of Australians. For some, it’s almost a wilful unwillingness to see, despite the powerful evidence of China’s aggressive intentions.
When writing Silent Invasion, I anticipated that its arguments would be dismissed as rooted in xenophobia and that I am just stirring a cauldron of anti-Chinese racism. I have a pretty good record of anti-racism over the decades, but for some that counts for little.
More to the point, in the book I tried hard to reflect the experiences of those Chinese-Australians who are critical of the Chinese Communist Party and feel threatened by it in their new home.
I discussed with some of them the risk of racist groups misusing the book to reinforce their prejudices. The typical response was: “Well, what’s the alternative? Should you just say nothing?”
The judgement of these Chinese-Australians is that they may have to take some collateral damage to win the larger battle. They are much more worried about the vast apparatus of Communist Party coercion than some wave of anti-Chinese sentiment.
From the moment I began researching and writing Silent Invasion, I resolved to ensure that none of the criticisms I made of the Chinese Communist Party could be construed as anti-Chinese or anti-China.
I knew that nothing I did would deter the party from its usual conflation of the party and the nation. And true to form its spokespersons in Canberra and Beijing have stuck to the party line, attacking the book as “racist bigotry” and “anti-Chinese”.
If you just read Race Discrimination Commissioner Tim Soutphommasane, Chinese Embassy statements, and Beijing’s trolls on social media, you’d think the danger we face in Australia is not Chinese Communist Party interference operations but the risk of inflaming anti-Chinese racism by calling out the party.
The problem lies not in Xi Jinping’s aggressive assertion of a newly risen China, but the stain on our own history. Our first goal must not be to resist growing foreign interference, but to keep the lid on fringe sentiments here.
But what of China experts in Australia? Surely they can see what is happening. Most of the serious ones can and have been trying to draw attention to it for some years.
Others, like the University of Sydney’s David Brophy, prefer to put their ideological purity on display. In a ranting “review” of Silent Invasion, he argued that when discussing the Chinese Communist Party’s interference operations in Australia, people like me and the string of China experts who take a similar view have got it all back to front.
For Brophy, when the issue of foreign interference arises, we must not “shift the blame onto China” but “confront our own failings”.
Concern about Communist Party interference in Australia, opines Brophy, actually “reflects a deep malaise in Australian society”. Really? Then Taiwan, Singapore, Canada, the US, New Zealand and several European countries, where the same debate is taking place, must be suffering from the same malaise.
In truth, when someone who is being bullied or violated is accused of just imagining it, we call it victim-blaming.
When Brophy dismisses the mountain of evidence of Communist Party interference in Australia as “imagined subversion”, he shares the assessment of his vice-chancellor, Michael Spence, who has labelled the mounting warnings by the government, based largely on ASIO reports, as “Sinophobic blatherings”.
As I suggest in Silent Invasion, Spence’s University of Sydney is among the most compromised of this country’s academic institutions.
It’s not Silent Invasion, but the reaction to it, that has highlighted something troubling in the intellectual life of the nation. The fault is not an incipient xenophobia ever-ready to burst forth in anti-Chinese racism, as if our universities inherited the culture of the gold fields.
No, the fault lies in the sacrifice of intellectual rigour to the guilt felt by politically correct academics for what happened on the goldfields. For the Chinese Communist Party, this fault is a rich seam to mine in its quest to exert its influence here.
Three political parties – the ALP, the Liberal Party and the National Party – dominate Australian politics. This dominance is particularly noticeable in the electoral contests for parliamentary lower houses, especially where these involve single-member electoral districts and electors cast a preferential vote.
In general, the vast majority of Australians vote for the three main parties. The dominance of the three parties’ representatives in state and federal parliaments reflects this.
Occasionally, developments in the party system can challenge this major party dominance. In 1955, for instance, the Labor Party split and the Democratic Labor Party (DLP) was created. During the 1980s and 1990s, the Australian Democrats party emerged, declaring it intended to “keep the bastards honest”. And in 1998, Pauline Hanson’s One Nation burst on the scene.
Neither the DLP nor the Democrats ever succeeded in winning a seat in the House of Representatives. One Nation also failed to win a lower house seat in the national parliament, although it did win seats in the Queensland parliament in 1998.
Here was prima facie evidence of the capacity of new parties to upset major party dominance over election outcomes. But this was to be overshadowed by another recurring theme – new parties quickly imploding due to weak organisation.
Within months, all the Queensland One Nation MPs left the party to form a new body (the City Country Alliance). At the next election, they all lost their seats.
Since then, other minor parties have similarly secured stunning lower house victories, only to be overwhelmed by internal instability.
Clive Palmer and his Palmer United Party secured a House of Representatives seat in 2013, after which the party fragmented.
In 2016, the Nick Xenophon Team’s (NXT) Rebekha Sharkie won the House of Representatives seat of Mayo. Fifteen months later, Xenophon resigned from the Senate to create yet another party (SA-Best) to participate in the recent South Australian state election. SA-Best appears to have failed in its bid to win a seat in the SA Legislative Assembly, and the rump of the NXT left behind in the Senate now has no leader and apparently no organisation.
Arguably the non-major party with the greatest impact in the party system is the Australian Greens. The party has secured House of Representatives seats on four occasions (a byelection win in Cunningham in 2002, and the seat of Melbourne in general elections in 2010, 2013 and 2016). This was matched by a significant increase in the number of seats held in the Senate, and by lower house success in state elections in Victoria, New South Wales, Queensland and Tasmania (albeit under a proportional electoral system).
It is stating the obvious to note that these minor party successes are the result of swings in voting behaviour at the expense of the major political parties. The total national primary vote cast for the main parties has been in decline.
But this in itself is no guarantee of inevitable change in the representational share between the major and minor parties, especially in single-member district electoral systems.
The shift of voter support away from the major parties has been variable and spread over a large number of alternative minor parties. In the 2013 and 2016 federal elections, more than 50 organisations registered as parties with the Australian Electoral Commission. Few of these parties polled over 1% of the vote. Only a handful polled over the 4% threshold to qualify for public funding.
Once again, only the Greens – and, in the 2016 election, the NXT – have been capable of amassing a sufficient primary vote in a particular seat to have a chance of winning lower house representation.
But as the Batman byelection reminds us, even a primary vote approaching 40% does not guarantee victory. Bland references to declining support for the major parties tend to obscure just how difficult it is for minor parties to win lower house seats, especially if their electoral support is evenly spread over a wide range of districts.
By the same token, the increasing proportion of the Australian electorate casting a primary vote for a party other than Labor, Liberal or National is a significant development, and appears to be a recurring theme in recent elections.
It is also having a representational impact, but not in lower houses that use single-member electoral districts (that is, all Australian parliaments except Tasmania and the Australian Capital Territory).
Rather, the real locus of minor party impact is to be found in those parliamentary chambers elected under a proportional system. The SA-Best result in South Australia is an example of this: while his party failed to win a lower house seat, Xenophon’s latest venture did secure two seats in the proportionally elected Legislative Council.
The Greens might have suffered an adverse swing in the last state election in Tasmania, but still hold two seats in the House of Assembly.
Meanwhile, the minor parties have a significant impact on national policy debate by holding the balance of power in the Senate. This has been the reality in the Senate for some time.
The recent elections in Tasmania, South Australia and the byelection in Batman have left an impression that the advance of the minor parties has stalled, maybe permanently. This is not necessarily the case.
If the demographic patterns to the voting alignments in Batman are repeated at the Victorian state election on November 24, the Greens could win at least four lower house seats. Meanwhile, the current rate at which electors are voting for minor parties can still have significant representational consequences for proportionally elected chambers such as the Senate.
The sense of minor party failure associated with these recent election contests has been due in part to the tendency to make hyperbolic claims about their prospects in the first place.
The flipside of this is to guard against hyperbolically pessimistic conclusions on the basis of recent electoral events. Tasmania, South Australia and Batman were not good elections for SA-Best or the Greens (or, indeed, Rise Up Australia, the Jacqui Lambie Network or the Australian Conservatives), but that may have been due to the peculiarities of the particular elections.
There is a significant non-major party vote in the Australian system. The place to observe its impact is in the contest and representational outcomes for Australia’s proportionally elected upper houses, including the Senate.
The ABC’s chief economics correspondent, Emma Alberici, did her job the other day. She wrote a well-researched analysis piece investigating whether the Turnbull government’s proposed company tax cuts would grow the economy and break Australia’s wages deadlock.
Alberici’s article came in for a lot of criticism from the Turnbull government for its one-sidedness and lack of balance. Later, the ABC took down the article from its website.
If you read her piece, you’ll see that, yes, she could have included more voices, and yes, the case for company tax cuts was forcefully argued against. But the argument and analysis was built on sound research, as Saul Eslake (one of Australia’s most senior and respected independent economists, who was quoted in Alberici’s story) has pointed out.
So, why on earth did ABC take the article down?
Part of the answer to this lies in the very editorial policies that are supposed to safeguard the ABC’s independence. The current wording of these polices function as a straitjacket on ABC journalists and make it hard for them to toe the line between analysis and opinion.
And that in turn makes the ABC look less independent.
High level of trust
One of the ABC’s greatest assets is the high public trust it enjoys compared to many of its commercial media competitors.
That trust is to a large extent built on the broadcaster maintaining and defending its independence from commercial, political and any other societal interests.
There are a lot of misconceptions regarding what a public broadcaster is. But one thing it is not is a government or state broadcaster.
There are certainly examples of some public broadcasters that are. One prominent recent case was when the Polish government in practice took control of the country’s public broadcaster and turned it into a government mouthpiece.
A serious case of self-doubt
The ABC Act and the ABC Charter are the safeguards of ABC’s independence from the government of the day. This independence was challenged to unprecedented levels by the Abbott government a few years ago.
A new major challenge to the ABC’s independence is the current change, driven by One Nation, to the ABC Charter requiring it to be “fair” and “balanced” in its reporting. If you recognise these terms, that’s because it used to be Fox News’ catchphrase.
The ABC is not turning into the Polish Broadcasting Corporation, but it has clearly lost a lot of confidence lately. In Alberici’s case, it appears it bowed to government pressure when it should have stood its ground.
But getting heat from the government of the day (regardless of the particular side of politics) is an indication that a public broadcaster is doing its most important job (provided you get your facts right): holding power to account. If you bow to political pressure, you’re not doing your job.
A public broadcaster with a confidence problem is a serious issue for political and democratic wellbeing.
Globally, there are between ten and 15 properly funded public broadcasters (depending on what level of funding you define as proper) with enough funding and safeguards to be able to call themselves editorially independent. This means there are only ten to 15 large repositories of in-depth public interest journalism – globally.
So, the case is strong for the Australian public to get behind the ABC and ask it to snap out of its crisis of confidence. Then it can get on with the job of keeping power to account – just like Alberici tried to do.
There is another 20-35% of party incomes that falls into a grey area, where accounting enables them to conceal the source of the money. Then there is another 50-70% of party incomes the public knows absolutely nothing about.
Political parties in Australia at the federal level only have to disclose payments of more than A$13,200. They are requested – but not required – to distinguish between “donations” and “other receipts”.
There are no caps on how much people can give, or who can give. And the disclosures are only released annually, in February each year, with no more than a name and address attached.
This might not sound too bad. But it is actually a system full of holes that can be exploited to hide where parties’ incomes are really coming from.
The first problem is what parties declare to be “donations” and what they declare to be “other receipts”. In many cases, parties claim more than half of the payments they receive over the threshold are “other receipts”, even though the payments come as round numbers from those you would expect to be lobbying government.
One journalistic analysis found 80 cases where the donor had declared a payment as a donation, only to have the party claim it as an “other receipt”. An academic study concluded that most “other receipts” should be treated as donations for analytical purposes. However, there are some legitimate “other receipts”, such as union fees, share dividends, and proceeds from property sales.
There are also some crafty schemes parties use to make donations technically qualify as “other receipts”. They hold fundraising dinners, charging people large sums to attend, then report the payments as a fee for a service rather than a donation.
The second problem is parties using fundraising bodies to effectively “launder” the donations they receive. Donors give money to a fundraising body that then gives it to the party. This makes it difficult to work out where the money originally came from.
The very high disclosure thresholds also enable parties to engage in “donation splitting” – when a large payment is split into smaller amounts and paid to different party branches so each payment comes in under the reporting thresholds. Parties don’t even need to aggregate payments made on different days.
Donors are technically supposed to declare their payments if the combined value of their donations is over the threshold. However, they don’t have to disclose payments to fundraising bodies. And if a donor doesn’t disclose, there’s no way to know if anything is missing. The disclosure laws are notoriously weakly enforced.
Finally, a year’s worth of donations data is released in one huge data dump on one day. Thousands of lines of data are released. The data cannot be meaningfully sorted, or tallies that mean anything easily calculated.
Who is funding our political process?
In today’s resource-starved media environment, journalists are reduced to identifying the biggest payment that hasn’t been split or concealed, and attempting to make hay of those unsophisticated enough to have allowed themselves to stand out.
The story fades after a day or two, and the real secrets of who is funding our political process remains buried.
Perhaps the most insidious aspect of the disclosure process is that the payments are only revealed months after they were made.
While small businesses have to pay tax quarterly, and the Australian Tax Office has apps that enable us to collect our receipts in real time, politicians only have to release their accounts annually. This means we only get to see the money that changed hands between stakeholders in the midst of major policy battles months after the issue has disappeared from the headlines.
The annual February festival of lampooning the largest visible donor lulls Australians into a false sense of security that there is a functioning political donations disclosure regime in place. Few realise how ineffective our political donations disclosure regime is, and how badly it is in need of reform.
Writing for Foreign Policy, Robert Malley, the newly appointed head of the International Crisis Group, makes a good point when discussing global challenges in 2018:
It is not all about Donald Trump.
To be sure, an erratic American presidency contributes to unsteadiness around the globe. American global leadership is now contested as never before since the Allies triumphed in the second world war.
Even in the depths of a Cold War marked by various crises – including the Berlin Blockade, an ill-starred military adventure in Vietnam, and the Cuban Missile Crisis – American leadership would still assert itself.
Let’s not forget American post-second-world-war diplomacy spawned international institutions like the World Bank and International Monetary Fund, the General Agreement on Tariffs and Trade, the United Nations and NATO. In Australia’s case, it also gave birth to the ANZUS Treaty, initialled in 1951.
There was hardly any component of post-war global architecture that did not involve Washington in a leading role.
ANZUS, and with it the American alliance, remains the cornerstone of Australia’s security arrangements – notwithstanding a frequent misinterpretation of the treaty as a security guarantee as opposed to an agreement to consult in the event of either party’s security being threatened.
In essence, America is godfather of post-war multilateralism. An American-led consensus on how best to manage its global responsibilities is now in danger of unravelling, buffeted by domestic “America First” disagreements at home and a contested security environment abroad.
Australia’s place in the world
From an Australian perspective, it is all about a shifting power balance in the Indo-Pacific.
This might be described as the pre-eminent challenge in the year(s) ahead, as Australia navigates between the idiosyncracies of a Trump White House and its successors. Then there is the relentless Chinese push to spread its power and influence.
Above all in the foreign policy sphere, Australian policymakers are faced with the task of expanding Canberra’s foreign and security policy room for manoeuvre between its security guarantor and principal trading partner, without endangering the alliance relationship itself.
This will require a sophistication that has not always been apparent among policymakers. Their instinct has been to cling to the alliance like a life raft and, on occasions, discreditably, use it as a wedge issue against political opponents.
China’s rise is encouraging a more realistic view of Australia’s geopolitical circumstances, and none too soon.
The following extracts from Australia’s Foreign Policy White Paper, released in November, provide a flavour of that greater realism:
Navigating the decade ahead will be hard because as China’s power grows our region is changing in ways without precedent in Australia’s modern history.
Powerful drivers are converging in a way that is reshaping the international order and challenging Australia’s interests. The United States has been the dominant power in our region throughout Australia’s post-second-world-war history. Today, China is challenging America’s position.
The government recognises there is great debate and uncertainty in the United States about the costs and benefits of its leadership of the international system.
In the decades ahead we expect further contestation [between the US and China] over ideas and influence, directly affecting Australia. It is imperative that Australia prepare for the long term.
All of this exposes Australia’s biggest challenge in the next several decades. Simply put, this is to build its own self-reliance, including smart investments in defence capabilities, along with nurturing security relationships in its own region.
Most desirable in all of this would be to involve – not exclude – China in building a regional security architecture. This could possibly be along the lines of the Helsinki Accords, which helped stabilise Europe during a long stand-off with the former Soviet Union.
Australian officials might want to expand a quadrilateral Indo-Pacific security partnership – involving the US, Japan, Australia and India – envisaged as a hedge against China to others, including China itself.
This is the big global challenge for Australia in 2018 and beyond. Now to what might be described as “localised” challenges.
We’ll restrict that number to five, including:
North Korea’s nuclear ambitions;
the Middle East more generally, and potential conflict with Iran in particular;
the Rohingya crisis and pressures that is exerting on Myanmar and surrounding countries. Alongside this is the “identity politics” across Asia, in which minorities (like the Rohingya) are threatened;
Afghanistan, in which Australian forces are still involved in a training capacity; and
threats of cyber-terrorism: what Ian Bremmer and Cliff Kupchan of the Eurasia Group describe as a “global tech cold war”.
Top of this list is North Korea, where the risk of overreach and accident with terrible consequences is real. As Malley puts it in his Foreign Policy paper:
Without a viable diplomatic offramp, Washington risks cornering itself into military action. Even a precisely targeted attack would likely provoke a North Korean response.
From Australia’s perspective, and given that the bulk of its trade goes to the countries of North Asia (China, Japan and South Korea), conflict on the Korean Peninsula would be crippling.
Second on my list, as it is on Malley’s, involves the risks of open conflict between Iran and Saudi Arabia, egged on by the US and Israel. Such disruption could not be contained. It would spread, risking oil shipments from the region and wider conflict between Sunni and Shia.
As Malley puts it:
With so many flashpoints, and so little diplomacy, the risk of an escalatory cycle is great.
From an Australian perspective, an escalation would be alarming, given the deployment of our forces in a training capacity in Iraq.
Third is Afghanistan, where the tempo of US-led strikes against the Taliban is set to increase, along with pressure on Pakistan to desist in its covert support for the insurgency.
US allies in Afghanistan should push for a greater diplomatic political component to the US strategy. As it stands, that strategy sets the stage for more violence while closing avenues for de-escalation.
With troops in the field in a training capacity, the Australian government should be pushing for a regional settlement, involving Afghanistan’s neighbours and the insurgents.
Fourth on my list is the issue of identity policy in southern Asia, including the displacement of the Rohingya to neighbouring Bangladesh.
As Bremmer and Kupchan put it:
Identity politics in southern Asia comes in several forms: Islamism, anti-China and anti-other minority sentiment, and intensifying nationalism in India.
From Australia’s perspective, displacement and persecution of minorities in its neighbourhood is a particularly worrying development, along with Islamic State-inspired eruptions in countries like the Philippines.
Finally, looms the issue of cyber conflict.
The biggest fight over economic power centres on the development of new information technologies. Competition for dominance in the areas of artificial intelligence and super-computing between the US and China has serious implications for Australia’s national security.
The cyber issue, which potentially includes the weaponisation of AI, is becoming the new contested space.
And that’s not all …
Now, to a less concerning issue, for the moment: the global economy.
In its latest overview, the World Bank expects global growth to edge up to 3.1% “after a much stronger-than-expected 2017, as the recovery in investment, manufacturing and trade continues, and as commodity-exporting developing economies benefit from firming commodity prices”.
As one of the world’s biggest commodity exporters, this is good news for Australia. The World Bank says:
2018 is on track to be the first year since the financial crisis that the global economy will be operating at or near full capacity.
However, it also warns of a slowdown in potential growth as stimulatory fiscal and monetary policies run their course.
Despite Sam Dastyari resigning this week over ongoing allegations of promoting Chinese interests, and regular denunciations of Chinese interference in Australian politics, little has been said about what China makes of it all.
On Monday, we received the definitive answer: an authoritative condemnation of Australia, signed off at the highest levels.
A brief timeline of Chinese responses shows how the matter escalated.
Last week, the Chinese Embassy in Australia issued an unusually heated statement criticising Australian media and politicians. Some politicians, it said, had made:
… irresponsible comments that hurt mutual trust, and that we fully reject.
The embassy in Canberra clearly reported their displeasure to the foreign ministry in Beijing. Foreign ministry spokesmen at the Beijing press conferences in the following days made similar statements.
The following day, Turnbull said “the Australian people stand up” to China, a phrase he said was inspired by Mao’s 1949 declaration that the Chinese people had stood up.
The matter then escalated. Following the comments being reported, and a meeting in Beijing (almost certainly the next day) to determine the official line, China launched a full rhetorical assault on December 11.
China’s official government spokesperson made a public statement that China:
… offer(s) Australia a word of advice: some of these people should stop saying things that hurt Australia’s image and Australia-China mutual trust.
Turnbull’s statement that Australian people “stand up” was the third-leading item on the national news put out by China’s state television broadcaster. Most significantly of all, the People’s Daily, China’s official newspaper of record, had a special signed editorial attacking Australia’s government and media.
Of these events, it is the People’s Daily editorial that is the most authoritative.
The People’s Daily is the official newspaper of the Communist Party that runs China. It has a number of different classes of editorial. This one is known as a “signed editorial”: it represents the “voice of China”. It must be signed off on by a member of China’s highest leadership committee, and drafted by a special group within the People’s Daily. It is the third-highest ranking editorial that can be released. The two highest-ranking editorials are only released for special occasions, roughly monthly.
Why is this editorial so important? Because it immediately signals to the entire Chinese political system, including roughly 90 million party members and 40 million public servants, that their top leaders are angry at Australia.
Based on the television broadcast and the official editorial, the issues appear to be with Australian media, the public discourse on China, and with the prime minister’s phrase that “the Australian people stand up” (which was described as “laughable”).
Next, the many ministries, departments, bureaux, businesses and Communist Party bodies of the massive Chinese state must determine how seriously they take this official displeasure. Chinese leaders rarely release specific orders with targets. Rather, they release exhortations and vague statements for which they then expect the lower level actors to provide specific solutions. So subordinate departments are to prepare and submit a response that is in line with the editorial so that the leaders may look favourably on them.
None of these measures threatens the Australian state, nor our economy. China will not launch a trade war over this. But we need to be clear: “breaching mutual trust”, as the Chinese government describes it, can be lived with as long as the benefits to Australia outweigh the costs. Based on the current official Chinese media, costs are highly probable.
The last time that Australia received an official editorial condemning its actions was in 2009, when it refused official requests by China not to issue a visa to a dissident filmmaker (at the same time as the arrest of Australian citizen and Rio Tinto employee Stern Hu in China). A pointed editorial, albeit one of lower rank than the one issued on Monday, warned about “Australia’s Choice”.
Australia’s prime minister at that time was expert sinologist Kevin Rudd, who refused to intervene personally in the situation. Rudd was not personally criticised in the editorial. And China eventually sent the head of its government over to make an unusual joint public statement. As this statement would also have needed to be signed off at the highest levels, it sent a new signal to the Chinese system that Australia was out of the dog house.
So until a new line or editorial comes out of Beijing, Australian business and government representatives in China can probably expect some rather heavy-going.
Recent events are likely to be raised in many meetings. It very likely will also retard the progress of the next stage of the Australia-China free trade agreement. Finally, there is likely to be a reduction in the number of Chinese students allowed to study in Australia – the editorial argued that these students had been “significantly wounded”.
There are some other factors that may reduce costs. This is the best time to incur the wrath of the Chinese government. Due to the delay between choosing new national Party leaders and then assigning them to their various government ministries (which occurs in March), government agencies tend to be less reactive to official media signals than usual.
The government has announced a suite of reforms targeting foreign interference and espionage in Australia’s political process. This will include a bill imposing a ban on political donations from foreign bank accounts, non-citizens and foreign entities.
The ban will apply broadly – not just to political parties and parliamentary candidates, but also to trade unions and advocacy groups such as GetUp!.
These proposed reforms follow revelations that Labor senator Sam Dastyari had warned Chinese Communist Party-linked donor Huang Xiangmo that his phone might be tapped by intelligence agencies. Both the Labor and Liberal parties have benefited from donations by Huang to the tune of almost A$3 million since 2012.
But it’s not just foreign donations that can skew the system. If the government is serious about restoring faith in our politics and politicians, there’s much more to be done.
The rationale for banning foreign donations is to stop the threat of foreign interests undermining Australian democracy. The concern is that foreign people or entities could exercise an unduly large influence on our politicians through generous donations.
Internationally, Australia is among the one-third of countries that allow foreign political donations. This is in contrast to comparable liberal democracies that ban foreign donations, such as the UK, US and Canada. New Zealand caps them at NZ$1,500.
Banning foreign donations will certainly reduce the ability of foreign people and entities to influence Australian policy and decision-making. In turn, this will reduce both actual corruption and the perception of corruption in politics. Ultimately, this may improve public confidence in the Australian political system.
But is this ban too broad?
The proposed reforms follow the recommendations of a Senate committee majority that foreign citizens and entities be banned from making donations to political parties, associated entities (such as trade unions and dedicated fundraising bodies), and third parties (such as GetUp! and other campaign groups).
Labor and the Greens supported a ban on foreign political donations to political parties and their associated entities, but rejected extending it to third parties. They argued that banning foreign donations to third parties would restrict the capacity of NGOs to draw attention to their causes, and endanger robust public discourse by civil society.
There may be constitutional issues with such a broad ban on foreign political donations. For instance, banning donations to advocacy groups may be found to stifle the implied freedom of political communication protected by the Australian Constitution.
Advocacy groups are one step removed from being able to directly change government policies and decision-making. It may be disproportionate to ban these groups from raising funds to robustly debate controversial policies.
And will this fix the system?
If ruled constitutional, a ban will certainly reduce the impact of overseas interests on domestic policy.
But the proposed ban is both too broad and too narrow. It is too broad because it may stifle legitimate public debate by targeting activist groups. It is too narrow because it does not capture all donations that might corrupt our political system.
Foreign donations are but one element of influence in our political system. The rhetoric on donations to date has focused on the fear of foreigners – the Chinese, in this case – exercising undue influence on Australian politics.
Yet, in 2015-16, foreign donations were a paltry 2.6% of total donations to political parties. In the last seven election periods from 1998-99 to 2016, foreign donations have amounted to between 0.03% and 6.13% of all donations.
Donations from rich Australians, unions or corporations can also influence our politicians to behave in corrupt ways. There have been concerns over donations by big business influencing mining, alcohol or gambling policy. Large donations have been followed by government decision-making that benefited these industries.
Caps on political donations of, say, A$1,000 that apply to all individuals, unions and corporations would better level the playing field. New South Wales already has caps on political donations of A$5,800 per party and A$2,500 for candidates. The state also bans donations from property developers and those in the tobacco, liquor and gambling industries.
Victoria has announced that it will implement a cap on donations by individuals, unions and corporations of $4,000 over a four-year parliamentary term.
Victorian Premier Daniel Andrews has announced a suite of reforms to the state’s political donations system. It includes:
a cap on donations by individuals, unions and corporations of A$4,000 over a four-year parliamentary term;
public disclosure of donations above $1,000;
a ban on foreign donations; and
real-time disclosure of donations.
Harsh penalties will be imposed on those who breach the rules, with fines of up to $44,000 and two years in jail.
These proposals follow several dubious events, including Liberal Party fundraiser Barrie Macmillan allegedly seeking to funnel donations from a mafia boss to the party after Opposition Leader Matthew Guy enjoyed a lobster dinner with the mafia leader.
… help put an end to individuals and corporations attempting to buy influence in Victorian politics.
Are these reforms good?
The proposed reforms will significantly improve Victoria’s donations system.
The caps on donations will level the playing field and reduce the risk of corruption in the state’s political system. It will prevent rich donors from exerting greater influence over politicians than those who lack the means to do so. Parties will no longer be able to rely on these wealthy donors to fund their election campaigns.
The caps equally target individuals, unions and corporations, meaning that money cannot be channelled through shady corporate structures to evade the rules. However, donations can still be channelled through the federal level, where there are no caps.
Real-time disclosures, which have already been introduced in Queensland, will improve the timeliness of disclosures. Combined with the lower disclosure threshold of $1,000, these are commendable steps towards enhancing transparency.
Election campaigns are currently funded by a mix of public funding and private donations. As there will be caps on private donations, public funding of Victorian elections from taxpayers’ pockets will need to increase.
There will be debate as to the level of public funding that should be given. Public funding should adequately compensate parties, but not be overly generous or allow them to rort the system.
Detractors may argue that, in the age of social media, there may be cheaper ways for political parties to get their messages across, so less public funding would be needed.
It is tricky to work out how to allocate public funding between established political parties, minor parties and new parties. There is also a question of whether public funding should cover activities such as policy development and party administration.
But public funding is already part of Australia’s system. In the 2016 federal election, $62.8 million of public funding was provided, which is about half of federal campaign costs.
Victoria’s move toward more public funding is not unprecedented. New South Wales already has caps on political donations of $5,800 per party and $2,500 for candidates, as well as a ban on donations from property developers and those in the tobacco, liquor and gambling industries. This was accompanied by an increase in public funding of elections, amounting to about 80% of campaign costs.
In Europe and Canada, there are high levels of public funding: between 50% and 90% of costs.
Another worry is that enterprising people and businesses might still circumvent the rules through creative means.
In the US, super PACs (political action committees) are special interest groups involved in fundraising and campaigning that are not officially affiliated with political parties. These groups can raise unlimited sums of money from corporations, unions, associations and individuals, and then spend this money to overtly advocate for or against political candidates.
If this possibility is not regulated in Australian jurisdictions, then our system will remain broken.
How can we improve our national system?
Australia’s political donations system remains fragmented. Ideally, we would have a uniform system with tough rules at both the federal and state levels, so that donors cannot easily evade the rules by channelling their money through more lax jurisdictions.
Labor senator Sam Dastyari has called for a full ban on all political donations from individuals and corporations. Dastyari is no stranger to this issue: he was forced to resign from the shadow frontbench in 2016 following revelations that a Chinese company paid his travel expenses.
Opposition Leader Bill Shorten has said he is not in favour of Dastyari’s position:
When it comes to donations, I don’t think the taxpayer is ready to foot the bill for all political expenses in Australia, so I still think there is a role for donations.
Both Labor and and the Liberal Party are in favour of banning foreign political donations, but not all donations generally.
The key issue with political donations is whether large donations secure greater access to politicians than ordinary people have.
Another issue is whether large donations sway politicians to bestow illegitimate favours or adopt policies that directly benefit donors.
Dastyari was the Labor Party’s chief fundraiser in New South Wales from 2010 to 2013. He explained that some donors give money for philanthropic reasons or to support an ideological cause, while those in ethnic communities may donate as a sign of prestige. But he also explained:
Frankly, some people do it because of that very, very murky world of access. And they want access for outcomes.
The suggestion is that it’s possible to “buy” political access and influence through political donations.
The managing director of Transfield Holdings, Luca Belgiorno-Nettis, has likened political donations to the Latin saying do ut des: “you give in order to have given back”.
Where will the money come from?
Campaigning for election is expensive. To promote their cause, political parties tend to spend big bucks on high-impact slots on TV and radio, travel extensively, and perhaps hire fancy political consultants.
Membership of Australia’s political parties has declined over the years, so they’re now less able to raise money from membership fees. Parties do receive some public funding, but not enough to pay for an expensive election campaign. This has led to the parties being very reliant on political donations.
If we ban all donations from individuals and corporations, funding for political campaigns must come from elsewhere. Public funding of elections would need to increase, meaning taxpayers would bear a bigger burden in funding elections.
The current level of federal public funding is about half of what an election campaign costs. In some parts of Europe and in Canada, the level of public funding of elections is higher, amounting to between 50% and 90% of costs.
There are challenges in calculating how much public funding should be allocated to parties, including the entitlement of new or micro-parties.
Any regulation of political donations needs to be consistent with the Constitution. Australia has a constitutionally protected freedom to communicate on political matters.
A ban on donations limits political communication by restricting the source of funds available to political parties and candidates to meet the costs of political communication.
The High Court has ruled that any limitations on the freedom of political communication must be proportionate and have a legitimate purpose. Banning donations would seem to have a legitimate purpose: to reduce undue influence on Australian politics and public policy. But it is difficult to predict how the court would rule on proportionality.
The High Court has not previously ruled on a complete ban on political donations, but it has held that caps on donations are constitutional.
Is this a good idea?
Dastyari’s proposal would definitely even up the playing field. It would eliminate the perception and reality that rich donors are able to “buy” access or influence in politics.
Besides fully banning donations, another option is to have a low cap on donations of, say, A$1,000. For example, NSW has a yearly cap of $5,800 per party and $2,500 for candidates. This would also level the playing field and reduce the influence of rich donors.
Dastyari is right: it is time to take action on the murky world of political donations. Let’s hope the government will heed the call for change.