Time for the federal government to catch up on political donations reform


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The states have pulled far ahead of the Commonwealth on improving transparency around political donations.
AAP/Mick Tsikas

Carmela Chivers, Grattan Institute; Danielle Wood, Grattan Institute, and Kate Griffiths, Grattan Institute

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.




Read more:
The truth about political donations: there is so much we don’t know


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.




Read more:
Ban on foreign political donations is both too broad and too narrow, and won’t fix our system


Let the sun shine in

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 ConversationThe states’ political donations laws aren’t perfect, but they are heading in the right direction. It’s time for Canberra to catch up.

Carmela Chivers, Associate, Grattan Institute; Danielle Wood, Program Director, Budget Policy and Institutions, Grattan Institute, and Kate Griffiths, Senior Associate, Grattan Institute

This article was originally published on The Conversation. Read the original article.

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Rising reliance on personal income tax signals need for bolder reforms


Phil Lewis, University of Canberra

The Parliamentary Budget Office (PBO) has just released a report on trends in Commonwealth taxation receipts. While supporting the expectations of a budget in balance by 2019-20, it exposes worrying trends in the balance of the burden of taxes in Australia. In particular, its analysis of trends in the composition of tax revenue identifies an increasing reliance on personal income tax.

The PBO shows that tax revenue from labour (mostly income tax) was 8.6% of GDP in 1971-72. By 2015/16, this had risen to 12.6% of GDP. Over the same period, tax collections from capital (mostly company tax) as a percentage of GDP was virtually unchanged, from 3.3% to 3.2% – although this increased noticeably during the “economic boom”, which ended when the Global Financial Crisis (GFC) hit in 2007.

Taxes on consumption (such a GST and excise duties) were 5.3% of GDP in 1971-72 and 5.7% of GDP in 2015-16. While the introduction of the GST in July 2001 raised consumption taxes temporarily, revenue from both GST and particularly excise taxes has been in decline as a percent of GDP since.

Figure 2 from the report shows these trends over the decades.

Trends in revenue from categories of Commonwealth taxes.
Source: ATO data and PBO analysis

The main emphasis of the PBO report is on the period since 2001-02. The chart below shows the increased reliance on income tax and declining importance of taxes on consumption and capital.

What is driving these shifts?

The main reason for the rise in income tax revenue is “bracket creep” as incomes increase and taxpayers move into higher marginal tax brackets. This is due to successive governments not fully indexing tax brackets to increases in CPI or average earnings.

Meanwhile, consumers have been changing their tastes and responding to prices by altering their consumption patterns. The so-called “sin taxes”, or rates of excise duties on alcohol and tobacco, have increased significantly over time.

This has been particularly true for tobacco where the volume of consumption has fallen as fewer people smoke and those who do smoke less. However, the percentage fall in consumption has been less than the percentage rise in tax, so tobacco tax revenue has risen.

For alcohol, consumers have been switching from more highly taxed beer to wine, which is more lightly taxed. For instance, a full-strength beer from your bottle shop carries a tax of $37.10 per litre of alcohol. A moderately priced bottle of wine bears a tax less than half that ($17.60 per litre).

What might be considered a distortion in the taxing of alcohol means that changes in tastes towards drinking wine reduce tax revenue. The system of taxing alcohol is distorting in that encourages changing consumption habits away from beer drinking to wine.

Fuel excise is levied on a number of fuels but revenue comes mainly from petrol sales. The indexing of fuel excise rates was abolished in 2001 before being reintroduced in 2014. This reduction in the real excise rates was accompanied by significant reduction in the volume of fuel per household, from 11.4 L/km in 2001 to 10.6 L/km in 2016, as vehicles became more fuel-efficient.

The combination of reduced real excise rates and reduced consumption have reduced fuel excise revenue as a percentage of GDP.

The GST, one of the principal aims of which was to provide a broadly based growth tax, is declining in relative importance. This is mainly due to the exemptions from the GST base. For instance, spending on education and health, which are exempt from GST, is growing faster than spending on other goods and services. There is also some loss in revenue due to online purchases from overseas, which the government is trying to address.

As the share of consumers’ spending continues to switch from GST-liable to GST-exempt items the share of GST revenue will continue to fall.

Company taxes have diminished in importance in Australia and elsewhere because of the way multinational companies can arrange their tax liabilities across national borders to minimise tax. However, there is also worldwide recognition of the need to reduce company tax rates because of the detrimental effects these have on investment and growth.

The need to cut ‘deadweight loss’

When discussing taxes economist often refer to “deadweight loss”, which is the loss to the economy over and above the amount recouped in tax revenue. When revenue is taken from individuals or companies this results in less of a service or good being produced.

It is argued that governments should put more reliance on taxes that cause less distortion – less deadweight loss. That is, they should have as little effect on individuals’ and firms’ behaviour as possible.

A broad-based GST is efficient because all goods and services bear the same tax rate and therefore will not change relative consumption. It is exemptions that bring about inefficiency by encouraging consumption of untaxed items and discouraging consumption of taxed items. Taxing wine more lightly than beer encourages wine consumption at the expense of beer.

The Australian Treasury has named company tax and income tax as having the “biggest deadweight loss” of all the Commonwealth taxes. International research backs this up. The deadweight loss falls on consumers and shareholders but mostly on workers and wages through lower investment.

The Treasury estimates the deadweight loss of company tax could be more than half the revenue raised from taxation. For income taxes, the deadweight loss is estimated to be 21 cents for every dollar of revenue. This comes about from reduced incentives to work, save or invest.

The ConversationThe PBO report suggests that with continuing trends in taxation revenue the budget’s reliance on personal income tax will increase if current levels of Commonwealth taxation are maintained as a percentage of GDP. While proposals to reduce company tax rates will reduce inefficiency of taxes somewhat, a heavy and increasing reliance on personal income tax points to the need for substantial tax reform. But that’s something neither major party seems prepared to do.

Phil Lewis, Professor of Economics, University of Canberra

This article was originally published on The Conversation. Read the original article.

Victorian ReachTEL poll: 51-49 to Labor, and time running out for upper house reform



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Victorian Premier Daniel Andrews’ Labor party leads in the latest polling ahead of the November 24 state election.
AAP/Alex Murray

Adrian Beaumont, University of Melbourne

A Victorian ReachTEL poll for The Age, conducted July 5 from a sample of 1,500, gave Labor a 51-49 lead. Primary votes were 39.4% Coalition, 35.4% Labor, 10.5% Greens, 3.6% One Nation, 2.8% Shooters and 3.5% undecided. The Victorian election will be held on November 24.

According to The Poll Bludger, if undecided voters were excluded, primary votes would be 40.8% Coalition, 36.7% Labor, 10.9% Greens and 3.7% One Nation. ReachTEL uses respondent allocation for its two party results, and this result is about the same as we would get using 2014 preference flows.

Premier Daniel Andrews led Opposition Leader Matthew Guy by a narrow 50.6-49.4 margin as better Premier. ReachTEL’s forced choice better Premier/PM question tends to be more favourable to opposition leaders than polls that do not use a forced choice.

In other forced-choice questions, Guy edged Andrews by 50.1-49.9 on who voters thought was more trustworthy. The Coalition had a 50.8-49.2 lead over Labor on party best to handle Melbourne’s congestion, a 51.6-48.4 lead on managing Melbourne’s growing population, and a 55.8-44.2 lead on law and order. Labor was just ahead by 50.2-49.8 on cost-of-living.

The responses to these issue questions are not good for Labor, but this poll did not ask about health, the economy and education, which are likely to be significant issues in voting decisions.

This ReachTEL is the first Victorian poll since a mid-April Newspoll, which also had Labor ahead by 51-49. If there is no early federal election, the Coalition will still be in power federally by the time of the state election. State parties tend to do better when the opposite party is in power federally. As Labor has a poll lead, and this is its first term, Labor will probably win the state election.




Read more:
Poll wrap: Labor’s Newspoll lead narrows federally and in Victoria


Time running out to abolish group ticket voting in Victorian upper house

All 40 upper house seats will be up for election at the state election. There are eight upper house regions that each return five members, so a quota is one-sixth of the vote, or 16.7%.

In early 2016, group voting tickets were abolished for the federal Senate, and in late 2017, they were abolished for the South Australian upper house. However, these tickets are still current electoral law in Victorian and Western Australian upper house elections.

Under group ticket voting, above-the-line voters cannot direct their own preferences. Instead, the party that receives a “1” vote controls that voter’s preferences. Votes can go to parties that are very different from the party that received the “1” vote.

The biggest problem with the group voting tickets is that the near 100% preference flows allow parties with negligible support to pass other parties, and then benefit from those parties’ preferences. At the 2014 state election, Vote 1 Local Jobs won the final seat in Western Victoria region on just 1.3% of the vote, or 0.08 quotas, a seat that should have gone to the Greens.




Read more:
Proposed Senate electoral reform is essential


To direct their own preferences, votes must be cast below-the-line. It is easier to vote below-the-line in Victoria than in other jurisdictions, as only five numbered boxes are required for a formal vote.

New South Wales and South Australia now use optional above-the-line preferential voting. Voters are required to number “1”, and can continue with “2”, “3”, and so on if they wish. Votes will exhaust when there are no further preferences to allocate.

In the federal Senate, voters are told that six numbers are required above the line, but only one is needed for a formal vote. The reformed Senate voting system performed well at the July 2016 double dissolution election.




Read more:
Further Senate results and analysis


The ConversationThere is no news regarding suggestions for electoral reform. I would be happy if Victoria adopted either the New South Wales or federal Senate models, but time is running out for electoral reform. Any proposal would need to pass both chambers of the Victorian parliament, likely needing bipartisan support. The final sitting day before the election is September 20.

Adrian Beaumont, Honorary Associate, School of Mathematics and Statistics, University of Melbourne

This article was originally published on The Conversation. Read the original article.

Eight charts on our growing tax problem: what abandoning tax reform means for taxpayers


Rebecca Cassells, Curtin University and Alan Duncan, Curtin University

As we move closer to Treasurer Scott Morrison’s third budget, what we do know is this – Australia has a revenue problem. A more global and digital economy; an ageing population with fewer taxpayers and sluggish wage growth make future predictions of revenue even more precarious. There’s never been a better time for tax reform.

But as governments have tried to reform (and stumbled) over the years the burden has shifted to individual taxpayers and the latest budget is likely to be no different.




Read more:
Government spending explained in 10 charts; from Howard to Turnbull


We looked at revenue data over the last 20 years drawing from budget papers, government finance statistics and the Australian Tax Office. To compare revenue over time, we have adjusted for the effect of inflation by using real measures.

Tax revenues have risen 26% in Australia since the global financial crisis, from A$310.3 billion in 2009 to A$389.8 billion by 2016.

Income tax has contributed most to this growth and some is driven by rising wages and jobs growth. Between 2009-10 and 2016-17, individual income tax revenue grew by 37% – an average of 5% each year.

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But bracket creep also comes into play as personal tax thresholds have not kept pace with inflation, causing average tax rates to rise among middle income earners in particular.

The growth in business tax revenue leading up to the global financial crisis was heroic – averaging 11% each year and well above any budget forecasts. In the ten years to 2007, business tax revenue grew by almost 130% – from A$41.4 billion to almost A$95 billion.

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But what goes up must come down, and business tax fell by 6.3% between 2008 and 2016. However we can see strong growth between the last two periods, with business tax receipts growing by 10.7% from A$72.6 billion to A$80.3 billion.

Revenues from GST and sales taxes have risen, by 16% since 2009.

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The relationship between Australia’s economic output and its tax revenue looks somewhat different. The tax-to-GDP ratio reached nearly 25% prior to the global financial crisis, but dropped to 20.5% in 2010-11. It recovered to around 22% by 2012 and has remained essentially flat since then.

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A history of reform attempts

Successive governments have attempted to create an efficient tax system that’s fair and reliable with few distortions. Prior to the turn of the century the Howard government argued the tax system was out of date, complex and inequitable, heavily reliant on individual and company tax, and prevented Australia competing on a global level.

The Howard government’s new tax system in 2001 was an answer to this. This new tax system seemed to have all the reform solutions needed – income tax cuts for hard working Australians and at long last the introduction of a goods and services tax, along with some pretty big welfare reforms.

Everything appeared to be going quite well with the new tax system – revenue from company tax was way, way above any Treasury official’s forecast.

But fast-forward 10 years and cracks began to show, prompting a new review into the effectiveness of Australia’s tax system. The Henry Review, provided some 138 recommendations for tax reform, yet very few saw the light of day. And just five years later, another review was conducted with then Treasurer Joe Hockey at the helm, which since seems to have been not so much parked as abandoned.

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Income taxes from individuals have always made up the greatest share of tax revenue in Australia. Prior to the introduction of the Howard government’s tax system, income tax from individuals made up 57.3% of the total tax pool – it now accounts for 51.0% of total tax revenue.

The Howard reforms included a reduction in personal income tax rates. During the next ten years Australian businesses shouldered a greater share of the tax burden, with their share rising from 17.9% in 2000-01 to 27.4% in 2007-08 at the peak of the resource boom. This has since fallen to 20.6%.

The contribution of taxes on goods and services has remained fairly steady since moving from sales tax to the GST in 2001. GST revenue is consistently around 16% of all tax revenue.

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The share of tax revenue from customs duties, excises and levies has been falling since 2001, from 14.5% to 9.5%. Other tax revenue has been fairly consistent over time, contributing less than 2% of total tax revenue. However, in 2012-13 this increased to around 4%, with the introduction of the short-lived carbon pricing mechanism.

The problem with predicting future revenue

Taxation revenues were consistently underestimated prior to the global financial crisis, but have fallen below expectations since its end. The tax-to-GDP ratio has been anchored close to 22% since 2012-13. This is despite eight successive federal budgets since May 2010 projecting future tax revenues in excess of 24% of GDP.

And where does the greatest divergence lie between forecast revenues and out turns?

Company tax revenues are consistently – and by some margin – the most difficult to predict. Receipts fell short of forecast estimates of around 5% of GDP, by around one percentage point over four years, since the May 2010 budget.

Estimates of company tax receipts for 2017-18 were revised upwards by A$4.4 billion in the latest MYEFO update in December 2017. Should this eventuate, it will take total company tax revenues for 2017-18 to A$83.8 billion (around 4.6% of GDP).

The government may well feel that this creates space for a company tax cut and personal income tax cuts in the upcoming budget.

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Revenue from individual income tax has been projected to rise to around 12.5% of GDP over the forward estimates, in each budget, since May 2013. Revenue has risen from 9.5% of GDP in 2009 to 11.4% by 2016 before dropping marginally by 0.2 percentage points in the latest Mid-Year Economic and Fiscal Outlook (MYEFO) forecasts.

But wages have not played the leading role that they have been cast in, in every budget going back to May 2011. Since this time wage growth has been forecast at an elusive 3% mark or thereabouts, yet has fallen well short of this each year and currently stand at 2.1%.

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Tax thresholds remained fixed between the 2012 and 2016 budgets, and the only change since has been to lift the 32.5% tax threshold from $80,000 to $87,000, effective 1 July 2016. Tax revenue growth up to now has certainly been driven by the effects of bracket creep.

Unless tax thresholds in the future are increased at least in line with inflation, this means that average taxes will continue to rise.

Plans for a 0.5% increase in the Medicare Levy rate from July 2019 have been shelved, which would have raised around A$8.2 billion over the next four years to support the National Disability Insurance Scheme.

Expectations have been raised for tax cuts to businesses as the government advocates for the “trickle-down” benefits to Australian households.

It’s hard to see how this will lead to anything other than a shift in the tax burden towards individual taxpayers – at least in the short term. This is unless company tax cuts are balanced with substantial, not modest, cuts to personal income taxes as well.

The ConversationIt seems Scott Morrison will be banking ever more on a strengthening economy to support Australia’s taxation revenues into the future.

Rebecca Cassells, Associate Professor, Bankwest Curtin Economics Centre, Curtin University and Alan Duncan, Director, Bankwest Curtin Economics Centre and Bankwest Research Chair in Economic Policy, Curtin University

This article was originally published on The Conversation. Read the original article.

Batman is a strong victory for Shorten, but he still has a selling job on tax move



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Ged Kearney and Bill Shorten pose for a photo at Preston Market.
AAP/Ellen Smith

Michelle Grattan, University of Canberra

On “Super Saturday”, Bill Shorten dodged a political bullet, while Nick Xenophon took one. South Australian Liberal leader Steven Marshall got the result he should have secured four years ago. The Greens proved the old maxim that disunity is death.

The Batman byelection and the poll in South Australia threw up all sorts of interesting points – even though in other circumstances, contests in a heartland Labor seat and a state with a 16-year-old government might have been routine.

For Shorten, avoiding defeat in Batman was vital – for Labor’s current momentum, for confidence in his leadership and, given his gamble of announcing his latest tax move in the campaign’s last week, for holding the line on a controversial policy.




Read more:
After 16 years, electoral dynamics finally caught up with Labor in South Australia


Many things contributed to Labor’s win, but if you were looking for one, I suspect it might have been that Ged Kearney wasn’t David Feeney. Kearney was the sort of candidate who encouraged Labor voters to be faithful, and not run away in fury.

As for the tax announcement, election watcher Tim Colebatch notes that the pro-Labor swing in the postals and pre-poll votes was much bigger than in the polling booths on the day, and suggests this may show the impact of Shorten unveiling his plan to scrap cash refunds for excess dividend imputation credits.

That the announcement didn’t stymie Labor in the byelection doesn’t mean Shorten has won the argument more widely. Labor will have much explaining to do in this complicated area. But if it had seriously backfired in Batman, that would have given ammunition to the Coalition and caused tensions in the opposition.

Labor was helped in the byelection by the Greens’ internal backbiting. The Greens’ failure to capitalise on a great chance reflects badly on their locals and on leader Richard Di Natale.

The party has deeper problems than its schisms in Batman. It lost a seat in the recent election in Tasmania, its heartland. Nationally, the citizenship crisis has taken its toll, costing it a couple of its strongest Senate performers in Scott Ludlam and Larissa Waters. Batman suggests it may have stalled in its push for inner-city federal seats. The next federal election sees the Greens particularly exposed because of the number of senators the party has going out.

The South Australian result has presented something of a reality check on perceptions of the potency of so-called “insurgencies”. This is the third recent state poll in which a major party has won a majority. Late last year in Queensland, Labor secured a second term, as did the Liberals in Tasmania earlier this month.

In Tasmania, the Jacqui Lambie Network got nowhere. In Queensland, One Nation won votes but only one seat. And in South Australia, Xenophon’s SA-Best crashed after initial too-good-to-be-true polls, with Xenophon failing to win the seat he was seeking and SA-Best expected to have no lower house representation.




Read more:
Liberals win South Australian election as Xenophon crushed, while Labor stuns the Greens in Batman


At state level, even when such parties achieve a respectable vote (SA-Best received about 14% of the statewide vote, as did One Nation in the Queensland election), the electoral system makes it hard for them to translate that into lower house seats.

Federally, the Senate’s proportional representation voting system has given small players a relatively easy passage to a very powerful place, although changes to the electoral arrangements will make that more difficult in future.

The “disruptors” are important, because the support they attract is a measure of the disillusionment and fragmentation in the contemporary political system. But South Australia reinforces the point that the major parties are still strong. For quite a few voters, the choice is between duelling desires – between sending an angry message or opting for stability.

Outgoing premier Jay Weatherill, gracious in defeat on Saturday night, didn’t look all that upset. Labor’s bidding for a fifth term in this day and age was an almost impossible ask; anyway, Labor won last time with only about 47% of the two-party vote, so it has been on borrowed time.

The huge loser in South Australia was Xenophon. In politics, as in business, you can be too greedy. Xenophon led a three-person Senate block that had a decisive share of the balance of power. It was capable of exerting much influence, and winning concessions in negotiating legislation. Then he decided he wanted to be kingmaker in South Australia – while still aspiring to be the absent master in Canberra.

His party is likely to end up with just a couple of upper house seats in South Australia. Meanwhile, the federal Senate team has been hit by the citizenship crisis as well as weakened by Xenophon’s departure.

Due to a fight with the party, Tim Storer, a replacement for Skye Kakoschke-Moore, a casualty of the citizenship debacle, will be sworn into the Senate on Monday as an independent. The Nick Xenophon Team has been reduced to two senators (and Rebekha Sharkie in the lower house, who could face a byelection in the citizenship saga).

Xenophon is in neither parliament, and the road ahead for his party is rocky. He now talks about SA-Best as a “start-up party” to gloss over its bad result, but it’s hard to see it as a “start-up” with an enduring future. Xenophon dismisses the prospect of a return to the Senate, but it remains to be seen whether his feet will become itchy.

Federal factors were not significant in the change in South Australia. But the outcome has positive implications for Malcolm Turnbull’s government. One of the big arguments between the federal and Weatherill governments was over energy policy, with Weatherill holding out against Canberra’s National Energy Guarantee (NEG). On Sunday, the federal government was welcoming the South Australian result as very good for the future of the NEG.

Another Liberal win at state level, coming after Tasmania, will also be a morale boost, albeit a limited one, for the embattled federal Liberals.

The ConversationSo, Super Saturday had positive spin-offs for both federal leaders, but substantially more for Shorten than Turnbull.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Dastyari saga shows the need for donations reform, and for politicians to take more care


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Labor’s Sam Dastyari has been sacked from his position as deputy Senate whip for his poor judgement.
AAP/Lukas Coch

Tony Walker, La Trobe University

New South Wales senator Sam Dastyari has been appropriately disciplined by Labor leader Bill Shorten for exercising poor judgement in his interactions with a Chinese businessman who is not an Australian citizen.

Dastyari has been sacked from his position as deputy Senate whip. This is his second demotion in little more than a year after having fallen foul of acceptable standards of political conduct.


Read more: Dastyari demoted again – but government demands he leave parliament


On that first occasion – confirmed by the release this week of a tape recording – Dastyari contradicted his own party’s policy that is critical of China’s activities in the South China Sea.

Compounding his difficulties, he had also accepted a A$5,000 donation from the Chinese businessman mentioned above to meet personal legal obligations.

On this latest occasion, it’s alleged that Dastyari went to the businessman’s house and advised him that conversations between the two needed to be conducted beyond the range of their mobile phones so as to avoid eavesdropping by Australia’s intelligence services.

Dastyari insists that he was not passing on classified information, but the very fact he was alerting a foreign businessman to the possibility of his phone being tapped by the security agencies justifies his sacking.

This was an act of stupidity, if not disloyalty, for an elected representative who claims he has nothing to hide.

The episode also calls Shorten’s management into question. Dastyari should not have been returned to a leadership role so quickly after his first display of poor judgement.

After his earlier demotion he spent just five months on the backbench. He should now remain there for a long time.

Need for clarity

In all of this there is a much bigger issue, and one that requires urgent attention. This is especially so given China’s continued rise, and its persistent efforts to influence politics among its neighbours.

As an important regional player, Australia is far from immune from Chinese “money” politics.

What is required as a matter of urgency is legislation that bans all foreign political donations, along with a separate register of lobbyists who are operating on behalf of foreign entities.

The Dastyari episode should have brought home to the government of the day the need for clear-cut protocols to preclude the possibility of foreign money tainting the political process.

Labor and the Greens have proposed legislation that would ban all foreign political donations. The government is now saying – belatedly – that it will advance legislation in the new year to bring this about. No reasonable argument exists to delay this process.

At the same time, government and opposition should prioritise the establishment of a National Integrity Commission – similar to state-based independent commissions against corruption – to bolster public confidence in the political process, now at a low ebb.

In a research paper, the Parliamentary Library points out that Australia is “one of the few countries where donations from foreign interest political parties or candidates is not prohibited”.

In defining “foreign interests”, the International Institute for Democracy and Electoral Assistance includes entities that “contribute directly or indirectly [and who] are governments, corporations, organisations or individuals who are not citizens; that do not reside in the country or have a large share of foreign ownership”.

That wording would seem to be a reasonable model for Australian legislation.

Of English-speaking democracies, only New Zealand allows overseas donations to parties, but these are capped at NZ$1,500.

Foreign influence

The Dastyari episode underscores the need for clear-cut rules to prevent those with links to foreign governments from using money to influence the political process.

The Chinese businessman in question, Huang Xiangmo, recently stepped down as chairman of the Australian Council for the Promotion of the Peaceful Reunification of China (ACPPRC), a front organisation for the United Work Department of the Chinese State.

The billionaire Huang, whose applications for Australian citizenship have been blocked by the Australian Security Intelligence Organisation, has deep connections in China’s ruling Communist Party.

None of this should be viewed as surprising, or necessarily cause for alarm, but what should be regarded as completely unacceptable is the use of money by foreign donors to influence policy in the service of a foreign government.

In Huang’s case, he withdrew a $400,000 funding pledge after Labor’s then-defence spokesman Stephen Conroy sharply criticised China’s territorial encroachments in the South China Sea.

What is required is clarity around foreign political donations. Politics and self-interest should not be allowed to stand in the way of reasonable steps to put in place regulations that ban all such donations.

In the Senate today, in several personal explanations, Dastyari insisted that he had not passed classified information to Huang, and that indeed he had never received briefings about relations with China that would have enabled him to do so.

That may well be the case, but perceptions in this case are fairly devastating.

Questions remain, such as:

  • Why did Dastyari need to go to the Chinese businessman’s house in the first place?

  • What did he need to tell Huang out of range of their mobile phones?

  • Who leaked the information about the encounter to Fairfax Media?

  • Was it leaked by a government agency for political purposes?

The point is this story has, potentially, some way to run, and may yet result in unexpected further developments.

What the whole unfortunate episode demonstrates is that public officials need to avoid carelessness in their interactions with anyone who might represent a foreign government. This is especially so in the case of a country whose methods of doing business politically are not aligned with those of Australia.

Finally, in his interactions with Huang, Dastyari may have served his interests better if he had familiarised himself with the example of the former Labor national secretary during the Gough Whitlam era.

David Combe served in the contentious period between 1973 and 1981, during which, it is alleged, he had sought financial assistance from Iraq for Labor’s losing 1975 election campaign. That support did not materialise, but revelations that it had been canvassed at all severely embarrassed Labor.


Read more: What is soft power? Hint: it’s not footing Sam Dastyari’s bills


After he relinquished his role as national secretary, Combe developed a lobbying business and in the process was befriended by a Soviet embassy official in Canberra whom it later emerged was a KGB agent.

In 1983, Prime Minister Bob Hawke expelled the Soviet official. A cloud descended on Combe, who was later found by the Hope royal xommission not to have compromised Australia’s security.

The ConversationHowever, if there is a lesson in the Combe and Dastyari episodes it is that those in positions of public trust cannot be too careful in the company they keep.

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article was originally published on The Conversation. Read the original article.

Senate crossbenchers take the first steps on lobbying reform – now to ensure it succeeds



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Jacqui Lambie has released a policy on lobbying that has become the starting point for negotiations on the issue.
AAP/Mick Tsikas

George Rennie, University of Melbourne

The suite of codes, statements and laws governing lobbying are failing Australian voters. Yet, for decades, the two major parties have been unwilling to meaningfully improve them.

But, having recognised the seriousness of the problems with lobbying and corruption in Australia, the Senate crossbenchers – along with lower house independents – have finally begun the process of deciding how lobbying reform should occur.

Into this space, the Jacqui Lambie Network has released a policy that has become the starting point for negotiations on one of Australia’s most important policy challenges.

A ‘federal ICAC’?

Labor and the trade unions have signalled a willingness to tackle lobbying at some point. However, there are meaningful obstacles to the crossbench’s current plan.

Given its control of the lower house, the Coalition would need to be brought on side for legislation to pass anytime soon. However, citing Australia’s performance on Transparency International’s corruption index, Attorney-General George Brandis is against a federal regulator to police anti-corruption.

Similarly, the Institute of Public Affairs – a Liberal Party ideological ally – rejects the idea because such an agency might abuse its power.

However, the crossbench has been more impressed by New South Wales’ Independent Commission Against Corruption (ICAC), where the true “abuses of power” have been those uncovered by the commission.

Enter the crossbench

Given the resistance from the Coalition, hope for changes to lobbying laws currently rest with the Senate crossbench and the lower house independents. They are negotiating a unified policy based on Lambie’s proposal.

The policy acknowledges that new lobbying laws need to be legislated; have meaningful enforcement provisions (including the possibility of fines or imprisonment for serious offences; and have an independent regulator to oversee them.

Having an independent regulator is critical. As it stands, when a minister leaves office, their eligibility to work as a lobbyist, and whether they have breached any lobbying regulations, is determined by those who directly work with – or for – the prime minister.

The problems of the revolving door are significant, and growing. It is now commonplace for former ministers to go on to work for companies directly related to their former portfolios – be it on their boards or as lobbyists.


Further reading: The revolving door: why politicians become lobbyists, and lobbyists become politicians


This creates a clear conflict of interest for those ministers when they are in power. Their decisions while in power have the potential to affect the possibility of a job when they leave office. It also allows them far greater access to, and creates conflicts of interest for, the government decision-makers they meet. These are people they often worked with, for, or above.

As a result, Lambie’s plan would ban ministers and senior public servants from taking up lobbying positions within five years of leaving office. This is increased from the current, poorly-enforced 18-month ban.

This move would bring Australia’s prohibition on post-separation employment in line with Canada and the US. Extending the exemption period of post-separation employment, and having an independent regulator to oversee it, would mean the potential for the aforementioned conflicts of interest and advantageous access are reduced.

Beyond the revolving door provisions, Lambie’s plan centres around the ideal of “levelling the playing field” for interest groups. This in turn is based on the problems that arise when some get better access than others.

As such, Lambie’s plan borrows heavily from the overseas examples. It calls for more transparency in lobbying, incentives to join a register of lobbyists, and expanding the definition of “lobbyists” to include those who operate in-house (Australia’s register currently only captures third-party lobbyists).


Further reading: Australia’s lobbying laws are inadequate, but other countries are getting it right


These goals may be in-part fulfilled by changing the access rules to the highly desired “orange passes” of Parliament House. Under Lambie’s plan, lobbyists are given incentives to join the register for better access to parliamentary offices.

This is an interesting idea, and is focused more on reward than punishment. If coupled with other monitoring conditions, it may improve the transparency of lobbying in Canberra – if only by increasing the likelihood that lobbyists will join the register.

The orange pass concept would be augmented by an expansion of the definition of “lobbyist” to include those who directly represent their organisation, regardless of what it does. This would mean the professional representatives of unions and not-for-profit organisations are treated the same as those from corporations.

At stake: our democracy

Ideally, a representative democracy supports “good lobbying”, where individuals and groups present their ideas, needs and wants on a level playing field. But the status quo in Australia acts to undermine this ideal.

While its benefits are clear, democracy is a fragile system. Its strength is fundamentally reliant on institutional and legal supports, as well as an engaged and informed electorate.

This is where “bad lobbying” presents a significant threat: it uses weak laws and institutions to create an unfair playing field for a few to the detriment of the many, and undermines trust in the system.

In turn, the electorate becomes cynical and disengaged. Democracy collapses when bad lobbying takes hold, and Australia’s bad lobbying has been steadily getting worse – and more pervasive.

The ConversationIn that critical sense, giving Australia’s lobbying laws teeth, and a sizeable regulatory jaw to occasionally brandish them, is a major step in the right direction.

George Rennie, Lecturer in American Politics and Lobbying Strategies, University of Melbourne

This article was originally published on The Conversation. Read the original article.

How the government and One Nation may use media reforms to clip the ABC’s wings


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It would be easy to set up an inquiry into the ABC – with the findings already known.
Shutterstock

Denis Muller, University of Melbourne

Among the four concessions concerning the ABC that senator Pauline Hanson extracted from the federal government in exchange for her support of its recent media ownership law changes, one in particular has the potential to do real damage to the national broadcaster.

This is the promised inquiry into the ABC’s competitive neutrality.

It has been on the agenda of News Corp for years to have the ABC’s wings clipped, for the obvious reason that it sees the ABC as a commercial rival. If News Corp had its way, the ABC’s big strategic move into digital broadcasting more than a decade ago would have been cut off at the pass.

So Hanson, whether she knew it or not, has played into the hands of New Corp on this, and given the government a political opportunity to do yet one more favour for Rupert Murdoch.

Since the government does not need a vote in parliament to set up an inquiry like this, it is easy to see how it might unfold.

An eminently well-qualified chairman could easily be found. To pick a name at random: Maurice Newman, former chairman of the stock exchange, former chairman of the ABC and now public ideologue opposed to public-sector broadcasting. He wrote a polemic in The Australian in April asserting that the ABC and SBS no longer served a public purpose.

The government could effortlessly craft terms of reference consistent with that axiom of politics – you never hold an inquiry without knowing the outcome.

A high-profile firm of economic consultants could be engaged to conduct an analysis of the impact of the ABC’s activities on private-sector media.

Using suitable assumptions, a selection of data and a fitting framework of economic theory, it might easily find that the ABC, despite manifold inefficiencies, was indeed using its public funding in an anti-competitive way to crowd out the private sector.

Recommendations would naturally ensue that the range of ABC activities had strayed well beyond the confines imagined by its founding fathers in the early 1930s. It would therefore follow that its funding should be cut in order to see it focus on outputs that no commercial broadcaster would touch with a barge pole.

Perfectly respectable.

Of the other three concessions to Hanson, the one likely to do the most mischief is the one requiring the ABC to publicly disclose the salaries and conditions of all staff whose packages amount to more than A$200,000 a year.

While in principle it seems reasonable that the salaries of people on the public payroll should be public, in fact the pay of individual public servants is generally a private matter.

This is the case not only because a person’s financial affairs are inherently private, but because it is a disincentive for good people to join the public sector if their private affairs are going to be trawled over in public for political purposes.

It has already happened with ABC salaries when they were inadvertently released under freedom-of-information laws a couple of years ago.

The combination of fame and their type of work magnifies the privacy issue for high-profile ABC journalists and presenters. No-one cares what some obscure under-secretary in the Department of Veterans Affairs gets paid, but politicians like Hanson salivate over the pay of people like Leigh Sales and Barrie Cassidy.

The remaining two concessions are not likely to have much impact on the ABC.

The one that got all the attention at the start was the insertion of “fair” and “balanced” into the ABC’s charter.

This is a sideshow. The ABC’s charter is contained within section six of the ABC Act, so amending it will require a parliamentary vote. Senator Nick Xenophon has said his team will not support it, and since his team’s support is likely to be necessary, it looks like an empty gesture by the government.

In any case, the requirements for fairness and balance are already built into the ABC’s editorial policies, which are binding on ABC journalists, so the practical effect would be nonexistent.

However, a parliamentary debate on the ABC’s impartiality would keep this matter bubbling along in the public mind and furnish an opportunity for reactionary politicians to further ventilate their suspicions.

Finally, there was a concession concerning provision of broadcasting services to regional areas. The ABC has already announced a A$50 million package
to enhance regional services. And anyway, this is a level of operational detail that generally lies beyond the reach of politicians.

A bit of cosmetic arm-wrestling between Communications Minister Mitch Fifield and the chair of the ABC, perhaps some pointed questions at Senate estimates, and a tweak of the ABC’s budget will probably satisfy this concession.

The ConversationTaken together, then, three of these concessions have considerable nuisance value. But the fourth contains the seeds of a serious challenge to the ABC’s future.

Denis Muller, Senior Research Fellow in the Centre for Advancing Journalism, University of Melbourne

This article was originally published on The Conversation. Read the original article.

Media reform deals will reduce diversity and amount to little more than window dressing


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The latest reforms will do nothing to prevent further concentration of Australia’s media landscape.
AAP/Dean Lewins

Tim Dwyer, University of Sydney

The breakthrough in negotiations with the Senate crossbenchers that the government has been chipping away at over media reform has finally arrived.

The deregulatory legislation, the Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017, required 38 votes to pass the Senate, where the Coalition controls 29 votes. It had already secured the support of three crossbenchers and four One Nation senators, but was waiting for just two votes to get it over the line – until Nick Xenophon did the deal.

After protracted negotiations with Xenophon and his NXT party, the Coalition has arrived at a quid pro quo deal that sees the repeal of the remaining cross-media diversity rules, after the government agreed to NXT’s proposal to introduce funding grants for small and regional publishers. Clearly, though, they are not the “substantial quid pro quo” for public interest journalism that Xenophon has trumpeted, which had previously included tax breaks.

The main features of the bill are:

  • repeal of the “two-out-of-three” rule and the 75% reach rule;

  • the creation of a one-off A$50 million innovation fund for smaller and regional publishers, whose turnover is between A$300,000 and A$30 million. This is capped at $1 million per publisher and available from mid-2018; and

  • the creation of 200 cadetships and 60 scholarships.

The government will also direct the ACCC to conduct an inquiry into the advertising practices of Google and Facebook and their impact on journalism.

Funding for these publishers will require them to meet specific eligibility criteria, including membership of the Australian Press Council and having ethical guidelines in place. It will need to be for the purposes of news production, and civic and public interest journalism from a local perspective. The Australian Communications and Media Authority will oversee the distribution of the funds.

Recipients of the grants must be majority Australian-owned, pass an independence test, and not be affiliated with a political party, union, super fund or lobby group.

These eligibility criteria means some publishers will not have access to these meagre funds. For example, offshore controlled or owned online publications such as The Guardian and Buzzfeed, or a publisher like The New Daily, which is closely affiliated with super funds, would miss out.

Other horsetrading has led to amendments that assist community television, a welcome rescue measure for the sector. It includes a controversial measure such as the A$30 million gift to Fox Sports for women’s and niche sports – a commercial broadcaster that can be accessed by less than 30% of the Australian population.

A major A$90 million gift to commercial free-to-air broadcasters in the form of licence fee removals raises the question of whether something was given in return.

The obvious quid pro quo here is an agreement secured to remove gambling advertising in prime time.

In the wider frame of high industry concentration and the dominance of US-based hegemons, Xenophon’s measures are a minimalistic band-aid response, which will do nothing to prevent further concentration of Australia’s media landscape.

The NXT “wins” are really only window dressing. The One Nation “wins” in relation to further scrutiny on the ABC are a ludicrous attempt at payback for critical coverage.

The more principled approach of Labor and the Greens, who did not support the repeal of the two-out-of-three diversity maintaining rule, is laudable – and may yet form the basis of real media reform in their next federal election campaigns.

The earlier proposed tax breaks for genuine public interest journalism reporting the news and informing the public had the potential to help keep some small players afloat. But one-off grants of A$1 million are hardly going to save struggling publishers.

On the face of it since eligible beneficiaries will be News Corporation and Fairfax Media competitors, many would think this must be a step in the right direction. However, it really is a drop in the ocean compared with the resources of the majors. It will do nothing to remedy the major problem of longer term concentration which needs a complete redesign of the regulatory framework fit for the 21st century.

The opportunity for a root-and-branch analysis of media consumption by Australian audiences, an agency tasked to effectively do that and tracking the transitioning news industries, with commensurate resources and diversity mechanisms has, once again, been sidestepped.

These latest negotiations follow a decade of attempts by conservative governments to dismantle media ownership restrictions.

These minor funding measures do nothing to address the underlying problem of an increasingly concentrated media landscape (where the vast bulk of the eyeballs are anyway). The more serious mechanisms that have been ventilated in the Senate Select Committee Inquiry into the Future of Public Interest Journalism — such as direct financial subsidies — have not got a look in.

A 2014 study prepared for the London School of Economics looked at countries with direct financial support for their news industries (the Nordic countries, the Netherlands, Austria, France). The support was for up to 50 years, no matter the party in power. The report concluded that:

Policymakers can support private media organisations with mechanisms such as tax relief or even direct subsidies to specific media companies. Such support need not compromise media independence if safeguards such as statutory eligibility criteria are in place.

The authors’ view was that the reality of convergence meant support of private media should be extended to online media.

Serious diversity mechanisms such as indirect tax measures and direct measures like subsidies did not pass muster in the historically cosy relations between politicians and media proprietors.

Real alternatives with impact are possible. In the Swedish subsidy scheme, for example, eligible print or digital newspapers need to have less than 30% market share.

While subsidies contribute only 2-3% of total industry revenue, they amount to 15-20% of revenue for weaker titles that are their main beneficiaries. For a handful, the subsidy represents up to 33% of total earnings.

Of greater importance to the survival of smaller publishers, these minor funding measures do very little to address the fact that 90% of new online ad spending is controlled by Google and Facebook. So why doesn’t the government introduce a levy on these two players to fund public interest journalism as suggested by the Senate Select Committee on the Future of Public Interest Journalism?

While there are still some ownership controls (minimum of five media voices in metro and four in regional and rural markets), and local content requirements that remain in place, these will not stop further media concentration.

A single person cannot control more than two radio stations or more than one television station in a single market. In regional markets there is still a requirement of 21 minutes of local content a day – a fairly low bar most agree. However, News Corp Australia, for example, which already owns around two-thirds of the print media sector, would be allowed to buy up all the traditional categories of media (TV, radio, and print) in any single market.

The ConversationIn cities such as Brisbane, Adelaide and Hobart, where there is already only one daily newspaper, the consequences of further concentration are stark.


CC BY-ND

Tim Dwyer, Associate Professor, Department of Media and Communications, University of Sydney

This article was originally published on The Conversation. Read the original article.

Abbott scores big win on party reform as Coalition continues to trail in Newspoll


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Tony Abbott’s ‘Warringah motion’ for party reform was passed by 748 votes to 476.
Daniel Munoz/AAP

Michelle Grattan, University of Canberra

The Abbott forces are seeking to drive home their sweeping Sunday victory in winning rank-and-file endorsement for reforming the New South Wales Liberal Party by putting a three-month deadline on the changes being ratified.

A special convention of party members voted overwhelmingly for motions from the former prime minister’s Warringah federal electorate conference (FEC) backing plebiscites for preselecting all candidates and direct election by the party members of those who run the party organisation.

This comes as the latest Newspoll, published in The Australian, shows the Coalition continuing to trail Labor 47-53% in two-party terms. This is the 16th consecutive Newspoll in which the government has been behind.

The Coalition’s primary vote rose one point to 36%, while Labor also rose one point, to 37%. One Nation slipped from 11% to 9%; the Greens fell from 10% to 9% since the last poll a fortnight ago.

Malcolm Turnbull’s net satisfaction improved four points to minus 20; Bill Shorten’s net satisfaction was static on minus 20. Turnbull widened his lead as better prime minister from eight points to 11 points.

At the convention of NSW Liberal Party members, the plebiscite motion was passed by 748 votes to 476, and the accompanying motion by a two-to-one margin.

The endorsement of the “Warringah” model is a huge challenge to the factional grip of the state division held by the moderates and soft right.

The changes would likely see the division move to the right, in line with the political colour of its rank-and-file, and make it harder for moderates to win preselections.

But the reforms have to be approved by the state council before they take effect. Given the majorities on the key votes were so decisive, and backing crossed factional lines, it would be hard for the current powerbrokers to resist the general thrust. But there could be a struggle ahead over timing and detail.

Walter Villatora, president of the Warringah FEC, said after the two-day meeting: “These reforms now need to be ratified, which I expect will happen within three months.”

“Somewhere up above in Liberal Party heaven Robert Menzies is looking down and smiling. The party membership have clearly spoken. The era of brutal factionalism is over,” he said. “The NSW Liberal Party is now the most democratic division in Australia.”

But a statement by state president Kent Johns suggested there would not be any rush. “The convention result reflected the members’ desire to reform some of our organisation’s internal processes, and serves as a clear demonstration of participation by our membership,” he said.

“Members showed their support for introducing a plebiscite model to ensure that the NSW Liberal Party continues to preselect the best candidates …

“Discussions at the convention will inform the development of the party’s modernisation plan, which will be prepared by me and the state director, Chris Stone. Constitutional amendments will be prepared over the coming months by our constitutional committee, and proceed to the party’s governing body – state council.”

Turnbull positioned himself carefully in his address to the convention on Saturday so as not to be caught in the firing line if the Abbott push won.

He stressed his support for plebiscites, saying every member should have a say in selecting candidates. It was widely believed, however, that he would have preferred a more circumscribed model.

But the convention voted down or didn’t reach motions attempting to impose some restrictions. These included having a longer eligibility period and an “activity test” before members could vote, and the grandfathering of electorates with sitting members.

In the Warringah model the only condition on party members voting in the plebiscites would be that they must have been a member for two years.

The present preselection system has candidates chosen by panels comprising local delegates and non-local members.

Neither Turnbull nor premier Gladys Berejiklian were at the convention when the vote was taken.

Later a spokeswoman for Turnbull said that as the prime minister had said at the convention: “He has long supported that all Liberal Party members have a direct say in preselections. The PM wants to ensure that every member of the party knows that their voice is heard and respected.

“The PM made it clear yesterday that plebiscites for preselections are a good idea, but hardly a new one. Every other Liberal party division has adopted them,” she said.

Abbott emailed members in his electorate: “This is a great advance for our party – and it would not have happened without the hard work of the Warringah conference led by our president, Walter Villatora.

“There’s more to do, of course. Democratisation now has to run the gauntlet of state council; but this is potentially a wonderful new start for our party. A revitalised, less factionalised party will be really important to winning the next election.

The Conversation“This is a big ‘thank you’ to all Warringah Liberals. Let’s now do our best to build on this success.”

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.