Australia’s foreign donations fiasco

Controversy surrounding foreign political donations in Australia is not new. Most recently, Australian Labor Party (ALP) Senator Sam Dastyari was forced to resign from the shadow ministry following allegations he accepted money from multiple Chinese donors. These controversies have prompted calls for a ban on foreign political donations.

But this puts the cart before the horse. Before jumping to ‘how’ to regulate foreign political donations, three questions need to be answered. What is the problem with ‘foreign’ political donations? Why are there particular concerns with ‘Chinese’ political donations? And why should such donations be regulated?

The concern with overseas-based donors or foreign-sourced donations is one of compliance. Enforcement of Australia’s electoral laws overseas is impossible. Such donations form a small, but not insignificant portion of total political donations in Australia — and they appear to be growing. Foreign-sourced donations made to political parties from 1998 to 2015 have generally increased in nominal terms over the past sixteen years and have formed an increasing proportion of total donations to Australian political parties.

In the financial year of the 2013 federal election, foreign-sourced donations constituted over 6 per cent of all donations. In the prior financial year they had hit 10 per cent. China and Hong Kong are the main countries of origin for these donations. In the past sixteen financial years, over 83 per cent of all foreign-sourced donations originated from China or Hong Kong. The next biggest contributor was Great Britain, which accounted for just over ten per cent of all foreign-sourced donations.

While both the major parties benefit from foreign-sourced donations, the ALP receives more of these funds. Nearly 60 per cent of foreign-sourced donations from 1998 to 2015 were directed to the ALP, with the Coalition receiving nearly 40 per cent. For donations sourced from China and Hong Kong, just over 68 per cent went to the ALP.

The significance of foreign-sourced donations together with the difficulties of enforcement present a clear and compelling case to severely restrict or ban them. This has already occurred in Queensland. And a similar ban has also been adopted in the United Kingdom.

But the British parliament has not banned ‘foreign’ political donations from all non-citizens. Neither for that matter has Canada or the United States. ‘Permissible donors’ in the United Kingdom include companies carrying out business in the United Kingdom. In Canada and the United States, permanent residents are not banned from making political donations.

A ban on political donations from all non-citizens would be unconstitutional in Australia — such a ban has already been struck down by the High Court. A central part of its reasoning was that non-citizens residing in Australia are entitled to voice their concerns in the political process by virtue of being subject to the laws of the land.

This points to the misunderstandings that seem to inform calls for a ban on donations from all non-citizens. An exclusive focus on Australian citizens fails to recognise permanent residents and long-term residents on temporary visas. These members of Australian society — including migrants from China — should not be denied their legitimate role in the democratic process.

Worryingly, this blinkered understanding sometimes tips into xenophobia with fears of the ‘yellow peril’ forming an undercurrent of the debate. These attitudes develop subtly through the racialisation of donations from those of Chinese ancestry or those who were born in China.

But ancestry or country of birth only seems to matter for Chinese political donors. Why wasn’t the donation from Lord Michael Ashcroft referred to as an ‘English’ political donation? Why weren’t the donations from the Calabrian Mafia referred to as ‘Italian’ political donations? Such racialisation trades on the sinister ambiguity of the label ‘Chinese’ with implications of interference by the Chinese government in Australian politics.

The involvement of the Chinese government in Australian politics, economics and media is a real issue to be debated. Yet the implication that Chinese political donors are doing the bidding of the Chinese government is one that is often assumed rather than demonstrated. Former Australian ambassador to China Geoff Raby has scoffed at the notion that ‘Chinese’ political donations are seeking to advance the agenda of the Communist Party of China.

But the Sinophobia which characterises the current debate is a major distraction from a more substantial malaise. A distorted focus on ‘foreignness’ obscures broader problems with how political money is regulated at the federal level.

The absence of caps on political donations and spending — like those in NSW — has allowed unsavoury fundraising practices to thrive. And a laissez-faire culture within political parties has left systemic conflicts of interest unaddressed. All of this has broadly served to undermine public confidence in the political process.

So how should Australia deal with foreign donations?

It should ban foreign-sourced donations — as best as it is able. At the same time, Australia should accept that ‘foreigners’ have a stake in the country they live in, work in and come to belong in — including migrants to Australia. But more importantly, Australia should reform the federal political finance laws in order to protect the integrity of Australia’s democracy.

Joo-Cheong Tham is an Associate Professor at the Melbourne Law School and author of Money and Politics: The Democracy We Can’t Afford (2010).

Malcolm Anderson is a researcher in Melbourne Law School and Honorary Research Fellow, Centre for the Study of Higher Education.