Electoral Funding Amendment (Cash Donations) Bill 2019

Hansard ID: HANSARD-1323879322-109000

Hansard session: Fifty-Seventh Parliament, First Session (57-1)

Electoral Funding Amendment (Cash Donations) Bill 2019

Second Reading Debate

Debate resumed from 14 November 2019.

Mr ALISTER HENSKENS (Ku-ring-gai) (12:22):

:18 Just to recap what I have already said in this debate, I brought to the attention of the House the fact that every elected member of the Australian Labor Party [ALP] in this Parliament sat mute and did not say a thing to the public prior to the 2019 election about the illegal donation, which has been exposed, at the so-called Chinese Friends of Labor fundraising function. Those opposite took the money, they hid the illegality and they went to the 2019 election completely mute as to the illegal conduct they were covering up. As I said in my earlier contribution, they should all be ashamed of themselves.

It is particularly important to note that the illegal donations were the scam of a former ALP upper House member, Ernest Wong, who only left this Parliament in March of this year, and the New South Wales head office employee Kenrick Cheah, who was employed as a community relations director of NSW Labor. It was then covered up by the most senior Labor official, the general secretary and head of the national right faction of the Labor Party—the all-powerful ALP right faction—Kaila Murnain.Despite important reforms that were introduced in the last Parliament to toughen up our electoral funding laws, the Labor Party nonetheless went ahead and perpetrated this fraud on the electorate.

I remind the House that the Coalition introduced two very important reforms in the last Parliament. The first was to expand the limitation period substantially for any illegality with regard to electoral donations or funding breaches. The second was to increase the penalties substantially. If there is a conspiracy to defraud or to circumvent the electoral funding laws, the maximum penalty is 10 years imprisonment under the Coalition amendment to the legislation. There have been very strong changes to ensure compliance with the electoral funding laws. Notwithstanding that, the Labor Party has been exposed for the scam that it engaged in at the Chinese Friends of Labor dinner.

I will show the necessity of this legislation. On page 77 of exhibit 150 before ICAC in the Operation Aero inquiry the amended disclosure by the Australian Labor Party New South Wales branch shows a $5,000 donation on 9 April 2015. It is important that that donation is not recorded in the disclosure as being a cash donation; it is simply described as being a "monetary" donation. For the electoral funding officials to have to determine whether that was cash, cheque or otherwise, they would have to go to the receipt and track through all of the documents.

On page 101, the Country Labor disclosure shows Teresa Tay on 9 April 2015 also making a $5,000 donation. The inquiry has exposed that there is a necessity to make it clear when cash is being donated. Country Labor has been exposed as a complete sham—just an organisation to double the electoral caps from the Labor Party's point of view and, in the cases of unlawful enterprises like the Chinese Friends of Labor dinner, doubling the illegality of conduct. Introducing a rule under the bill that nothing more than $100 in cash can be donated will provide a clear trace of any illegal donations to the Labor Party.

Mr DAVID HARRIS (Wyong) (12:26):

:58 The Electoral Funding Amendment (Cash Donations) Bill 2019 is very important, for reasons that I will outline. The bill seeks to make it unlawful for a person to make or accept a political donation in cash that exceeds the value of $100. It is fundamental to every person in this place that elections are carried out fairly. I speak as someone who has been the victim of illegal practices. I have been the victim of people who engaged in illegal practices, back in 2011. At that time I was the then member for Wyong. Suddenly a candidate appeared on the scene who—

Mr Alister Henskens:

Point of order: This has nothing to do with cash donations.

Mr DAVID HARRIS:

Of course it does. You haven't even heard what I have to say.

Mr Alister Henskens:

The bill is about cash donations.

Mr DAVID HARRIS:

Yes, and this is about cash donations.

Mr Alister Henskens:

It is about the $100 cash donation limit. It has got nothing to do with something that happened in 2011.

TEMPORARY SPEAKER (Mr Gurmesh Singh):

I will hear a little further from the member for Wyong.

Mr DAVID HARRIS:

I just sat there while the member for Ku-ring-gai spoke so he should show some respect. This is absolutely about cash donations. In this case, it was found out through Operation Spicer, many people in my community were approached for donations illegally, because many of them were property developers. It is on the record in Operation Spicer that a particular person was paid to campaign. He received money to campaign, so he did not have to do anything else, and all of the election materials and things that were used against me in that campaign were funded through this illegal activity that Operation Spicer exposed as the Eight By Five. Why this is important is that we will not get any changes in this area until we have a system—and this is my personal view, not necessarily the view of my party—whereby we go to public funding and have caps on spending. If members want to do what needs to be done then we need to introduce caps on spending in campaigns.

Mr Alister Henskens:

We have caps on spending already.

Mr DAVID HARRIS:

We know that is not true. The member for Ku-ring-gai can pretend, but we know that is not how it happens. We also know that if public funding was provided, the need for people to seek donations—

Mr Alister Henskens:

If you have knowledge that Labor is breaking the law then tell the Parliament.

TEMPORARY SPEAKER (Mr Gurmesh Singh):

Order! Government members will come to order.

Mr DAVID HARRIS:

After Operation Spicer—and this is what really affects me—some of those people said they had been cleared. That is clearly not the case because the Independent Commission Against Corruption said it decided not to ask the Director of Public Prosecutions to lay charges against those people because a three‑year statute of limitation period under the Election Funding, Expenditure and Disclosures Act 1981 had expired and it would be difficult to secure a conviction. That is hardly saying what those people did was right or that they did nothing wrong. It simply says that, as time had passed, no conviction would be secured so no charges were pressed.

Government members point the finger in one direction. However, members in this place who have any fortitude and who are not hypocrites must understand that people on both sides of politics have done the wrong thing in the past. Not a single person could deny that is the case. Let us not stand in here and throw bombs. I have a whole lot of examples. I could talk about Bart Bassett, who held the seat of Londonderry in Sydney's outer west. He knowingly solicited an $18,000 donation from Nathan Tinkler's property development company, Buildev, for his 2011 election campaign. It was washed through a Canberra‑based entity called the Free Enterprise Foundation.

All sorts of schemes are created, the money gets washed through—from both sides—and it is wrong and needs to stop. As a local member, working my heart out for my community, I need to know that the reason for winning or losing an election is based on policies, not on how much money is thrown at a campaign and where that money came from. As an individual member, I say, "Shame on both sides for what they have done in the past." If the member for Ku-ring-gai wants to defend any party's corrupt practices, then shame on him because all members should be outraged by what has gone on. No member should try to make excuses in this place. Such practices, from both sides, are wrong and have undermined public confidence in the Parliament because the public knows—and people say this to me all the time—that interests outside the parties make the decisions now and not the individuals within the Parliament.

My community is still outraged by what happened. I was returned as member for Wyong at the next election. My margin has increased because people know—and I am pleased to put on record—that I obtained a loan to run my election campaign. I tried to self‑fund my campaign because I believe candidates should be responsible for themselves. The bill represents a good move and a step forward by the Government, but it is not enough. Both parties must continue to work towards a system of publicly funded campaigns with no more donations. Not a single member in this place would feel good having to seek donations and having pressure put on them to do so by those above, especially when they do not know who is attending an event and with whom their photograph is being taken. At some stage down the track the person may produce that photo and say the member was standing next to an illegal donor. All members in this place face that all the time.

Let us be realistic. Mr Righteous on the other side of the House, the member for Ku-ring-gai, says the problem lies only on this side. It does not. It lies on both sides, and always has. Every time the laws change everyone tries to work out a way around them, and we should all be ashamed of that. Every member in this place should stand up in Parliament and say, "We do not want to accept these practices any more." We want honest elections based on policy decisions, not on who can raise the most money. That is how the system currently works. As I said, this is my personal position as a member who lost his seat because someone went into the market, engaged in illegal practices and was able to use the money against me to unseat me. My community could not believe the amount of money thrown around in that campaign. People say to me that they would rather have people who are there for the community, not people who are there because donors—most of whom are illegal, as Operation Spicer stated—are giving them money for decisions.

Mining has always been one of the biggest issues in my community, and Liberal members stood there wearing their nice big red T-shirts saying "Water Not Coal" and made an absolute commitment to my community that they would move legislation and ban mining in the catchment. Barry O'Farrell said "no ifs, no buts". Members of the Australian Coal Alliance, the local organisation opposed to coalmining in the area, spoke to shadow Cabinet. The current Premier sat on that shadow Cabinet that gave an absolute guarantee to my community it would not allow mining to go ahead. Guess what happened straight after the election? Those opposite backflipped and allowed the mining company to put in an application that has now been approved. No-one in my community believes there was not some sort of influence involved in that decision-making process. Chris Hartcher, the Minister for Resources and Energy at the time, was a key person—

Mr Kevin Conolly:

Try saying some of that outside.

Mr DAVID HARRIS:

It is outside; it was revealed in Operation Spicer. I am relying on the facts.

TEMPORARY SPEAKER (Mr Gurmesh Singh):

Order! Government members will come to order.

Mr DAVID HARRIS:

Chris Hartcher was identified as one of those people who—

Mr Alister Henskens:

Point of order: This mining tirade that the member for Wyong is going on about has nothing to do with cash donations, which is the topic of the bill. He has not made reference to one cash donation to do with Operation Spicer in all his tirade. He has not referred to one cash donation. This is a bill about cash donations.

Ms Lynda Voltz:

To the point of order: The member for Ku-ring-gai has not identified the standing order to which his point of order refers.

TEMPORARY SPEAKER (Mr Gurmesh Singh):

Under which standing order does the member for Ku-ring-gai take his point of order?

Mr Alister Henskens:

It is relevance.

TEMPORARY SPEAKER (Mr Gurmesh Singh):

The member for Wyong is being generally relevant.

Mr DAVID HARRIS:Extension of time

Every member should be outraged by what has happened. The member for Ku‑ring-gai says that having a $100 cap on cash donations has nothing to do with it. Of course it does. Why would a cap be put on donations if people did not think there was something wrong with the system? The way the donation system works allows people to get around it and that is why the bill is needed. I absolutely support the bill. We will not clean up the system unless we go the whole hog and introduce public funding. That way candidates will not have to rely on donations or doing favours for other people. []

I suppose some people will make a donation because they think you are a nice person. But in most cases it is generally because either they support the way you think or maybe down the track they want you to act on their behalf on a particular issue. Something is always tied to donations; anyone here who does not think that is the case is blindingly ignorant. As a Parliament, we should ensure that the decisions we take are the best decisions because it is the right thing to do, not because we fear upsetting someone who has given us money.

Mr Alister Henskens:

Why didn't you disclose the $100,000 illegal donation before the election?

TEMPORARY SPEAKER (Mr Gurmesh Singh):

Order! The member for Ku-ring-gai will come to order.

Mr DAVID HARRIS:

I have just said that I condemn that as well. I condemn every practice and the path that has been taken.

Mr Alister Henskens:

Your party knew about it, and people in your party know about it. You probably knew about it.

Mr DAVID HARRIS:

I did not know about it, that is why I got a loan to fund my election campaign. That shows what I knew about how much other people were getting.

Public opinion has reached rock bottom when it comes to politicians and donations. The public sees too often that politics is corrupted and that the community is not getting the outcomes it deserves. I argue that both sides should get together to properly fix the system so that none of us is constantly besmirched by the actions of others. Whilst we have a system that relies on donations there will always be someone trying to get around that system. To say otherwise is just dishonest. The establishment of Operation Spicer and its results, which are currently being looked at by the Independent Commission Against Corruption, prove that there will always be people who will try to get around the rules and the system.

Let us be honest and acknowledge that the system is broken. Tinkering around the edges—such as imposing a cap of $100 or $50 on donations—will not fix it. We know that in Newcastle people were taking donations in paper bags and were being funded through intricate schemes such as Eight By Five or the Free Enterprise Foundation. We know also through the evidence that there was a system in place in the Labor Party. I do not agree with that scheme for a second. In fact, Labor Party members are probably under more scrutiny because we submit individual returns and make personal declarations.

TEMPORARY SPEAKER (Mr Gurmesh Singh):

Order! The member for Auburn will cease interjecting.

Mr DAVID HARRIS:

Perhaps it would be a step forward if every member in this place had to submit a personal declaration. But I still say that whilst there is a system in place that relies on donations there will always be issues. Not one member in this place, if they were being absolutely honest, would disagree with that. This is not the position of my party; this is my personal position as someone who almost lost his house and who became unemployed. I discovered through Operation Spicer that that happened because of dirty, illegal money. Members should wait until it is their turn before they disagree with me. They should wait until it happens to them, to lose their livelihoods and to see the impact on their family and the way their community looks at them, all because other people have engaged in illegal practices. You cannot understand it until you go through it. Members can throw all the bombs they want in this place but they should be honest. Every member on both sides knows that in the past people have done the wrong thing. Let us put our hands up and say, "Yes, we acknowledge that. Let us try and fix it." Let us get rid of the political point-scoring in this place and try to do the right thing for a change.

Mr MARK COURE (Oatley) (12:42):

:18 I speak on the Electoral Funding Amendment (Cash Donations) Bill 2019. The purpose of this bill is to amend the Electoral Funding Act 2018 to make it unlawful for a person to make or accept a political donation in cash of over $100. Further, the bill will ensure that significant political donations are traceable and transparent and therefore that such donations cannot be made in secret. This will limit opportunities to disguise the true source of political donations. The bill gives effect to one of the Government's commitments by adding a new section to the Electoral Funding Act 2018. This new provision makes it unlawful for a person to make or accept a political donation in cash that exceeds the value of $100.

In terms of stakeholder management, the Department of Premier and Cabinet has consulted with the NSW Electoral Commission on the proposal to prohibit cash donations and the terms of this bill. The Electoral Funding Act 2018 already provides a strong framework for political donations in New South Wales. Moving forward, this reform is an Australian first. It puts New South Wales at the forefront of transparency and integrity in political participation in the country and in the democratic world. This Government will not take a backwards step when it comes to ensuring integrity and probity in our political processes. The bill amends the Electoral Funding Act 2018 to make it unlawful for a person to make or accept a political donation in cash of over $100. This change will make it easier to trace and account for political donations by removing potential opportunities to disguise their true source.

The Electoral Funding Act 2018 already establishes a framework for political donations which includes donations caps and other requirements and provisions. For example, the Act caps political donations to registered parties at $6,400 per year. Political donations of $1,000 or more are required to be reported. Subject to the existing caps on donations and prohibited donor provisions, it will still be possible to make and accept political donations that exceed $100 using alternative payment methods. It is only cash donations, which cannot be as reliably traced or accounted for, that exceed $100 which will be banned. The $100 threshold has been carefully considered to strike the right balance between ensuring that political donations are traceable while avoiding an unreasonable administrative burden on parties, candidates and donors. The $100 limit allows for political donations to continue to be made in certain circumstances where a non‑cash alternative might not be feasible, such as buying raffle tickets at a fundraising event.

The prohibition will not affect the application of existing provisions in the Act, which ensure that multiple donations from the same source are to be aggregated for the purpose of the caps on donations and disclosure requirements. A contravention of the proposed prohibition of cash donations of more than $100 will be an offence under section 145 of the Act, which carries a maximum penalty of $44,000 or imprisonment for two years, or both. These penalties are consistent with the maximum penalties for comparable offences with respect to prohibited donations, such as making or accepting a donation from a liquor and gaming establishment or a property developer. The anti‑avoidance provision at section 144 of the Act will continue to apply to anyone who deliberately seeks to circumvent the caps on donations, prohibited donor provisions and disclosure requirements. I understand the Opposition supports this bill. I commend the bill to the House.

Dr HUGH McDERMOTT (Prospect) (12:46):

:35 I speak in debate on the Electoral Funding Amendment (Cash Donations) Bill 2019, which reforms the Electoral Funding Act 2018 to prohibit political donations in cash that exceed $100. The purpose of the amendment is to make political donations more traceable and transparent. Donation laws requiring the transparent handling of funds are critical to ensuring public trust in our democratic institutions. There have been too many instances in New South Wales where political parties have breached current laws. The Independent Commission Against Corruption [ICAC] has undertaken and continues to undertake several investigations and has made corruption findings in relation to electoral funding breaches over the last decade. During this period there have been multiple instances of donations made in cash that breach electoral laws. The nature of these cash donations makes it easier to hide their origins, making it possible for donation laws to be circumvented.

There have been a number of major operations by ICAC. I will discuss two recent operations, Operation Spicer and Operation Dasha. These operations identified a number of former members of this House who solicited donations from prohibited donors and then tried to hide the hundreds of thousands of dollars they had sought. I turn first to Operation Spicer. The ICAC investigated allegations that during the lead‑up to the 2011 New South Wales State election certain New South Wales Liberal Party candidates and others solicited and received political donations which were not declared, as is required by the Election Funding, Expenditure and Disclosures Act 1981. The allegations included that some of these political donations were made by and received from prohibited donors, such as property developers, and some exceeded the applicable caps on political donations.

The commission also examined whether in the lead‑up to the 2011 New South Wales State election members or associates of the New South Wales Liberal Party used or attempted to use the Free Enterprise Foundation as a means of disguising the true identity of donors and evading the prohibition on receiving political donations from property developers. I will go through the long list of former members of this Parliament investigated by ICAC. They start with Andrew Cornwell, former member for Charlestown, Garry Edwards, former member for Swansea, and Michael Gallacher. Michael Gallacher is interesting because there was no finding against him. Of course, I have a heckler in the Chamber who is absolutely right to say there was no finding against Michael Gallaher.

Mr Kevin Conolly:

Point of order: I ask that the member return to the leave of the bill, which is about cash donations—donations in cash or not. We are not banning donations. We are talking about the manner in which it is done.

TEMPORARY SPEAKER (Mr Gurmesh Singh):

Whilst the bill is quite specific, the member is being generally relevant.

Dr HUGH McDERMOTT:

Some of them did not actually have findings against them but it destroyed their political careers. Michael Gallacher, as a former police Minister, is a prime example of that. We read about him in the papers today. I hope that the Government gives him a formal apology. It destroyed his political career. Others included Timothy Owen, a former member for Newcastle; Christopher Spence, a former member for The Entrance; Chris Hartcher; Craig Baumann, a former member for Port Stephens; Darren Webber, a former member for Wyong; Bart Bassett, a former member for Londonderry; and Marie Ficarra, a former member of the Legislative Council. There were major issues. They either stood down or had to leave Parliament. Some had to go to the crossbenches.

I will turn now to the finding of facts by the Independent Commission against Corruption. ICAC found that the people I have mentioned, plus plenty of others, acted with the intention of evading laws—

Mr Kevin Conolly:

Point of order: I understand the Temporary Speaker's previous ruling. But if the member is now going to quote from a report that has nothing to do with this bill then clearly he is straying.

TEMPORARY SPEAKER (Mr Gurmesh Singh):

This is a second reading debate. The member is being generally relevant.

Dr HUGH McDERMOTT:

It concerns me that members opposite are trying to stop me from talking about these operations. We should all acknowledge that both sides of this House have had to deal with horrific forms of corruption. We are dealing with one now in the Labor Party—the $100,000 donation to a former general secretary—but I cannot talk about that in any detail until the report comes out, although I am sure those opposite will. I have mentioned a lot of people who are no longer in this House. They either lost their seats in the 2015 election or had to resign.

Then we go to Operation Dasha, which happened very recently, and concerned Daryl Maguire, a former member for Wagga Wagga. In that operation—in July of last year—Maguire accepted a cash donation and sought further donations. There were also allegations concerning public officials and former councillors from Canterbury City Council. I will not go into all the details. However, the background of what happened and its impact demonstrates why it is so important that this bill gets up. Indeed, that is why the bill is basically being supported by both sides of this House. As I have said, time and again we have seen corruption rear its dirty head in New South Wales. That has meant members of this Parliament have either had to be removed or—as we have seen previously—go to jail. We need to have complete transparency in our donation laws.

I return to Operation Dasha. Daryl Maguire resigned in 2017 from his seat of Wagga Wagga after admitting he sought payment to help broker a deal with a property developer. At that time, Labor called on Premier Berejiklian to launch a wider inquiry into the conduct of Mr Maguire and other MPs, which she refused to do. About that time, the Liberals cut ICAC's budget and restructured it to engineer the removal of Megan Latham—the commissioner who had led the investigation into a Liberal Party fundraiser before the 2011 State election. That is the one I have just discussed.

Once again, we see more cuts to ICAC by this Government. That is a problem for both sides of this House and it needs to be dealt with. It saddens me that Ministers sit in this House heckling when they should be supportive of it. They should own up to the issues in their own party, including with lobbyists and this issue. In 2016 the New South Wales Electoral Commission found the State Liberal Party received almost $600,000 in unlawful donations in the lead-up to the 2011 State election—mostly from property developers. The commission had frozen $4.4 million in election funding in the wake of revelations that the party had used money from banned donors to help bankroll its 2011 State election campaign. Prior to 2011 the Labor Party in government was on the nose. It was on its way out. It had been in government too long. But it amazes me that the Liberal Party nevertheless still sought millions of dollars from prohibited donors to bankroll its campaign. I will not go into the resignation of Barry O'Farrell because that involved a bottle of wine, not money.

In this legislation the limit of $100 was set to allow for minor donations to continue to be made in cash—for example, buying raffle tickets and payment for events-entry at grassroots fundraisers. It is important that we do not stifle the ability of candidates to raise money in that manner. Individual seat campaigns and local government elections are often run by groups of dedicated community members who raise small sums of money to ensure they can have a voice in our local democracies. While it is critically important for our democracy that election funding is transparent and fair, it is also important that small-scale campaigns can be run without unduly burdensome administrative requirements. The $100 limit strikes a reasonable balance between those two requirements.

This amending bill does not make any further changes to the Electoral Funding Act 2018. Any cash donations continue to count towards the donation cap and the disclosure cap for individuals, businesses and political parties. The Opposition supports the proposed amendments to the Electoral Funding Act 2018. I commend the bill to the House.

Mr MARK TAYLOR (Seven Hills) (12:55):

:42 I support the Electoral Funding Amendments (Cash Donations) Bill 2019. The exact problem that confronts us today has been demonstrated by the member for Prospect—that is, an inability to face facts about what is occurring today at the Independent Commission Against Corruption [ICAC]. The member for Prospect canvassed the history of the New South Wales Parliament but failed to get to the point—that is, the reason members are participating in this debate today is because of current actions of the Labor Party. Currently ICAC is investigating whether the New South Wales Labor Party, branch officials, members of Chinese Friends of Labor, political donors and others entered into or carried out a scheme to circumvent prohibitions or requirements under part 6 of the Election Funding, Expenditure and Disclosures Act 1981 relating to political donations. That inquiry is taking place down the road from the New South Wales Parliament as I speak.

As the Parliamentary Secretary for Police and Justice I am very pleased to participate in the second reading debate on the bill. On 16 October the bill was introduced in the other place by the Special Minister of State, the Hon. Don Harwin, it was received in this House on 23 October 2019 by the Minister for Transport and Roads, and the Minister for Water, Property and Housing moved for the bill's second reading on 14 November 2019. The bill reflects a single but important reform: To ensure the integrity of electoral funding in this State and consequently the integrity of democracy of the State. That goes to the heart of the role of members of Parliament—to represent the people of New South Wales—and that is based on trust. Representation is firmly based on members' ability to conduct themselves within the law of this great State.

I am particularly pleased to support the bill given my previous role as a member of the parliamentary Committee on the Independent Commission Against Corruption. I am proud of the important reforms, which were developed, made and promoted by that committee, that subsequently led to changes to the Independent Commission Against Corruption. The commission was established a number of years ago as an independent organisation. Its role is to protect the public interest and to prevent breaches of public trust by guiding the conduct of public officials in the New South Wales public sector. The commission was established by a former New South Wales Government in response to growing community concerns about the integrity of public administration in New South Wales. The matters before ICAC today fit precisely into ICAC's remit. It is disappointing for all members of this House that those matters are still occurring.

Many of the reforms that resulted from the ICAC process are reflected in the Act that is being amended today. The Act received assent in 2019 prior to the New South Wales State election campaign. I would argue that it strengthened the integrity of the democratic process that took place in the lead-up to, and the conduct of, that election. The Electoral Funding Act 2018, which the bill seeks to amend, already provides a robust regulatory framework for the making and receipt of political donations in New South Wales. The bill will further strengthen that framework in relation to political donations made or received in cash. Specifically, the bill will amend the Electoral Funding Act 2018 to make it unlawful for a person to make or accept a political donation in cash that exceeds $100. The change will make it easier to trace and account for significant political donations, removing potential opportunities to disguise their true source.

The Electoral Funding Act 2018 already establishes a rigorous framework for political donations, which includes donation caps, donation requirements and prohibited donor provisions. For example, the Act caps political donations to registered parties at $6,400 per year. Political donations of $1,000 or more are required to be reported. The Act also prohibits donations from property developers and those involved in tobacco, liquor or gambling industries. The bill strengthens that framework by ensuring that donations over $100 are traceable and transparent. The reform will strengthen the ability of the Electoral Commission to identify potential contraventions of the disclosure requirements, caps on donations and prohibited donor provisions under the Act.

Improving the traceability and transparency of donations over $100 will make it harder to mask the source of a significant political donation. It will promote compliance with the legislative framework for political donations while improving the integrity of the electoral system more broadly. The bill makes simple changes to the regulatory framework that are proportionate and measured. Subject to the existing caps on donations and prohibited donor provisions, it will still be possible, using alternative payment methods, to make and accept political donations that exceed $100. Only cash donations that cannot be as reliably traced or accounted for and that exceed $100 will be banned. The $100 threshold has been carefully considered to strike the right balance between ensuring that political donations are traceable and avoiding an unreasonable administrative burden on parties, candidates and donors.

The $100 limit provides for political donations to continue to be made in certain circumstances where a non‑cash alternative might not be feasible, such as buying raffle tickets at a fundraising event. The prohibition will not affect the application of existing provisions in the Act, which ensure that multiple donations from the same source are to be aggregated for the purpose of the caps on donations and disclosure requirements. The current aggregation provisions will continue to apply to cash donations, subject to the existing exemption in section 57 of the Act for certain small donations of $50 or less. A contravention of the proposed prohibition of cash donations of more than $100 will be an offence under section 145 of the Act, which carries a maximum penalty of $44,000 or imprisonment for two years or both. The penalties are consistent with the maximum penalties for comparable offences with respect to prohibited donations, such as making or accepting a donation from a property developer.

The anti-avoidance provisions at section 144 of the Act will also continue to apply to anyone who deliberately seeks to circumvent the caps on donations, prohibited donor provisions and disclosure requirements. The bill makes a proportionate and necessary change to the Electoral Funding Act 2018. The bill will strengthen the legislative framework for political donations in New South Wales by making political donations more transparent and traceable. The reform is an Australian first and puts New South Wales at the forefront of transparency and integrity for political participation in the country and the democratic world. This Government will not take a backward step when it comes to ensuring integrity and probity in our political processes. As the member for Prospect said, it is time members opposite started talking about today and stopped living in the past.

Ms TANIA MIHAILUK (Bankstown) (13:03):

:42 I make a brief contribution to debate on the Electoral Funding Amendment (Cash Donations) Bill 2019. The Opposition supports the bill. I commend the Government for introducing this important reform. However, the Government must be mindful of a couple of issues in the bill, which may need some amendments. I will raise one particular concern later in my contribution. The bill seeks to amend the Electoral Funding Act by inserting new section 58 to impose a limit of $100 on political donations made in cash. The term "political donation" is already defined in the Act and includes a gift made to or for the benefit of a party or a group of candidates, as well as an elected member, a candidate or an entity when it is intended that the whole or part of the gift be used for the sole or substantial purpose of an election or to enable the making or reimbursement of a political donation or the incurring of electoral expenditure. A political donation may also include party membership fees and contributions made at fundraisers that are made for no consideration and where those payments are taken to be a gift under the Act.

The new section makes it unlawful for a person to make or accept a political donation in cash that exceeds the value of $100. The capping of cash donations will allow for better transparency and enforcement of political donation rules by ensuring that donations exceeding $100 are made by means such as electronic transfer or cheque, which are easily traceable. My only concern is around gift cards being used as a credit cards. I would appreciate it if the Minister addressed that issue in his speech in reply. We are aware that gift cards are now used as bank cards. Payments made by gift cards could be made in such a way that they were untraceable. That issue requires further clarification. For example, gift cards purchased at a post office or certain news agencies are often used to make purchases on the internet and they do act as a bank card or credit card. For the purposes of this bill, are those gift cards able to be used for the purposes of political donations? If they are and they do not fall within the scope of this bill, those transactions would not be traceable, and that would be an issue. I seek further clarification on that.

So much more needs to be done in this space, but it is not only for the State Government to tackle this issue, it is also for the Federal Government. While developer donations are still legal at the Federal level, all the State‑level efforts in this space for both local government and State election purposes are inadequate. In this climate, where political donations, including developer donations—which are clearly banned at the State level—continue to be acceptable at the Federal level, there are concerns for all political parties, particularly the major political parties that still rely on these donations. The potential impact and undue influence that developers who donate at a Federal level can have on other elections is concerning. I note that New South Wales local government elections will take place next year and candidates within all the parties will seek preselection. I would be greatly concerned if there were candidates who were being influenced in any way, shape or form by individuals making donations at a Federal level to political parties and then seeking preselection at a local government level or to influence the outcome of the preselection process.

I raise that concern for all parties—my own, in particular. I always give my own party some advice. Over the years I have experienced a whole range of issues as the member for Bankstown. I have seen corruption at its worst. My council was amalgamated with a council that still has an unfinished ICAC investigation. I never agreed to that. I raise concerns because that ICAC investigation is still not complete, but we were forcibly merged with that council. Next year we will have a local government election. Section 144 of the Act provides a maximum penalty of 10 years imprisonment for a person who enters into a scheme, whether alone or with others, for the purpose of circumventing political donation rules, which may also apply to a contravention of the new section 50A created by the bill.

I am sure all members will agree that it is critically important for the public to be confident that our electoral system is transparent. While the bill helps to ensure the integrity of the system to some degree, more reforms are needed at all levels of government to ensure that we eliminate the influence of people, such as developers, on our system of government. I welcome those particular changes and I note that there is provision to allow for some sorts of cash donations for raffles and so forth. I want to be confident that any cash donation above $100 is traceable and transparent so that if the Electoral Commission undertakes an investigation there is an opportunity to trace those funds. It is important that we clarify that the bill cannot be circumvented in any way, shape or form by the use of gift cards or bank cards that are not easily traceable. I mentioned earlier that there could be some opportunity for abuse in that regard. I would like the Minister to clarify that in his reply.

Mr KEVIN CONOLLY (Riverstone) (13:10):

:57 I support the Electoral Funding Amendment (Cash Donations) Bill 2019. People throughout our community need to be able to have faith in our electoral system. The reason we have rules around electoral funding and donations is to know that there is not disproportionate hidden influence on the politicians who are making decisions in places like this. The purpose of it being out in the open is so that when I advocate for a policy the people know that I am supportive of that policy. If someone has supported me financially to do so, that can be seen: It is transparent and on the record. Not only that, donations are also capped so that any influence is not disproportionate to the influence any other member of the community may choose to have on the political process. Donations are a healthy element of our political process. They are a healthy way for a member of a community to put their support behind a cause that they believe in. As long as it works within a regime of caps and transparency, it is like donating time on an election day. It is about someone putting their effort, money and support towards a particular cause. That is a good thing. Democracy needs the involvement of people to make it work.

Why are we here today? This bill has been introduced because some people have deliberately tried to exploit the rules to hide the influence they seek to have, to hide the identity of the people making donations and, at the same time, exceed the allowable caps. An individual wanted to make a $100,000 donation without being known and to pretend it came from donations underneath the cap of many other people. It turned out that the only way that was achievable under the current arrangement was to make the donation in cash because there is no cheque, electronic transfer or bank debit. You can only see that cash was donated and it could have come from anybody. That was the scheme hatched by the General Secretary of the Labor Party to hide the source of that donation to the party. This is different from the mudraking and smearing that some Labor members have engaged in this morning, because it is still happening. The beneficiaries of the scheme are still on the other side of the Chamber, some of them on the front bench. That is the difference.

Under Premier Mike Baird we amended the Act after various things were exposed by ICAC. We amended section 144, increased the penalties and closed the door on activities that had become apparent. Never mind that many of the people whose careers were destroyed had no findings against them at ICAC but were collateral damage for an overenthusiastic Geoffrey Watson; when issues were exposed we legislated to close those loopholes. This is one more loophole that has become apparent because of activities benefiting Labor in recent times and benefiting people still sitting on the Opposition benches. That is the difference. We are dealing with an activity by those on the other side of the Chamber that is corrupting the system and needs to be fixed. Now that we have found out about this loophole, we are closing it—just as we closed the last lot under Premier Baird when they became apparent through the ICAC process. The Liberal Party and The Nationals will always move to fix and tighten legislation in the interests of transparency and integrity so that people can have confidence in the system.

It is a sad day when we have to do this, but that is the reality and we are dealing with it. It would be a far better thing if the Labor Party would leave aside the pretence that this is even‑handed and happens on both sides. They did not move to close this loophole, even though they probably became aware of it long before we did. It would have been common knowledge on the other side of the House.

Debate interrupted.

TEMPORARY SPEAKER (Mr Gurmesh Singh):

I will now leave the chair. The House will resume at 2.15 p.m.