MPs told to respect donation laws

Illustration by Karl HilzingerAN EXPERT panel advising on electoral funding reforms has rebuked two Hunter MPs for criticising laws and downplaying the seriousness of dodgy donations.

The panel, appointed by the Baird government and headed by former public servant Kerry Schott, has recommended sweeping changes to enforcement efforts that ‘‘cannot come a moment too soon’’.

Members of Parliament ‘‘cannot pick and choose which laws they will comply with simply because they feel that some laws are ‘bad’ or ‘unfair’,’’ the panel said in its final report released on Tuesday.

It has issued 50 recommendations, including the need for NSW to push for nationally consistent donations laws, in the wake of the ‘‘systemic failure’’ exposed by the state’s corruption watchdog.

The public had been left in ‘‘shock and disgust at the brazen way in which some candidates and MPs have apparently sidestepped political donations laws for personal and political gain’’ in the lead-up to the 2011 state election.

The panel, also including former Liberal shadow attorney-general Andrew Tink and former Labor deputy premier John Watkins, wants the ban on donations from developers and the liquor and tobacco industries to remain, pending the outcome of developer and former Newcastle lord mayor Jeff McCloy’s High Court challenge to the laws, set for late January.

It expressed concern over public statements by retiring Port Stephens MP Craig Baumann and Swansea MP Garry Edwards.

Mr Baumann described the laws as ‘‘inherently unfair and bad legislation’’ and Mr Edwards said none of his Hunter Liberal colleagues whom the Independent Commission Against Corruption investigated had ‘‘acted at any time in any improper way and never dishonestly’’.

‘‘The public is entitled to expect its elected members, its lawmakers, to show respect for the rule of law,’’ the panel said, noting allegations aired at ICAC, if proved, could not be considered ‘‘minor’’ breaches.

Both were among MPs forced to the crossbench after the ICAC uncovered alleged secret donations to their campaigns from Mr McCloy, who has denied he personally could be considered adeveloper despite his property development interests.

The panel was convened to advise on long-term reforms following ICAC revelations, which also forced the resignations of Newcastle and Charlestown MPs Tim Owen and Andrew Cornwell. But it said the allegations, particularly the use of slush funds and other entities to ‘‘wash’’ illegal donations and channel them into Liberal coffers, followed on from corruption inquiries into former Labor ministers and showed sweeping changes ‘‘cannot come a moment too soon’’.

‘‘An important question raised by the ICAC’s allegations is why neither party intervened at an earlier stage given the nature of the alleged activity in both major parties,’’ the panel said.

The developer ban should stay as there was no cap yet on local government donations, and the removal of the ban in those circumstances would ‘‘enliven corruption risks given the planning and development responsibilities of local government’’.

It considered a model of full public funding for elections to get rid of donations altogether, but found the arrangements would be impractical, could cost the taxpayer about $100million over a four-year election cycle and may not be valid anyway under the Constitution.

Instead, the panel backed most of the existing caps and disclosure thresholds, with the exception of recommending the election-timed spending limit for unions and other third parties be halved to $500,000. But it wants stricter requirements for parties, saying they should be held to the same standards as other organisations that receive public money.

The Auditor-General would be brought in for the first time to scrutinise party claims for funding of administrative costs and to run an eye over annual financial statements. The major parties would be made legal entities that could be prosecuted and ‘‘official party agents’’ positions would be scrapped in favour of holding candidates responsible for their campaign funds.

An example of the need for such a change was Mr Owen’s ICAC evidence about how he wondered about the source of money ‘‘sloshing around in the campaign’’ but ‘‘I just sort of kept my nose to myself’’.

‘‘Elected members and candidates cannot have it both ways,’’ the panel said. ‘‘They cannot be involved in sourcing funds from donors for the benefit of the party and themselves, while at the same time deferring responsibility to an agent.’’

Senior party officials would not be able to shrug off responsibility for breaches, instead being held personally liable for not fulfilling their obligations, in the manner of company directors.

Parties would have to make more detailed disclosures, indicating when a donation was intended for a specific candidate or where electoral spending targeted a specific seat.

Real-time disclosures should be introduced for campaigns, and the Electoral Commission should switch focus from administrative activities to enforcement and withhold funds from parties that don’t obey the rules.

The government said it would respond by the March election. In October, it increased penalties for electoral funding offences, in line with the panel’s interim findings.