Non-profits caught in Electoral Bill

The Electoral and Other Legislation (Accountability, Integrity and Other Matters) Amendment Bill 2019 (Qld) (Bill) was introduced into the Legislative Assembly on November 2019 and referred to a committee for examination. In February the Committee released its report which recommends that the Bill be passed, but its only other recommendation was that non-profit organisations have a higher threshold for engagement under the new provisions.

Overview of the Bill

There is an increasing trend for Australian jurisdictions to more tightly regulate election financing, to address growing concerns about the escalating campaign ‘arms race’ and the potential undue influence of private funds in the electoral Caps on political donations are now in place in New South Wales and Victoria, while New South Wales, SA, the ACT, and the NT have all implemented caps on electoral expenditure.

The Bill contains a series of significant amendments relating to:

• funding and expenditure for State elections;
• signage at State elections;
• dishonest conduct of Ministers; and
• dishonest conduct of councillors and other local government matters.

The Bill proposes to:

• introduce caps on political donations and electoral expenditure;
• require election participants to maintain dedicated campaign accounts (to support the integrity of, and compliance with, the donations and expenditure caps);
• increase public election funding for eligible political parties and candidates;
• increase and expand access to policy development payments; and
• implement related administrative and disclosure requirements and other clarifying provisions.

The Bill inserts a new definition of ‘electoral expenditure’ for the expenditure cap scheme, providing that electoral expenditure means any expenditure (including the giving of a gift-in-kind) which is incurred for, or related to, the purposes of:

• promoting or opposing (directly or indirectly) a political party in relation to a State election
• promoting or opposing (directly or indirectly) the election of a candidate; or
• otherwise influencing (directly or indirectly) voting at State elections.

The length of the capped expenditure period is 12 months, which is long by world standards.

The Bill will apply to what is known as ‘third parties’ which includes charities and community organisations.

Expenditure incurred by a third party will only be electoral expenditure if the dominant purpose of the expenditure is one of these purposes. The first 2 purposes are unlikely to be activated by charities because of the constraints placed on them by the ACNC and the Charities Act (Cth).  However, the third, “otherwise influencing (directly or indirectly) voting at State election” is very wide and the committee was asked to consider if a local community organisation or church organised a “meet the candidates” event would be caught.  Some might say that the purpose of such a meeting was to influence voting, albeit to be informed and even if no party was suggested or favoured.

Additionally, to fall within the Bill’s definition of ‘electoral expenditure’, expenditure must be one of the following kinds of expenditure:

• expenditure for designing, producing, printing, broadcasting or publishing an advertisement or other election material including an advertisement for broadcast on radio or television, at a cinema or using the internet, email or SMS; or for distribution in letters or publication in newspapers, magazines, on billboards or as brochures, flyers, how-to-vote cards or information sheets;
• expenditure for the direct cost of distributing an advertisement or other election material, including, for example, the cost of postage, sending SMS messages or couriers;
• expenditure for carrying out an opinion poll or research; or
• expenditure of another kind prescribed by regulation.

Again, most community organisations and particularly charities are unlikely to have this type of expenditure, apart from “expenditure for carrying out an opinion poll or research” unless they are seriously into advocating for issues. However, an organisation may within the electoral period produce some research and after published it becomes through other events a highly politicised matter.

Third parties – non-profit and charity

A third party would be required to be registered for an election if electoral expenditure incurred by, or with the authority of, the third party during the capped expenditure period for an election, exceeds $1,000.

It was pointed out to the committee that this is a very low threshold, particularly when over a 12 month electoral period. Victoria has a threshold of $4,000 per financial year and those appearing before the committee suggested figures over $5,000 were more appropriate.

A significant issue is the administrative burden that a third party could cause by exceeding the $1,000 threshold.

The Bill clarifies that a third party does not commit an offence if the third party is not registered. However, while a failure to register is not in and of itself an offence.  If the unregistered third party were to incur electoral expenditure in excess of the $1,000 threshold for registration, this would amount to an offence under the expenditure cap scheme, noting that the Bill sets the maximum amount an unregistered third party can spend on an election as equal to the threshold for

To cover the circumstances in which a third party plans to, but is yet to incur, electoral expenditure, the amendments provide for voluntary third party registration.

The Electoral Commission of Queensland (ECQ) would be required to keep a register of the third parties who are registered for the election, and would be required to publish the register of third parties for the election on the ECQ website.

Third parties that incur electoral expenditure of more than $1,000 would be subject to the donation caps, the expenditure cap, and to administrative obligations including:

• registration with the ECQ (and updates on any changes to details)
• maintaining and  managing  state  campaign  accounts  for  political  donations  and   electoral expenditure
• managing political donations throughout the four years leading up to the election and managing electoral expenditure (typically in the year leading up to a polling day) in accordance with the scheme caps and, and issuing donor statements to donors in respect of contributions made
• record-keeping in relation to all political donations and electoral expenditure
• adhering to real-time disclosure requirements, and
• lodging returns with the ECQ in relation to electoral expenditure following each election.

The costs of compliance might well exceed the actual expenditure on advocacy by a charity or community organisation.

For these reasons the Committee recommended that:

“the Attorney General and Minister for Justice consider amending the Bill to address the concerns of small, not-for-profit third party organisations regarding the regulatory burden of the political donation and electoral expenditure cap schemes, such as by increasing the threshold for third party registration.”