Coalition bill to ban foreign political donations passes Senate

The government’s bill to ban foreign political donations has passed the Senate after backroom negotiations with Labor resolved a dispute about the Coalition’s attempt to override state donation laws.

The electoral funding and disclosure bill is the third plank for the Coalition’s foreign interference package to pass the Senate after bills to strengthen espionage offences and set up a foreign influence register passed in June.

Labor used the bill’s passage on Thursday evening to call on the Liberal and National parties to voluntarily stop taking foreign political donations, as it will not become law until it goes from the Senate and is passed by the House of Representatives.

The passage of the bill in the Senate was welcomed by civil society groups in the Hands Off Our Charities coalition including the Australian Conservation Foundation, which were pleased that substantial amendments had clarified and rolled back proposed new red tape on charities.

The Greens remained critical of aspects of the legislation, citing advice that despite the Coalition and Labor’s assurances the bill may create a loophole for political parties to restructure their finances to avoid state developer donation bans.

But despite those warnings the heat was taken out of Senate debate on Thursday morning when the Labor deputy leader in the Senate and shadow special minister of state, Don Farrell, confirmed the opposition would support the bill.

Labor succeeded in making a symbolic second reading amendment calling for the threshold for disclosure of political donations to be reduced to $1,000. A suite of Greens amendments, including to cap all political donations at $1,000, failed.

The Greens’ democracy spokeswoman, Larissa Waters, said the bill attempted to regulate only the 6% of political donations from foreign sources, leaving 94% of donations which “corrupt democracy” unregulated.

Waters said the bill “doesn’t even stop all” foreign sources of money, because of the potential for foreign companies to donate through Australian subsidiaries and the exception allowing foreign residents of Australia to donate.

Waters noted that Sam Dastyari’s dealings with the Sydney-based Chinese businessman Huang Xiangmo would therefore not even be captured by the law.

“It is not drafted in a way to actually fix the problem of corporate control of our democracy,” she said. “Everybody in this place knows exactly that. I think the Australian public won’t buy this either.”

Although Labor always supported the bill’s aim of banning foreign political donations, it became controversial when charities and not-for-profit groups lobbied against proposed rules regulating their campaigning activities.

The Australian Conservation Foundation chief executive, Kelly O’Shanassy, said the original bill would have “redefined non-partisan, independent, issues-based advocacy as political campaigning” and “prevented many groups from receiving international philanthropy for important public interest work”.

Farrell and Labor’s charities spokesman, Andrew Leigh, accused the Coalition of trying to “hijack this important reform and use it as an opportunity to shut down their critics”.

“And if they had gotten their way, Australia’s charities and not-for-profits would have been reeling from yet another Coalition attack on their right to play an active part in our democracy,” they said.

After a bipartisan joint standing committee on electoral matters report in April, the bill was amended to clarify that issue-based campaigns are not captured in the definition of “electoral matters” that attract the higher transparency measures.

O’Shanassy said the final bill was a “significant improvement on the original proposal, addressing many of the concerns raised by charities and non-profits”.

The Coalition and Labor bipartisan push to pass the bill was threatened in September by a new set of government amendments that included provisions to override state and territory donation laws unless donors specified their funding was only for state elections.

Academics warned the provisions would override state laws including bans on political donations from developers and stricter caps on donations, expenditure and disclosure.

Labor objected to the “state immunity provisions” but negotiations between the finance minister, Mathias Cormann, and Farrell overcame the objections by inserting further amendments to clarify if donations are ultimately spent on state campaigns the state law would apply.