I present the second advisory report of the Joint Standing Committee on Electoral Matters on the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017, and I move:

That the Senate take note of the report.

The government approached the Joint Standing Committee on Electoral Matters to seek its views on proposed amendments to the Electoral Legislation Amendment (Electoral Funding and Disclosure Reform) Bill 2017. I am pleased that the government gave the committee the opportunity to review its proposed amendments to the bill. This bill prohibits the use of foreign donations to influence voting in federal elections. It is vitally important that Australians have confidence that foreign entities are not influencing the course of Australian democracy.

The government has worked constructively with JSCEM, sharing its proposals with the committee to facilitate scrutiny of the changes and to enable wide consultation with the public on the proposed reforms. Indeed, JSCEM has considered the matter three times, including an initial inquiry that considered the general issue of foreign donations, which reported in March 2017; an inquiry into the bill in its original form, which reported in April 2018; and then the current inquiry into the proposed government amendments to the bill, which we are reporting on today.

As chair I have appreciated the collaborative approach of JSCEM members during this inquiry and I recognise the work that has been invested in the preceding two inquiries in support of a goal that a foreign political donation ban must apply to all relevant electoral expenditure. I also appreciate the extensive input into the committee’s deliberations from charities, academic institutions, think tanks and various non-government organisations with an interest in public affairs. In the committee’s report tabled in April there were 15 recommendations. The minister responded positively to these proposals last month, sharing a draft of specific legislative amendments to address the majority of those recommendations that require a legislative response.

The minister’s response to our last report also explained the government’s plans for advancing the remaining proposals that need administrative action or warrant inclusion in other reforms—for instance, recommendation 14 dealing with breach of DGR obligations. In its proposed amendments the government has addressed all prior recommendations relating to reducing the compliance burdens for political actors. I highlight four changes in particular. The amendments establish a single transparency register on which key political actors are required to report electoral expenditure and large gifts. Most importantly, the new definitions ensure that pure issue advocacy is not treated in the same way as campaign activity. The new terms ‘electoral matter’ and ‘electoral expenditure’ will capture only activity that is aimed at influencing how people vote in a federal election. The new general anti-avoidance provisions are a welcome, simplified replacement for more-specific provisions while still protecting national sovereignty, voter transparency and democratic freedoms. Another important simplification is revision of penalty provisions, making them more proportionate to the scale of the breaches.

The government’s draft recommendations go further than the committee’s recommendations in two areas, to minimise red tape without compromising the bill’s core policy objectives. First, in evidence submitted to the committee’s inquiry, representatives from the not-for-profit sector indicated that there has been widespread inadvertent noncompliance with longstanding disclosure obligations in the sector. To assist these third parties with the transition to the bill’s new requirements, the amendments provide statutory forgiveness for historical noncompliance. Second, the committee recommended that the bill include anti-avoidance rules dealing with the movement of funds through other organisations or jurisdictions. In responding to that earlier JSCEM proposal, the government proposed changes that would ensure that the Commonwealth laws apply to donations that may be spent on federal elections.

Of particular relevance, the committee took evidence about complications that arose from the Awabdy case, which was decided in the Queensland courts earlier this year. The court case found that there can be a concurrent overlap between the laws of different jurisdictions. If the government had not proposed amendments, there would be confusion for regulated entities. Such ambiguity would increase the regulatory compliance burden for affected entities. The committee heard evidence from legal experts in constitutional law about drafting amendments to clarify which laws apply when. Professor Anne Twomey suggested that there was a drafting flaw in the amendments. But if that issue was addressed, then the rule to prevent state and territory laws from regulating donations for federal elections would be considered valid and appropriate. As Professor Twomey said:

These provisions need to be altered to ensure that the Commonwealth law does not purport to override the State law where the donation concerned is used for the purpose of State electoral expenditure. Certainly, if it is used for Commonwealth electoral expenditure, then the Commonwealth law should prevail over the State law.

This view is endorsed in recommendation 10 of the committee report, which proposes an adjustment of the rule on the interaction of laws to safeguard the legitimate interests of states and territories in regulating donations within their jurisdictions.

The opposition has flagged in its dissenting report that the Commonwealth law should not interfere with legitimate state legislation. However, I would note that this principle ought to work in both directions, as it would be inappropriate for state and territory law to regulate donations that are used for federal elections. I would hope that appropriate adjustments can be made to the government’s amendments to ensure that Commonwealth law applies to donations for federal elections while state and territory laws apply to donations for state and territory elections. I don’t think the opposition is far apart from the committee’s recommendation 10. I would encourage the opposition to engage positively with the government on the detail of the relevant amendments after the government has reconsidered the wording. Just as this bill would ensure that only those with a meaningful connection to Australia are able to fund Australian political activity, it is also appropriate to ensure that only the laws of the Commonwealth apply to the regulation of donations made for the purposes of a federal election.

The committee made a number of other constructive suggestions with cross-party support. I expect that the government will consider these on the same positive basis that it considered the proposals in our earlier report. These important reforms are necessary to support the integrity of Australia’s electoral system and ensure that Commonwealth electoral laws keep pace with international developments.