Foreign donations pour into the Liberal and National parties

 

The following article by Mike Seccombe (The Saturday Paper’s national correspondent  27 January 2018), provides a good insight into the the fallacy of the Australian government’s foreign donations legislation. The Liberal and National parties are tied into the mining industry, the largest part of which is foreign owned and donates generously to both.

We knew about the foreign antecedents and dubious practices of some of the more prominent members of the Minerals Council of Australia already, of course.

We knew about Peabody, for example, the largest private coalmining company in the world. It has been well publicised for many years that the American company was one of the major funders of climate change denial organisations and front groups. It is well known, too, that the company filed for bankruptcy in the United States in April 2016 but emerged from it a year later after Donald Trump’s election brought a surge in its share price.

Then there is Glencore, another coalminer, the world’s largest commodities trading company and, according to the Australian Tax Office and Paradise Papers, a major tax dodger in this country and elsewhere, with an unsavoury history of dealing with corrupt regimes and sanctions busting around the world. It is Swiss.

Of course, we knew a lot about Gautam Adani, the Indian billionaire and his eponymous company, proponent of the giant, controversial Carmichael coalmine in Queensland. His company’s history of international tax avoidance, failure to comply with environmental laws, and labour and human rights abuses have been well documented by civil society groups and the media, including The Saturday Paper.

“Foreign money from the multinationals or billionaires will continue to flow, and there’s no cap on the amount that can come in”

But new analysis of the ownership of the member companies of the Minerals Council of Australia, the peak lobbying body of the mining industry, shows foreign interest doesn’t stop with these major operators. About a third of the council’s members are wholly foreign owned, or subsidiaries of foreign-owned companies.

The work, carried out by Ross McClure of the University of Technology Sydney business school, at the request of the activist group GetUp!, set out to identify the “global ultimate owner” of every member of the Minerals Council.

The aim of the exercise was to make a point about foreign influence on Australian politics. For, as the council conceded only a week ago in its formal response to a Senate committee inquiry into the political influence of donations, it gives money to political parties to buy access so it can “update members of parliament about conditions in the Australian minerals industry and the policy priorities of the MCA”.

Perhaps some credit should be given to the MCA for the admission that it gives to political parties in furtherance of its efforts to lobby for policy outcomes. Many other business donors – including Crown Resorts, the Insurance Council of Australia, the Financial Services Council and the ANZ bank – continued to insist, in their responses to the inquiry, that they gave money for the altruistic purpose of supporting democracy.

The reality, though, is particularly obvious in the case of the mining lobby group and its constituent members, given their long history of massive spending in pursuit of policy changes to advantage their corporate interests, both directly, through party donations, and indirectly, through “third party” campaigns such as those against the Labor government’s mining and carbon taxes.

And, as McClure’s analysis shows, those interests are substantially foreign. It shows 15 of 48 members are 100 per cent foreign owned. Less than half the companies are publicly listed in Australia.

Those ultimate owners or largest shareholders, it shows, were incorporated in various places. As noted earlier, Peabody is a US company, while Glencore and the Australia-based Adani Mining’s parent, Adani Group, were incorporated in the tax havens of Switzerland and Singapore respectively. Other members of the Minerals Council were based in places including Canada, South Africa, Bermuda, Japan and France. The ultimate owner of one was a Chinese state-owned company.

Why does this matter?

Well, if you accept the rhetoric of the Turnbull government you might conclude it matters because the flow of foreign money into the Australian political process represents a threat to our democracy.

At the end of last year’s parliamentary sittings, in the wake of the scandal involving Labor senator Sam Dastyari’s links to China, the government introduced legislation proposing sweeping changes to Australia’s electoral funding laws, purportedly to prevent potentially corrupting flows.

In his speech introducing the electoral funding and disclosure reform bill, Finance Minister Mathias Cormann noted “concern amongst the community about foreign interference with our domestic political landscape”.

“Media reports of foreign donations to parties, candidates and third parties have affected the perceived integrity of elections, which is critical to our peaceful democratic government,” he said.

To keep foreign money out of Australian elections, Cormann said, the government planned to ban “political parties, candidates, Senate groups and significant political campaigners” from receiving “foreign gifts over $250, or any money transferred from foreign accounts”.

That sounds good on its face, except that the detail of the government’s proposed legislation suggests it is less about curtailing the influence of foreign money than about nobbling advocacy by domestic charities and other civil society groups.

Which is the point GetUp! is seeking to make in its analysis of the membership of the minerals council: that multinational corporations, which are by far the biggest sources of foreign money in the political process, will be unaffected. GetUp! would face audits, but at the Minerals Council it would be business as usual.

“They won’t be impacted by this legislation at all,” says GetUp!’s national director, Paul Oosting.

“Foreign money from multinationals or billionaires will continue to flow, and there’s no cap on the amount that can come in.

“All you need to do is have a bank account, a local entity set up, even a shell company, and you will be able to … donate to political parties or run your own campaigns, just as we’ve seen the Minerals Council do, spending tens of millions in knocking off the mining tax, the carbon price, among other things,” Oosting says.

“Adani will be able to funnel money from its operations in India and continue to be a major donor to the Liberal Party. Instead, this legislation has clearly been designed to silence the charitable sector.”

Notably, the concerns voiced by GetUp! are substantially shared by the Institute of Public Affairs. The right-wing think tank has warned the changes risked curtailing the activities of charities, professional associations, even churches, which seek to advocate a cause in opposition to government policy.

“My concern is it will cast a very wide net at anyone expressing a political opinion,” the institute’s executive director, John Roskam, told Guardian Australia a couple of weeks ago.

Which, it would appear, is exactly what it is intended to do, notwithstanding Cormann’s assurance when introducing the legislation.

“This bill does not restrict the ability of charities to receive foreign gifts for non-political purposes,” said Cormann. “Nor does it restrict the political activities that charities can engage in with contributions from Australians.”

However, “to maintain the integrity of the foreign donations ban, no entity will be permitted to use foreign money for their political expenditure”.

In reality, this means any organisation that has spent more than $100,000 on “political” activity or advocacy in any of the previous three years, or $50,000 in the current year, must register as a “political campaigner”. They then become subject to an onerous provision requiring them to report which bits of their income were spent on what activities.

The proposed legislation threatens to see charitable groups categorised as “associated entities” of opposition parties, simply for advocating against government policies.

It’s a trick straight from the playbook of the conservative governments of Canada and Britain, which also sought to shut down critical civil society groups by gagging them with red tape and the threat of heavy penalties if they transgressed.

“We know from that international experience that when governments interrogate the lobbying activities of charities, require an audit of the income and details of their advocacy, it serves to frighten many charities into inaction,” says David Crosbie, chief executive of the Community Council for Australia.

“In this country, charities are already heavily legislated when it comes to political parties and elections. They cannot support a particular candidate, cannot donate any money to any party, cannot support any political party and cannot hand out how-to-vote cards or propose that people vote a specific way. All they can do is advocate on their issue.

“Those restrictions do not apply to the Minerals Council or any private entity. They can do all those things that charities can’t and get a tax deduction for doing them.”

Crosbie scoffs at the suggestion foreign donations to civil society groups could undermine the integrity of the electoral system.

“There is no evidence, anywhere, of foreign money coming into the country and supporting charities to advocate for foreign interests,” he says.

“The biggest single source of foreign money is Bill Gates, and most of that money goes to health research. Presumably under these changes anyone who gets money from Bill Gates would not be able to speak up about the need for more health research.

“Apparently now you should not be able to advocate in areas in which you have expertise and community knowledge; we have a government that would not allow people to advocate for the poor to be better looked after, or for the environment or for more investment in education and health.”

Crosbie has no doubt the proposed measures are primarily directed at a few charities, particularly environment groups, with which the government and its backers in the Minerals Council have major issues, because of their criticism of climate change policy and green issues.

“But our view is that is called democracy,” says Crosbie, “and attempts to stifle the voices of charities and advocates undermines that democracy.”

The debate over the government’s move has some distance to run. Submissions to the parliamentary inquiry closed this week. They have yet to be released. Next week, the committee begins public hearings. On past form, we can expect the Greens and Labor to oppose the plan to nobble charities.

Even if the government does ultimately manage to get its changes through the Senate, a number of civil society groups, including GetUp!, have flagged their preparedness to take the issue to the High Court, to argue the government’s muzzling of dissent breaches Australia’s implied freedom of political expression. A number of respected constitutional lawyers suggest they would have a strong case.

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