Election Funding Amendment (Political Donations and Expenditure) Bill 2008
Local Government and Planning Legislation Amendment (Political Donations) Bill 2008

Debate resumed from 18 June 2008.

The Hon. DON HARWIN [11.20 p.m.]: In an answer to a question in the other place on 28 February 2008 the Premier said, "We will ensure that there is reform, not just change" to the State's laws on electoral and political party funding and expenditure. After reading the provisions of the bill, it is difficult to avoid the conclusion that the Premier has not passed his own test. The bill has a number of piecemeal changes but no meaningful reform. These changes, foreshadowed in the Premier's answer to a question on 28 February 2008, cannot be divorced from the context in which they were made.

In February Wollongong City Council became the subject of inquiry by the Independent Commission Against Corruption. The inquiry heard evidence that a council planner had been sexually involved with three developers while assessing their developments. There also was evidence presented of an impersonation of Independent Commission Against Corruption officers and plans of intimidation—activities that were instigated and funded by Joe Scimone, who is a former Wollongong City Council officer and New South Wales Labor official who has close personal connections to the Minister for Ports and Waterways, the person who had appointed Mr Scimone to a position in New South Wales Maritime.

Mr Scimone also had business links with several Labor members of Wollongong City Council, and several Labor members of Parliament had received donations from companies linked to the developers at the centre of the scandal. The Premier told the other place that he would make a submission to the Select Committee on Electoral and Political Party Funding, and that was duly received on 3 April 2008. In that submission the Director General of the Department of Premier and Cabinet summarised the proposed changes as follows: first, increasing the amount of information that must be disclosed; second, improving the quality of disclosure; third, preventing the improper use of donations; fourth, reducing the risk of undue influence and corruption; and fifth, improving transparency in New South Wales planning and approval processes.

By April, however, events in Wollongong had caused the Iemma Government's spin doctors to move on. On 4 March 2008, following recommendations made by Commissioner Jerrold Cripps, QC, the Minister for Local Government approached the Governor of New South Wales to formally sack the council and install a panel of administrators for a period of four years, citing clear evidence of systemic corruption in the council. At the same time attention focused on the member for Wollongong. During the Independent Commission Against Corruption investigation it had been revealed that the member for Wollongong had failed to declare $65,000 in political donations, including free office space provided by property developer Frank Vellar who had been named at the Wollongong City Council corruption investigation. It was only after the Independent Commission Against Corruption had interviewed the member for Wollongong that the member altered her declaration.

From a telephone tap submitted at the Independent Commission Against Corruption inquiry it was revealed that the member for Wollongong had agreed to lobby Wollongong councillors on behalf of Mr Vellar. Later that month it was revealed that the member for Wollongong also owed a substantial debt to another of Wollongong's biggest property developers, Ken Tugrul. The Minister for Planning was accused of asking a development company to book a table at a fundraiser he had organised. Mr Sartor stated that he could not recall the conversation and after examining the matter the Independent Commission Against Corruption decided not to investigate. The story only fed into the growing public perception that political influence in New South Wales could be bought. Continuing negative media resulting from these revelations and allegations forced the Government to try to defuse the crisis. At a press conference on 21 March 2008, Easter Saturday, the Premier had his conversion on the road to Wollongong—as my Leader refers to it—and stated:

My view is that the time has come for us to now seriously consider moving away from donations and having a fully public funded system. It has now got to the point that the mere fact of giving a donation creates the perception that something has been done wrong. The time has come to test the viability of a full public system.

The Premier foreshadowed that the Assistant General Secretary of the New South Wales branch of the Australian Labor Party, Mr Karl Bitar, would send a supplementary submission to the select committee. An innocent bystander might have thought that the Iemma Government had actually decided to get serious and meet community expectations for fundamental reform. Those who served on the select committee waited with trepidation for Mr Bitar's submission, which arrived on 25 March 2008. I think that many of the members of the committee were, to say the least, underwhelmed. The submission contained six lines that contained any detail, and they were:

This supplementary submission by New South Wales Labor advocates a ban on all private donations to political parties in favour of a system of full public funding. This overhaul of the existing system of funding and disclosure would help restore the public's faith in political decision making. The Premier has asked me to initiate discussions with other parties to arrest this.

That was literally the only detail provided in a four-page document—just six lines. The rest of the so-called supplementary submission was just historic and contextual observations. Mr Bitar had nothing to add when he appeared before the select committee as a witness on 4 April 2008. My colleague the Hon. Jennifer Gardiner and I asked him about the freedom of parties to add to public funding, revenue from affiliation fees, membership fees, investment property rents and so forth, intra-party transfer of funds from other State branches and the Federal office and how they should be regarded, how to establish an in-kind donation ban that prevents, for example, affiliated trade unions providing paid union workers to marginal seat campaign for long periods, how to address third party campaigns, how arrangements would apply to local government elections, how limiting the organisation receipt handling and administration of donations to central party offices would impact upon State electoral councils as they are referred to by Labor, or conferences as they are called in my party, and the scope and duration of the consultation period with other political parties. Mr Bitar could not provide any guidance on any of these matters.

For the record, there is nothing in the bill that in any way delivers on the Premier's seemingly dramatic announcement of a new direction on 21 March 2008, and the supplementary submission of Mr Bitar that followed soon after. This should come as no surprise to anyone who has followed the progress of these inter-party talks. Mr Bitar and the Iemma Government had taken only perfunctory steps to address the Premier's stated preference for a complete ban on private donations as demonstrated by the fact that there has been just one brief meeting between Mr Bitar and the State directors of the Liberal Party and one with the Director of The Nationals. There has been no follow-up. Also, for the record, the meeting with the Liberal Party's interim State director took place on 8 April, and we have heard nothing since then. It is clear that the Premier's donation ban proposal of 21 March was nothing but a device to buy him time and get him through a number of very awkward news cycles at the height of the Wollongong crisis. It has been stated repeatedly that the purpose of the reforms is to end the perception that money buys political favours. The Premier and the Government are interested in fixing the headline, not the broken system. They are running away from their proposal as fast as they can.

That is very clear from the Minister's second reading speech. The Premier's donation ban is now just one option that will be examined as part of the green paper process being coordinated by the Federal Government. As part of that green paper process yet another paper has been commissioned from a well-credentialed and worthy academic, but the only promise we have had from the Minister is that the paper will "inform further debate within government and the community". That is it. So we are left with the five changes flagged by the Department of Premier and Cabinet in April. The bill delivers on most, but not all, of the expectations that arose out of that paper. For example, the submission stated that the legislation would "ensure that loans and other credit facilities provided to parties, MPs, councillors and candidates" would be disclosed. Yet new section 96G in schedule 1 to the bill exempts all loans from financial institutions. Even if they are loans at rates other than normal market rates of interest with lengthy or even unlimited borrowing periods, there is no obligation to disclose. This is a dangerous area for parties, as the recent cash for peerages scandal in the United Kingdom demonstrated.

There are also some areas where the bill has clearly not gone as far as the Premier envisaged. In this respect the select committee has played an important role, as the Minister conceded, in canvassing the opinions of some key stakeholders. In particular, wide concerns were expressed about the impracticality of forcing Independents to use the Election Funding Authority or another independent body to organise, receive, handle and administer donations on their behalf. There was also evidence to the select committee from councillors representing shires in rural New South Wales who questioned the need for elaborate structures and a heavy compliance regime when at local government elections they receive few, if any, donations and their electoral expenditure is counted in the hundreds of dollars, not the thousands or indeed millions of dollars we see at the Federal and State levels. The solutions adopted in the bill relating to official agents and the exemptions for campaigns with less than $1,000 worth of donations and expenditure are sensible. So, on the whole, the very modest ambitions outlined by the Premier on 28 February and by the director general on 3 April have been met.

The bill makes eight principal changes to the Election Funding Act. They are: requiring the biannual disclosure of political donations and electoral expenditure; extending reporting obligations to members of Parliament and candidates; establishing a new disclosure limit of $1,000 for political donations to candidates, groups and parties; requiring the disclosure of membership or affiliation fees of more than $1,000 payable to a party by individuals, industrial organisations or other entities; preventing elected members, councillors and/or candidates from having personal campaign accounts or having direct involvement with the receipt and handling of political donations; requiring entities to include their Australian business number [ABN] when making donations; prohibiting entities from making certain indirect campaign contributions, which are commonly referred to as in-kind or value-in-kind donations; and increasing penalties and introducing new offences for accepting donations or loans without recording relevant details, failing to keep prescribed records, accepting donations of more than $1,000 from entities without an ABN and making or accepting in-kind donations.

The Opposition does not oppose any of these changes so far as they go. I welcome the requirement to disclose membership fees. Parties should not be able to have a membership fee that is more than the $1,000 limit, which might be a loophole to avoid disclosure. I am not aware of any allegations that the loophole has been exploited, but I am glad the matter has been dealt with. Equally, the requirement that trade union affiliation fees be disclosed goes hand in hand with closing this potential loophole. However, I have some concerns about how the provisions relating to in-kind donations will work in practice. In particular, I remain very sceptical about the exemptions for volunteers. On the one hand they are absolutely necessary—everyone concedes that—but on the other hand there is a great deal of concern that those exemptions may permit the continuation of the very substantial in-kind donations made, for example, by the trade union movement that are a massive supplement to New South Wales Labor's already gargantuan campaign resources.

The stories are legendary. We know of Labor's practice of assigning a trade union to each marginal seat. How many times during the 2007 election campaign did I see vehicles festooned with trade union insignia adjacent to campaign offices, street stalls or other campaigning activities? I have lost count. Then there are the union organisers who are not on leave but on full pay who work in campaign offices with their union-funded laptops and BlackBerries. Will New South Wales Labor and the trade union movement observe the in-kind donation provisions or will the letter of the law in new section 96E be so flexible that those sorts of contributions will continue? I await an assurance from the Minister on this point—but I will not hold my breath.

The Opposition is concerned about the operation of new section 86, subsections (3) and (4), which are new and have no equivalents in current State or Federal legislation. The provision has retrospective operation insofar as it will create a definition of "associated parties" based on whether parties contested the 2007 periodic council election on a joint ticket. In my view the provision is lacking in clarity. I was advised earlier in the day by staff from the Premier's department that this provision, which requires that donations to different but associated parties be aggregated, applies only to entities or persons making potentially reportable political donations. The advice we received is that the final sentence of new section 86 (3) means that the associated parties will not have to liaise prior to lodging six monthly disclosures and aggregate the disclosures therein.

The fact is that parties may be associated but still separate and distinct—they may even fall out. The Opposition has asked for an assurance on the record when the Minister replies to the debate to confirm the advice received from Ms Whelan of the Premier's office and Mr Lang of the Department of Premier and Cabinet to this effect earlier in the day. There is of course no better example of associated parties than the Liberal-Nationals Coalition, and this matter is important to us. As I said, we await the Minister's response and, failing that, I foreshadow that I will move an amendment in Committee to deal with the matter—I have already lodged it just in case.

There are also three changes in the cognate Local Government and Planning Legislation Amendment (Political Donations) Bill 2008 to deal with the serious problems that are obvious in relation to planning approvals and the impact of political donations. Together with the change already announced to the model code of conduct for councillors, the changes are welcome and somewhat more substantial and overdue. They include: requiring the general manager of each council to record the voting histories of councillors, giving the Pecuniary Interest and Disciplinary Tribunal jurisdiction over matters to do with political donations at a local government level, and requiring applicants and objectors to disclose political donations and gifts made in the two years prior to submitting a development application.

The Government also asserts that last week's changes to the Environmental Planning and Assessment Act implementing Minister Sartor's planning reform agenda are also relevant. That view, to say the least, is contestable. I refer honourable members to several contributions that were made last week, including my own. It is important to record that this bill places obligations on local councillors and provides transparency in relation to their voting history on development approvals that are not in place at a State level, but should be with the continuing and very substantial involvement that the Minister for Planning retains, despite last week's bill. The Opposition will pursue this matter with an amendment in Committee. Our proposed amendment requires that the Director General of the Department of Planning be required to keep a specific register which records the way the Minister for Planning has ruled on applications he is directly in charge of where the applicant was a donor to either his party or his personal campaign fund.

This amendment seeks to replicate the requirement that general managers of local councils keep registers of the way in which individual councillors vote on planning applications where the applicant was a donor. This amendment will bring greater transparency to the Minister's role in development approvals. I also note that by giving jurisdiction over matters relating to political donations to the Pecuniary Interest and Disciplinary Tribunal the bill gives the Department of Local Government a substantial new responsibility. The Minister's second reading speech was silent on the issue of whether the department's budget will receive supplementation so that it will be able to effectively fulfil its compliance and disciplinary role. Nothing will undermine confidence in the new approach more quickly than an unresponsive Department of Local Government without the resources to administer this new regulatory regime. We also would not want to see any of the department's other important functions compromised by this new unfunded mandate. I ask the Minister to give us some assurance in his reply speech.

The Select Committee on Electoral and Political Party Funding, which was established by my resolution almost exactly a year ago and on which I served as deputy chair, reported last week. The breadth of the report and its recommendations are impressive. After receiving 189 submissions, holding 5 public hearings with 32 witnesses and convening a community forum, we produced a 260-page report with 47 substantial recommendations. That report underlines the limitations of the bill before the House. The scope of the bill's changes are narrow, but the report reminds us that significant reform is required. Reverend the Hon. Fred Nile's chairman's foreword to the report notes:

The time for change is now.

Our key recommendations are: political donations from corporations and other organisations to be banned; political donations from individuals to be capped at $1,000; caps on election spending by parties, groups and candidates; caps on election spending by third parties; public funding increased for State government elections; public funding investigated for local government elections; a party administration fund created to subsidise administration costs of parties represented in the New South Wales Parliament as a result of caps on donations; party administration costs to be subsidised by exempting certain sources of income from the ban on political donations; the Political Education Fund to be retained and administered by the New South Wales Electoral Commission; disclosure every six months of donations and spending over $500; and compulsory online lodgement of disclosure returns. That is a most important recommendation.

Further key recommendations are: individual donations to be linked to the New South Wales electoral roll; clear identification of donations made through fundraising events; a review of the Election Funding Authority's powers to identify suspected breaches, with suspected breaches to be investigated by a designated external body; tougher penalties for breaches of the scheme; increased funding and staff for the Election Funding Authority; the authority to report annually to the Parliament on the effectiveness of the electoral funding and disclosure scheme; the Joint Standing Committee on Electoral Matters to be reconstituted as a statutory committee with oversight responsibility for election funding reform; electoral funding reform to be added to the Council of Australian Governments agenda; the provision of clear instructions to councillors on the circumstances in which political donations give rise to non-pecuniary conflicts of interest; councillors required to refrain from discussion and voting on matters involving campaign donors for political donations over $1,000; failure to declare a non-pecuniary interest relating to a political donation to be a matter falling within the jurisdiction of the Pecuniary Interest and Disciplinary Tribunal; include in the list of designated developments all development applications to the Minister for Planning in respect of which a declaration as to the making of a donation has been made; persons lodging and objecting to development applicants, as well as property developers to declare political donations over $1,000; and individual councillors' voting histories to be recorded and published.

Many of those key recommendations are in the bill. I am sure every member of the committee is pleased about that. It is still a substantially unfinished agenda that we pass on to the Government. The committee's recommendations build upon the pioneering 1981 reforms, but there is much more to be done. In the course of the committee's deliberations I had the privilege of closely examining the electoral and political party funding regimes in Canada and Britain courtesy of the Commonwealth Parliamentary Association, New South Wales branch. I had the opportunity to meet some of the foremost experts in the world to discuss the reform of our system, including in Canada Emeritus Professor Fred Fletcher of York University in Toronto, Dr Anthony Sayers and Dr Lisa Young, both associate professors of political science at the University of Calgary, representatives of Elections Canada, Elections Ontario, Elections Quebec, Elections Nova Scotia and the Auditor General of Ontario. In Britain I met with Professor Keith Ewing of King's College, London, and Mr Jack Rowbottom of King's College, Cambridge, Dr Joo-Cheong Tham who is a University of Melbourne academic but is currently at Oxford, Lisa Klein of the recently established Electoral Commission in Britain and the Hansard Society. Most importantly, I met Sir Hayden Phillips, a former Permanent Secretary of the Lord Chancellor's Department, now called the Department of Constitutional Affairs, who chaired for the Blair Government the talks between the political parties on more reform in Britain.

A consensus of views amongst all the people I met was clear to me: overwhelmingly the preference was for the Canadian model, which had its origins at the provincial level of Quebec. I am delighted that our recommendations have reflected this best practice model. No system is perfect. We need to be vigilant about dealing with those who will seek to find loopholes. This House will have to close any loopholes. The tighter the regulatory regime, the more frequently it needs to be revisited and refined. In this respect, I am pleased that the report recommends an upgraded role of the Joint Standing Committee on Electoral Matters as an oversight committee with a statutory mandate to monitor problems. I hope that the Government accepts this recommendation. I stated at the outset that the bill involves limited piecemeal change and not real reform. It delivers token and perfunctory initiatives to deal with the election funding crisis we have prior to the local government election. We should not be dealing with these changes in such a rushed fashion at this time of the evening. There has been far too little consultation of the political parties on the specific provisions in the bill.

This bill is very much what New South Wales Labor head office wants. The select committee report has been available for five days. The Opposition does not believe that this bill is necessarily the vehicle for implementing the report in full, and that will be an important view that it will take at the Committee stage. However, the Government needs to move quickly to respond to the select committee report. We need to see a major reform bill in the very near future.

Reverend the Hon. FRED NILE [11.50 p.m.]: The Christian Democratic Party is pleased to support the Election Funding Amendment (Political Donations and Expenditure) Bill 2008 and the Local Government and Planning Legislation Amendment (Political Donations) Bill 2008. As members know, in February the Premier announced wide-ranging reforms to laws governing the management and disclosure of political donations and expenditure. In the following weeks the Premier made further announcements. This legislation gives effect to the Premier's initial announcements but they do not relate to a ban on political donations. As members, know the Parliament also established a select committee, which I chaired, to investigate the issue of electoral funding donations. This bill is an interim measure in electoral reform: it is not the end result but it is the beginning. The Government in its briefing announced that it had commissioned Associate Professor Anne Twomey, a leading expert in constitutional electoral law, to prepare a paper outlining the key issues that needed to be addressed in the next stage of donations reform.

The committee indicated that there may be constitutional questions in relation to a total ban on donations, a cap on expenditure and so on. We know that previous matters have been taken to the High Court and we know that any reforms in legislation that we adopt must be able to stand up to scrutiny if appealed in the High Court. This bill is an interim stage in electoral reform. The committee made 47 recommendations and covered a very detailed and extensive range of issues. I look forward, perhaps in October, to see the second stage of reform that will deal with the more controversial issue of a total ban on donations, or a restriction, as the committee recommended, of donations up to $1,000 from individuals to remove any threat of donations influencing the political agenda at either the State or local government level.

This bill is needed now because the House rises this week and will not resume until after the local government elections in September. This bill is necessary if the Government wants to remove the potential danger of donations influencing council decisions and the election in September. I understand the Government's strategy to introduce this first stage in electoral reform and, of necessity, a second stage. A number of important provisions are contained in this legislation to tighten up areas of disclosure, particularly the universal disclosure limit of $1,000 for parties, groups, elected members, including members of Parliament and councillors, candidates and donors, consistent with the Commonwealth Government's proposed legislation. The Rudd Government has initiated its own reform, as was announced prior to the last Federal election. Senator Faulkner has led to establish a lower limit for disclosure than previously put in place by the Howard Government and has introduced other proposals that allow for greater disclosure and represent the wider views of the community.

The bill also requires disclosure of donations received in the period since the last election to 30 June 2008 by 25 August 2008, before the local government elections. Local government candidates have already begun campaigning and receiving donations but this requirement will only take effect from 25 August. There will also be biannual disclosure of political donations and expenditure for parties, groups, elected members, candidates and donors. Declarations will be required to be lodged within eight weeks of the end of the relevant disclosure period, consistent with the Commonwealth Government's proposed legislation. There are new rules for the management of campaign finances which will: prevent members, groups and candidates from handling donations, with all donations to be received and administered by an official agent who will be appointed by the party or Independent candidates. It will not take away their authority but someone other than the candidate will handle donations and expenditure. If the official agent is not an accountant, he or she will be trained by the Election Funding Authority. I believe those practical provisions are very important.

Some of the recommendations contained in the committee report have been included in this initial reform bill, for example, a ban on certain in-kind donations valued at $1,000 or more, including the provision of offices, cars and other equipment for little or no consideration; volunteer labour and the incidental use of equipment which belongs to volunteers is excluded from the ban; and provisions which make it unlawful to accept a reportable political donation that exceeds the $1,000 threshold unless it is made by an entity that has an Australia business number or by an individual. The bill will also tighten up the provisions relating to loans and provides increased maximum penalties for a range of offences, which I also support. As an interim first-stage reform this bill goes a long way to meeting the concerns of the Christian Democratic Party and the community. I look forward to the second stage reforms later in the year, perhaps in October, which will deal with the more controversial area of a ban on donations.

Ms LEE RHIANNON [11.58 p.m.]: This bill has been brought forward in response to the crisis in electoral funding, and the disclosure system, in Australia. Earlier this year almost daily media stories were about vast amounts of money being donated to the major political parties from the property and hotel industries. As the stories made headlines, the public became increasingly concerned about the impact of corporate donations on the democratic process. Donations from developers have proved to be particularly controversial and I think many would agree that the resulting scandals played a crucial role in pushing the major parties to change their position on donations.

I pay tribute to the many community groups that have worked tirelessly over the years to expose the link between developer donations in appropriate development. I am proud that the Greens have been part of it. One of our early campaign slogans in the 1990s was "community need, not developer greed". Often the Greens have been ridiculed for stating what is now obvious: political donations damage the democratic process and corrupt the planning process as well. There have been times when members of the Greens and others concerned about donations, not just from developers but from all corporations, have been dismissed as slurring politicians and their corporate backers. I acknowledge that a few individuals of the Labor and Liberal parties over the years have also spoken about the need for far-reaching reforms of political donations. Former Australian Labor Party President Carmen Lawrence stated:

It disturbs me, as it should all citizens, that there are some who are more equal than others. Corporations do not make large donations out of a charitable impulse or a commitment to civic duty. We do not know how much is being spent to inform, persuade and cajole our decision-makers. It is time we subjected the process to scrutiny, and judged the decisions of our governments knowing who has been in their ears.

In 2004 former New South Wales Labor Party Secretary Mr Mark Arbib said:

With elections becoming much more expensive, political parties are more and more reliant on corporate donations. It's time for the party to develop new policies to counter this reliance and ensure the integrity of Australia's political system is maintained.

The former Prime Minister Mr Paul Keating has stated:

I think we would be better off if developers were forbidden from donating election funds to municipal candidates and to political parties.

Upper House members Mr Don Harwin and Mr Eric Roozendaal have also spoken of the need for reform in this area, long before their respective leaders came on board with a new understanding of the importance of banning political donations. But for years calls for reforms were ignored. The Wollongong scandal in February this year involving donations from property companies and corrupt planning processes brought the issue to a head and within a few weeks, on Easter Saturday, 22 March, the Premier made his statement that the New South Wales Government would quickly move to reform political donations. Within a few hours of the Premier announcing his changed position, Liberal leader, Mr Barry O'Farrell, also came on board to support a ban on political donations, and a few days later The Nationals leader, Mr Andrew Stoner, also backed the ban.

I believe this has happened only because these leaders have come to realise a high level of community concern about the corrupting impact of political donations. This was a major policy reversal and I congratulate the Premier on having the courage to give leadership on this issue. Now he must follow through. Prior to this, the Premier had followed the lead of former Premier Bob Carr in arguing that it was not possible to take action only in New South Wales as uniform national laws on donations was the only way to successfully change the political funding system. Clearly, that would be the preferred option, but in Australia today someone needs to take the lead and the Premier's policy reversal is welcome and most significant.

The Federal Labor Government has initiated a green paper process to reassess political funding. This is important, considering the setbacks that occurred under the former Coalition Government with regard to donations. In 2006 the Coalition parties, using the control of the Senate, pushed through laws that raised the threshold for disclosure of contributions to political parties in December 2005 from $1,500 to more than $10,000. Since the new threshold is linked to the consumer price index, it rose each July and was up to $10,500 when the Coalition was voted out of office. The new threshold for disclosure allowed parties to secretly receive millions of dollars. When the law was changed, key Liberal members of Parliament stated that the new $10,000 disclosure threshold would make little difference to public scrutiny.

Senator Eric Abetz stated that 88 per cent of the dollar amount donated would still be available for public scrutiny. Similarly, the Federal director of the Liberal Party, Brian Loughnane, stated in a parliamentary inquiry into the 2004 Federal election that almost 90 per cent of donations received in 2003-04 would be disclosed if the threshold were raised to $10,000. That statement was wrong, and I believe those leading Liberals would have known that to be the case as the Liberal donation data at the time revealed the large number of donations that would escape scrutiny under the new $10,000 disclosure rule. Senator Minchin argued that raising the disclosure threshold was a move to protect the privacy of the donors. Anna Johnston, Chair of the Australian Privacy Foundation, saw it quite differently. In a letter to the Australian Financial Review about the Liberal Party's proposal she stated:

This is secrecy, not privacy. One hides corruption, the other exposes it.

The Greens Democracy4Sale research project examined the 2004-05 donations to the New South Wales Liberals and found that only 58 per cent—$3.2 million—of the money donated in that year would have been identified if the current 2006-07 disclosure threshold had then applied. Approximately $2.3 million would have escaped scrutiny by the press and the public and 81 per cent of contributors to the New South Wales Liberals would never have been known. This included most donations from hotels, clubs, small property companies, law firms, health care companies and even major lobby groups.

The claims made by Senator Abetz and Brian Loughnane that close to 90 per cent of the dollar amount of contributions would be identified was clearly wrong. The move to change the disclosure threshold was opposed by Labor, the Greens and the Australian Democrats. As expected, the Liberals Coalition partner, The Nationals, supported the change. The fact that we have this legislation before us shows how far we have come since that most regressive legislation was passed in the Federal Parliament. I congratulate the Federal Labor Government on its decision to wind back the threshold of $10,500 to $1,000.

Sweeping reform is needed to clean up the stench that has permeated New South Wales politics since the eruption of Wollongong's donations scandal. One aspect of the affair that has been particularly on the nose for voters is the escalating culture of political fundraising in New South Wales. A handful of Labor lower House members of Parliament have been highly successful fundraisers in their party. As with many political fundraising activities, that is not illegal. Individual Labor candidates have pulled in big money. In the lead up to the last State election the member for Blacktown, Paul Gibson, raised $336,355; the Minister for Tourism, Matt Brown, raised $96,289; the member for Riverstone, John Aquilina, raised $108,960; the member for Wollongong, Noreen Hay, raised $81,254; and the Minister for Police, David Campbell, raised $35,057.

But when all these donations are not spent on Labor's election campaigns what happens to the money? An examination of the activities of the member for Wollongong, Noreen Hay, shows that that is not always clear. Ms Hay told the ABC Four Corners program on political funding, aired earlier this year:

You know having dinners and raising funds, that's the system that exists and I work within the system that exists.

Ms Hay raised almost double the amount she declared for the 2007 election campaign, taking her total from $120,000 to $230,000. She has admitted to receiving a donation of office space from a developer, Frank Vellar. Ms Hay initially failed to disclose that donation and other donations totalling $65,000. All up, the Independent Commission Against Corruption inquiry found that Ms Hay had received $181,000 more in donations than she declared. That is a lot of money. I think it is important that Ms Hay discloses full details of these donations, as she is obliged to do under the current election funding law. Ms Hay should reveal to her constituents and the Election Funding Authority how much was spent on the renovation of her house by developer Ken Tugrul. The locals have a right to see the receipts for this work. This would be one of the quickest ways Ms Hay could clear her name.

Ms Hay has had some interesting adventures with developers, and it appears that in some cases the full story is yet to be revealed. It has been reported that Ms Hay lobbied to have a publicly owned car park rezoned in an area that benefited the developer Jempak, who purchased this land very cheaply and in murky circumstances involving the former corrupt Wollongong City Council. Indeed, the developer's representatives publicly thanked Ms Hay for her assistance in securing the rezoning. Jempak is the same corporate outfit that constructed a massive, non-conforming residential development, the Landmark Executive Apartments, across the road from the rezoned car park. According to official records, Ms Hay is listed as an owner of a unit in this development, which she has listed as purchasing for $340,000. Several similar units purchased that year were resold within months, and some within weeks, for $490,000.

If Ms Hay did purchase a unit at a rate below market value, the people of Wollongong need to know how this came about and be absolutely sure that her decision to invest in this developer's project had nothing to do with the assistance she apparently provided to the same developer in his other controversial projects. Developers and their donations are doing enormous damage to the planning and democratic processes in this State. Another problem with the fundraising efforts of lower House candidates is that many do not spend all their money on the election campaign for which the moneys are raised, and there is a large question mark over what happens to this money. The member for Wollongong, Noreen Hay, and the member for Kiama, Matt Brown, have more than $280,000 in unspent election funds sitting in their campaign accounts.

Election Funding Authority records reveal that after the 2007 State election both Noreen Hay and Matt Brown had funds left over. Mr Brown raised $209,000 in his campaign but spent only $113,000, while Ms Hay raised $230,000 and spent only $39,000. Both used personal bank accounts for the campaign funds, which are not audited by Labor Party headquarters. I understand that both these members of Parliament have stated that surplus funds are retained in their accounts for later campaigns. Ms Hay has also used some of her leftover money to assist other Labor candidates, but these donations have been small. Ms Hay made a $2,000 donation to Tweed Labor candidate Neville Newell and one of $240 to Paul McLeay's Heathcote campaign. Ms Hay's donation chest has also received contributions from Wollongong and Shellharbour councils. Wollongong City Council reportedly paid $2,250 for nine councillors to attend a Noreen Hay fundraiser at the Lagoon Restaurant in 2005. Ms Hay ended up paying for these tickets as there was so much criticism of Wollongong ratepayers being hit up for this donation.

The Hon. John Hatzistergos: Point of order: Mr Deputy-President, I draw your attention to Standing Order 91 (3), which says that a member may not use offensive words against either House of the Legislature or any member of the House and all imputations of improper motives and all personal reflections on either House, members or officers will be considered disorderly. I ask you to bring the member to order and to ask her to refrain from making these personal reflections or imputations of improper motives.

Ms LEE RHIANNON: To the point of order: I have not been making reflections or imputations. I have been sharing with the House information collected from the Election Funding Authority website and from other reports about Ms Hay and activities of some other members of Parliament. Most of this information is on the record. Largely what I am doing is collating it.

The Hon. John Hatzistergos: To the point of order: Ms Lee Rhiannon has been going beyond just simply stating facts. She has been making a whole series of imputations against members of the other House, including the member for Kiama, the Minister for Housing, Mr Brown, and the member for Wollongong, Ms Hay. This included issues about buildings and what funds were used where and asking Ms Hay to prove certain things, and then going on to talk about dinners and lunches in restaurants and who paid for what. If the member wants to do that there is a process by which she can do it, but the rules of debate do not allow her in the context of the discussion about a bill before the House to make imputations of improper motives and personal reflections on members. That is what she is doing in her contribution and I ask you to draw her attention to the standing order and to comply with it.

Ms Sylvia Hale: To the point of order: Ms Lee Rhiannon was clearly bringing together the information that is on the public record. She was not drawing any conclusions; she was merely stating that so much money had been raised and so much money was disbursed from an account, and that funds were held in personal accounts that could not be audited. She has not drawn any conclusions from that; she has merely stated facts that are on the public record. The conclusions that might be drawn are left to individual members. Clearly, Ms Hay thinks there is nothing untoward about this because she has declared all this information. If she has declared it and she is happy for it to be on the public record, then I think it is perfectly appropriate and fitting in the context of this debate that members' attention be drawn to that information.

The Hon. Duncan Gay: To the point of order: I was listening to the debate and the member, as indicated, put a series of facts before the House. The only conclusion that has been drawn is that drawn by the Attorney General that there appears to be some behaviour that is inappropriate. If the Attorney General wants to draw the conclusion that is up to him, but the member who was putting the facts before the House did not draw any conclusions.

DEPUTY-PRESIDENT (Reverend the Hon. Fred Nile): Order! At one point the matters referred to were linked to private renovations or buildings that were not part of any declaration. The Minister drew attention to Standing Order 91 (3), which provides that all imputations of improper motives and all personal reflections on either House are disorderly. I remind members that the matter complained of may be merely an imputation or reflection and not a clear-cut allegation. I uphold the point of order and caution members against contravening that standing order.

Ms LEE RHIANNON: Election Funding Authority records show that Shellharbour council donated $1,250 to Ms Hay's campaign in December 2004. Mayor David Hamilton has stated that there was only a $500 cost to ratepayers after councillors paid their own way. Shellharbour councillors also attended one of Ms Hay's fundraisers on the evening of Friday 23 November last year, the eve of the Federal election. This is an interesting event. Some of the invited guests saw it as a fundraiser; others saw it as a briefing from key Labor Ministers. There were plenty of Ministers on hand. At this event Ms Hay had the support of Treasurer Michael Costa, health Minister Reba Meagher and ports Minister Joe Tripodi. Dress was business attire for a $200 a head dinner at the Lagoon seafood restaurant, a venue favoured by Ms Hay for many of her fundraisers. The event was not advertised as a fundraiser and attendees were asked to make cheques payable to the Noreen Hay campaign account. The invitation was sent out under the crest of the New South Wales Parliament. So, what was this event—a fundraiser or a briefing from leading Government Ministers?

At the public inquiry into Shellharbour council, Councillor Helen Gillett in sworn evidence denied she knew that the 23 November event was a fundraiser. She stated she was under the impression it was a meet the Ministers dinner. She said she tried to have the councillors' money refunded by Ms Hay but when this did not happen she personally paid the money back to the council. The story got even better when the Australian Labor Party Mayor of Shellharbour, Mr David Hamilton, took the stand at the Shellharbour inquiry and said in his evidence that he did not know the business briefing dinner he attended was a political fundraiser for Noreen Hay until after he arrived and found his ticket had been paid. Why would he? Nowhere on the invitation does it say or suggest that this event was a political fundraiser. On the contrary, the New South Wales parliamentary crest, the official titles of the Ministers and the member for Wollongong, and the title of the event, "Annual business briefing", are clearly designed to convey the impression that this was official Government business. The question on everyone's lips in Wollongong is: How can a member of the Government use her official position and that of other Ministers of the Crown to pocket thousands of dollars of funds from her constituents? Is this not a question of obtaining personal benefit from public office? Does this not constitute corrupt behaviour?

The Hon. John Hatzistergos: Point of order: Again I draw your attention to Standing Order 91 (3) and ask you to direct the member to refrain from making imputations and personal reflections against members.

Ms LEE RHIANNON: I was not making imputations. I had shared the information with the House and then I posed questions. The culture of the House is one where we can explore issues extensively. I think it would be unfortunate if the gag were put on this issue, considering that it is most topical and relevant to the bills before the House.

The Hon. John Hatzistergos: To the point of order: Ms Lee Rhiannon clearly does not understand what she has been saying. She is saying that the member for Wollongong used her publicly paid position in order to obtain a personal benefit. That is what the speech she was reading out clearly stated. That is making a personal reflection and an imputation on the member for Wollongong. Mr Deputy-President, you should direct her to withdraw those remarks and to confine herself to debate within the standing orders.

Ms LEE RHIANNON: To the point of order: The Attorney General has been inaccurate. I did not say it was for a personal benefit. I posed the question: Is this not a question of obtaining personal benefit from public office? That is a question. Again, if the Attorney General interprets it in that way, it is informative to the debate. That was not the point I made.

The Hon. Greg Donnelly: To the point of order: The Attorney General is right to direct our attention to the standing order. I cannot see how the reputation of the member for Wollongong is not being impugned by Ms Lee Rhiannon's suggestions. It is clearly an imputation. The member is making explicit inferences. Her contribution cannot be interpreted in any other way. What she is trying to do is very clear.

Ms Sylvia Hale: To the point of order: This entire bill and the debate about political donations has been prompted by the very real perception in the community that the making of donations results in favourable decisions being made, particularly in the planning sphere. It is absurd that those perceptions—particularly as they may relate to members of Parliament—cannot be mentioned while we debate this legislation. We are pretending that the discussion going on outside this Parliament does not exist and that we should be somehow assessing the merits of this bill in a way that is not informed by the current coinage in the community. To suggest that Ms Lee Rhiannon cannot even pose questions because somehow by doing so she is making adverse imputations is to ignore the purpose of the legislation and the reason we are engaged in this debate.

DEPUTY-PRESIDENT (Reverend the Hon. Fred Nile): Order! President Willis ruled on 20 September 1995:

There is a difference between a member relating a statement of fact and a member reflecting upon or imputing improper motives to a member of either this House or the other place. I entreat the member, therefore, to simply state the facts without opinion or reflection on those actions, otherwise the member will be out of order.

That was the substance of the Attorney General's point of order. The question was rhetorical and the answer was obvious. The member stated the case and then asked the question, to which the answer was obvious. The result was a personal reflection on a member of the other House, and that is out of order. I rule accordingly.

The Hon. John Hatzistergos: Does that take slabs out of your speech?

Ms LEE RHIANNON: No, I am just pulling it together so that the Attorney General will be more informed.

The Hon. John Hatzistergos: Is it full of imputations?

Ms LEE RHIANNON: No, not at all. The Attorney General's comments have been revealing. They were most useful. The money collected for Ms Hay's event was paid into her personal account and, according to documents lodged with the Election Funding Authority, not all of it has been spent on election work. As I stated, the invitation for this event asked for cheques to be made payable to the Noreen Hay campaign account. It is not clear whether the money is still in Ms Hay's personal account or whether it has been used to pay any personal or unrelated expenses. After the Independent Commission Against Corruption Wollongong inquiry found that Ms Hay had received $110,181 more in donations than she declared, she said that she would "return or donate to charity donations from donors involved in the Independent Commission Against Corruption inquiry". That is a lot of money. Having made that commitment, it is important that Ms Hay disclose whether she has returned the money to the developers or donated any or all of it to charities and, if so, which charities. Ms Hay would do a great deal for her own credibility and that of her party if she were to provide that information.

The Illawarra Mercury recently reported that Ms Hay, accompanied by a Minister, wrote a personal cheque for $1,000 for a charity run by the Uniting Church in Wollongong. I understand that a member of the church told Ms Hay that he would not accept the donation given that other community services had been given proper grants of hundreds of thousands of dollars earlier that day. Maybe Ms Hay had more success with other charities. I again urge her to make that information public. Not surprisingly, the Leader of the Opposition, Mr Barry O'Farrell, has attacked Ms Hay's delay in declaring donations. That is hypocritical because Liberal lower House candidates did not disclose any donations for the 2003 and 2007 elections. We know that Ms Hay and other Labor candidates failed to disclose their donations fully, but at least we obtained some information. The Liberal Party has channelled all donations for the past two New South Wales elections through its head office. The effect of that has been to bring the shutters down on the public finding out who donated what to their local candidates.

Increasing cynicism is developing in the wider community about politicians and the electoral process. Since the Wollongong scandal broke, individuals and organisations have contacted my office expressing concerns about similar events in other areas. The large number of complaints and the diverse nature of the distortion and rorting of the donation process underlines the need for a ban on donations from corporations and other organisations. Such a ban should be in place before the 13 September local government elections. The Premier made strong statements about cleaning up the donations process in the wake of the Wollongong scandal and the public had an expectation that this bill would deliver tough changes and would be the antidote to corruption and developer bias. The Premier has fudged his commitment to introduce a tough disclosure regime in time for the September local government elections. With three months still to go until those elections, the Premier clearly has time to crack down on donations disclosure and to put in place his promised ban on donations.

The Election Funding Amendment (Political Donations Expenditure) Bill 2008 stops short of winding back the corrupting influence of donations. The Greens will move amendments to ban corporate donations and to introduce a cap on election expenditure before the local government elections. The amendments provide that only people residing in Australia can donate to a political party and that the donation of moneys from other than a natural person is an offence punishable by a maximum penalty of 200 penalty units or about $22,000. The amendments cap individual lower House candidate expenditure at $30,000 and political party expenditure where the party is running a statewide campaign at $1 million. Caps would also apply to local government election expenditure.

The recommendations in the New South Wales upper House inquiry report released last week support the need for bans on donations and caps on election expenditure. The Greens were very pleased with the report and I take this opportunity to commend the committee members who faithfully represented the views expressed by so many members of the public who lodged submissions and gave their time to attend the committee's public forums. The report should have made it easier for the Government to clean up the corrupting political donation process. It delivered a comprehensive road map for how to go about that process. It suggested that New South Wales follow the path taken by Canada, which has implemented a successful model of electoral funding reform. A ban on donations and electoral expenditure caps are key elements of that reform.

Another shortcoming of the bill is the 10-week disclosure gap that it opens up in the lead-up to local government elections. Under this legislation, candidates are not required to disclose until after the election any donations they have received after 30 June 2008. As a result, voters will not know until after they have cast their vote what money has changed hands after 30 June. Donations received by first-time candidates will also escape any scrutiny. We need a level playing field. All candidates—whether sitting councillors or first-timers—should reveal their monetary supporters before the election.

The Government failed to adopt a donation ban and we understand that it will not support the Greens amendment imposing a ban and a cap on election expenditure. The Greens will also move an amendment to establish a system of continuous disclosure of all donations received in the two months prior to the election. If the amendment is supported, all candidates and parties will be required to release information publicly on the source and amount of their donations in the lead-up to this election. The Greens will also move an amendment to ensure that the disclosure threshold of $1,000 in any one year is cumulative for donations received both by a political party and its elected representatives and candidates.

We want to ensure that a local councillor will be exempted from voting when one of their donors has a matter before council, irrespective of whether the candidate or his or her party head office has accepted the donation. As it stands, the Local Government and Planning Legislation Amendment (Political Donations) Bill 2008 does not tie a councillor or a candidate to the donations of their party. The Election Funding Amendment (Political Donations and Expenditure) Bill fudges the issue by only keeping track of a cumulative total of donations made to a party head office and not for elected councillors. My colleague Ms Sylvia Hale will expand on the local government aspects of this when she speaks.

Also, for example, if a big property developer has given $500,000 to the Labor Party but has not given any money directly to a Labor councillor then the councillor could still vote on a development application from the developer. It is vital that any party-affiliated councillors be held to account for the influence of the donations that their party has accepted from developers, corporations and organisations. Again the Greens amendments would create a level playing field for councillors who belong to major political parties, Greens councillors who do not accept corporate donations, and genuine independents.

The Greens will also move an amendment to support independent councillors to enable the Election Funding Authority to grant two genuine independent candidates an exemption so that they do not have to appoint an official agent to handle their funding returns. Independent candidates would be able to handle their own funding returns rather than appoint an official agent where they can demonstrate that dealing with an agent is a burden on their resources. The candidate would have to be a genuine independent and not a member of or affiliated with any political party. In doing so, the Greens want to make sure that the rights of all minor parties and genuine independents are fairly dealt with in the Government's donations reforms.

I have been contacted by several councillors who are extremely concerned about the level of red tape that this bill introduces because they do not have the resources of a party head office behind them. If given more time to respond to this bill, the Greens would have worked on other concerns raised by independent councillors. We are not talking about the many so-called independent councillors who are actually paid-up members of the Liberal Party but choose not to declare their party affiliation on their voting ticket. We are not talking about councillors who get voted in as independents and then vote in a block with a major party for the next four years. The Greens amendments are striving to make sure that, wherever possible, this bill does not unfairly impose upon, genuinely independent, community-based candidates. I will share the concerns of one independent councillor who has contacted me over the past two days. He said in a letter that he has sent to the Sydney Morning Herald:

My name is Norman Jew, I am a Councillor on Wollondilly Shire Council. At the last Council Election 9 independent Councillors were elected to Wollondilly Council.

Last night, at a routine Workshop, our General Manager distributed to us, a copy of the Second Reading of the Election Funding Amendment (Political Donations and Expenditure) Bill 2008. On the "surface" this Bill reads as a good move to reduce the opportunities for corruption. However when it is read carefully, and the recent changes to the Labor Party Donation Rules are taken into account, it becomes obvious that this really is not the purpose of the Bill.

The Major Parties have "sterilized" their donations by having them directed straight to the Party and not to the candidates. No Party candidates receive Donations. The candidate's expenses are then paid by the Party.

Another consequence of the Bill is that if a Councillor receives a donation of $1,000.00 or more and a matter arises in Council involving the person making that donation, then the Councillor must declare a Conflict of Interest and leave the Chamber. All very right and all very proper. However, a Labor or Liberal Councillor would not be in the same position. He or she could very well be instructed by the Party to vote in a certain way on a motion pertaining to a matter involving someone who has made a donation of more than $1,000.00. There is no way that this would be "traceable". Party Councillors would not be required to leave the Chamber as would an Independent Councillor.

Also there is a subtle difference here that has ramifications. The current situation is that if a Councillor has a Conflict of Interest, that Councillor has the option to determine that it will not affect his vote, and can partake in the discussion and voting. This is under the proposed Bill not an option, the Councillor must leave the Chamber, unless of course he/she is a Party member.

This is far from a transparent system. It is wide open to abuse and is blatantly discrimination.

The Candidates that this Bill is targeted at are the independents. It is also worth noting that the vast majority of corruption exposed recently involves Labor Party Councillors or Party Members.

That is part of a letter from Mr Norman Jew, a Wollondilly councillor. The new role of the official agent seems to be a significant part of the bill. I do not think it will make any difference in the public's mind whether candidates use an official agent or not. The big measures that the public is looking for are significant steps away from the way political donations have been handled in New South Wales in recent years. A ban on developer donations, an end to corporate dinners and fundraisers where donors can buy influence with the major parties, a limit to the amount of money that gets spent on election advertising campaigns to stop the kind of excesses we have seen in recent elections are the meaningful changes people want to see. Ms Sylvia Hale will cover changes in the local government and planning amendment legislation, as I mentioned earlier.

The bill, as it stands, is inadequate. It is a disappointment that the Premier has not given leadership to consolidate in law the cross-party support that we now have for a ban on corporate and group donations and a cap on election expenditure. The time for half measures is over. Unfortunately, that is what this bill is—a series of useful but insufficient measures to clean up the corrupting influence of political donations. The Greens do support the bill, but let us finish the job. We will move amendments in Committee to carry through on the commitments Premier Morris Iemma gave on 22 March.

The Hon. JENNIFER GARDINER [12.35 a.m.]: At 12.35 in the morning I have pleasure in speaking on the Election Funding Amendment (Political Donations and Expenditure) Bill and the Local Government and Planning Legislation Amendment (Political Donations) Bill 2008. The passage of these bills at this time, prior to the House adjourning for the winter recess, is designed to get the Premier, Mr Iemma, out of a hole that he and the New South Wales Labor Party have dug for themselves. The Premier, in the wake of the sensational and sometimes bizarre revelations at ICAC hearings inquiring into what has been going on with respect to political donations and links with planning decisions at the Wollongong council, made pronouncements at Easter about the election funding law reform needed in New South Wales and he presaged a fully publicly-funded campaign finance system. It is a radical overhaul of the New South Wales election funding laws that he was talking about.

The events at Wollongong, which included eventually the sacking of the Wollongong council because of systemic corruption and other revelations potentially implicating the Minister for Planning and other members of Parliament who had received donations from some of those mentioned in ICAC's dispatches, gave even greater force to the long-running advocacy by many people for reform of donations laws in this State. Arising out of the work of the Legislative Council Select Committee on Electoral and Political Party Funding, the Premier was then forced to declare that campaign funding law reform would be in place so as to take effect in time for the 2008 local government elections. So it is that these bills had to be through the Parliament this week, the last week of the sittings before those local government elections, and that is why we are sitting here at this hour of the day, because of that hole that the Premier has dug for himself.

The bills do not address the broad sweep of election campaign finance law reform that the public requires and which has broad support across the political spectrum. That broad support is evidenced by the recommendations of the Select Committee on Electoral and Political Party Funding in New South Wales tabled in this House last Thursday. For the record, I can confirm what the Hon. Don Harwin said earlier in this debate with respect to that wider reform agenda: The ALP General Secretary, Mr Bitar, has had only one preliminary discussion with The Nationals on those topics. It seems that zeal for wide-ranging reform has gone off the boil since Easter.

The select committee's recommendations, in summary, envisage the adoption by New South Wales of a local version of campaign finance law that applies in the Federal jurisdiction in Canada. Those recommendations have received cross-party consensus from members right across the six registered parties with members in this Parliament—something that is probably quite unusual with a select committee report, particularly one that was dealing with such a controversial topic as campaign finance law reform.

The Government must take serious cognisance of the 47 recommendations of the select committee. During the forthcoming weeks, when New South Parliament will not be sitting, the Government will have adequate opportunity to examine the recommendations and should provide its response to them when the sittings resume for the spring, preferably after serious consultation with the registered parties and others. An overhaul of the New South Wales election funding laws is required and should not be unduly delayed. As it is, the bills are significant reforms to which each of the registered parties and others will need to adapt. I turn now to the provisions of those bills.

The Election Funding Amendment (Political Donations and Expenditure) Bill will provide for biannual instead of four-yearly disclosures of donations made or received and all electoral expenditure incurred. That will be in line with proposed amendments to the Commonwealth Electoral Act. The reporting dates will be 30 June and 31 December each year. The Nationals welcome the move to harmonise the reporting periods as between State and Federal laws because the different reporting dates have caused confusion, particularly for example—and it has been recently exposed—for many donors who had not disclosed their donations to the Election Funding Authority simply because they did not realise they needed to disclose them to both the Australian Electoral Commission and the Election Funding Authority. Some of those matters are now subject to prosecution. The lack of consistency between the two pieces of legislation has also meant double counting of many donations that had been referred to, for example, in the media. That is not very surprising, because it is difficult to work out who has given what to whom. That reform is welcome.

The Federal Government, Mr Rudd's Government, has also been embarrassed by the New South Wales Labor Party's involvement in the Wollongong donations and planning scandals. Up until those revelations the Rudd Government's intentions for amending the Commonwealth Electoral Act were very modest, namely, rolling back the donations disclosure threshold from Mr Howard's increase to that threshold recently, and ending tax deductibility for political contributions. That was about the extent of them. I remember Mr Rudd specifically saying that he was not envisaging any further reform.

The Hon. John Hatzistergos: At the ministerial council?

The Hon. JENNIFER GARDINER: No, before the ministerial council; that is what he said.

The Hon. John Hatzistergos: And also the Pauline Hanson rort.

The Hon. JENNIFER GARDINER: Yes, that is true, and certainly The Nationals support the ending of the Pauline Hanson rort. Because of the ALP scandals in New South Wales and Queensland, and the never-ending scandals affecting the Labor Government in Western Australia, Mr Rudd and Senator Faulkner have been forced to widen the review of the election finances and financial disclosures provisions of the Commonwealth Electoral Act and have commissioned a green paper on those matters. That process may well be lengthened because some of those matters have been referred to a Federal parliamentary committee. It is our contention that New South Wales, as the select committee said, should not delay its reform process simply because the Commonwealth might fall behind schedule.

The principal bill, for the first time, extends disclosure provisions to members of Parliament as well as parties, groups, candidates, councillors and donors, and the disclosure period starts from the time of acceptance of a donation even if a candidate has not yet registered or been nominated. The Election Funding Authority will publish the information that is lodged without verification, and responsibility for the accuracy of the information lodged will rest with those who are making the disclosures. Under this legislation, the Election Funding Authority will have enforcement powers. For example, it will be able to conduct random audits to monitor compliance. We note that the Australian Electoral Commission has long had such powers to undertake random audits. The donation disclosure threshold is reduced from $1,500 to $1,000, which will be in line with the proposed Federal threshold, and the $1,000 threshold across the board for parties, groups, candidates and donors is a welcome change, because the common threshold will help to reduce confusion on the part of donors, parties and candidates.

Membership or affiliation fees of or above $1,000 paid to a party by individuals, industrial organisations or other entities will need to be disclosed, and membership and affiliation data—for example, the number of members paying a particular subscription rate—will need to be provided to the Election Funding Authority. The constitution and rules of The Nationals New South Wales provide for various categories of membership subscriptions, and the party's reporting procedures will need to be adapted to that clause in the bill. Of course, other political parties will have to make similar changes where they apply.

Disclosure of income from fundraising ventures and functions shall include either the net or gross proceeds and a description of the event. The Nationals trust that the guidelines that will accompany some of these provisions will clearly set out the rules so that those office bearers in branches, for example, who are volunteer office bearers, will clearly understand their obligations. Our party is a proudly decentralised party, relying on volunteers in large part, the salt of the earth people who will be duly mindful of their obligations at law but who will not want to be strapped up by confusing red tape. We would appreciate it if the Minister in his reply to this debate can outline any implications for local branch office-bearers for whom fundraising is quite often an important part of their role in their local community on behalf of their party or candidate. They are distinct from, say, State Electorate Council office-bearers in the overall scheme of things.

The bill requires that loans of $1,000 or more be disclosed in the six-monthly disclosures, other than loans from a recognised financial institution. There will be a ban on personal campaign accounts for candidates, parliamentarians and councillors. In The Nationals it has been long practice that donations and expenditures for a candidate's campaign must be deposited and extracted from a State Electorate Council account with duly authorised office-bearers. Apparently personal accounts still apply inside the ALP, and I guess this provision is a further attempt by the Labor Party to clean up its own backyard, which is a good thing.

The bill will limit the involvement of candidates, parliamentarians and councillors in fundraising by ensuring that all donations are organised, received, handled and administered by the central party office. That will prevent elected members and candidates from having direct involvement with the receipt of or handling of political donations. Over the years in The Nationals it has become the norm for State election candidates to be at arms-length when it comes to campaign finances. Of course, that protects them from any perception that they may be subjected to undue influence from any person who financially supports them or their party.

Official agents will be compulsory for all groups, candidates, parliamentarians and councils, and they will control the campaign account on behalf of each group, candidate, parliamentarian or councillor. That will require significant administrative changes for all the political parties, but certainly for The Nationals. In my opinion, all those administrative changes are doable, but members might need some time to adapt to the new provisions. Funds remaining in a campaign account when the parliamentarian, group, or candidate ceases to be a parliamentarian, group or a candidate, have to be paid to that person's party. The Nationals certainly welcome that provision.

For political parties, their State election candidates and their parliamentarians, the party agent, who is normally the party's registered officer, will be designated as the official agent. Again, as a result of these changes we will have more consistency. That will centralise responsibility for donations and disclosure with the central party office and, consequently, increase the level of responsibility on the shoulders of such officers, regardless of their party. Each candidate, group, parliamentarian and councillor will be required to open a separate account with a bank, credit union, or building society, and that will have to be controlled by the official agent. The official agent may, by authorisation in writing, appoint other persons—except for the parliamentarian, candidate or councillor—to assist with the handling of donations.

Election funding will be paid into the campaign account. I repeat, though, that the new scheme envisaged in this bill does not extend to the question of fully publicly funded election campaigns. That remains to be debated in another piece of legislation provided this bill is passed relatively unamended. Political donations will need to be made to the official agent and deposited by the official agent into the campaign account. All electoral expenditure will be required to come out of the campaign account and any payments from the campaign account must be used to incur the electoral expenditure of the candidate or his or her party, or for other permitted purposes.

The Election Funding Authority [EFA] will issue guidelines that may exclude minor payments from the campaign account rules. Again, we hope that the Government will be able to give us some indication as to when those guidelines will be issued because it is important that all those concerned get off on the right foot from the beginning with a minimum of confusion as to what are their obligations. Candidates, parliamentarians and councillors will be entitled to pay their own funds into their campaign accounts, and they are entitled to be reimbursed from the campaign account if the funds in the account remain unspent when the account is no longer required and the terms on which a person's own funds are paid into the account have to be disclosed.

The bill requires that all donations must be spent on election campaigns and none on personal benefit, so funds from the campaign account can be used only for prescribed purposes. The same will apply to parties, and that is as it should be. Independent candidates, groups and councillors at local government elections must also have an official agent to administer their campaign finances. I think that is a fair compromise to what was suggested by some witnesses to the select committee. Official agents must be enrolled in New South Wales and have completed Election Funding Authority training. There will be a provision for accountants and others with the relevant professional qualifications to be exempted from the training. Again, we look forward to receiving information about the training timetable and to participating in such training, where necessary.

A candidate, group, parliamentarian or councillor need not comply with the campaign account requirements if he or she does not accept $1,000 or more in donations, or spend that amount in electoral expenditure, so the smaller groups will not be subjected to the more onerous provisions in this legislation. The start date for the new rules for managing campaign finances—1 August 2008—gives a very short timeframe within which to adapt to financial reporting formats. I note that there will be transitional provisions and that the Election Funding Authority will have the discretion to waive compliance when it is satisfied that there is good cause to do so, but that the gross period expires 30 days after the forthcoming local government elections.

The Nationals do not plan to endorse any candidates for the local government elections, as is our usual custom. Whilst my party is keen to make the necessary internal changes as required, I think that one month is not a reasonable period within which to change all financial reporting procedures. No doubt everyone in the party will do their best to make those changes. We will see how it goes, and we look forward to working with the Election Funding Authority to achieve the required outcome. The acceptance or making of some in-kind donations to parties, groups, candidates, parliamentarians and councillors will be banned if they are valued at $1,000 or more. That is designed to stop third parties from providing offices, vehicles, computers and other equipment valued at more than $1,000 to political entities for little or no consideration, and it will stop third parties from paying for the electoral expenditure of a party, group or candidate, including advertising costs.

Existing provisions require the disclosure of in-kind contributions to campaigns, but these new provisions are aimed at making the requirement clearer to all concerned. Volunteer labour and the incidental use of vehicles and equipment that belong to volunteers are not prohibited by this new legislation. Again, the Election Funding Authority will have to issue guidelines on that matter. Obviously, volunteerism is at the core of the way in which The Nationals and other parties operate. Volunteers are used as booth workers, for making letterbox drops, for driving candidates around an electorate, and so on. It is important that they continue to be uninhibited in volunteering their services for such tasks.

The provisions in the bill respect the fact that in Australia the role of volunteers in the election process is extremely valuable. It is one of the links between communities and the parties that seek to represent them in parliaments and in local councils, and it is a way of engaging communities. Such engagement should not be diminished in the process of reforming our election funding laws. In many respects the penalties in the legislation are substantially increased and in some cases there are serious penalties. The role of the Election Funding Authority with respect to training and the clarity of the material that is issued by the authority are important. Some new offences are also created. The Election Funding Authority will have new enforcement powers, for example, to conduct compliance audits and to request any person to provide it with relevant information.

The cognate bill, the Local Government and Planning Legislation Amendment Bill 2008, does not envisage public funding of local government campaigns—that will be a matter for debate later this year—but it makes a number of changes that go back to some of the issues that were raised at the Independent Commission Against Corruption's Wollongong inquiry and other inquiries by that body and other bodies. Due to the lateness of the hour I will not go through those provisions, but I wish to underscore a matter referred to earlier this evening by the Hon. Don Harwin relating to the reference in the bill to associated parties. I am aware that the Leader of The Nationals, Mr Andrew Stoner, has requested a written assurance from the Premier that parties that filled a joint ticket in a periodic Legislative Council election will not be required to act—quite wrongly in our view—where both The Nationals and the Liberal Party would have to compare political donor lists before lodging their disclosures at the required time. Of course, the two parties are completely separate entities.

The Hon. John Hatzistergos: They are not.

The Hon. JENNIFER GARDINER: They are.

The Hon. John Hatzistergos: Why don't you write a separate ticket? That would solve the problem.

The Hon. JENNIFER GARDINER: If you are not prepared to give us an assurance, we cannot support this part of the bill.

The Hon. John Hatzistergos: The donors will have to disclose. If a donor gives a donation, half to The Nationals and half to the Liberals, they will have to disclose that donation. The parties themselves will not have to disclose it.

The Hon. JENNIFER GARDINER: They will have to disclose the aggregate?

The Hon. John Hatzistergos: No.

The Hon. JENNIFER GARDINER: But individually they will?

The Hon. John Hatzistergos: The donors will have to disclose it.

The Hon. JENNIFER GARDINER: And if it breaches an aggregate sum across the two parties?

The Hon. John Hatzistergos: The donors then will have to disclose but the party will not. The party will only have to disclose if it is above $1,000.

The Hon. JENNIFER GARDINER: Together with my colleague the Hon. Don Harwin and other Opposition members, I look forward to monitoring the implementation of these two bills. I especially look forward to a timely and constructive response by the Government to the select committee's recommendations for wider election for campaign finance reform—reform that is much needed and highly desired.

Ms SYLVIA HALE [1.01 a.m.]: I address my remarks on behalf of the Greens to the Local Government and Planning Legislation Amendment (Political Donations) Bill 2008. The Greens welcome the bill. For many years we have campaigned to try to clean up systemic corruption of the planning system at both local and State level caused by the malign influence of political donations by property developers. The bill is a step towards that goal. However, it does not come anywhere near to achieving that goal. That bill focuses predominantly on tightening disclosure regulations in the Local Government Act and the Environmental Planning and Assessment Act.

Stricter disclosure regulations are welcome. The property development industry in this State has been notorious for backroom deals, political favours and outright corruption since the days of colonial rule. The planning system in this State is held in widespread disrepute. Under this Government it has become a system based on vested interests, political favours, and millions of dollars in payments to the ruling party. It is a system dominated and perverted by conflicts of interest, and the more light that can be shone on how property decisions are made the better for all the State's residents.

The bill requires the general manager of a council to record which local councillors voted for, and which local councillors voted against, each planning decision of the council and to make that record publicly available. The bill enables matters relating to political donations in connection with local councillors to be referred to the Pecuniary Interest and Disciplinary Tribunal. The bill requires that when any relevant planning application is made to the Minister for Planning, the Department of Planning or local council, the applicant, or any person making a public submission opposing or supporting the application, is to disclose political donations and gifts made within two years before the application or submission is made.

All these provisions are a step forward and are welcome. However, there is a significant loophole in the bill and the Greens will move amendments in Committee to close that loophole. The major area of concern is the differentiation contained both in this bill and in the new code of conduct for councillors released yesterday morning by the Minister for Local Government between donations made directly to councillors' campaign funds and those made to the central campaign funds of the parties. It is the view of the Greens that the new code of conduct for councillors and this bill will not remove the problem of political donations from developers influencing planning decisions unless they cover donations made to the political parties as well as to individual councillor's campaigns.

Everyone would agree that if a councillor has taken a donation of $1,000 or more from a developer, the councillor should not vote on an application from that developer. The same should apply if the developer has made a donation to the councillor's party. Councillors rely on party support for their preselection and election campaigns and this raises the possibility of them being pressured by party figures to vote in a certain way. Wollongong City Council is a salutary example of how this happens. It has been alleged in relation to that council—and this is supported by taped telephone conversations—that the local member of Parliament, Noreen Hay, was asked by a developer who had made significant donations to her campaign and to the Australian Labor Party to influence the way Labor councillors on Wollongong City Council would vote when that developer's application came before council.

The bill and the new code will do nothing to stop such a situation because the developer will not have to disclose the donations he or she had made to the party, and the councillors will not have to absent themselves from any vote on an application by that developer. The sort of corruption and influence-peddling we have seen at Wollongong will be allowed to continue. Under this bill and the Government's new code, only independent councillors will be excluded from voting because parties will simply launder all donations through their head offices. Premier Iemma has already said that Labor will move to centralise all donations. The bill, unless amended in the way the Greens propose, could have the perverse effect of making political donations and their influence on development decisions less transparent by allowing political parties to centralise all donations and thus avoid the reporting requirements contained in the bill.

It is ridiculous to create a situation in which an independent councillor who has received a donation of $1,100 from a developer cannot vote on an application by that developer but a Labor or Liberal councillor whose party has taken hundreds of thousands of dollars from the same developer can. Donations should not be allowed to influence decisions, whether they are made to individual candidates or to parties. In recent years we have seen significant corruption at local council level involving both independent councillors and those elected to represent parties. Both groups are equally susceptible to improper external influences and both groups should be subject to the same disclosure requirements. In treating donations to parties differently, the bill and the Government's code of conduct become self-serving and do nothing to stop Wollongong-style corruption being repeated and entrenched across the State. Therefore, the Greens will move amendments to the bill to ensure that donations to parties are treated in the same manner as donations to individual councillor's campaign funds.

The Hon. MARIE FICARRA [1.07 a.m.]: The Election Funding Amendment (Political Donations and Expenditure) Bill 2008 and the Local Government and Planning Legislation Amendment (Political Donations) Bill 2008 have been long awaited, since the Premier's rhetoric following the infamous Labor Party scandal involving Wollongong City Council earlier this year. Indeed, it took the Coalition-initiated Committee on Electoral and Political Party Funding to push the Labor Government into actually doing something. For over a year now the Leader of the Opposition, Barry O'Farrell, has been pressing for political donation reform. These proposed reforms will help reduce the stench of corruption around government in New South Wales. After 13 years of Labor in this State and Labor's political fundraising methods, public confidence in government is at an all-time low. Significantly reducing spending limits is the only way to reduce money laundering around politics in New South Wales. If one cannot spend it, one does not need to raise it. If limits are imposed on amounts that can be donated, one does not end up being beholden to vested interests. Typically, however, this legislation fails to ban all political donations, as the Premier sprouted to the press and all who would listen Easter Saturday last.

These bills also fail to impose restraint on union support and other third-party donors for the Labor Party. Access to decision makers is a fundamental part of democracy. However, when certain people, groups or corporations are facilitated greater access to decision makers due to political donations and those donations facilitate favourable decisions, society should be very worried: this is nothing but corruption and a perversion of democracy. Decisions for sale should be condemned and those peddling in it should be penalised severely for their crime. As most members in this House are aware, there is great unrest in the community after seeing the goings on involving Labor Party members and the direct links between donations and planning decisions. Indeed, as the Leader of the Opposition, Barry O'Farrell, stated in the other place:

The New South Wales Labor Party raised $24 million during its last term of office and, as recent scandals have highlighted, the community is appalled at the links between donations and Iemma Government decisions.

One has only to look at the recent controversy surrounding donations and Labor figures in Wollongong City Council to see how bad our system of democracy has deteriorated into downright corruption. The community was flabbergasted also when the infamous Oasis scandal involving the Labor Party and Liverpool City Council was blazoned across their local newspapers and television sets. The actions of Labor's administrator Dick Persson at Warringah Council in forcing on to that community a height increase to 18 storeys to facilitate towers for Multiplex is yet another example of where the big end of town has prevailed over massive community opposition. It will be interesting to see whether Multiplex's donations to the Labor Party will ensure that Minister Sartor approves the Dick Persson Dee Why Town Centre local environmental plan [LEP], which is overwhelmingly opposed by the Warringah community. The Brookfield Multiplex Group website states that it donated $125,610 to the Australian Labor Party in 2007. I note also the comments of the Coalition's knowledgeable academic and member for Pittwater, Rob Stokes, who has extensive experience in planning and environmental law. He said:

The New South Wales planning system has been subverted and undermined, particularly over the past decade, because developer's interests have exerted a dominant influence on the shape of the planning system. By simply reacting to pressure exerted by certain vested interests, the Labor Government has introduced serious distortions in planning.

It is clear that the issue of political donations to candidates for public office and those already in public office continues to plague the planning process as well as the decision-making process on a range of other issues. I support the provision of the Election Funding Amendment (Political Donations and Expenditure) Bill that introduces a system of biannual disclosure. However, I do not believe the bill goes far enough. Time and time again communities have called for true pecuniary interests of candidates for local government, for example, to be publicised. It has been proposed that candidates for office should have to disclose their pecuniary interests and sources of campaign funding prior to an election, and that such disclosures be published in voting booths on election day to provide transparency. This will provide the community with information about those who aspire to public office. Keeping such a register up to date on a monthly basis is submitted as imperative. Would this type of provision have prevented the farce witnessed at Wollongong? I believe it would have had a massive impact. Another worrying aspect of the effectiveness of the bill is whether union affiliation fees donated to the Labor Party are subject to the provisions of the bill. Will they be documented in electoral returns? It appears this bill is a backdoor way to facilitate donations to the Labor Party.

A consistent approach needs to be adopted regarding the law on disclosure limits as to the amounts of donations. Currently, different disclosure limits apply to parties, groups, candidates and donors while disclosure limits differ between jurisdictions. I support the bill's provision that provides for a uniformed disclosure limit of $1,000 for all donations. I note the provision that involves the mandatory disclosure of loans and the Attorney General's statement that the details of any loan of $1,000 or more, other than a loan from a recognised financial institution, must be recorded by the person receiving the loan and disclosed to the authority as part of the six monthly declaration. Is this provision to be extended only to loans related to political campaigns?

During the Wollongong council scandal I recall it was revealed that the Labor member for Wollongong, Noreen Hay, owed more than $20,000 to one of Wollongong's largest developers for renovations on her home. A couple of years later Ms Hay made representations to Minister Sartor about plans from the same developer, Ken Tugrul. This year Ms Hay made representations on behalf of Mr Tugrul's company, Huntley Heritage, to Minister Sartor about approving plans to develop a 400-hectare site, once part of the Huntley coalmine west of Dapto, into an 18-hole golf course with up to 1,000 square metres of retail space and a funicular railway.

Mr Tugrul's business partner, Robert Renshall, successfully bid $12,000 at a fundraising function for the pair to have dinner with the Premier, Morris Iemma, and Ms Hay last November. Ms Hay has stated that the renovations were declared on her parliamentary pecuniary interests register. The 2004-05 parliamentary pecuniary interests register shows a debt to TDK Constructions. I seek the Attorney General's assurance that under this proposed legislation the type of loan Ms Hay received will have to be disclosed.

I support the provisions of the bill concerning managing campaign finance. However, I have some reservations as to how local government independents and small local government parties will be able to manage these requirements. I sincerely hope the authority will try to educate candidates and official agents about their responsibilities under the new legislation. I note that official agents are required to complete training by the authority. Has the authority set dates for such training courses? I also note the transitional provisions in this regard and that the authority has a discretion to waive compliance with the new requirements when it is satisfied that there is good cause to do so. This grace period will apply until 30 days after the September local government elections. I seek clarification from the Attorney General on whether some type of publicly available register documenting such waivers will be maintained by the authority for public view. Another criticism of this legislation is the creation of a 10-week gap in the lead-up to the September local government elections when candidates do not have to disclose any donations they receive. Currently, candidates must disclose donations received for the last council elections by 25 August 2008, but will need to disclose only donations received prior to 30 June 2008, leaving a 10-week disclosure gap. I ask the Attorney General to address this omission in his reply.

The Coalition supports the provision banning in-kind donations. Again, this issue was highlighted during the Wollongong council scandal with the provision of a campaign office on an in-kind basis by developer Frank Vellar to Labor's Ms Noreen Hay. Members will be aware that the Independent Commission Against Corruption [ICAC] last month found that Mr Vellar and former Wollongong City Council planner, Beth Morgan, engaged in serious corrupt conduct. The Independent Commission Against Corruption determined that Ms Morgan engaged in official misconduct when she approved Mr Vellar's $100 million Quattro development in the city centre. It is of concern also that Ms Hay accepted the in-kind donation from Mr Vellar while he was trying to curry favour with the Labor-dominated council. The new offences and investigation powers for the authority is a positive step in ensuring compliance with the law. However, a paltry $22,000 fine for non-compliance is not compelling enough for some rogues to stop their nefarious deeds. Hopefully, the threat of a jail term, provided for in the bill, will address this concern.

The Local Government and Planning Legislation Amendment (Political Donations) Bill 2008 has adopted many of the recommendations in the Independent Commission Against Corruption's report entitled "Corruption risks in New South Wales development approval processes", which was released in December 2005. After 2½ years of dithering, why has the Government not adopted all of the recommendations? For that matter, I note that many of the numerous recommendations of commissioners following section 740 public inquiries into councils that have been dismissed over the last five years have not been taken up. Last year I asked several questions on notice of the Minister for Local Government regarding the outcome of the various inquires into particular councils that were dismissed. It is disappointing to note that the Government has not properly addressed the recommendations of the inquiries. This shows how disingenuous the Government is about fixing the problems identified in local government and its failure to put mechanisms in place to prevent further problems occurring in the future.

Purportedly the Local Government and Planning Legislation Amendment (Political Donations) Bill 2008 contains measures that are specifically designed to make the planning and development approval process more transparent, both at the State and local levels. I do not believe the provisions are rigorous enough to prevent corruption. The bill requiring the general manager of every local council to record councillors vote for and against each planning decision of the council, and to make this information publicly available, is not a massive step towards corruption prevention and transparency. Indeed, many councils that have been the subject of serious complaints of corruption have adopted this practice for many years, and yet the alleged corruption continues.

Analysis of legislation across Australia governing local government pecuniary interests and conflict of interest disclosure provisions shows just how poor New South Wales legislation is in dealing with those in local government who seek to gain financially from their public office. In New South Wales, should a councillor not disclose a pecuniary interest and vote on any matter in which they receive a benefit, the penalty, if imposed, is a mere suspension or expulsion from office for five years. Should a councillor in Western Australia abuse their position of power and vote on a matter in which they have an interest, the maximum penalty, if convicted, is a jail term. The Western Australian provisions are certainly a greater deterrent for the few rogue self-interested councillors who seek to benefit financially from their office. Similar provisions should have been included in the Local Government and Planning Legislation Amendment (Political Donations) Bill 2008 to ensure that councillors voting in the interests of donors and associates are appropriately penalised.

I note the Attorney General's comments that, under the bill, when a general manager reasonably suspects that a councillor has failed to comply with his or her obligation to disclose and manage a conflict arising from a political donation, the general manager must refer the matter to the Director General of the Department of Local Government. The director general may then refer the matter directly to the Pecuniary Interest and Disciplinary Tribunal. I ask: Why can a member of the public not refer such concerns to the director general directly? We have already seen the holes in the referral process of complaints to general managers under the provisions of the Local Government Act 1993 highlighted by the conduct of Warringah Council's general manager, Rik Hart, in relation to complaints about the conduct of the Labor administrator, Dick Persson.

Residents were informed that they should direct complaints about this Labor-appointed administrator to the general manager of Warringah Council, Mr Hart. Mr Hart immediately dismissed the complaints, stating that he had talked to Mr Persson. When residents inquired about what investigations were actually undertaken, Mr Hart referred the letter to Mr Persson—the very person the residents were complaining about—to answer the residents directly. Mr Persson advised that complaints about him can be referred to the Minister for Local Government, who has previously demonstrated his unwillingness to act on his Labor factional colleagues' alleged misconduct. What a fob-off! It is a perfect example of just how bad and ineffective the local government complaints handling system is under the Local Government Act. Clearly the systems in place are a sham masquerading as accountability.

And yet the same ineffective process is proposed to be adopted under this bill. It is interesting to again note that, of the 773 complaints received by the New South Wales Department of Local Government between 1999 and the present regarding alleged breaches of pecuniary and conflict of interest disclosure provisions, only 15 were prosecuted in the Pecuniary Interest and Disciplinary Tribunal, which was formerly the Pecuniary Interest Tribunal. The ineffectiveness of the New South Wales Labor Government in ensuring compliance highlights what a sorry State New South Wales is in, and demonstrates that referral of electoral and disclosure breaches to the Department of Local Government under this bill is useless and will not result in compliance and prosecution of offenders.

Despite Premier Iemma's Easter Saturday proclamations of a road to Wollongong conversion on donations reform, his promise of a ban on all donations has failed to materialise. The Premier's failure to back up his talk with action is just another example of his pathetic dithering. The Opposition is concerned about the Government's failure to impose restraint on union support for the Labor Party. The bills fail to address third party donations and merely facilitate Labor's increasing reliance on unions to finance their campaigns and cover up such backdoor contributions. I whole-heartedly support the submission made by the Leader of the Opposition, Barry O'Farrell, who said:

A fair system must not allow special treatment for a particular interest group. It must at all times be focussed on the public interest. Who you know or how much you donate should not dictate policy in New South Wales.

The Hon. JOHN HATZISTERGOS (Attorney General, Minister for Justice, and Acting Minister for Education and Training) [1.25 a.m.], in reply: I thank all honourable members who contributed to debate on the Election Funding Amendment (Political Donations and Expenditure) Bill 2008 and the Local Government and Planning Legislation Amendment (Political Donations) Bill 2008. My reply will not be lengthy but my dealing with one issue relating to section 86 (3), which was raised by the Hon. Don Harwin and the Hon. Jennifer Gardiner, may avoid a debate in Committee. The Government believes that the legislation is quite clear. The aggregation of donations made to associated parties is necessary as an anti-avoidance provision. It will ensure that major donors will not evade disclosure requirements by splitting a donation between two or more parties running a joint ticket and therefore sharing the benefit of the donations. The bill makes it clear that the aggregation provision does not apply to disclosures made by the parties. In other words, separate donations of less than $1,000 which are made to associated parties are required to be aggregated only for the purpose of a disclosure made by a political donor.

In relation to other issues that were raised in the context of banning donations and caps on donations, I point out that I indicated in my second reading speech, and reiterate now, that the Government has commissioned Associate Professor Anne Twomey to prepare a paper on constitutional and policy issues. They will need to be resolved before we can move to the next stage of donations reform. We are also contributing to discussions that are taking place at the Commonwealth level with State and Territory Ministers and Senator Faulkner relating to the preparation of a green paper. We anticipate that further proposals related to reform may eventuate from that process.

A number of quite sanctimonious statements have been made by Opposition members when espousing their views on donations reform and the alleged conversion on the road to Wollongong. It is interesting to note history which demonstrates that every time the Coalition has been in government its actions in relation to donations reform have taken us backwards, not forwards. In respect of disclosure requirements of public funding for whatever proposal is made relating to transparency and accountability, the Liberal Party and The Nationals have been the hallmark of obfuscation. It is interesting that not one member of the Opposition defended the Howard Government's actions immediately prior to being voted out of office when it significantly increased thresholds of obfuscation in relation to disclosure requirements. I hope that the Opposition, in the context of this debate, is being genuine and not merely sanctimonious.

Question—That these bills be now read a second time—put and resolved in the affirmative.

Motion agreed to.

Bills read a second time.


The CHAIR (The Hon. Amanda Fazio): The Committee will deal first with the Election Funding Amendment (Political Donations and Expenditure) Bill 2008.

Clauses 1 to 5 agreed to.

Ms LEE RHIANNON [1.30 a.m.], by leave: I move Greens amendments Nos 1 to 3 in globo:

No. 1 Page 4, Schedule 1 [3] (proposed definition of official agent), line 18. After "means" insert "(subject to subsection (1A))".

No. 2 Page 5, schedule 1. Insert after line 14:

[6] Section 4 (1A)

Insert after section 4 (1):

(1A) In the definition of official agent in subsection (1), a reference to a party agent in relation to a person who is a candidate (whether or not also an elected member) is a reference to the official agent of the person if such an agent is appointed under this Act by the person.

No. 3 Page 8, Schedule 1 [21]. Omit lines 9-12. Insert instead:

(1A)

This section applies only to candidates, or all candidates in a group:

(a) who are authorised under section 96A to accept political donations and incur electoral expenditure without a campaign account, or

(b) who are independent candidates who satisfy the Authority that they are able to comply with this Act without the need for the appointment of a separate agent.

The Greens believe the provision to require all candidates to have an official party agent would be a burden on independents who share the concerns of independent councillors who have contacted my office about the bill forcing candidates to have an agent. Therefore, we are seeking to amend the bill so that independent candidates for local government elections who have no party membership or affiliation can apply to the Commissioner of the Election Funding Authority for an exemption from appointing an official agent, provided they can demonstrate that the requirement will be too onerous.

The Greens also seek to amend the bill so that elected members, in particular State elected candidates, can appoint an official agent. As the bill stands, the party agent would be the agent for every one of the party's lower House candidates, which could mean it is the agent for 93 local electorate campaigns. This would be a huge workload and demand to place on the party agent who will always know little about the finances of each of those local campaigns and will not take an active role in administering those finances.

The party agent would rely on locals to do the work and sign election returns based entirely on the financial work carried out by others at the local level, such as branch treasurers or someone on the local campaign committee responsible for finances. The party agent will have a mountain of work to do, being the agent for the party on the statewide campaign for the upper House. Lower House candidates should be able to appoint their own agent, preferably a local working on their campaign, and the requirement that the party agent be the local candidate's agent should be removed. The provisions of the definition of "official agent" as they stand are impractical and need amendment.

The Hon. JOHN HATZISTERGOS (Attorney General, Minister for Justice, and Acting Minister for Education and Training) [1.33 a.m.]: The Government does not support the amendment of the Greens regarding the definition of "official agent". The bill provides that the official agent is automatically deemed to be the party agent of the party for State elected members and candidates. This provides for a centralised administration of donations and expenditure through the central party office, which will improve compliance with disclosure obligations. The amendment is unnecessary as there already is provision in section 96A (4) of the bill, which enables official agents to appoint other persons except the party group elected member or candidate to assist with the collection and management of donations and expenditure. This will alleviate any perceived burden on party agents who are deemed to be the official agent of their party's State members and candidates.

The Government opposes Greens amendment No. 3. The requirement that there be an independent agent should apply to all candidates regardless of whether they are independents or members of a party. The amendment is silent as to how an independent candidate would satisfy the authority that he or she is able to comply with the Act without the need for the appointment of an official agent. This amendment would give the authority an extremely broad discretion to exempt independents from the requirement to have an official agent. There is no reason why independents should receive the benefit of such discretion to the exclusion of other candidates. It is a limited and piecemeal amendment that the Government will not support.

The Hon. DON HARWIN [1.34 a.m.]: The Opposition does not support Greens amendments Nos 1, 2 and 3. We agree with the Minister about the watering down aspect of the amendments as they relate to official agents for independent candidates. The Opposition does not consider that to be a good move. We are happy with the bill as drafted and accept the Minister's assurances that other provisions in the bill adequately deal with the matter.

Question—That Greens amendments Nos 1 to 3 be agreed to—put.

The Committee divided.

Mr Ajaka Mr Brown Mr Catanzariti Mr Clarke Mr Colless Mr Costa Ms Ficarra Mr Gallacher Miss Gardiner Mr Gay Ms Griffin

Mr Hatzistergos Mr Khan Mr Lynn Mr Mason-Cox Reverend Nile Mr Obeid Ms Parker Mrs Pavey Mr Pearce Mr Primrose Ms Robertson

Ms Sharpe Mr Smith Mr Tsang Mr Veitch Ms Voltz Mr West Tellers, Mr Donnelly Mr Harwin

Question resolved in the negative.

Greens amendments Nos 1 to 3 negatived.

Ms LEE RHIANNON [1.42 a.m.]: I move Greens amendment No. 4:

No. 4 Page 13, schedule 1 [34] (proposed section 86). Insert after line 35:

(5) A political donation of less than an amount specified in subsection (1) made by an entity or other person to a party is to be treated as a reportable political donation if that and other separate political donations made by that entity or other person to elected members, candidates or other persons who are members of that party within the same financial year (ending 30 June) would, if aggregated, constitute a reportable political donation under subsection (1).

Greens amendment No. 4 proposes to change the meaning of a donation to ensure that the cumulative total of donations includes donations accepted both by parties and by party candidates. This amendment is clearly necessary to ensure that councillors who belong to a party are also held accountable for donations accepted by their party. The bill dodges this level of accountability. If this amendment is not passed it will result in a very uneven playing field. The amendment is necessary because councillors who are members of a party must be linked to the donations that particular donors make to that party, otherwise it will be particularly unfair for independents.

[Interruption]

I acknowledge the interjection. Independent councillors will be dogged by the provision in the bill but those councillors who are members of a political party will appear to be cleanskins when their party is clearly being influenced by donations from different quarters.

The Hon. JOHN HATZISTERGOS (Attorney General, Minister for Justice, and Acting Minister for Education and Training) [1.44 a.m.]: The Government cannot support Greens amendment No. 4. Requiring donations to candidates to be aggregated with donations made to the party of which they are a member is unnecessary and would be completely unworkable in practice. The purpose of the aggregation provisions is to ensure that donors cannot avoid disclosure by splitting one large donation into a number of smaller donations for the benefit of a particular party or candidate. The Greens amendment will do nothing to address this problem. It will simply result in a situation where a donation made to a State branch of a political party must be linked for disclosure purposes with a donation made to a local candidate even when the local candidate does not know about or receive the benefit of the first-mentioned donation. This would be particularly onerous for candidates and elected members, who would be required to consult their political parties to determine whether each person who has made a donation to them has also made a donation to the party. I remind honourable members that there are more than 5,000 candidates in local government elections alone. The amendment would be totally unworkable in practice. The $1,000 disclosure threshold coupled with the existing aggregation provisions in the bill will ensure that donors are not able to avoid the disclosure of multiple donations made to the same party or related parties, groups, elected members or candidates in the same financial year.

The Hon. DON HARWIN [1.45 a.m.]: The Attorney General is correct: to do as Ms Lee Rhiannon proposes in Greens amendment No. 4 is completely unworkable. That is not to say that she is not accurate when she says that a totally different obligation is placed on independent councillors from that placed on councillors who are members of a political party. I am prepared to concede that point. But this is one of a number of amendments through which the Greens are trying to fix a bill that has very modest ambitions. It is a small step forward. Other honourable members have categorised it as step one—and not a particularly satisfactory step one. Nevertheless, it is a first step. This sort of matter will need to be addressed in a major reform bill by the cap on donations of $1,000 limited just to individuals, as proposed by the select committee. Doing as Ms Lee Rhiannon proposes in this amendment is simply not good enough—worse than that, it is completely unworkable.

Question—That Greens amendment No. 4 be agreed to—put and resolved in the negative.

Greens amendment No. 4 negatived.

Ms LEE RHIANNON [1.47 a.m.]: I move Greens amendment No. 5:

No. 5 Page 17, schedule 1 [34] (proposed section 91). Insert after line 10:

(7) During the period of 2 months preceding polling day for any general election, the disclosure of political donations required to be made in relation to a party, group or candidate is to be made within 3 days after each donation is made and is to be made under subsection (3) on a website maintained by the Authority, despite anything to the contrary in this section.

This amendment is about continuous disclosure. It obviously would be preferable to place a total ban on donations from corporations and other organisations. But until such time as that is achieved, the Greens believe candidates should be required to disclose all donations they or their parties receive in the lead-up to an election. We have nominated a two-month period preceding polling day for a general election during which these disclosures must be made. This is not an onerous task; the information can be set out quite clearly on websites and spreadsheets. The majority of people already enter such information electronically, and it could be uploaded readily and easily. The Greens believe the declaration should be available on a public website so that people can see who is donating to candidates in the week before the election. It is important that people have that knowledge before they vote. The bill creates a window of 10 critical weeks when donations made in the lead-up to polling day on 13 September will not be disclosed until after the election. It also excludes disclosure before the election for any candidates who did not contest the previous election.

The amendment will go some way to addressing this matter. The disclosure that is set out in this legislation, which in many ways is one of the best things going for the bill, is still extremely limited. Continuous disclosure would push us into the twenty-first century and provide important information on a regular basis to voters. The major parties, which I am sure do not have anything to hide, could readily agree to this amendment.

The Hon. JOHN HATZISTERGOS (Attorney General, Minister for Justice, and Acting Minister for Education and Training) [1.49 a.m.]: The Government will not support this amendment. Under the bill parties, groups, elected members and candidates must disclose all donations of expenditure for each six-month period on 30 June and 31 December. Declarations must be lodged with the authority within eight weeks of the due date for making disclosures. As an alternative to six-monthly disclosures, the bill makes provision for electronic disclosure of individual donations on a website that is maintained by the authority before the due date. The website will specify the classes of donations that may be disclosed in this manner—for example, donations made by major donors. Disclosure before the due date will be optimal. Disclosures are to be published by the authority on its website twice a year as soon as practicable after the due date for the making of disclosures.

The Government does not believe that a move from four yearly to real-time disclosures is realistic or appropriate at this time. Firstly, it would take a considerable amount of time for the authority to develop a technological and organisational capacity to support real-time disclosure. Secondly, the immediate move from four yearly to real-time disclosures would be onerous for parties, groups and candidates. It might also discourage candidates from standing at the next local government elections, which would be a surprising move for the Greens to support. It is unrealistic to expect that parties, groups and candidates could comply with an immediate transition to real-time disclosure. An immediate move to real-time disclosure would be particularly onerous for major donors. Educating a large class of persons about their real-time disclosure obligations and enforcing compliance with such obligations would be a costly and time-consuming exercise.

Biannual disclosure is the better option at this time. The biannual system proposed by the Government has a number of advantages over real-time disclosure in terms of accuracy and transparency. Parties, groups and candidates must ensure that their accounts are independently audited before declarations are lodged and published by the authority every six months. This kind of audit requirement would not be practical in a real-time system. Real-time disclosure also increases the risk of false and vexatious disclosures being made public. It is important to note that in addition to six monthly declarations published by the authority, donations made by persons lodging certain planning applications or making submissions will be disclosed and made public at the time those applications and submissions are lodged. Disclosure of donations at the time planning applications and submissions are lodged is practical, it is targeted at an identifiable group of persons, and it can be easily integrated into the existing regulatory requirements for planning applications. The reform of our electoral system must be undertaken in a careful and measured way. The Government believes that publication of properly audited donation information every six months strikes the right balance between transparency and efficiency.

The Hon. DON HARWIN [1.52 a.m.]: I do not have much to add to the Minister's comments. He put it very well. I will note two matters. I believe the only jurisdiction that has real-time disclosure at present is Ontario, where there are no caps on donations, unlike the situation at a federal level in Canada. From memory, disclosure is after 10 days, not 3 days, which is a far more realistic proposal if we were minded to go to real-time disclosure. The select committee recommended a different model, that is, the Canadian federal model. The Canadian model does not have these sorts of provisions at all. I reiterate what I said earlier, which was amply elaborated by the Minister: this is not the way to go about bringing in real-time disclosure.

Question—That Greens amendment No. 5 be agreed to—put.

Division called for and Standing Order 114 (4) applied.

The Committee divided.
Question resolved in the negative.

Greens amendment No. 5 negatived.

Ms LEE RHIANNON [1.57 a.m.], by leave: I move Greens amendments Nos 6 and 7 in globo:

No. 6 Page 17, schedule 1 [34] (proposed section 92 (2) (d) - (f)), lines 28-33. Omit all words on those lines. Insert instead:

(d) the residential address in Australia of the donor,

(e) the amount of the donation.

No. 7 Page 23, schedule 1 [34] (proposed section 96D), lines 29-34. Omit all words on those lines. Insert instead:

96D Prohibition on donations except from individuals living in Australia

It is unlawful for a person to accept a political donation unless it is made by an individual who is ordinarily resident in Australia.

These Greens amendments will effectively ban donations by corporations and other organisations to political parties by permitting only natural persons who ordinarily reside in Australia to donate to a political party or candidates. Any donations from a corporation or organisation would attract a penalty of approximately $22,000. I know that we have cross-party support for a ban, so it is most disappointing that the Government did not bring forward the measures in the legislation. The Attorney General has now indicated that the Government will not support any of the Greens amendments, so we are left wondering when these measures will materialise. To clean up the political system and improve our democracy we need this ban in place.

The ban has worked in Canada and is widely supported by the people of New South Wales, as shown by the upper House inquiry into political donations. If corporate donations were banned it would clearly remove a massive conflict of interest that governments create when they accept such donations, some of which are huge and undermine the democratic process. The same will apply to councils, and the Greens have moved these amendments so that they are in place before the 13 September elections. The saga of Wollongong has been evoked many times. It is a real problem that could easily occur again. It is a reminder that this House has a responsibility to pass these amendments that ban donations from corporations and other organisations. I commend the amendments to the Committee.

The Hon. JOHN HATZISTERGOS (Attorney General, Minister for Justice, and Acting Minister for Education and Training) [2.00 a.m.]: The Government strongly objects to the proposals contained in Greens amendments Nos 6 and 7. Any kind of ban on donations, whether applied globally or from particular persons or groups, raises complex legal and policy issues. As I have indicated, the Government has commissioned Professor Anne Twomey to examine some of these issues and to feed the outcomes of Professor Twomey's work into the green paper. It should also be pointed out that the proposed amendment makes no attempt to deal with significant compliance issues that would arise if a prohibition on corporation donations were implemented. There would be nothing to stop individual directors of a corporation from making a donation to a party, group or candidate. There would be nothing to prevent the emergence of third-party organisations, such as political action committees that exist in the United States which are formed for the sole purpose of raising private money and running advertising campaigns to support the candidate or the party of their choice.

The proposed amendments also fail to deal with jurisdictional issues that would arise from the New South Wales only ban on corporate donations. Corporations could easily circumvent the ban by making donations to other State branches of political parties that could then be channelled back into New South Wales. These are complex legal and policy issues. Any attempt to impose bans on donations at this early stage of the Federal Government's green paper process would be premature and imprudent. The proposed amendments would also unfairly stop individuals who may not have a residential address in Australia but are still entitled to vote from making a political donation over $1,000.

The Hon. DON HARWIN [2.02 a.m.]: The Opposition supports all of the valid points raised by the Attorney General. The Greens suggest that people who are not on the electoral roll and are not Australian citizens should still be able to make donations, but that is not what the select committee said. The select committee was quite clear in limiting the provision to enrolled Australian citizens. The Minister has indicated that Anne Twomey—someone whom I greatly respect and whose book on the New South Wales Constitution is almost the last word on that subject—needs to look at those issues, as the select committee also noted in its recommendations. Therefore, these amendments should not proceed.

Question—That Greens amendments Nos 6 and 7 be agreed to—put.

Division called for and Standing Order 114 (4) applied.

The Committee divided.
Question resolved in the negative.

Greens amendments Nos 6 and 7 negatived.

Ms LEE RHIANNON [2.06 a.m.], by leave: I move Greens amendments Nos 8 and 9 in globo:

No. 8 Page 25, schedule 1 [34]. Insert after line 30:

Division 5 Prohibition of electoral expenditure exceeding cap

96H Relevant electoral expenditure cap

For the purposes of this Division, the relevant electoral expenditure cap is as follows:

(a) in the case of a party that incurs electoral expenditure on a State-wide campaign for a State general election (not including expenditure by a candidate for the purposes of an election to the Legislative Assembly)—$1 million,

(c) in the case of a candidate or group that incurs electoral expenditure on a campaign for a State election —$30,000,

(d) in the case of a party that incurs electoral expenditure on a State-wide campaign for a local government election (not including expenditure by a candidate or group for the purposes of a local government election in an area)—$500,000,

(f) in the case of a candidate or group that incurs electoral expenditure on a campaign for a local government election in a whole area or in a ward of an area—whichever is the greater of the following amounts:

(i) 50 cents per voter on the electoral roll for the whole area or for the ward (as the case requires),

(ii) $10,000.

96I Prohibition on exceeding cap on electoral expenditure

(1) It is unlawful for a party, group or candidate (or any person acting on behalf of a party, group or candidate) to incur electoral expenditure in any campaign for an election that would exceed the relevant electoral expenditure cap for the party, group or candidate in relation to that election.

(3) For the purposes of this section, incurring electoral expenditure means incurring any electoral expenditure that is required to be disclosed under this Part.

No. 9 Page 26, schedule 1 [34] (proposed section 96I) line 18. Omit "Division 3 or 4". Insert instead "Division 3, 4 or 5".

These amendments cover the issue of election expenditure caps. The two key requirements to clean up political funding in this State are the ban on donations and election expenditure caps. The Greens suggest that the expenditure cap on statewide party election campaigns for State elections should be $1 million, and State election candidate campaigns for the Legislative Assembly should be capped at $30,000. Caps on parties for local government election campaigns should be $500,000 and expenditure should be capped at $10,000 or 50¢ per voter in the ward or council area if there are no wards, whichever amount is higher. Limiting expenditure in State and local government elections will remove the incentive for parties and candidates to compromise themselves by seeking and accepting corporate donations.

Having a cap on election expenditure clearly has positive impacts. Parties and candidates will no longer have to raise massive election war chests in order to be competitive in an election. It will remove the pressure from parties to fundraise so extensively and bow to big business demands, and clearly it would improve our democratic process. We could get back to debating issues on their merit and discussing and debating policy issues and move away from the influence of powerful sectional interests that have come to dominate election funding in recent times.

The Hon. JOHN HATZISTERGOS (Attorney General, Minister for Justice, and Acting Minister for Education and Training) [2.08 a.m.]: The Government does not support the proposed amendment that attempts to impose arbitrary expenditure on parties, groups and candidates. In the United States expenditure caps have been struck down as unconstitutional on the basis that they restrict the ability of candidates to communicate their policies, and that the legitimate aim of preventing undue influence and corruption can be achieved through other means, such as disclosure requirements. Whilst the constitutional validity of expenditure caps has not yet been tested in this country, the Government has some reservations about the legality of the proposed amendments. Those issues will be further examined by Professor Twomey in the work that has been commissioned.

The caps proposed by the Greens may well breach the implied freedom of political communications by limiting the quality and diversity of such communication, and by restricting the ability of candidates to convey their policies to their electorates. The risk to constitutional challenge has also increased because the expenditure limits are set well below the amounts currently spent by major parties in conducting election campaigns.

The proposed limit of $1 million is not even close to the amount that is spent by the major parties in New South Wales who realistically have a hope of forming government. Not surprisingly, the proposed cap is well above the current level of expenditure included by the Greens and bears no relationship to the actual costs associated with running a proper and effective election campaign. In addition, the amendments make no effort to address the significant compliance issues that would arise from the proposed expenditure caps, and some measures to control spending in campaigning by third-party organisations, such as corporations' and unions' expenditure caps, would be pointless.

Again, the constitutional validity of limits on third-party activity is a complex issue. Clearly, this is the kind of reform that cannot be done on the back of an envelope. The amendment proposed by the Greens would create many more problems than it resolves. The Government, of course, is committed to working towards the Federal Government's green paper process. As I have indicated, the New South Wales Government has commissioned Associate Professor Twomey to prepare a paper on constitutional and policy issues that will need to be addressed at the next stage of donation reforms, including issues associated with expenditure caps.

The Hon. DON HARWIN [2.10 a.m.]: I am glad the Attorney General raised the issue of the appropriateness of the size of the limits and campaign spending. As he says, they do not even resemble current levels of spending; they would not even have been above the level of New South Wales Labor's spending in 1995—several elections ago. Since then there has been a 467 per cent increase in Labor's campaign spending, including a 746 per cent increase on television advertising alone, showing that we well and truly need to address the campaign spending arms race, as the Greens amendment suggests. I recognise the actual caps, at least insofar as they apply to State elections, as being very similar but still below the caps that apply in New Zealand.

The Attorney General also raised the issue of the possible unconstitutionality of spending caps, and he flags that Professor Anne Twomey will look at those issues. I am sure she will consider the case law in Canada that is relevant. Of course, Canada has a Charter of Rights and Freedoms—which we do not—and yet spending limits have not been struck down in Canada at all as being unconstitutional. It was certainly the opinion of all the people who appeared before the select committee that it was very, very unlikely that spending caps would be struck down by the High Court of Australia and, having read the political advertising case and other relevant cases, I think it is very likely that spending caps will be found to be constitutional. That is not the issue, but that is certainly something we have to bear in mind when listening to arguments that we hear from the Attorney General and from the general secretary of the Labor Party at the select committee hearing about why we cannot have spending caps. I am extremely sceptical about claims that they are unconstitutional.

In regard to these amendments, I draw the attention of the House to the fact that two amendments have been moved to put a prohibition on electoral expenditure exceeding a cap. The amendments say what those caps are, but where is the amendment to say what the penalty is for a breach of those caps? This just shows that this is gesture politics by the Greens; it is not a serious attempt to reform this bill at all. It shows the Greens' approach to this bill in the Committee stage for what it is and it shows why the Opposition is entirely justified in taking the view that all the Greens' amendments should be opposed pending—and we stress "pending"—a major reform bill. During the second reading debate a number of Opposition members and Reverend the Hon. Fred Nile emphasised that a reform bill should be brought forward. We hope that one will be brought forward before the end of this year.

Ms LEE RHIANNON [2.15 a.m.]: I am disappointed Mr Harwin has been critical that no penalty information has been included. The Coalition has had problems also with the rushed way this legislation has been brought forward to be able to get all our amendments fully finalised. I appreciate the assistance from Parliamentary Counsel, but that was one matter that we were not able to finalise—certainly not for want of trying. I think that is a poor way to debate the matter—probably understandable considering the lateness of the hour, but certainly not justified.

The Hon. DON HARWIN [2.15 a.m.]: I will accept the chastisement. However, I will not accept—but I will inevitably see over the next couple of weeks—ream after ream of press releases and other material coming from the Greens saying that the Opposition, the Government, whoever, did not support spending caps in committees. We did not do it tonight—even though the Opposition is clearly on the record as supporting spending caps—because the amendments that have been moved tonight are not a holistic solution to spending caps. Everything that Ms Lee Rhiannon says about the limited time and the fact that we are debating this issue at 2.17 a.m. is valid. As I said, I will accept her chastisement but, please, let us not have the Greens going around in the next few weeks saying that the Opposition would not support spending caps.

The Hon. JOHN HATZISTERGOS (Attorney General, Minister for Justice, and Acting Minister for Education and Training) [2.16 a.m.]: Further to the matters raised by the Hon. Don Harwin, the Greens also have to rework these amendments. In fact, they will leave the bill with two division 5s and a subsequent provision referring to division 5—you will have a choice as to which division 5 you apply!

Ms LEE RHIANNON [2.17 a.m.]: I refer to Mr Harwin's comments. He does seem to be a little bit precious in relation to the comments about election expenditure caps. In relation to the ban on corporate donations, I heard a number of members—and Mr Harwin before his leader came on board on this matter—express a commitment to that position. Now we know the parties that are on board. But tonight, even with the penalty provisions as part of the amendments, they have not supported the amendments when we could have voted together on this bill. It has been disappointing. Clearly, people have a right to know.

The Hon. DON HARWIN [2.17 a.m.]: I am glad Ms Lee Rhiannon again raises the donation caps issue. When we were discussing that amendment the Attorney General clearly pointed out why it was not possible to proceed in that respect. Yes, there may have been a penalty there, but there was nothing about intra-party transfers and there was nothing there about third-party donation caps. So it is exactly the same situation, with great respect.

Ms LEE RHIANNON [2.18 a.m.]: We have moved the amendments. It does not mean that the whole thing is solved. Other people could have come forward, like the Liberals, and put forward the requirements that Mr Harwin has identified.

Question—That Greens amendments Nos 8 and 9 be agreed to—put.

Division called for and Standing Order 114 (4) applied.

The Committee divided.
Question resolved in the negative.

Greens amendments Nos 8 and 9 negatived.

Schedule 1 agreed to.

Title agreed to.

DEPUTY-PRESIDENT (The Hon. Amanda Fazio): Order! The Committee will now consider the Local Government and Planning Legislation Amendment (Political Donations) Bill 2008.

Clauses 1 to 5 agreed to.

Ms SYLVIA HALE [2.23 a.m.], by leave: I move eight Greens amendments in globo:

Page 3, schedule 1 [2] (proposed section 328A (1)), line 21. Insert "or by or on behalf of parties of which those councillors are members or were members at any time within the period of 6 months before they were last elected" after "councillors)".

Page 3, schedule 1 [2]. Insert after line 31:

328B Exclusion of councillors from planning decisions where political donations made

(1) For the purposes of Chapter 14, a councillor is taken to have a pecuniary interest in relation to a relevant planning application made to the council if a disclosure of a political donation or gift is made under section 147 of the Environmental Planning and Assessment Act 1979 in relation to the application (being a disclosure that relates to the councillor) or would be required to be made if that section extended to political donations or gifts made to any party of which the councillor is a member.

(2) In this section, a relevant planning application means a relevant planning application within the meaning of section 147 of the Environmental Planning and Assessment Act 1979.

Page 4, schedule 1 [3] (proposed section 375A (2)), line 26. Insert after "decision" the following:

In addition, the general manager is to record in the register the names of any councillors who were excluded from voting in relation to the decision because of a pecuniary interest in the matter.

Page 4, schedule 1. Insert after line 34:

[4] Section 458 Powers of Minister in relation to meetings

Omit the section.

Page 7, schedule 2, line 11, (proposed section 147). Insert "or any political party or candidate" after "council".

Page 7, schedule 2, line 13 (proposed section 147). Insert "or any political party or candidate" after "council".

Page 7, schedule 2, line 26 (proposed section 147). Insert "or any political party or candidate" after "council".

Page 7, schedule 2, line 28 (proposed section 147). Insert "or any political party or candidate" after "council".

A week ago we were in this Chamber debating the planning bills at an equally early hour of the morning, but at least on that occasion we were dealing with a very complex bill for which we had had three weeks to prepare amendments. This bill is an equally critical piece of legislation but it is only four days since the bill was introduced. Obviously it has been impossible not only for the Greens but for other members to prepare amendments to deal with it adequately.

DEPUTY-PRESIDENT (The Hon. Amanda Fazio): Order! The Chair should not have to remind members that silly comments made by way of interjections tend to lengthen debates, rather than shorten them.

Ms SYLVIA HALE: I moved the amendments in globo because they need to be viewed holistically. They all hang together and each impacts on the other. The package of amendments seeks to treat party political donations from developers and others as donations whose purpose is to influence councillors and the decisions those councillors make. The Greens amendments also seek to make the process of declaring a pecuniary interest fairer from the perspective of independent councillors when the obligations placed on them are compared with those placed on a councillor who is a member of a political party.

Greens amendment No. 1 provides that a general manager of a council must keep a register not only of declarations of disclosures of political donations lodged by or on behalf of a councillor but also a register of disclosure declarations lodged by political parties of which a councillor was a member within the six months before the councillor was elected. The Greens believe the purpose of political donations is to influence the outcome of planning decisions being made by elected councillors. This includes a donation to a political party of which a councillor is a member. The purpose of the amendment is twofold: one purpose is to expand the concept of what constitutes a pecuniary interest. If a developer makes a significant donation to a political party, then it is more likely than not that directly or indirectly pressure will be applied to councillors who are members of that party to vote in such a way to ensure the donations continue to roll in. Funnelling money to the head offices of political parties will not eliminate this pressure; it will only increase it. Under the bill as it stands the level of opacity will also increase while the level of transparency will decline.

If the legislation goes through unamended, the outcome is as clear as day. Labor and Liberal councillors will never be obliged to declare receipt of a donation because those donations will not go to them but to their head offices. Independent councillors who do not have access to a party apparatus will be obliged to declare everything they receive and to refrain from voting on relevant matters. Labor and Liberal councillors will be free from any such restraint. The Government knows full well that many Labor and Liberal councillors will have nothing to disclose because all the donations will come through head office.

The second purpose underlying the Greens amendments is to eliminate the discrimination independent councillors will face. The Greens want a genuinely level playing field, not one that favours members of the major parties. If an independent receives a donation from Joe Bloggs, a local grocery shop owner, and he subsequently submits a development application to expand his shop, then clearly the independent councillor should declare an interest and not vote on that application. By the same token, if Stockland donates $1 million to the Australian Labor Party or the Liberal Party and then submits an application to build a block of units, then Labor and Liberal councillors whose parties have received donations from Stockland should declare a pecuniary interest and also be prevented from voting. The bill as it stands is not fair to independents. Independent candidates finance their campaigns through fundraising and donations to their personal campaigns.

Labor candidates will be getting their cheques from Sussex Street. Greens amendment No. 1 ensures that any candidate or councillor—whether Independent, Liberal or Labor—who receives a donation or gift from a person or organisation with a development application before a council must declare that donation or gift and should not vote on the relevant development application. Receiving a donation or gift from a development application proponent should be classed as a pecuniary interest. It is as simple as that. The amendment provides a further safeguard to ensure transparency. It is possible that a newly elected councillor may seek to avoid the requirement to declare a pecuniary interest by renouncing his or her party membership immediately after being elected. The amendment would thwart that stratagem because it would apply to the period six months prior to the election.

Greens amendment No. 2 once again presumes that a councillor has a pecuniary interest if the party of which he or she is a member benefits from donations and a development application comes before council where the proponent is a developer that has donated to the party. The Greens' unequivocal position is that developer and corporate donations to political parties should be banned. The Greens have a slogan: "Community need, not developer greed." We stand by that slogan, to which many of the members of the community respond warmly. All too often in New South Wales we have seen the outcome of money talking, most recently in Wollongong. Time and again, members of Parliament such as Noreen Hay, Frank Sartor and others have intervened in council issues after being approached by a developer and have talked to Labor councillors to try to achieve a desired outcome or to expedite a decision.

Gifts such as kitchen renovations have been given to Labor members of Parliament. Only an extremely naive person would argue that simply because a councillor has not received a direct donation from a developer he or she would not be influenced by a donation. Only an extremely naive person could fail to see what these Government amendments are all about; that is, to allow the funnelling of donations through party offices and thereby freeing up councillors to keep voting for development applications lodged by their developer mates. Party members are clearly influenced because their party and, therefore, they—to the extent that their party bankrolls their campaign—have a pecuniary interest. The Greens are simply saying that political donations to a candidate or the party of which they are members should be treated the same way as other pecuniary interests.

Greens amendment No. 3 amends the provision relating to the recording of votes so that if councillors do not vote because they or their party have received a donation, and therefore they are obliged to refrain from voting on a substantive planning decision because of a pecuniary interest, the general manager must record that fact. Greens amendment No. 4 deletes a proposed section in the bill that allows councillors to vote even if they have a pecuniary interest if the Minister so chooses. This gives too much power to the Minister because he could simply decide that it is in the interests of electors to allow councillors to vote despite their having a pecuniary interest. If many councillors have a pecuniary interest, the council can refer the entire matter to the newly established joint regional planning panels. Greens amendments Nos 5 to 8 amend section 147 of the Environmental Planning and Assessment Act to require full disclosure of all political donations at the time of making a relevant planning application or public submission. For example, proposed section 147 (4) provides:

A person who makes a relevant planning application to a council is required to disclose the following reportable political donations and gifts (if any) made by any person with a financial interest in the application within the period commencing 2 years before the application is made and ending when the application is determined:

(a) all reportable political donations made to any local councillor of that council,

(b) all gifts made to any local councillor or employee of that council.

The Greens wish to add "or any political party". That means that if the applicant is obliged to disclose that they have made a donation to a political party there can be absolutely no excuse for a councillor who is a member of that party not to recognise that. It is fair and obvious that once that disclosure has been made, any councillor who is a member of a political party to which the donation has been made will be aware of the potential conflict of interest and should be obliged to declare that conflict of interest immediately and to refrain from voting. If that is to be expected of Independent councillors, it is surely reasonable to expect the same of councillors who are members of political parties. The argument about one council not being aware of a donation being made in another part of the State is completely blown out of the water by the requirement that when the donor makes an application he has also to make a disclosure declaration about contributions in the two previous years. These amendments give substance to any endeavour to prevent political donations influencing the outcomes of planning decisions.

The Hon. JOHN HATZISTERGOS (Attorney General, Minister for Justice, and Acting Minister for Education and Training) [2.35 a.m.]: The Government does not support these amendments. It does not support amendment No. 1 on the basis that it is unworkable in practice and could in fact increase corruption risks and fuel the public perception that donations influence planning decisions. The proposed amendment would require general managers to obtain copies of declarations lodged by the political parties of which councillors are members. It is important to note that donations made to political parties will be available to the public via the Authority, which is the appropriate body for this purpose. It will keep centralised records of all declarations—both original and amended—that are lodged by parties, groups, candidates, elected members and donors.

Amendments Nos 2 and 3 are completely unnecessary in light of recent changes to the model code of conduct for local councils in New South Wales. Under the model code, councillors are required to disclose and manage all conflicts of interest, including those that arise from a political donation. The Government believes that the model code is by far the most appropriate mechanism for dealing with non-pecuniary conflicts of interest arising from donations. These matters are not always straightforward. The model code and guidelines provide a workable balance between certainty and flexibility. The amendments to the model code recently announced by the Minister for Local Government are also consistent with the recommendations of the Independent Commission Against Corruption in its recent position paper entitled "Corruption Risks in New South Wales Development Approval Processes".

The Government does not support proposed amendment No. 4, which seeks to repeal section 458 of the Local Government Act. The Minister must retain the discretion to allow a councillor who has a pecuniary interest in a matter to vote on the matter if the Minister determines that it is in the interests of the electors for the area to do so. Obviously, this discretion would only be exercised in the most exceptional circumstances. To remove this discretion would place local councils and their constituents in an unacceptable position of uncertainty. It would also leave the system open to abuse, for example, where a donor deliberately makes donations to all councillors so as to block council business in relation to a particular matter. There must be a mechanism that allows important decisions to be made in the unlikely event that a majority of councillors have a conflict of interest.

The Government does not support the other proposed amendments, which would require persons lodging certain planning applications with local councils to disclose donations made to political parties as well as donations made to councillors themselves. Mandatory reporting of all donations by development applicants could have an unintended consequence for the probity of local council decision making. At present, unless the donation is made directly to a councillor, the councillor may not know that a donation has been made. Mandatory reporting requirements for development applicants could effectively force the decision-maker to become aware of any donations made, thereby increasing the public perception that political donations influence the decision-making process. In light of this, the reporting requirements have been drafted so that only donations made to individual councillors, rather than donations made to political parties, are required to be disclosed at the time a relevant planning application is lodged with a local council. The Government is consulting with the Independent Commission Against Corruption further, as is indicated in the response to the standing committee in relation to some of the other issues raised by Ms Sylvia Hale.

The Hon. DON HARWIN [2.39 a.m.]: The Opposition supports the Minister's comments, in particular his comments on the model code as it relates to amendment No. 2, and the very pertinent comments that he made in relation to amendment No. 4 and the effect that that might have on the capacity of the council to be quorate and able to operate. In relation to the four amendments on the additional sheet I would indicate that comments I made earlier on amendments to the Election Funding Amendment (Political Donations and Expenditure) Bill are equally applicable to those four amendments.

Question—That the Greens amendments be agreed to—put.

Division called for and Standing Order 114 (4) applied.

The Committee divided.
Greens amendments negatived.

Schedule 1 agreed to.

The Hon. DON HARWIN [2.45 a.m.]: I move Opposition amendment No. 1:

No. 1 Page 9, schedule 2 (proposed section 147). Insert after line 37:

(13) A disclosure of a reportable political donation required to be made available under subsection (12) (a) is to be shown separately if it discloses a donation to the Minister or to the party of which the Minister is a member. A record of the way in which the relevant planning application was determined is to be included with the disclosure.

Our Select Committee report says at paragraph 10.93:

In relation to applications to the Minister for Planning involving campaign donors, the ICAC found that it would be impractical for the Minister to remove himself from such decisions, and recommended that there be some independent assessment of the application, as well as that objectors be given further appeal rights. The Committee agrees with this recommendation.

It then goes on to make an important recommendation, which is the genesis of this amendment. Recommendation 35 states:

That the Premier implement the ICAC's recommendation, that the Minister for Planning include in the list of designated developments, development in respect of which a declaration as to the making of a donation has been made.

This afternoon with parliamentary counsel we explored implementing the recommendation in full. There were some difficulties and, because of the amount of time available, an attempt to implement the full effect of that recommendation was not able to be made, but we have come up with amendment No. 1, which seeks to do a similar thing. The amendment is that the Director General of the Department of Planning be required to keep a specific register, which records the way the Minister for Planning has ruled on applications he is directly in charge of where the applicant was a donor to either his party or his personal campaign fund. This amendment seeks to replicate the requirement that general managers of local councils keep registers of the way in which individual councillors vote on planning applications where the applicant is a donor. This amendment will bring greater transparency to the Minister's role in development approvals.

Madam Chair, you will recall one of the most frequent comments of councillors was, when they came before the select committee in public hearings, that they felt that it was important that they be treated at local government level in a similar way to the way we are treated at State Government level. This bill has placed all sorts of obligations on councillors, but the Minister for Planning, despite the changes last week, still has a substantial area where he has consent over the development approval process. We think that this is an appropriate amendment, to apply the same scrutiny and transparency to the Minister for Planning that the Government's bill does on local councillors.

Ms SYLVIA HALE [2.48 a.m.]: The Greens support this amendment. We believe that unfortunately it applies only to those applications where the Minister will be making the decision. It would, it seems to the Greens, be preferable if that register was also maintained in relation to matters that refer to the Planning Assessment Commission because, after all, the members of that commission will be appointed solely by the Minister and there will be no possibility of appeal against any aspect of those appointments., o it would be appropriate that the conflicts of interest that are potentially made by the Minister's political appointees should also be subject to a register of disclosure.

The Hon. JOHN HATZISTERGOS (Attorney General, Minister for Justice, and Acting Minister for Education and Training) [2.49 a.m.]: The Government opposes this amendment. I am a bit confused because the proposed amendment has two sentences that do not seem to follow each other. The proposal is to amend section 147, but section 147 does not deal with planning disclosures, it deals with the disclosure of political donations and gifts. Why the Opposition has chosen to move such a dysfunctional amendment in one paragraph is beyond me. In any event, the first part of the amendment is unnecessary. Proposed subsections (9) and (10) of section 147 provide that the disclosure of donations and gifts is to include the disclosure of the following details of each donation or gift—I emphasise the word "each"—the name of the party or person whose benefit the donation or gift was given, the date on which the donation or gift was made, the name of the donor or the person who made the gift, the residential or registered address of the donor or the person who made the gift, the amount or value of the donation or gift, and; in the case of a donor who is not an individual, the ABN of the donor. All these details must be made available to the public. There is no scope under the bill for the Department of Planning or for local councils to aggregate information disclosed in conjunction with the relevant planning application. Therefore, the amendment really adds no value at all.

The second part of the amendment requires that a record be kept of the way in which the relevant planning application was determined is to be included with the disclosure. I do not know how that fits in with the rest of the paragraph, let alone with section 147. In any event, it does not even relate to a planning application by the Minister. In fact, the legislation—and this was referred to by Hon. Don Harwin—already provides for disclosures in relation to planning applications by local councils. For those reasons the Government opposes the amendment.

Question—That Opposition amendment No. 1 be agreed to—put.

The Committee divided.

Question resolved in the negative.

Opposition amendment No. 1 negatived.

Schedule 2 agreed to.

Title agreed to.

Bills reported from Committee without amendment.


Motion by the Hon. John Hatzistergos agreed to:Motion by the Hon. John Hatzistergos agreed to:

That the report be adopted.

Report adopted.


Motion by the Hon. John Hatzistergos agreed to:

That these bills be now read a third time.

Bills read a third time and transmitted to the Legislative Assembly with a message seeking its concurrence in the bills.