Hidden sources gave major political parties more than $62m in so-called dark money last financial year, a new report will show.
Preliminary findings from a Grattan Institute report show the origins of a huge chunk of money being handed to political parties remain secret.
The findings, first reported by the ABC, show about 30-40% of donations to political parties in the past decade came from untraceable sources. Last financial year alone, the source of $62.8m in party income is completely hidden.
Grattan Institute researchers Danielle Wood and Carmela Chivers spent six months attempting to trace the origins of the donations as part of a broader report on hidden influences on the political system, which will be released later this month.
Hidden donations, generally referred to as dark money, have long been recognised as a pervasive problem in Australian politics, caused in part by Australia’s lax donations laws.
Federal political parties are only required to disclose donations above $13,800, and can choose whether to distinguish incoming money as “donations” or “other receipts”. It is often more difficult to work out exactly what makes up “other receipts”. Money from a fundraising dinner or returns on an investment, for example, could both be described by parties as “other receipts”.
No cap exists on individual donors and there is no requirement for real-time disclosure, meaning the source of funds is only revealed annually, usually in February, and sometimes after an election has already been held.
Wood said Australia’s $13,800 disclosure threshold was high compared with most other developed nations.
“The fact that it’s high, combined with the fact you don’t have to aggregate it, really undermines the regime,” she told Guardian Australia. “The purpose of the regime should be that we can see anyone who is giving sizeable amounts of funds to a party. You don’t want to pick up the small mum and dad donors, it’s too much administratively, and people have a right to privacy.”
Another layer of opacity is added by the use of fundraising bodies and associated entities, which receive donations and then pass them on to the political party, often further masking the donor’s identity. Parties use events like dinners and fundraisers are used to receive donations, which are often classed as “other receipts”, hiding the identity of the donors.
“Some of the money we do know where it comes from comes from these associated entities, but then they declare almost nothing about where their money has come from,” Chivers said. “Fundraising bodies are the worst for it … they basically have nothing on their declared donations list to the [Australian Electoral Commission].”
“I think probably what is happening is that the tickets for the fundraising events are set a little bit too low to meet the threshold, so they don’t have to declare them. But it’s hundreds of thousands of dollars, it’s a lot of money.”
University of New South Wales academic Belinda Edwards has repeatedly attempted to map the funding sources to major political parties. Edwards’ analysis suggests only 10-20% of donations are transparently disclosed by the major parties.
A significant chunk, which Edwards estimates at between 20-35%, falls into a grey area, where the origins of the donations is concealed by accounting tricks.
The source of another 50-70% is completely opaque, Edwards has found. She says Australia’s disclosure laws are among the weakest in the developed world.
“It’s dreadful,” Edwards told Guardian Australia earlier this year. “When I started researching in this area I assumed, like lots of people do, that we had a much stronger disclosure regime, and I was quite shocked … when you actually go through it,” she said.
“It’s not something you would have expected in a modern democracy, to be honest.”
Edwards said the practice of hiding donations had become normalised. She described that as “corrosive”.