Drink Tank

Corporate lobby in clover, charities SLAPPED

This week the Turnbull Government announced it will introduce an electoral reform bill to ban foreign donations; a decision that has been roundly criticised by the Community Council for Australia for a measure that would seek to limit the advocacy of charities.

A critique of the proposed laws by RMIT Lecturer, Ye-Fui Ng, writing for the Conversation summed it up best, by pointing out the Government’s flawed proposal was both too broad and too narrow.

Too broad because in its bid to prevent foreign interference in Australian politics, the legislation would also ban foreign donations to third parties and effectively limit the ability of charities to draw attention to their causes and best serve their communities. And too narrow, because in focussing solely on foreign donations, it fails to address all corporate donations that can and do influence our politicians.

A case in point, last month, a FARE study revealed how the alcohol industry donates generously and strategically to political parties in its efforts to secure favourable policy outcomes.

FARE Chief Executive Michael Thorn said at the time that it was crucial to call out and end the undue corporate influence.

“Political donations are being used to do more than open doors and secure meetings. This is not just about securing access to politicians. This is about buying favourable policy outcomes, that, in the case of the alcohol industry, benefit only Big Alcohol and ultimately punish and harm everyday Australians.”

Today on Drink Tank, Michael West, who earlier foreshadowed this week’s announcement, says the government’s jihad on charities is an assault on free speech and a slight on democracy.

There was much talk from government yesterday of terrorism, espionage and the insidious interference by foreign powers. Then came the announcement, perfectly framed by one newspaper, “Australia bans foreign donations, cracks down on offshore influence”. The heads of Australia’s charities feared this was coming however and terrorists were the last things on their minds.

SLAPP: A strategic lawsuit against public participation (SLAPP) is a lawsuit that is intended to censor, intimidate, and silence critics by burdening them with the cost of a legal defense until they abandon their criticism or opposition. Such lawsuits have been made illegal in many jurisdictions on the grounds that they impede freedom of speech. Wiktionary.

It’s all happening to charities: Tax Office audits, investigations by the charity regulator and the Electoral Commission, and new laws slated for early next month to stymie tax deductibility, contain advocacy and ban or restrict foreign donations. Many in the Not-for-Profit sector are scared to speak out for fear of reprisal.

Left-wing activist group GetUp! went before the Senate inquiry into political donations last week and pulled out a report detailing the vast amount of money which is spent buying influence in Australian politics.

I should declare an interest here. Yours truly did the research. It found 18 corporate lobby groups had raised $1.9 billion over the past three years.

These are vast sums, yet they only represent a few of the most powerful advocacy groups in a handful of sectors: banking, mining, property and Big Pharma. There must be 100 more. And, together with an estimated $1 billion in corporate political donations since 1998, the “revolving doors” between industry and government, and the hundreds of millions spent by individual companies on “in-house” government relations and external consultants, the real numbers involved in swaying politicians must be well north of $1 billion a year, or more than $4 million per federal politician per year.

There is already a dangerous imbalance between corporate political power and people’s political power in this country.

In her new autobiography, “Christine Milne: An Activist Life”, the former Greens leader warns of the shift from democracy to plutocracy. “The takeover is almost complete … The rush toward the revolving door between business and politics has become a stampede. Of the 538 lobbyists registered by the Department of Prime Minister and Cabinet in 2016, 191 were former government representatives,” writes Milne.

The farmer and veteran of death threats, jail time and arrests as an activist, describes the hegemony of corporate influence as a “major factor in the disillusionment with politicians and democracy”.

Meanwhile, the government is slapping down its ideological adversaries with Tax Office audits and investigations by the Australian Electoral Commission (AEC) and charities regulator, the Australian Charities & Not-for-Profits Commission (ACNC).

Draft legislation is prepared and a bill is tipped to come before Parliament in the final sitting week of this year. There are serious implications for democracy and free speech.

One one of the main planks of this “reform” is expected to be a ban on foreign donations. It is mostly designed to hit environmental groups such as Greenpeace, 350.org, Lock the Gate and the Australian Conservation Foundation but will also affect those charities working with indigenous people, poor people, sick people and medical research.

If the bill gets up – and this may depend on what deal is dangled in front of Opposition Leader Bill Shorten, given the government is no longer in majority in parliament – it may see off foreign donations and tax deductibility.

Such would leave an unlevel playing field. Membership to corporate peak bodies such as the Business Council of Australia and the Minerals Council of Australia is tax deductible. Like the charities and NFPs, they pay no tax, but their funding is enormous.

Keen to contain the influence of environmental groups whose message flourishes on social media, the Minerals Council has been the chief urger in lobbying for the government crackdown on NFP advocacy.

More pertinently, while the government moves against foreign donations for environmental and other civil society groups, the corporate lobby remains untouched. The question should be asked, is this fair? The Minerals Council, its state affiliates and the oil and gas peak body, Australian Petroleum Production and Exploration Association (APPEA), have raised more than half a billion dollars for advocacy over the past 11 years.

They would contend that this funding is not “foreign donations” but it might as well be. The biggest two members of the Minerals Council are more than 70 per cent owned offshore and the third largest, Glencore is 100 per cent foreign-owned.

If BHP or Rio have a placement or a rights issue on the share market, the bulk of their equity funding would come from their offshore shareholders. Likewise, if Glencore required funding, its Swiss headquarters could borrow in the two per cent range. This is foreign funding in almost anybody’s book.

A number of NFPs were contacted for this article. All spoke but most on condition of anonymity. There has been a chilling effect on advocacy; the charities are afraid to speak out.

Here are the five prongs in the government’s attack on the sector:

  1. The Senate Inquiry into political donations and impending legislation changing the requirements of charities to maintain DGR (Designated Gift Recipient or tax-deductible donation) status.
  2. Restricting or banning foreign donations to charities.
  3. Investigations by the ACNC into charities and their funding. Sources say there are at least five organisations under investigation.
  4. Tax Office auditing of organisations which share funding with smaller, non-DGR organisations.
  5. Use of the Australian Federal Police and media to raid and report on the Australian Workers’ Union to find documents relating to donations made to GetUp! 12 years ago. As donating to GetUp! is not illegal, the purpose of the raid was to smear.

Besides the spectre of new laws restricting funding, the charities sector has been facing what one NFP boss calls “a creeping micromanagement”.

“Charities fear that they won’t get government funding if they speak out,” said the source. “The bigger issue is that pressure is being applied in a number of ways to not be critical of government”.

There are gag orders in government contracts for one. In order to win the contract to manage services in, say, offshore detention centres, the charity is required to approve contract clauses pledging it won’t engage in advocacy or make comments critical of government.

In a tender to provide services for Manus Island, the Salvation Army is said to have lodged a superior bid than Serco, although Serco still got the job.

There is a particularly insidious aspect to this; charities are more focused on caring for the subjects of detention, whether prisoners or detainees in offshore detention centres, while the focus of corporations is to maximise shareholder returns. In prisons, this may entail maximising prisoner numbers rather than rehabilitation.

The government’s jihad on charities is an assault on free speech whose impact is already felt. It is a slight on democracy, and, even if it can be justified purely from a taxpayer point of view, does not stack up when it comes to the double standard of allowing tax breaks for multinational corporations and their advocacy.

This post was first published on Michael West’s website.

Michael West

Michael West spent two decades working as a journalist, stockbroker, editor and finance commentator before striking out on his own in July 2016.

Having worked for eight years investigating financial markets and big business for Rupert Murdoch’s The Australian and another eight years for The Age and Sydney Morning Herald at Fairfax Media, West has established www.michaelwest.com.au to focus on journalism of high public interest.

West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences last year. The role is to work with the School’s Sydney Democracy Network, investigating money in politics, corporate influence and the intersection between government and big business.

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