The Sunday Star Times had a story in yesterday morning’s paper suggesting that Labour was playing fast with electoral laws relating to donations. The heading of the article “Artworks used to funnel secret donors’ contributions to the Labour Party” says it all. The article contains this hyperbolic passage:
The Labour Party is hiding tens of thousands of dollars in donations behind over-inflated art auctions – and naming the artists as donors instead of the secret individuals handing over the big bucks.
The artists had no idea the party was naming them as the donors – they never saw a cent of the money. They say their works are auctioned off at well above market value to wealthy benefactors who want to keep their support for the party secret.
Labour says the practice complies with electoral rules. But one party operative described the practice as “whitewashing” – a way to keep big donations private at a time when corporate contributions to political parties were falling because of public scrutiny.
I have been to a few of these auctions. They are not secret. Anyone who wants to pay the entry price is welcome to attend. And successful bidders are hardly anonymous.
From the article the process the Labour Party has chosen is to assign a value to a painting and treat that as a donation with the artist listed as a donor. If someone pays more than $15,000 over that value then the difference is also treated as a donation.
This is exactly what the current laws require. Section 207 of the Electoral Act 1993 defines a party donation as “a donation (whether of money or of the equivalent of money or of goods or services or of a combination of those things) that is made to a party”.
So an artist giving the party a painting worth $30,000 is clearly making a donation of goods in that amount and it is correct that this is reported.
And what of the person buying the painting at value? Well they are getting the item for what it is worth. They are not making a donation which involves giving something and getting nothing back.
But what about the generous soul who knowing that the auction is for the Labour Party and they will get all the money and who makes an outlandish bid? Well they are caught. Section 207 includes within the definition of “party donation” “where goods … are provided by a party under a contract or arrangement at a value that is more than their reasonable market value, the amount of the difference between that value and the reasonable market value of those goods or services”. So if someone bids over $15,000 more than its value for a painting then the difference will be treated as a donation which needs to be declared.
So there is nothing underhand in this arrangement. It is precisely the way the donation reporting system is designed to work.
And I am surprised that the paper should concentrate on Labour’s fundraising which compared to National’s is very modest. If you want proof of this have a look at Labour’s latest return and National’s latest return.
A related article highlights issues relating to anonymous donations although the maths does not appear to be correct.
At least four out of every five dollars donated to the two big parties is given secretly, as transparency around their political funding dwindles.
More than $31 million has been donated to registered political parties in the past six years, most of that to National.
Smaller parties like the Greens publicly disclose who provided most of their funding, but the big parties are secretive. 83 per cent ($8.7m over six years) of the money donated to National is from anonymous donors, and 80 per cent ($2.8m) of that donated to Labour.
I can’t see how the other parties excluding National and Labour received $17 million over the past six years. I presume the figures also add in electorate donations but if this is so National would be even further ahead. Possibly the broadcasting allowance is also included.
Of course the best solution is to establish state funding of political parties. Just think no need for donations, no unfair advantage to one side, no donations regime …