Recommendations for corruption prevention

The Commission’s investigation uncovered conduct indicative of significant failures to comply with election funding laws concerning the disclosure of political donations, the prohibition on property developers making political donations and the caps placed on political donations.

At the time of the investigation, NSW had some of the most restrictive political donation and election expenditure rules of any jurisdiction, but those rules by themselves were demonstrated by the investigation as insufficient to make regulation effective. If the framework of enforcement, scrutiny by civil society, incentives and penalties does not support compliance with the rules, then rules alone will be ineffective.

Some of the weaknesses in the system uncovered by the investigation were remedied by the Election Funding, Expenditure and Disclosures Amendment Act 2014. This Act amended the Election Funding, Expenditure and Disclosures Act 1981 by increasing maximum penalties for summary offences relating to political donations and electoral expenditure. The limitation period for commencing proceedings for summary offences was also increased. Importantly, limits on political donations have meant that third-party campaigners and branches of political parties operating in other jurisdictions are no longer an effective conduit for circumventing NSW donation laws. In addition, a new separate indictable offence was created relating to schemes to circumvent the donation or expenditure prohibitions or restrictions. For serious matters, a member of Parliament may now, if convicted, lose their seat.

Despite these welcome changes, there remained flaws in the regulatory framework which, in the Commission’s opinion, continued to fall short of an effective system.

In December 2014, the Commission published its report, Election funding, expenditure and disclosure in NSW: Strengthening accountability and transparency. In that report, the Commission made 22 recommendations affecting electoral funding, disclosure, election expenditure and political party registration operations at both the macro and micro levels in the context of NSW state elections. The report was distributed to NSW Parliament as well as the Political Donations Panel of Experts, a panel of specialists assembled by the NSW Government to assess potential reforms to election funding laws, led by Dr Kerry Schott.

After the Commission’s report was released, the Political Donations Panel of Experts released their final report to the governor and premier. The report contained a set of 50 recommendations for reform to NSW election laws, traversing a range of issues, including restrictions on political donations and expenditure, public funding, party governance, regulation of third-party campaigners, disclosure requirements and enforcement. The 50 recommendations provided by the expert panel aligned closely with the recommendations submitted in the Commission’s December 2014 report.