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External Influences: Electoral Funding And Foreign Principals

Actors in the not-for-profit sector have raised concerns about the impact that the reforms contained in Electoral Legislation Amendment (Electoral Funding And Disclosure Reform) Bill 2017 (Cth) (“Electoral Funding Bill”) will have on charities. There is also concern about provisions of The Foreign Influence Transparency Scheme Bill 2017 (“FITS Bill”)

Electoral Funding

The provisions of the Electoral Funding Bill that are most likely to affect charities registered with the Australian Charities and Not-for-profits Commission (ACNC) are as follows:

  1. The establishment of a public register for key non-political actors

The Electoral Funding Bill provides for the establishment of a public register of political campaigners, third party campaigners, and associated entities to be maintained by the Australian Electoral Commission.

Any ACNC registered charity that has spent over $100,000 on “political purposes” in any one of the previous three years will need to be registered as a “political campaigner”, while charities that have spent over $13,500 will need to register as a “third party campaigner”’.

  1. Require non-financial particulars to be reported
  2. Prohibit registered charities from using donations from foreign sources to fund reportable public expenditure

The impact on charities

Political purposes

In the case of Aid/Watch Inc v Federal Commission of Taxation [2010] HCA 42 the High Court, as Seak-King Huang explains, “held that in Australia there is no broad general rule excluding “political objects” from charitable purposes”.

The Charities Act 2013 (Cth) recognises “advancing public debate” as charitable purpose and, as the ACNC explains, registered charities can “undertake public advocacy to work towards achieving their charitable purposes”, such as by:

  • generating public debate about or seeking explanation of current or proposed laws, government policies or practices
  • distributing information on, analysing or comparing party policies as they relate to a charity’s purposes
  • publishing research on current or proposed laws, government policies or practices

Chilling debate

Charities have raised the concern that the reforms may “deter them from speaking out about injustices in order to avoid the onerous administrative costs that such advocacy would incur”.

The potentially chilling effect is particulary concerning considering the findings contained in the recent Civil Voices Report, an initiative of Pro Bono Australia and the Human Rights Law Centre. The Civil Voices Project intended to “examine how public debate and advocacy has changed” and “re-examine NGO perceptions of their capacity to participate in public debate” by surveying 1,462 people operating in the not-for-profit sector.  The Report, which was published in October 2017, recording the following:

  • 40 per cent [of respondents] directly linked the airing of dissenting viewpoints as a threat to their DGR status
  • Sixty-five per cent of state-based NGOs reported they felt restricted by funding agreements compared to 42 per cent of national organisations
  • One in five respondents believed that their funding agreement restricted their ability to comment on government policy

Despite existing federal legislation banning “gag-clauses” in government agreements with charities, the Civil Voices Report indicated that even before the government announced electoral reforms, charities were engaging in “self-silencing”.

Foreign Influence

The FITS Bill intends to “introduce… registration obligations for persons or entities who have arrangements with, or undertake certain activities on behalf of, foreign principals”. This Bill has garnered significant criticism, particularly from representatives of the Catholic Church as, according to Father Frank Brennan SJ, “under the proposed Bill the Vatican would be considered a “foreign government”. “The drafters of the legislation”, Fr Brennan comments, “have an Orwellian view that Catholics operate at the direction of foreign operatives.  Commentators have identified that although there is an exemption for religion, it is limited to a person acting on behalf of a foreign government. The uncertainty arises if it is thought that  someone within the Church is acting on behalf of a foreign principal (for example, the Pope). The proposed exemption does not cover this.

The Explanatory Memorandum uses an example of a Catholic priest encouraging his parishioners to lobby against a euthanasia law. The proposed exemption is designed to cover this situation excluding the need for the parish priest to be “registered”. The example is presented on the basis of a purported relationship by the priest to Vatican City, considered a “foreign government”. This analysis is fraught, as it confuses the Holy See with Vatican City and the Holy See is not a “foreign government”. In any event, as Church representatives made clear at the recent joint parliamentary committee hearing, local Catholics are not beholden to a foreign government.

What’s next?

Submissions closed on 25 January 2018. The Charity sector retains its call for complete exclusion of charities from the operation of both Bills.

Merryn Lynch, Solicitor
Josephine Heesh, Partner

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