Australian businesses at risk from anti-charities crusade: Legal advice

Legal advice obtained by The Australia Institute from law firm Arnold Bloch Leibler (ABL), reveals the government’s foreign donations bill may have a ‘very adverse’ impact on Australian businesses.

One element of the laws would require the many businesses that engage in a modest level of expenditure expressing views on issues of public importance to obtain from senior staff highly sensitive information about their personal political affiliations and to disclose this publicly.

“While it’s immediately clear that this bill is a draconian overreach on the charity sector, what this advice shows is that many everyday activities of Australian business could get caught in the same net,” Deputy Director of The Australia Institute, Ebony Bennett said.

“It’s extraordinary to contemplate that businesses would need to obtain the personal political affiliations of senior staff and to disclose this publicly. This bill is a clear threat to free speech.”

“This advice shows that the government’s proposals are not only an attack on democracy but would tie business in red tape as well. The legislation should now be abandoned altogether,” Bennett said.

Prominent businessman Geoffrey Cousins said: “This bill is a major part of the government’s campaign to stifle contrary voices by restricting free speech. It will impose a huge regulatory burden on businesses and could expose individual businesses to fines of up to $1 million and jail terms for non-compliance.”

“The broad definition of ‘political expenditure’ in the bill could include everything from CBA’s climate commitment to Qantas, the Football Federation of Australia, ANZ, Commonwealth Bank, Foxtel and Google publishing a newspaper ad showing ‘corporate Australia’s’ support’ for the Yes campaign on marriage equality.

“The penalties are draconian and unreasonable and undemocratic in nature. This is a bill that should be rejected by business and parliament alike,” Cousins said.

Legal Advice

For the reasons that follow, in our view the Electoral Legislation Amendment Bill has the potential to have a very adverse impact on a broad range of Australian businesses.

  • The commentary to date about the impact of this Bill on business has likely been significantly understated. For example, some reports and submissions state that this Bill will not capture the work of the Minerals Council of Australia.  That is probably not an accurate statement of the true position. It is true that the ban on foreign gifts will not impact industry peak bodies or multi-national corporate groups that instead source foreign funding through commercial transactions, membership fees and inter-group transfers. But the ban on foreign gifts is only one part of a complex package of proposed reforms.
  • Examples of potential impacts on business and industry peak bodies are set out below:

o   Businesses that incur political expenditure are also subject to the requirement to register as a “third party campaigner” or “political campaigner”.  Based on previous AEC returns, the Business Council of Australia, Industry Super Australia, and Minerals Council of Australia, to name just a few peak bodies, would all very likely be “political campaigners”.

o   As “political campaigners”, regardless of whether they receive any foreign funding, these businesses would be required to disclose, amongst other things, details of all “amounts received” from a person or organisation over the modest disclosure threshold ($13,500) during the FY (importantly “amounts” in this context are not limited to gifts or donations).  

o   These businesses would also need to obtain from senior staff highly sensitive information about their personal political affiliations and disclose this publicly (keeping in mind though that discrimination on the basis of trade union association and political opinion is unlawful under a range of Commonwealth and State laws).

  • The Bill’s proposed amendments to the definition of “political expenditure” significantly increase the risk of a broad and literal interpretation by the relevant authorities of what it means to incur expenditure “for” the purpose of publicly expressing a view on a Federal MP, political party or election issue. If so, many more businesses can be expected to be classed as “political campaigners”.
  • “Political expenditure”, as it would be defined under the Bill, may include, for example:

o   Promoted posts by businesses on Linkedin, Twitter and Facebook that comment (positively or negatively) on a Federal MP or the policy positions of the Government or Opposition;

o   Corporate expenditure in support of same sex marriage, including the AFL’s expenditure in altering its logo to “YES”, the NRL’s Grand Final entertainment and the full page newspaper advertisement attached showing ‘corporate Australia’s’ support, including support from Arnold Bloch Leibler and other eminent law firms, Qantas, the Football Federation of Australia, ANZ, Commonwealth Bank, Foxtel and Google;

o   Corporate expenditure in developing and communicating policies and position statements on climate change and the environment (E.g. CBA’s climate commitment);  

o   Corporate support for reconciliation, Indigenous constitutional recognition, Indigenous financial literacy and general Indigenous empowerment;

o   Apportioned over-head and staff costs, for example of in-house corporate PR and government relations departments.  

  • A vast number of major Australian companies also operate a related foundation or charitable entity as part of their commitment to CSR. If that related foundation engages in even a modest amount of “political expenditure” (which could well include advocacy expenditure, including public submissions, on any issue at all of importance to Australian civil society), the foundation’s disclosure obligations would likely require publication of the company’s gifts to the foundation.
  • If a business provides a “gift” of more than $13,500 to a charity or NFP that is itself branded a “political campaigner”, this would also be treated as a political act. The business would need to make an AEC disclosure for its gift, just as if it had made a donation to a political party. For example, a business may match donations through a staff charitable giving program to a charity such as the St Vincent de Paul Society, which has stated publicly that it is concerned it will be a “political campaigner”. Failure to submit an AEC disclosure of the gift to the Society would attract a considerable fine.
  • The penalties for non-compliance with the Electoral Act ought to also gravely concern businesses, not just charities and not-for-profits. For example, a business that spends a mere $14,000 on “political expenditure” and fails to register as a “third party campaigner” within 6 weeks of the grace period would face a fine of over $1 million  (42 days x 120 penalty units x $210). Even more alarming, other contraventions will carry a jail term for the person with responsibility within the business for administering such matters !
  • Finally, as a consequence of the increased disclosure obligations for public advocacy initiatives, businesses may feel they have no practical choice but to choose to direct their advocacy energies to significantly less transparent lobbying activities, including meeting privately with MPs and other political actors. The threats to democracy in this country (as presently understood and greatly appreciated) are therefore obvious and they are real.

Peter Seidel | Partner, Public Interest Law
Arnold Bloch Leibler

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