Councillor Chris Harris

By Norman Thompson (published in The SMH)
In March this year NSW Premier Morris Iemma and Opposition Leader Barry O’Farrell gave strong backing to a wide ranging overhaul of political funding laws.
But after more than a decade of relying on corporate money to fund big spending campaigns, have the Labor and Coalition parties really turned their back on their generous donors?

An examination by the Greens Democracy4Sale Research Project of the NSW Election Funding Authority (EFA) records reveals that a number of leading politicians have learned how to hide dirty money while talking up their commitment to cleaning up election campaigns.

The new donation game in town is to find a loophole and exploit it fully. We are at a point now where it is nearly impossible for voters to link major party candidates with money from developers and other discredited donors such as alcohol interests, hotels, gaming outlets and the tobacco industry.

Hiding the money donated from such sources is done mainly in three ways.

The first is where money raised at fundraisers for a local candidate is first handed over to the party head office, which then passes the money on to fund the candidate’s campaign.

Another method is for the money to be donated to the campaign committee of a separate candidate, which agrees to accept the donation and pass it on to other candidates who claim not to take “dirty” money.

The last of the popular methods is to funnel money to “clean” candidates from donors through innocuous looking third parties, such as companies or other organisations.

When these tactics are used, it is difficult and often impossible for the public to know the original source of campaign funds for many candidates. Here are examples of each to illustrate how easy it is to exploit these loopholes.

First, the head office option. In the 2007 NSW state election Liberal candidate returns lodged with the EFA indicated that no donations had been received. Yet in many seats Liberal candidates had spent large amounts of money on their campaigns. Mike Baird spent over $263,000 in his Manly campaign, Peter Debnam almost $94,000 in Vaucluse, Barry O’Farrell $42,000 in Ku-ring-gai and Chris Hatcher over $200,000 in Terrigal.

Where did the hundreds of thousands of dollars come from that funded the 2007 Liberal campaigns in individual electorates? While a small amount could be the candidate’s own money, most of the funds came from a pool of donations the NSW Liberal Party had received. The largest donors to that party were property developers, the hotel and club industry, banks and other financial institutions.

Some say if the donations are at arm’s length, there cannot be any question of a candidate knowing where the donations come from and so there is no effect on later decisions.

This is unlikely. Much of the money is given at fundraising events, many of which were held in local areas, where the donor can sit down and discuss issues with the candidates.

While the Liberals deny any of their candidates accepted donations, disclosure forms lodged with the EFA indicate otherwise. Clubs NSW informed the EFA that they gave $5000 to O’Farrell’s campaign, and Belford Productions contributed $20,000 to Prue Goward. The wealthy founder and CEO of WorleyParsons Ltd. which is involved in the energy and resources industries donated $5000 to Mike Baird’s campaign. None of these Liberal MPs informed the EFA that they have received this money.

Considering the bad donation stories involving the Labor Government this year it’s not surprising Premier Iemma has said he favours this Liberal Party tactic of funneling all donations through head office.

Ironically, Morris Iemma has presented this new approach as one of his solutions to “cleaning up” donations. All it is likely to do is clean up the appearance of those donations, as the money flows on.

While it is not illegal to funnel donations through a party’s head office, and to cut out any money trail to a local candidate or MP, it is certainly not ethical.

If both major parties exploit this loophole it is going to be almost impossible to expose donation scandals similar to those that linked Wollongong MP Noreen Hay and Newcastle MP Jodi Mackay to local developers.

The second donations trick — that of shifting money from one campaign to another — is already very popular in the Labor Party. It was a common practice in the 2003 election, and used to a lesser extent in 2007.

Linda Scott was the Labor candidate for the NSW state seat of Sydney in 2007. She ran a strong public campaign on not accepting donations from property companies, hotels, tobacco or gaming outlets. The Democracy4Sale Project has discovered that Scott received in-kind donations of $21,320 from the Labor MP Kristina Keneally for printing campaign materials. In turn Keneally received almost $20,000 from “Frank Sartor for Rockdale” and thousands of dollars from other property and hotel interests.

Surprisingly, in her declaration lodged to the EFA Scott did not declare that $20,000 of her money came from Keneally. Had Keneally not been so thorough in her own return to the EFA we never would have known about the funneling of money from property and hotels to the Scott campaign.

Scott is the second candidate on the Labor Party’s ticket for the Sydney Council election, and the money trail behind her campaign compromises the credibility of Labor Mayoral candidate Meredith Burgmann’s commitment not to accept any funds from property, alcohol, gaming or tobacco interests.

An example of the third technique of funneling money — through third parties to hide the real source of the funds — can be found in the campaign funding of Sydney’s Lord Mayor, Clover Moore, who has for years claimed she does not take money from property developers. She has frequently called for a complete and unequivocal ban on developer donations to political parties and elected officials at state and local government levels.

In June 2008 Moore severely criticised recent amendments to NSW donations laws because they did not ban donations from the property development industry, or other “high-risk” industries.

However, in the 2004 Sydney Council election the Clover Moore Independent Party accepted considerable property money for its campaign. The Moore Party received almost 50 per cent of its money from Living Sydney Ltd. Living Sydney was set up in 1995 as a political campaign management firm and collected hundreds of thousands of dollars for Frank Sartor’s campaigns for Sydney Council. Approximately 70 per cent of this money came from property companies between 1995 and 2004. The Living Sydney donors included many well known property companies such as Meriton Apartments, Multiplex, Mirvac, Grocon and Transfield.

The possible laundering of money through a third party means that candidates funding campaigns this way are always going to be suspect. Ms Moore claimed she was given guarantees that no property money came to her from Living Sydney Ltd., but this has been denied by two people who were directors of the company in 2004.

The way the Labor and Liberal parties and some independents are exploiting these funding loopholes underlines the need for far-reaching reform of the NSW and federal electoral funding laws. Governments can attempt to close loopholes in their disclosure laws in order to increase transparency of the source of money flowing into the coffers of the political parties. That’s a good thing. However, it appears every time one loophole is closed, political parties and candidates find other ways to avoid accurate disclosure.

Failures in the current system demand some well designed changes to our donation laws to stop private money buying access to those who make decisions that affect the lives of us all. To do this, we need to ban all corporate and group donations, place a low limit on donations from individuals and put caps election expenditure. Candidates should also continuously disclose donations from individuals and the money they spend on their own election campaigns.

These are important steps to take if we want to promote a healthy and vibrant democracy in this country.

A priceless remnant of Sydney’s heavy industrial history is threatened with closure, which could mean the loss of skills and iron work manufacture critical for the preservation of much of Sydney’s heritage landscape.

Wrought Artworks at the Australian Technology Park has been told by the Redfern Waterloo Authority to vacate its premises by the end of September, 2008.  This is despite the fact that the small business is training apprentices, and according to the owners, is performing valuable work on State-owned equipment for which it receives no financial reward.

I put a question to the City of Sydney Council on June 30, 2008 which was well received by the Lord Mayor who voiced her concern about the threatened closure. However, many aspects of the answer which came back from City of Sydney staff who had sought information from the RWA have been challenged by Wrought Artworks.

Wendie McCaffley of Wrought Artworks has submitted a response to statements made by the RWA and ATP.  Below is my question, the answer, and Wendie’s response.
 

The Question 

Question without Notice – Council 30 June 2008
WROUGHT ART WORKS (S044440)
7. By Councillor Harris
My question concerns the Blacksmith’s Shop at the Australian Technology Park at Eveleigh – it goes by the name of Wrought Art Works. This small operation has been told by the Redfern-Waterloo Authority to vacate its premises by 30 September and a campaign has been organised to try to save it. The construction of the AustralianTechnology Park even included the building of an acoustic wall to accommodate this workshop. This operation is employing several young apprentices who are learning old skills which are in short supply today, as well as providing a link to the building’s industrial past and Sydney’s heritage. How could Council work with the Redfern-Waterloo Authority to allow Wrought Art Works to continue its very worthwhile operations at the ATP?

 The Answer
Staff have sought information from the Redfern Waterloo Authority (RWA) on behalf of the ATP. Wrought Art Works is a commercial operation that has operated from the Blacksmith’s Shop for around 18 years. Wrought Art Works has not had a lease or licence with ATP on the premises, nor do they pay rent. Wrought Art Works believes it has a verbal agreement from State Rail for free use of the property in perpetuity. ATP believes the organisation should pay rent and their tenancy should be subject to a lease or licence. Wrought Artworks does not accept this. ATP reports that it has issued a six months eviction notice in order to bring the matter to a resolution. ATP has advised Wrought Art Works it is prepared to consider them remaining in the premises on condition that they sign a standard form lease, pay an appropriate market rent and conduct themselves in accordance with legal obligations the same as any other tenant of the ATP.
 

And Wrought Artworks response.

“It has come to our attention that a Question Without Notice was asked by Councillor Harris at the Council meeting 30 June in regards our occupation of the blacksmiths shop and that  we wish to respond that  the supplementary answer from the ATP/RWA was incorrect, we wish to state:

“WAWs believes it has a verbal agreement from State Rail for free use of the property in perpetuity.
Wrought Artworks does not have a verbal agreement with State Rail. The verbal agreement was with Dr. Tom Forgan-(The initial  ATP- CEO) who said we could be here as long as we wished and that he was not interested in any money from these bays.
 
ATP believes the organization should pay rent and their tenancy should be subject to a lease or license. WAW does not accept this.
The ATP has never offered any lease or asked for any rental.
 
ATP  has advised WAW it is  prepared to concider them remaining …..
We have not been advised of anything.
 
…on condition they sign a standard lease…
A standard form lease is completely inappropriate for any tenure by a blacksmith in an office complex and I stated in prior discussions this year that I would be happy to formalize our tenure under the existing arrangement , but would not sign a standard lease. By signing a standard lease I would be signing away the right of the workshop to operate in perpetuity forever.
 
…and pay an appropriate market …
A market rental would  be inappropriate as the land area and value in commercial terms is beyond our ability to pay. Unlike other tenants Wrought Artworks performs valuable work on the State owned equipment in its care and other duties for which it receives no financial reward. For instance  today I gave tours to four groups of school children considering a career in Rail Engineering and entering into Rail Cadet ships. Nor was a commercial outcome of the operating blacksmithing bays ever sought by Government agencies. In fact we specifically kept our work light weight and unindustrial so as not to affect the amenity of other tenants.
Should we have pursued a commercial use for all the equipment in our care, Redfern Station platform would be shaking from the use of the double arch hammer[ As it used to do] and every tenant in the park would long ago have sued the ATP for damages.
 
…in accordance with the legal obligations the same as any other tenant of the ATP.
It would be unrealistic of the ATP to consider our legal obligations the same as any other tenant.The Guidelines for the site state from the Eveleigh Precinct Conservation Policy that Bays 1-4a of the locomotive building should be treated differently to the remainder of the building given that the machinery identified as a Heritage item by the REP is largely located in this area.”

******

While the answer from the Redfern Waterloo Authority and the response from Wrought Artworks presents two sides of an argument, the threat to the blacksmith’s business has attracted much attention and a burgeoning campaign from the local community, heritage experts and a former Eveleigh worker, Brian Dunnett, who is passionate about saving this piece of Sydney’s industrial and railway heritage.

Brian Dunnett has made a lengthy submission to the NSW Department of Planning regarding the whole Eveleigh workshops site. He sees a future for Eveleigh as a functioning heritage treasure which could become an important cultural tourism icon.

Below are Mr Dunnett’s submission and a publication on the Eveleigh Workshops by Brian Dunnett and Robert Haworth.

north-eveleigh-submission.doc
pp157-171_dunnett-haworth_everleigh.pdf
 

Like many other NSW Greens councillors I put a motion to the City of Sydney Council to try to improve the transparency surrounding election funding in the lead up to the Local Government elections in September.

The Lord Mayor and her party members plus the Liberal councillor failed to support the motion which simply called for an on-line register of donations with candidates being invited to provide continuous disclosure of donations of more than $200.  Under the Government’s new political funding bill, The Election Funding Amendment (Political Donations and Expenditure) Bill 2008, donations need only be disclosed every six months. This means that donations made to local government candidates in September would not need to be declared until February 2009 - five months after the election.

The Sydney Morning Herald picked up the story, running it on page 3 on August 6. See below.

Following is the motion and my accompanying speech.

Notice of motion - Cr Chris Harris
1. That Council maintain an on-line and easily accessible register of
political donations made to candidates for the 2008 Council election;

2. That Council, on closing of nominations, invite all candidates
for the up-coming Council elections to participate in the register;

3. That candidates be invited to provide continuous disclosure of all
donations made to the candidates of $200 or more including details of:
(a) the candidate or group to or for whose benefit the donation was made,
(b) the date on which the donation was made,
(c) the name of the donor,
(d) the suburb of the donor (in the case of an individual) or the address of the registered or other official office of the donor (in the case of an entity),
(e) the amount of the donation,
(f) in the case of a donor that is an entity and not an individual—the Australian Business Number of the entity.

4. That Council notes that this is a voluntary commitment for candidates in
the interests of providing genuine transparency as to the source of candidates’ election funding prior to eligible voters casting their compulsory ballot.

5. That the register allow for a candidate to participate in the register by including a notation to the effect that the candidate has not received any donations of $200 or more.

Speech on motion
While the State government dithers on political donations The Greens think it is important that this council declares its commitment to the utmost transparency on election funding.

Recent history involving councils and donations has been very disturbing with scandals involving developer donations at Wollongong and Shellharbour Councils leading to both councils being sacked. The Premier’s political funding Bill, The Election Funding Amendment (Political Donations & Expenditure) Bill 2008, is Labor’s response to this but it does not go nearly far enough to wind back the corrupting influence of political donations.

For the record The Greens believe that only donations from individuals should be allowed and that these donations should be capped at $1000. All donations of $200 and over should be disclosed within 3 working days of their receipt.  There should be a cap on what a candidate can spend and public funding should be made available for election campaigns

The Government’s new bill will not stop councillors hiding the source of their campaign funding for the September council elections if donations only need to be disclosed every six months. This election falls in the middle of the six-monthly disclosure cycle and so disclosure declarations are not due to be lodged until 23 February 2009.

Continuous disclosure would allow voters to see exactly where electoral funding is coming from at the time the donation is made. The local government ballot is compulsory so surely voters have a right to be in possession of all information relevant to the candidates before they cast their compulsory vote.

There also needs to be transparency on where the funding has come from if that funding has been channelled through political parties or special funds. As the Bill currently stands, only donations made to individual councillors, rather than those made to political parties or groups, are required to be disclosed by councillors at the twice yearly disclosure.

Donations to councillors could come via a party or fund that only needs to disclose those donations after six months, but in the meantime the councillor has benefited from the funds for his or her election campaign.

A readily accessible register of donations of $200 or more would be easy to set up and would send a message to voters that this council really is serious about representing the needs of their community rather than the special interests of financial donors.

Signing up to the register would be voluntary and allow candidates who have not received donations of $200 or more to declare such information.

I can’t see any real impediment to setting up an on-line register. It’s not a high-cost exercise, we have the resources to do it and it will benefit candidates who, because of the recent scandals involving councils, would surely want to promote their transparency.  In addition the public would appreciate The City’s efforts to provide such information.

I seek the support of councillors to have this disclosure register set up.

Moore votes down donations disclosure
Wendy Frew Urban Affairs Editor SMH
August 6, 2008

THE Lord Mayor, Clover Moore, has voted against a proposal for City of Sydney election candidates to regularly disclose political donations before the September 13 local government election.

At the City of Sydney Council meeting on Monday night, councillors debated a Greens motion that called on candidates to continuously disclose donations of $200 or more before polling day. The motion proposed also that the council maintain a public website of political donations made to candidates.

The mayor, all her party councillors and the only Liberal councillor, Shayne Mallard, combined to defeat the motion, which Labor and the Greens had supported.

The motion was flawed because it did not cover donations to central party headquarters and disadvantaged independent candidates, and sought to inappropriately use council resources for electioneering purposes, said Cr Moore, who has been a fierce critic of the State Government’s policy of funding election campaigns with donations from the corporate sector and, in particular, from developers. “The Clover Moore Independent Team will disclose donations before the election,” she said.

“In keeping with my nine previous elections, I and my team will not accept donations that create a conflict of interest and will return any donations that we subsequently suspect could compromise our integrity and independence.”

However, Greens Councillor Chris Harris said the mayor’s refusal to back his motion was in line with her previous stand on donations. “In 2004, the Clover Moore Party accepted $30,000 of dirty developer money that was laundered through the old Living City Party,” said Cr Harris.

“I was hoping that the Clover Moore party councillors would be part of the solution to the corrupting influence of corporate donations … it looks like they are part of the problem,” he said.