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Donations sent from state to federal parties ‘impossible’ to identify

While some state laws ban donations from property developers and apply tighter caps on disclosure than the federal regime, it is difficult to track whether money paid for a federal purpose is only used for that purpose.

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“There is no consistent way that either the AEC or the parties report these intra-party transfers, making them essentially impossible to easily identify among the thousands of receipts reported each year,” said the Parliamentary Library.

“Complicating matters is that some intra-party transfers involve entities that are not easily identified as being part of the political party.”

The Parliamentary Library analysis, conducted for the Greens, says parties report donations and “other receipts” from campaign committees that could involve money transferred between state and federal divisions.

“Some of these might represent ‘new’ money into the party, and some might represent transfers of existing money between parts of the party,” it said.

“However, as the name of the donor is not the same as the party name, finding all such examples is likely to be impossible.”

The distinction between federal and state money is crucial to the debate over the government’s new bill, which seeks to respond to a High Court decision last year that upheld a Queensland law banning donations from property developers.

The court ruling raised questions about whether a property developer might be able to donate to a state branch if the purpose was to fund a federal campaign.

Finance Minister Mathias Cormann introduced the bill into the Senate last week with the promise that the federal rules could apply “exclusively” to donations for federal purposes.

Labor spokesman Don Farrell negotiated with Senator Cormann over the changes but announced on Wednesday the bill should go to an inquiry. Labor supports a transparent, uniform federal system that governs all federal candidates and MPs, across the country.

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Senator Farrell said Labor wanted greater transparency including lowering the threshold for having to report donations from $14,000 to $1,000.

With the Greens and other crossbench members also concerned about the changes, the outcome ensures an inquiry by the Joint Standing Committee on Electoral Matters.

“We need to strengthen federal donation laws, not open up a new back door that lets property developers funnel money through state parties,” said Greens leader Adam Bandt.

“The only answer is to get the big money out of politics by limiting donations from anyone to $1,000 per year. We should also put spending caps on elections to remove the incentive to seek money from big corporations in the first place.”

Queensland and NSW ban donations from property developers and have faster disclosure rules than the federal government, with lower thresholds for disclosure as well.

Grattan Institute fellow Kate Griffiths said the new bill raised the risk of undermining the tougher measures applied by the states, an argument also made by Centre for Public Integrity executive director Han Aulby.

University of Melbourne associate professor Joo-Cheong Tham, who is also a director of the Centre for Public Integrity, said the review of the bill should consider dropping the change so as to allow federal, state and territory schemes to operate alongside each other.

Independent MP Zali Steggall told Parliament the state governments had led the way and the federal rules needed to be improved.

“At federal level we still have no national integrity and anti-corruption watchdog and no prohibition on political donations from property development, mining, tobacco or gambling industries,” she said.

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