NT toughens its electoral funding laws - Constitutional & Administrative Law

The Northern Territory has toughened its electoral funding laws in time for the next territory election, due on 22 August 2020.

The reforms arise out of the Political Donations Inquiry conducted by former Federal Court judge John Mansfield AM QC, though not all its recommendations were adopted.

What has changed?

The principal changes are as follows:

Donations to candidates and parties must now be disclosed if they exceed $1,500 in any financial year. Disclosure is to be made within 60 days of the end of the financial year.
There is a cap on electoral expenditure between 1 January in the year of an election and 30 days after the election. For a party, the cap is $40,000 multiplied by the number of electorates in which it endorses a candidate. Expenditure incurred by a party's associated entity is included in this cap. For an independent candidate, the cap is $40,000. The amount will be indexed after the 2020 election.
A person who spends more than $1,000 on promoting a candidate is a third party campaigner, and must be registered and disclose gifts they receive and expenditure they incur. However, unlike in New South Wales, there is no limit on expenditure by a third party campaigner.
An associated entity, which is one that is controlled by or operates for the benefit of a party, must be registered before incurring expenditure or receiving a gift. Parties, candidates, associated entities and third party campaigners must submit frequent donation reports before and after an election, and an expenditure report after an election.
New offences are created and some existing penalties are increased. In particular:
- it is an offence to knowingly or recklessly exceed the expenditure cap, with penalties of $46,500 or 18 months' imprisonment or both (for candidates), and $232,500 (for parties or associated entities);
- it is an offence to carry out a scheme to circumvent the expenditure cap, punishable by up to 10 years' imprisonment; and
- it is an offence for a third party campaigner or associated entity to fail to register, with penalties of $31,000 or 12 months' imprisonment or both (for individuals) or $155,000 (for bodies corporate).
The time for bringing a prosecution is extended from three to four years, and the Northern Territory Electoral Commission can issue an infringement notice for certain offences (such as for failing to submit a return on time).

What has not changed?

The Northern Territory has not embraced the approach taken in Queensland and New South Wales of banning donations from particular types of donors. There remains no prohibition on donations by property developers, liquor and gaming entities, or foreign citizens. The Inquiry declined to recommend such prohibitions. There is also still no limit on political donations, even though the Inquiry recommended such a cap.

It is possible that parties and candidates will avoid the impact of their expenditure caps by relying on third parties, whose spending is not limited. Whether this occurs will be revealed as a result of the enhanced disclosure regime. The Chief Minister has indicated that the reforms will be reviewed after the next election.

Key takeaways for business

The next Northern Territory election is due on 22 August 2020. Businesses who are intending to participate in the election, whether by donating or incurring expenditure in support of a candidate, should:

ensure they are across the new disclosure obligations and understand the procedure for disclosing donations above the disclosure threshold (if in doubt, legal advice will provide greater comfort);
take special note of the transitional arrangements in place for the 2020 election (for example, donations of more than $1,500 to a party or $200 to a candidate made before 1 January 2020 must be disclosed by 29 February 2020. From 1 January 2020, the new regime will apply); and
keep comprehensive records of any donations, remembering that donations can include gifts in kind as well as monetary donations.

Making a political donation is often a strategic investment for business. By following good due diligence procedures, businesses can be confident in making donations to parties, candidates and third party campaigners in the Northern Territory without incurring penalties or creating unintended reputational risk.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.