(Image: AAP)

An Australian National Audit Office review of the Electoral Commission’s political donation process has revealed the contempt with which political parties and many donors hold our most important transparency requirement, and prompted a brawl between the auditors and the agency charged with overseeing Australia’s political process.

The audit shows that, over a four-year period, more than a fifth of annual donation returns were late, and around 17% of post-election returns were also lodged by political parties, associated entities and donors later than required under legislation, in a number of cases around four months late.

However, the Electoral Commission has point-blank rejected the ANAO’s recommendation that the Commission make stronger use of its enforcement powers via a graduated approach. The auditors concluded that the AEC was too light-touch in its response to repeated breaches of legislation by political parties, with Labor state and territory branches appearing to be a particular problem.

Across five years of compliance reviews examined by the ANAO, four political parties have been involved in three compliance reviews where repeated non-compliance was found, Australian Greens (South Australia), the Australian Labor Party (Northern Territory) Branch, the Australian Labor Party (Tasmanian Branch) and the Australian Labor Party (Victorian Branch). In each case, the AEC directed the entity to lodge an amendment to correct the non-compliance and did not take any further action.

Only in two cases during the audit period had the Commission successfully pursued breaches through court action.

However, the Commission, charging that the ANAO has made “serious inaccuracies”, says it has no interest in fully using its powers and that doing so consumes too much of its staffing and resources. In any event, the Commission says, that’s not what parliament wants:

The ANAO seems to have misinterpreted parliament’s intent on this issue. The AEC’s view, supported by data, is that the AEC has successfully achieved disclosure through consultation and education. The proposition the AEC should be more heavy-handed in its approach to enforcement is rejected, as prosecutorial action for amendments and other administrative mistakes would be disproportionate.

The AEC believes the ANAO’s misunderstanding of the intent of the legislation exaggerates the nature of the recommendations and the perceived risk to electoral integrity.

In other circumstances, this is what would be called industry capture, where a regulator ends up being controlled by, or overly mindful of, the interests of the sector it is supposedly policing.

Despite evidence that parties, entities and donors routinely breach the law around disclosure, the Commission prefers consultation and education in the belief that parliament — which is the industry being regulated — would prefer it that way.

But the ANAO also points out that the Commission isn’t just failing to use its enforcement powers, it is failing to properly monitor those it is charged with regulating.

Of the 168 reviews that were planned to have been conducted over the five year period examined by the ANAO, 58 (35%) have not been completed. While completion rates have improved in the last two years this is due to the AEC significantly reducing the number of planned reviews, narrowing the scope of planned reviews, and reducing the value of the transactions being tested. There has also been a marked decline in the number of full reviews that are being conducted on large entities with disclosure obligations.

The AEC responds to that by saying it doesn’t have to undertake compliance reviews and it has “sparse resources” to devote to them if it perceive there is no systemic issue to be pursued.

A more succinct way of saying that is that, ultimately, the AEC can only regulate political parties as far as politicians empower it and fund it to do so. And at the federal level, that’s not far at all.