The 2004 Federal Election

Modern election campaigns

Modern political campaigning is an increasingly professional activity.¹ Political parties and candidates use new information tools to target voters, to conduct polls, and to persuade the electorate both individually and en masse.

During the 2004 election period a combination of innovative and traditional communication media engulfed the electorate with a new intensity. Voters were subject to a “continuous campaign”; and they wondered who was paying for it.

Are Australia’s electoral laws adequate regulators of modern election campaigns in this high information environment?

This chapter evaluates questions about the laws governing political campaigns, specifically in relation to:

• the regulation of internet commentary;
• the cost of modern elections;
• overseas regulation of campaign finance;
• expenditure controls; and
• advertising costs and controls.

Regulation of internet commentary

This section of the report evaluates the potential for effective regulation of electoral material in cyberspace.

Technological challenges

Advances in electronic publishing systems, email and teletext technologies have enabled a more immediate and freer dissemination of viewpoints about electoral matters by candidates, members of the public and interest groups.

Internet technologies introduce the potential for instant interactive advertising and commentary. Material can be produced by anyone without the editorial vetting conventional to the print media and at low or no cost. Websites can be accessed at any time while chat rooms facilitate nationwide discussion in a moment. The opportunities for the generation of political commentary, of every tenor, are obvious.

At present, internet technologies are not subject to regulation under the CEA or Broadcasting Act, whereas other media are. In this apparent regulatory vacuum, concerns have grown that without CEA requirements for identification of an author, offended parties can not access remedies under the law.

Events during the last election period, when internet sites with subversive names and content were logged,² intensified political parties' attention on regulating the internet. It was suggested that electoral laws requiring authorisation of electoral material in print and on radio and television broadcasts should also apply to internet communications.³

Authorising of advertising

The current, pre-internet, provisions of the CEA are in section 328:

1) A person shall not print, publish or distribute or cause, permit or authorize to be printed, published or distributed, an electoral advertisement, handbill, pamphlet, poster or notice unless:

(a) the name and address of the person who authorized the advertisement, handbill, pamphlet, poster or notice appears at the end thereof; and

(b) in the case of an electoral advertisement, handbill, pamphlet, poster or notice that is printed otherwise than in a newspaper—the name and place of business of the printer appears at the end thereof.

Section 328(2) extends these requirements to electoral video recorded matter. Television and radio advertising have separate authorisation requirements which are set out in the Broadcasting Services Act 1922.⁴

Evidence to the Committee expressed various views about the interpretation of s328 and its extension to cover internet material.

Authorising and the internet

The AEC previously held the view that s328 applied to electoral advertising on the internet. However, during the inquiry it reported legal advice that s328 does not apply to internet publications, although this has not been tested in the Courts.⁵

The Australian Labor Party considered that as electronic technologies are used to “publish or distribute “ electoral material, s328 should clearly apply to all new technologies. Accordingly, the ALP recommended that the CEA be amended to require that electoral matter circulated by the internet, email, SMS and pre-recorded telephone material should require authorisation.⁶

However, website publishers took a different view. They maintained that the dynamic and candid nature of internet communications would make regulation of this type both undesirable and impractical.

Professor John Quiggin , who operates a “blogg” website,⁷ argued that applying s328 to the internet would not be feasible legally nor technically, and would make his position as the operator of a continuing website untenable.⁸ In particular:

• the legislation would be unenforceable because websites are often published outside Australia’s legal jurisdiction (eg the United States);
• anonymity is a feature of web communications, given the nature of the medium and the personal and other information exchanged (and this is unlikely to change even if the law was applied);
• any successful litigation on commentary would not be timely enough to limit the proliferation of the offending material;
• a web administrator would not have the resources to verify the names and addresses of contributing authors; and
• the regulation would unduly affect administrators of continuing sites, but would not prevent fly-by-night sites from publishing detrimental material anonymously in the lead up to an election.⁹

Mr William Bowe, also an independent website editor, had no objections to authorisation requirements, although he did have reservations about carrying editorial responsibility for material logged on his site:

I would have thought that it would be sensible for anyone running a web site that is going to make it its business to make comment on the electoral process and election campaigns to be authorised and to have an identifiable person take responsibility for what is printed on that web site. The issue, of course, is the comments facilities that many web logs contain.¹⁰

Reconsidering “advertising” on the internet

One option offered to the Committee was to amend the definition of electoral advertising matter in the legislation. It was suggested that s328 could distinguish between "electoral advertising" material per se, and general commentary on the net. Regulations could apply to the first, and not to the latter.

Professor Quiggin argued that a precedent for this is set by AEC exemptions from authorisation requirements permitted for other media. There is no requirement for the identification of the authors of “letters to the editor” in newspapers and journals. Similarly, there is no law requiring the identification of talkback radio callers during an election period.¹¹ He concluded:

on this basis, consistent application of the Electoral Act to Internet publications would appear to imply that it is permissible to publish electoral matter, without identifying details as part of ordinary editorial content, but that advertisements, presented as a discrete part of the page or site would require authorisation, whether they were paid for or published without charge.¹²

The Committee notes that the United States Federal Electoral Commission's (FEC) Inquiry into Internet Communications is considering making a distinction between paid political advertising and non-partisan commentary.¹³

Legal advisers to the FEC suggested this distinction be made based on two considerations:

• the need to preserve the robust nature and democratic value of the internet’s “free low cost speech and information exchange”; and
• Supreme Court findings that internet communications are not as “invasive” as communications via traditional media.¹⁴

It was concluded that disclosure requirements should not apply broadly to internet communications.¹⁵ Instead, only paid advertisements, in the form of streaming video in banner advertisements or in “pop-ups” appearing on another entity or individual's website, should be required to comply.¹⁶

The Committee's view

The Committee acknowledges that regulation of internet communications presents a number of practical problems, making application of s328’s authorisation requirements to the internet cumbersome, and perhaps unenforceable.

While, for example, a web administrator may wish to comply with the authorisation requirements, it would be very difficult to enforce a law requiring maintenance of an accurate record of all contributors of commentary to a website. It is also feasible that authorisation requirements may not effectively control misleading commentary, but would certainly impose onerous and, perhaps, impossible burdens on web administrators.

Notwithstanding these limitations, the Committee could see merit in a proposal for targeted treatment of electoral advertisement, ie promotional material. The difficulty remains in making a clear distinction between this and other commentary on the internet under Australian electoral law: the scant definition within the CEA of what constitutes an advertisement¹⁷ is unhelpful; its application to the internet would need clarification by the courts.

The Committee judges that a distinction could be made between advertising/promotional material and the type of political debate which the internet facilitates. Such a distinction is supported by considerations that internet discussion is more akin to editorial commentary or letters to the editor.

With the developments in the United States in mind, the Committee suggests that authorisation requirements should at the very least be consistently applied to discrete promotional material on the internet, as it is to electoral advertisements in the print and broadcasting media.

To make this enforceable, the criteria for defining advertisements on the internet will need to specify that the material has been sponsored by an external organisation or individual, and is presented in a visually discrete manner.

In drafting these amendments, the AEC should ensure that the definition of published electoral matter specifies that the authorisation requirements are also to apply to material republished on the internet. In this instance, the AEC should determine a cut off point for disclosure of authorisations, such as whether disclosure of the original sponsor, as well as of the immediate re-publisher of the material, will be sufficient.

The Committee also considers there may be merit in a broader review of authorisation requirements within s328 of the Electoral Act, to ensure greater transparency of financial disclosures or party political affiliations.

The AEC may consider, for example, the feasibility of setting requirements for registration of the names of web domains commenting on political matters. This could also include consideration of requirements for identification of political party sponsorship on any websites making political commentary.

Misleading and defamatory internet publications

This section looks at regulatory responses to defamatory or misleading electoral material in the context of internet publications.

Electoral Act remedies for misleading and defamatory comment

The CEA has remedies for defamatory and misleading comment in electoral advertising in the print and broadcasting media. Evidence questioned whether these can be applied to the internet without significantly impeding the free exchange of ideas which characterises the internet environment. There are two relevant sections.

Section 329 governs misleading comment. As discussed in Chapter 5, Election Day, this section has been restricted through court interpretation to apply only to the castingof a vote; it is not a matter of influencing a voter’s judgement in doing so.¹⁸ The AEC views s329 as applicable to the internet, for regulation of material such as how-to-vote cards and ballot material.¹⁹ There were some concerns that the legislation could halt all political discussion on the web during an election, given the prohibitions on circulation of “misleading” material during an election period.²⁰ This would imply a broader interpretation of s329 than is currently applied.

Section 350 sets out penalties for publishing false or defamatory statements and provides that:

a person is guilty of an offence if the person makes or publishes any false and defamatory statement in relation to the personal character or conduct of a candidate.²¹

Section 350(2) provides that any offending person:

may be restrained by injunction at the suit of the candidate aggrieved, from repeating the statement or any similar false and defamatory statement.

While this section is apparently a potent provision, the AEC had concerns that the section may be ineffective following two judgements in 2002. It recommended to the Committee in that year that s350 be removed from the CEA leaving redress for alleged defamation to be pursued in civil proceedings.²²

Evidence on proposed removal of section 350

During the inquiry, the AEC’s position was endorsed. The application of s350 to internet publications was seen as problematical in a number of respects.

Professor Quiggin advised that jurisdictional issues and the anonymous nature of internet interaction made prosecution of defamation of any type a challenge for the courts, and s350 superfluous in the internet context:

obviously, if I were going to publish something I knew to be defamatory, I would seek anonymity. In that case, I would be relying on undetectability, not on the fact that I was not breaching a provision of the Electoral Act. I would point out that the problem of anonymous defamation on the internet is far more serious outside the political sphere. After all, you can say a fair bit under decisions of the High Court in a political context that would be defamatory in other contexts. To have a special electoral provision directed at anonymous defamation seems anomalous to me.²³

There were also issues of equity and free speech. Evidence claimed that s350 would disproportionately affect private commentators running websites, rather than political parties or journalists, striking dumb political debate.²⁴ Mr David Edgar observed:

to require a single person to carefully watch what they say on the topic of politics places an onerous responsibility on them …If they allow a reader to leave comments—as most websites do—they are required to ensure each comment can be traced back to an individual. What are the implications of the global nature of their site? Must they ensure that a South African reader must leave an address?

These decisions can only lead to a chilling effect on political speech. With apparently little to differentiate political speech, electoral material and personal opinion, the very real possibility of a not insignificant fine or expensive court case to clear one's name will lead to self–censorship.²⁵

Mr Bowe has personal experience of litigation under s350 as a website publisher. He maintained that the legislation is anachronistic in a modern communications environment and recommended it be removed from the Electoral Act:

I think that the section may have been drawn up in an environment that has changed quite dramatically in relation to free speech issues. In particular, with the emergence of the internet, there has been an explosion in private comment on political matters and the means of making those comments have become a lot more freely available. I would suggest that in the distance past, when this section was drawn up, if one was a publisher presumably one had vast means at one’s disposal or was engaging in an attempt to influence the outcome of the election, neither of which is true of me. I think that the section, in addition to the legal matters that were raised by the Electoral Commission, is obsolete in the environment that has emerged with the emergence of the internet.²⁶

Senator Andrew Murray also supported the removal of the section, or its amendment to include a clause making it clear that defamatory material had significantly affected the outcome of an election. This might facilitate prosecution of defamatory political comment on the internet through the Court of Disputed Returns, which handles allegations of corruption of the electoral process.²⁷

The Committee's view

Internet communications are by their nature both ephemeral and pervasive. The feasibility of regulating misleading or defamatory commentary in such an environment effectively, poses immense obstacles.

As noted, the Committee’s consideration of this issue takes place at a time when other democratic nations grapple with the difficulties of developing appropriate regulatory standards for internet campaigning and political commentary.

The Committee considers that these regulatory approaches in the United States are not sufficiently advanced for the Committee to form a view beyond agreement that preservation of our constitutional convention of free speech is essential. The broader implications for the regulation of truth in political advertising, more generally, are discussed later in the chapter.

Nevertheless, in view of the AEC’s previous opinion, and its reiteration in evidence to the current inquiry, the Committee believes that s350 should be removed and prosecution of defamation revert to existing defamation laws.

Cost of modern elections

Election costs appear to be rising with every election campaign. This trend is occurring around the world, catalysing debate about the means and desirability of controlling campaign expenditure.

The costs of campaigns are carried and regulated by various arrangements in different jurisdictions. Australia’s system has evolved to include mechanisms to moderate cost and make elections more equitable.³⁰ Amendments to the CEA in 1924 to require compulsory voting were introduced, for example, to increase voter turnout but also to reduce campaign expenditure.³¹

This section looks at the marshalling of the electoral campaign by:

• the AEC, which administers the election machinery and public awareness campaigns to expand and secure the electoral franchise; and
• political parties and candidates, with the support of business and public organisations, which wage high profile campaigns to inform the electorate and secure votes.

The AEC

The AEC’s orchestration of the electoral process is a massive and expensive exercise. Independent of public funding (considered below), the AEC's expenditure for the 2004 election was almost $76 million, as set out in Table 12.1³² AEC expenditure on the previous two federal elections was approximately $67 million spent for the 2001 election,³³ and $62 million for the 1998 election.³⁴

Table12.1 2004 Federal election expenses as at 30 June 2005

Source Submission 182, (AEC), p. 29. Including freight, election equipment, call centre services and forms.

Educating the electorate

Educating the public about elections, sometimes at short notice, poses substantial challenges.

Voter education takes on an unprecedented significance and importance. New technologies and innovative approaches must be employed to ensure the widest franchise. These factors put a high demand on resources and drive up costs. As Table 12.1 shows, campaign advertising and promotion was the largest single item of AEC expenditure after wages and salaries.

Public funding

The other significant expenditure item for the AEC during elections is the public funding allocated to electoral candidates under Part XX, Funding and Disclosure, of the Electoral Act. The total for the 2004 Election, nearly $42 million, compares with $38.5 million allocated for the 2001 Federal Election.³⁶

Campaign costs

The substantial cost of modern election campaigns drives campaign budgets well beyond the public funding provided to electoral candidates by the AEC.³⁷

To address this deficiency in funds, parties and candidates rely on financial support garnered from fundraising events and from donations by organisations and private individuals. It is estimated that more than 80 per cent of funding gained by political parties comes from private sources and that, until recently, the amount of private funding has been growing.³⁸

The Committee's report on the 2001 Federal election recorded that in the 2001-2002 financial year political parties spent a total of $131.5 million, more than three times the amount—$38.5 million—allocated to them in public funding.³⁹ Total campaign expenditures for the last election are not yet available.⁴⁰ Table 12.2 charts the rise in party expenditure reported over the last two election periods.⁴¹

Table 12.2 Annual return summaries, showing total party expenditure 1999–2002

Source AEC Funding and Disclosure Report—Election 2001, “Financial Disclosure”, p. 3

Between 1987 and 1996 campaign expenditure overall went from 21.2 million to 32.8 million. Advertising costs were the most expensive item in election campaign budgets. Between 1987 and 1996 political advertising costs almost doubled, from $8.6 million to $16.5 million.⁴²

Estimates are that the Liberal-National Coalition and Australian Labor Party each spent some $20 million on advertising during the 2004 election year.⁴³ This $40 million package is an increase on former Federal election campaigns when they spent a combined $30 million in 2001 and 1998, and $27.2 million in 1996 on election marketing.⁴⁴

The Committee's view

Australia's electoral law and funding regimes are designed to ensure that political candidates are adequately resourced to conduct forceful and fair campaigns. On the basis of the figures set out above, it would appear that the cost of conducting such campaigns is growing exponentially: the AEC and political candidates commit more resources with each election.

The importance of effective communications within the modern electoral process is indicated by the high level of advertising expenditure for the AEC and for political parties.

While this is to some extent a consequence of media pervasiveness in society, the Committee is concerned that the steady and substantial increase in these costs may not be sustainable.

To develop an appropriate response to the apparent problem of rising campaign costs, the Committee surveyed arrangements for regulation of campaign expenditure in jurisdictions internationally.

Regulating campaign costs: overseas comparisons

Evidence before the Committee referred to regulatory approaches adopted by the United Kingdom, United States, Canada, New Zealand and Ireland. The main components of campaign finance regulation were :

• campaign expenditure caps;
• disclosure obligations and private funding limits;
• public funding allocations; and
• controls on campaign advertising and broadcasting.

Campaign expenditure caps

Some countries impose expenditure caps or other limits on the monies that can be spent by candidates on an election campaign. The arrangements for Canada, New Zealand and the United Kingdom are summarised below in Table 12.3.

In 2001 the United Kingdom overhauled its system of party finance regulation, and now has the most comprehensive regulatory regime for campaign finance. Among other things, the Political Parties Elections and Referendums Act 2000 (PPERA) imposed specific limits on party campaign expenditure for the year before the date of the polls and ending on the date of the poll. ⁴⁵

Allowable expenditure is determined according to the number of seats being contested, although the amount allocated cannot fall below a prescribed minimum.⁴⁶ Any excessive allocation by a party treasurer is a punishable offence.⁴⁷

Table 12.3: Campaign expenditure limits—selected countries

Source: Professor Graeme Orr , Schedule reproduced in Submission 160, Exhibit 31, p. 50.⁴⁹

Disclosure obligations and private funding limits

Regulations governing the amount of private funding that political parties receive have been implemented, or reinforced, in the United States, Canada and the United Kingdom in recent years.

The US legislation also bans donations from corporation treasury funds and from some organisations and groups, including labour organisations, national banks, government contractors and political action committees. In addition, disclosure obligations for all annual donations above $200 apply.

Table 12.4 shows how Australia’s regulation of the area compares with New Zealand, Canada and the United Kingdom.

Table 12.4 Donor limits and disclosure requirements—selected countries

Source Professor Graeme Orr , Schedule reproduced in Submission No. 160, Exhibit 31, p. 50.⁵²

Public funding allocations

In Australia, candidates receive public funding to assist with campaign expenses. Some other jurisdictions limit the use of public funding for campaign purposes.

In the United Kingdom, specific electoral funding is limited to the entitlement of free postage for one communication to each constituent during an election.⁵³ Other public funding is not specifically tied to electoral purposes. Instead, monies are allocated to Opposition parties for performance of parliamentary functions. The amount is calculated on the seats obtained and electoral support achieved at the previous general election. ⁵⁴

In Ireland, public funding is allocated to parties but cannot be spent on campaign advertising. It must be used only for general administration of the party, research, education and training, policy formulation and branch and member coordination of activities.⁵⁵

Controls on campaign advertising and broadcasting

The United Kingdom has the most rigorous controls on campaign advertising expenditure. The definition of “campaign expenditure” includes “party political” broadcasts and “advertising of any nature (whatever the medium used)”. ⁵⁶This means that expenditure on political communication is banned, as mentioned above, for a full year preceding an election. Instead, parties are allocated free airtime by broadcasting licensees and public broadcasters. ⁵⁷

The UK also has other broadcasting controls, as do Canada and New Zealand. These countries use a combination of free airtime and broadcasting bans to moderate the political contest and to prevent an expenditure race.

These approaches are discussed in more detail under the section below on Advertising.

The Committee's view

Senator Murray alerted the Committee to overseas prohibitions on foreign donations, as a discrete area of interest. His views are set out in the section on overseas funding and disclosure regimes in Chapter 13, Funding and Disclosure.

Expenditure controls

Unlike comparable jurisdictions overseas, Australia adopts a minimalist approach to regulation of campaign expenditure.⁵⁸ Our regime comprises:

• the provision of public funding;⁵⁹
• candidate campaign expenditure disclosure requirements;⁶⁰
• donation disclosure requirements;⁶¹
• broadcasting and publisher disclosure statements;⁶²
• three day electronic advertising ban to 6pm on polling day; with broadcasters to provide opportunity for advertising prior to this period;⁶³ and
• the “caretaker convention” which limits all government advertising once an election is called.⁶⁴

For the purposes of this section, the Committee will focus on the potential of proposed expenditure options to limit campaign expenditure. The Committee will not engage with systemic questions about public funding and political finance disclosure, which is the subject of the following chapter. Funding controls will, however, be touched upon in the section on campaign expenditure limits.

Campaign expenditure caps

Prior to 1980, Australia had campaign expenditure limits in place.⁶⁵ In order to maintain parity with other major democracies, a number of submissions proposed that caps on campaign expenditure should be reintroduced. However, few put forward any developed proposals for their implementation.

Mr Joo-Cheong Tham and Professor Graeme Orr were exceptions, providing detailed commentary. Mr Tham noted that whereas the United Kingdom had made its regulation of the area more robust, Australia leaves campaign finance largely unregulated.⁶⁶ He and Professor Orr cited British justifications for applying controls on campaign expenditure:

• the anti-corruption rationale—with campaign expenditure controls in place, parties would not be tempted to seek larger donations, carrying the risk of corruption and undue influence; and
• the equality/level playing field rationale—which assumes that “campaign expenditure buys votes”, so destabilizing the integrity of the electoral contest.⁶⁷

When applied to the Australian situation, the first principle suggested companion controls on donations should be implemented. This is discussed below.

The second criterion raised questions about the efficacy of campaigning to change voter opinion.

Although Mr Tham and Professor Orr noted that there was no true equation between campaign activity and voting patterns in Australia,⁶⁸ they considered that expenditure caps were necessary given that:

one side or other of politics can use money to inordinately shape the landscape of political and electoral discourse. Whilst ideas need some airtime and hence money to breathe, it is unhealthy for representative democracy to allow open- slather electoral expenditure, because this can skew public policy debates.⁶⁹

A stumbling block to proposed caps on campaign expenditure was that the courts may consider such controls an unjustified interference in free speech.⁷⁰

Mr Malcolm Turnbull MP raised this issue when proposing caps on donations. He suggested the burden of the law could be limited by providing that a candidate or party's compliance would be a condition of receiving public money, leaving this as optional.⁷¹

Tham and Orr noted that workable legislation is already place in other countries with liberal traditions. They considered that capping laws are not only feasible but are highly effective. In the UK, Labour, Liberal Democrats and Conservative parties collectively spent total of £45.5 million in 1997. In 2001, after new cap legislation was introduced there was sharp drop in campaign expenditure, to £25.1 million.⁷²

Private donations and campaign expenditure

Caps and controls on private donations are important features of regulatory regimes for campaign expenditure in the United States and Canada. Both apply conditions or bans on donations to political parties from unions, corporations and other organisations, and also caps on individual donations. The intention is to limit undue influence and contain campaign expenditure.

During the inquiry, a correlation was made between the size of private donations and increasing campaign costs in Australia.⁷³

The origin of these funds, and the regulations governing their receipt, has been commented on during the Committee's inquiries into successive elections. Referring to the findings of the JSCEM's seminal report on the matter (1989), Mr Turnbull observed:

as long as businesses and unions with vested interests can finance political campaigns real concerns will continue to be expressed. Some Australians will always have the perception, rightly or wrongly, that ‘he who pays the piper calls the tune’.⁷⁴

The Committee evaluated proposals to moderate these perceptions along the lines adopted overseas. Options included:

• imposing restrictions on the size of donations; and
• banning donations from certain organisations and groups.

The related issue of disclosure of donations and political expenditure is discussed in the following chapter.

One suggestion was that only individuals, not unions or corporations, should be allowed to make donations. Mr Turnbull recommended the CEA be amended so that that candidates and political parties may not spend money for campaign electoral purposes other than:

(a) funds received from the Australian Electoral Commission as part of public funding,

(b) donations received directly from individuals who are Australian citizens or otherwise on the electoral roll and who certify that the funds contributed are from their own or spouse's resources.

Mr Turnbull proposed that an annual cap on individual donations could be considered.⁷⁵ To encourage support of the measure, donations should be tax deductible, up to a certain limit.⁷⁶

Mr Christopher Pyne MP supported this proposal, suggesting the annual cap could be $10,000. He predicted:

there would be an immediate outcome from such a move—the spending by political parties on election campaigns would probably come down as it is likely less money would be available to political parties. I would hazard a guess that that would be welcomed by the voters.⁷⁷

Another view was that limits on donations from unions and corporations, as adopted in Canada, should apply. Senator Bob Brown stated:

I am in favour and the Greens are in favour of a prohibition on donations coming from other entities to political parties. That is what public funding is for. I have just been in Canada, where, nationally, they put a ban on donations coming from unions, corporations and so on. They have given very good public funding to make up for that.⁷⁸

Controls on the use of public funding for campaign expenditure

The aim of the public funding regime is to promote equitable and fair elections by providing a more level playing field in the political contest:

It can help secure greater equality between citizens, promote freedom of speech by increasing the range of persons who have the opportunity to meaningfully exercise that freedom, relieve politicians from the burden of fundraising and to prevent corruption.⁷⁹

Public funding is allotted to candidates who achieve four per cent of formal first preference votes in an election. The electoral funding rate at the last election was $1.94 for each vote.⁸⁰

However, in absence of appropriate expenditure controls or caps, Mr Tham and Professor Orr considered that:

public funding of political parties has fuelled campaign expenditure. In the absence of expenditure limits, and with open slather television advertising, there is no necessary limit to campaign expenditure or, more generally, to the parties’ expenditure. The only real limit is the size of the parties’ budgets. Even their perception of campaign saturation is no longer a natural limitation, with the contemporary advent of ‘permanent campaigning’ included increased use of internal polling, direct mail, and computerised tracking of elector’s views, particularly by the major parties. Thus, if the parties’ budgets expand because of public funding, we should expect increases in campaign expenditure in the absence of other constraints like expenditure limits.⁸¹

With these cost drivers in place, Dr Sally Young submitted that:

Australian politicians may in future legislate again to increase the rate of public funding so that they may spend more.⁸²

Recommendations for review of public funding arrangements to control campaign expenditure included:

• the imposition of spending caps, with candidates accountable for expenditure;⁸³
• that funding should only be allocated for actual expenditure, and not be paid on a dollar amount per vote;⁸⁴
• public funding arrangements should not apply;⁸⁵ and
• parties should pay for their own campaign material.⁸⁶

The Committee's view

Despite having derived our regulatory model from the United Kingdom, Australia has rejected the UK's more interventionist approach to regulation of campaign finance matters. In this, we stand outside approaches taken in other Commonwealth countries such as Canada and New Zealand.

Advertising costs and controls

This section deals with election advertising, defined as advertisements which candidates and parties use to canvass votes during an election period.

As discussed earlier in this chapter, advertising costs are a key budgetary item for governments, political parties and candidates. The political advertising budget has increased in proportion to overall budgetary expenditure, and rises with each election.

Within this budget, television broadcasting is the most expensive item. A breakdown of the 2004 advertising figures cited earlier indicates that the Coalition and the ALP each spent approximately $6 million on direct-mail and research, $2 million on television broadcasts, $1 million on radio, and $500,000 on newspaper advertisements.⁸⁷ New technologies add to this mix, with telemarketing and internet exposure⁸⁸ now used extensively.⁸⁹

This intense media deployment became the focus of commentary in submissions, prompting recommendations for restraint in the form of advertising prohibitions and spending limits.

Advertising bans

Some regulatory jurisdictions routinely include advertising and broadcasting controls as part of their campaign finance regulatory architecture.

As mentioned above, the UK bans expenditure on electoral advertising for the full year before an election.⁹⁰ In addition, its Broadcasting Act 1990 provides that “any body whose object is wholly or mainly of a political nature” is not permitted to advertise on radio and television. Major parties spend around 80 per cent of expenditure on billboards and hoardings. Paid advertisements in newspapers are also unusual.⁹¹ Instead of paid advertising on television, parties are allocated free airtime by broadcasting licensees and public broadcasters.⁹²

In the United States advertising bans or limits would conflict with First Amendment protections of free speech.⁹⁴ However, the US has some controls via advertising cost. Under the Federal Communication Act of 1934, broadcasters must sell advertising time to election candidates at the “lowest rate it has charged other commercial advertisers during the preceding 45 days, even if that rate is part of a discounted package rate”. The Act also requires that if advertising space is offered to one candidate it is offered to all.⁹⁵

Australia has experimented with imposition of advertising bans in the past, but these have been subsequently withdrawn when constitutional and operational problems were identified.⁹⁶

Controls remain limited to the provisions set out in Schedule 2 of the Broadcasting Act 1922. These impose a three day ban on political advertising, from Wednesday to the end of polling on Saturday. The ban is administered under a code by the Australian Broadcasting Authority.⁹⁷

There was no support in the evidence for advertising bans per se. Instead, such controls were seen as integral to proposed campaign finance regimes.

The Committee's view

The past experience and absence of agitation for bans indicated to the Committee that this was not an issue which required further consideration.

However, other more localised concerns about advertising bans emerged during the 2004 election. The Committee understands that a number of local governments have introduced by-laws to limit or ban electoral advertising, in particular election signage.

Aside from obvious practical difficulties arising from inconsistent requirements being imposed by different councils, often located within a single Federal electorate's boundaries, the Committee is concerned that these developments undermine an important principle for candidates.

In particular, the Committee believes that candidates for a Federal Election should enjoy uniform entitlements to advertise, and should not be subject to additional and inconsistent regulation imposed by other jurisdictions.

The Committee therefore concludes that the AEC should assess concerns about the jurisdiction of local and State laws governing electoral signage, and determine whether Commonwealth legislation safeguards equal advertising rights for all candidates, especially where signage is erected on private property.

Spending limits

As noted in the section on campaign expenditure, the United Kingdom, Canada and New Zealand have limitations on campaign expenditure, a key objective being to contain advertising expenditure.

In the Australian context, the lack of a comprehensive approach to campaign regulation finance regulation was thought to drive the “continuous campaign” described by Dr Young:

Australian politicians are no longer confining their election campaigning to the official election campaign period but are instead, stringing their campaigns throughout the election cycle and, increasingly, pushing the costs of this ‘permanent’ campaigning onto taxpayers.¹⁰⁰

Professor George Williams and Mr Brian Mercurio, among others, made connections between the lack of controls on donations private donations, and the spiralling costs of campaign advertising by major parties:

Australia’s laissez-faire approach to campaign finance and advertising laws is troubling for a number of reasons, not the least of which is that it inherently favours major parties. For instance, the fact that Australia allows unlimited donations and no expenditure caps effectively means that the parties can blitz the electorate with advertising similar to what we are used to with corporate ads, such as Coles v Woolworths or Coke v Pepsi.¹⁰¹

The Democratic Audit of Australia concluded that:

the laissez-faire attitude in Australia towards paid political advertising: (a) compounds inequality between political parties and; (b) creates a spending race between major political parties, with the cost of this race driving up the dependence on large corporate donations already discussed.¹⁰²

These various criticisms suggested a more appropriate balance of campaign broadcasting and expenditure controls are needed.

One proposal was that purchased television advertising time should be regulated.¹⁰³ Mr Eric Jones advocated for free airtime to counteract a system which he saw as privileging incumbent members and political parties.¹⁰⁴

A different approach to the problem was to regulate perceived high costs of advertising caused by the peculiarities of the Australian electoral system:

Australian political parties appear to pay up to 50 per cent more ‘for advertising time than do private companies’. This is because political advertisers do not know precise election dates until they are called so they are unable to book in advance. Once they do know the election date, they want advertising time urgently and are willing to pay for dearly for it. For all of these reasons, they are often charged a very expensive rate.¹⁰⁵

Accordingly Dr Young judged:

The lack of a requirement to sell airtime to political candidates at a reasonable rate is ultimately costing Australian taxpayers through the public funding system and contributing to pushing up the increasingly high costs of election campaigning.¹⁰⁶

Overwhelmingly, however, advertising controls were discussed as a discrete but integral part of campaign expenditure architecture. The Committee was referred to overseas models for this, and for examples of approaches to broadcasting regulation.

The Committee's view

Australia's regulation of electoral advertising is commensurate with comparable approaches overseas; it is based on two principal regulatory features seen in those regimes:

• an election advertising blackout on all electronic media from midnight on the Wednesday before polling to the end of polling on the Saturday; and
• guaranteed opportunities for pre-election broadcasts.

In the Committee’s view, there is an appropriate balance between restriction and opportunity in the current laws. The three day ban preserves a reasonable period for review and assessment before the vote is cast. The broadcasting allocation encourages the expansion of political debate, and the clarification of important issues for the electorate in the lead up to election day.

The Committee supports the continued operation of these arrangements and does not consider that any further restrictions on airplay, advertising expenditure or other adjustment is warranted.

Laws governing ‘misleading’ advertisements

As previously discussed, the CEA does not seek to regulate information that will influence how an elector makes a decision.¹⁰⁹

Under s329(1) the AEC is relieved of making value judgements about the veracity of the content of political advertising. Instead, its role is to regulate the publications—such as how-to-vote (HTV) cards—that assist voters with the actual marking of the ballot paper, and the depositing of that paper in the ballot box.

Questions about material that is factuallymisleading or defamatory, in the broader sense, is discussed below under truth in advertising. Here the narrower interpretation provided by the AEC is taken.

In Chapter 5, Election day, the Committee examined issues associated with the Liberals for Forests HTV and other allegations of misleading conduct. These highlighted for the Committee the limited effect of the regulations on conduct, over and above AEC adjudication of published electoral matter.

In its report on the 2001 Federal Election, the Committee expressed concerns about the limited capacity of the legislation to deal with misleading conduct. To ensure that any misconduct could be immediately addressed on election day, the Committee recommended

• relevant parties should be advised of Divisional Retuning Officers (DRO)/Australian Electoral Officer (AEO) decisions on disputed material; and
• that presiding officers should advise that any continued handing out of this material will be considered by the AEC as in breach of the Electoral Act.¹¹⁰

This recommendation was supported in principal by the Government.¹¹¹

The AEC has advised that it remains steadfast in its view that s329 does not apply to misleading conduct, as against publications. Hence: “there is no regulation or section of the Act which allows us to enforce any of that”.¹¹²

The Committee's view

The Committee has arrived at the view that the visual agreement between the green Liberals for Forests HTV card and the Liberal party card could not have been effective if the name Liberals for Forests had not been prominent. The prominence of the name exacerbated the confusion rather than otherwise. In this respect the Committee considers that further consideration needs to be given to the registration of party names. This issue is considered in Chapter 4, Party registration.

The Committee made a recommendation in Chapter 5, Election day, based on evidence that officials are not employed in sufficient number on election days. This matter must be addressed; it has clear implications for the type of behaviour evinced at Richmond. However, without a positive judgement that an HTV card is misleading, AEC officers are in any case powerless.

The AEC's reluctance to broaden the interpretation of s329 is understandable but the inability to act, in such circumstances, discredits the integrity of the electoral process on polling day.

The Committee considers that recourse could be in review of s340 of the CEA which governs prohibition of canvassing near polling booths and s348, regulating behaviour at polling booths.

Truth in advertising

The potential to better regulate electoral material that is misleading or defamatory has been a recurrent theme for this Committee and for the Parliament.

A Senate evaluation of “truth” proposals set out in the Electoral Amendment (Political Honesty) Bill 2000 [2002] concluded that there are both legal and practical obstacles to the implementation of “truth” legislation.¹¹³ The Bill had been introduced by Senator Murray to amend the CEA to prohibit, on pain of substantial penalties, any electoral advertising material containing a purported statement of fact that is “inaccurate or misleading to a material extent”.¹¹⁴

Commenting on the Evans v Crichton-Brown (1981) judgement, and the consequent unenforceability of “truth” in political advertising under s329, the Professor Williams and Mr Mercurio submitted:

by allowing deceptive and misleading advertisements to air, Australia is potentially violating the internationally known standard for ‘free and fair’ elections. Moreover, it can be argued that the party running the deceptive or misleading advertisement denies the other parties a fair and equal piece of the electoral process. While this argument can be countered by asserting that all parties engage in such deceptive and misleading comment, such a response is unsatisfactory.¹¹⁵

Can facts be misleading?

The Committee is aware that there could be difficulty in establishing the “fact” of a matter in an Election situation.

The interpretation of “inaccurate and misleading” under the present legislation was raised in the Committee’s public hearings. The issue for the ALP was verification of the factual content of advertising material sourced to the Reserve Bank of Australia.

The ALP maintained that :

the Liberal Party issued misleading flyers which had the effect of deceiving voters thinking that the Reserve Bank… supported their claims. This included the statement:

Over 30 years interest rates have risen to over 10% under every Labor government. Source: Reserve Bank of Australia.

No report, media release or public comment from the Reserve Bank is cited for this purely political statement. This is because none exists.¹¹⁶

The contrary view heard by the Committee was that:

statistics reveal that during the Hawke and Keating period of government, between 1983 and 1996, the standard variable home mortgage rate rose to 17 … according to those statistics published by the RBA… Those are matters of public record, as revealed by the statistics published by the RBA.¹¹⁷

Irrespective of any complaint to the RBA, the ALP confirmed that the statistics quoted were: factual; produced by the RBA; and, indisputably, “the[re] would be those published statistics”.¹¹⁸

Senator Brown referred to an article in the MelbourneHerald Sun which the Australian Press Council found had misled voters about Greens’ policies. He stated:

I believe we should legislate to ensure that an independent office in the Electoral Commission has that power to challenge people, to test the veracity at least of advertising and of election material generally before it is put into the public arena. We need to defend the right of voters to be properly informed and not misled on the way to the ballot box, particularly in a system which has compulsory voting.¹¹⁹

A number of submissions also expressed concerns about authorisation tags on broadcast and other electoral advertising material. The AEC noted in its submission that most complaints of this type arise because of misconceptions that authorisation requirements under s328 require:

• the disclosure of the identity of the political party which distributed the material; and
• that authorisation requirements apply to internet or telephone advertisements.¹²⁰

Truthfulness in TV electoral advertising

Another area of commentary was the regulation of truthfulness in televised electoral broadcasts.

Prior to June 2004, complaints about the truthfulness of television electoral advertising were made to the Federation of Australian Commercial Television Stations (FACTS). FACTS could then investigate the veracity of the advertisement's content and recommend on its continued broadcasting.¹²¹

Evidence to the Committee raised concerns that FACTS, now known as Free TV Australia, no longer has the authority to monitor the truthfulness of electoral advertising.

Senator Brown submitted that television advertisements, which falsely represented Green policies in the lead-up to the election, would not have been permitted under the previous regime. He asked the Committee to review the relevant legislation and ask for reinstatement of Free TV Australia’s surveillance authority over the content of television political advertising.¹²²

In its report on the 2001 election, the Committee recorded how FACTS had accepted, following legal advice, that it had no jurisdiction to vet the content of political advertising.

FACTS acknowledged this in a letter to political parties, stating that it had formerly acted on the belief that the Trade Practices Act 1987 applied to political advertising. This had led to a situation where advertisements on television were subject to stricter controls than those broadcast on radio.¹²³

Free TV Australia now reviews election material:

• for classification under the Commercial Television Industry Code of Practice;
• to ensure that it complies with relevant legislation under the Broadcasting Services Act ( Clause 2, Part 2 of Schedule 2) relating to provision of authorisation tags, and with state and Federal Electoral Acts; and
• to protect broadcasters from liability under defamation laws.¹²⁴

Under this arrangement, electoral laws governing defamation and the prohibition of misleading information are consistently applied to both radio and television advertising (under s329 [1] and s 350). The responsibility for compliance rests with the party or candidate authorising the advertisement, and penalties apply if the requirements are not met.¹²⁵

As indicated, under s350 (2) candidates have the right to make a complaint about false or defamatory statements in advertising material, and to seek an injunction preventing the repeated publication of such statements. This action would be taken out against the person authorising the speech, usually a party representative or employee.

This approach prevents any possible incursion on the implied freedom of political communication, or “free speech” in the Australian Constitution, that would be made if legislation controlling “truth” in television political advertising was to be introduced.¹²⁶ It also removes any responsibility for adjudication of contentious matter from the AEC.

The Committee’s view

The Committee’s view remains that there is a high risk that the introduction of so-called “truth” legislation would traverse the implied freedom of political speech underpinning the democratic principles which govern our electoral processes.

The Committee considers that the primary objective of the regulation of electoral advertising under electoral law is that it should be consistent.

The present system defers decisions about the truthfulness of any advertisement to the courts. The CEA does not give the AEC authority to make judgements on matters of truth in political advertising; instead it is the offended candidate who can take action against allegedly untrue statements about that candidate and his or her policies.

In this respect, the Committee finds there is no foundation to ALP assertions that there was anything misleading or deceptive about the use of RBA statistics in the Liberal Party electoral advertisements. All figures quoted were verifiable and accurate, and had been issued by the Reserve Bank of Australia in official publications.

Of more serious import, the Committee believes that Senator Brown’s representations over the inaccuracy of statements in the MelbourneHerald Sun article are of less than honest intent. The policies described in the article were identical to those publicly and explicitly advocated on the Greens’ party website at the time. There was one exception which was a technical error, but it too had been sourced from an earlier Greens’ policy announcement.¹²⁷

On consideration of the facts of this matter, the Committee concludes that the Australian Press Council’s findings against the MelbourneHerald Sun article constitute an error of judgement. Nothing in the article was invented; it was entirely sourced from the Green’s website and its intention was to do nothing other than to truthfully inform the public.

It has therefore recommended that the Government give consideration to repealing the section, and that action be taken through civil court jurisdictions.