As the Sam Dastyari donations scandal continues to unfold, both sides of politics, and the crossbench, are flirting with reform. By Karen Middleton.

Political donations and Sam Dastyari’s downfall

Sam Dastyari fronts the  media in Sydney on Tuesday.
Sam Dastyari fronts the media in Sydney on Tuesday.

Between Tuesday and Wednesday, Labor senator Sam Dastyari made a lot of phone calls and received a fair few more.

Dastyari had wound up his mea culpa news conference on Tuesday feeling as though he had addressed the matters that had been attracting negative public attention for more than a week.

He’d been asked during Tuesday’s half-hour presser whether he had offered to quit the shadow ministry.

“No,” he said with his usual obliging brightness. “I haven’t offered and I haven’t been asked.”

He thought that would be the end of it. Having described as a “mistake” his earlier decisions to ask a Chinese-linked business to cover a $1670 travel expenses debt he owed the finance department, and another Chinese-Australian company to cover a $5000 legal bill, he was convinced the public furore over the issue would go away.

It didn’t take long for him to realise he was wrong.

Dastyari’s resignation in a crisp, two-minute statement on Wednesday has still not heralded the end of the matter.

Ahead of next week’s parliamentary session, political leaders from across the spectrum are scrambling to be seen to be doing something about improving electoral funding rules.

Opposition leader Bill Shorten is preparing legislation to ban foreign donations to political parties and candidates, calling on Prime Minister Malcolm Turnbull to join him.

“Mr Turnbull and I have an opportunity to restore some faith in the political process by cleaning up the overdue issue of foreign donations in this country,” Shorten said on Thursday.

Labor wants all donations above $1000 fully disclosed and already follows that practice, despite the law only requiring disclosure above $13,000.

The Australian Greens are also calling for a ban on foreign donations and go further, pressing for what NSW Greens senator Lee Rhiannon calls a “comprehensive suite of reforms”.

“We’ve got an opportunity to clean up political donations – a whole regime of electoral funding in this country,” Rhiannon said on Thursday. “[Shorten] talks about the problem with overseas donations buying influence, buying political influence. But why does that just stop with overseas donations? Developers, alcohol industry, the gambling industry – so many corporations give millions and millions of dollars. That’s buying influence in this country.”

1 . Changes recommended years ago

Five years ago, the parliamentary joint committee on electoral matters investigated the system and recommended changes. 

It heard evidence that the Greens had received a $1.6 million pre-election donation from businessman and Guardian Australia investor Graeme Wood, which they did not disclose until after the 2010 election, despite advocating more regular disclosures. Greens national manager Brett Constable told the committee it had not been disclosed earlier “out of respect for the donor”.

At the time, Constable said: “I would say that he has not exerted any influence on the party.”

Last Thursday, during the first parliamentary sitting week, Rhiannon and South Australian senator Nick Xenophon put a motion before the senate quietly, urging it to back a ban on foreign donations.

Just before it was put, the Labor opposition, via the shadow special minister of state, Senator Stephen Conroy, added its name to the motion. The senate passed it without a formal vote.

There has been some hesitation about such a ban because it could rule out dual nationals.

It is understood there is a view that dual nationals could avoid being banned through a provision that would call them Australian if that were their primary country of residence.

Prime Minister Malcolm Turnbull also wants to ban not only foreign donations but donations from third parties and corporations.

“Ideally I would like – if we can manage it – for financial participation in the election process to be limited to those people who can vote,” Turnbull said on Thursday. “That’s where we should get to, but we do have big legal issues and indeed some constitutional issues.” 

2 . Call for a full inquiry

Xenophon has drafted a further motion calling for a full-blown inquiry into the donations system.

“We need to have a root-and-branch review of political funding and donations in this country,” he told The Saturday Paper. “We should look at the best practices. We should look at the UK and Canada.”

Xenophon points to Canada in particular, where electoral funding laws were updated two years ago and restrict the size of all donations.

For Xenophon, the issue is foreign donors and appropriate disclosure, ahead of caps on donations.

Earlier in the year, when Xenophon acknowledged he had received contributions from Australian retailer and activist Ian Melrose, he indicated that he’d like to be in a position to repay them eventually. He clarified as the election campaign began that the $170,000 in contributions from Melrose were donations, not loans.

Parties and candidates receiving more than 4 per cent of the vote at an election qualify for a taxpayer-funded reimbursement for each first-preference vote, currently set at $2.63.

By that formula, the Nick Xenophon Team received just under $1.2 million from the July 2 election. 

But Xenophon says his party didn’t earn enough to pay back Ian Melrose’s donations. “We didn’t do well enough,” Xenophon told The Saturday Paper. “We just covered expenses. We cut our cloth accordingly.”

He says his hope that he might be able to return the money was not realistic. “I thought it would’ve been a nice thing to do but not a practical thing to do.”

3 . Howard adds his voice

Former prime minister John Howard has added his voice to those opposing any further restrictions.

“I don’t believe that if a company is carrying on a lawful activity that it should be prohibited from making a political donation,” Howard told the National Press Club this week. “I don’t think every developer in this country is a crook any more than I believe people who aren’t developers are all virtuous.”

He opposed placing further limits on the size of donations, calling that an “attack on freedom of political activity and expression”.

But he supported more timely disclosure of donations.

The Coalition’s parliamentary team is focused on differentiating between donations and the payment of a personal debt, as in Senator Dastyari’s case.

After the Labor senator’s resignation, Treasurer Scott Morrison continued to take rhetorical jabs, shifting his focus from Dastyari to Bill Shorten.

“Who would’ve thought that Sam Dastyari was going to set higher standards than Bill Shorten?” Morrison asked reporters. “What the Labor Party seem to be saying about Senator Dastyari is this: He didn’t have to go because he did the wrong thing, he had to go because he was becoming politically inconvenient for the Labor Party. And that just tells me that they still don’t get it. The problem with Sam Dastyari, and Bill Shorten for that matter, isn’t just that he crossed a line. It’s that the Labor Party doesn’t even seem to know that there is a line when it comes to these kinds of things.”

Each party is taking a different view of where that line should be drawn, seeking to set the boundaries for the debate so any issues relating to their own acceptance of donations or gifts fall outside them.

“The issue of donations is not the same thing as what’s going on with Senator Dastyari here,” Morrison said.

Dastyari’s debt for over-claiming travel allowance was paid by the Top Education Institute, run by Chinese Australian Minshen Zhu, who is described as being close to the Chinese government and has been photographed alongside a range of Australian politicians, including Labor prime ministers Kevin Rudd and Julia Gillard, Liberal prime minister Malcolm Turnbull and Morrison himself.

Dastyari’s legal bill was paid by Sydney-based property developers the Yuhu Group, whose owner Huang Xiangmo is a prominent political donor.

4 . A different business culture

Another prominent Chinese Australian property tycoon, Ray Chan, head of Henson Properties, says Chinese-Australian business leaders will abide by the law whatever it is. If a ban on foreign donors is implemented, so be it. “It’s fine. If it’s a policy, we have to accept the law.”

But he argues that Chinese-Australian benefactors are simply following Chinese business practice of friendship first and business after and are just looking after their friends. Chan says Australia should be less closed-minded on such practices.

“I think being Australian, we should open up our viewpoints a bit wider,” Chan told The Saturday Paper. 

“If I go to the Forum in Leichhardt, I will have the Italian meals and toast with the Italian liquor, grappa… And if I have a Lebanese friend, I kiss them three times on the cheek. And if I have a Greek friend, I do the Zorba. In Australia, we should learn to enjoy each other’s difference, not restrict each other’s difference.”

He contrasted the Australian business culture with the culture in China. 

“There’s much more opportunities in China,” Chan says. “There’s much more people willing to work harder… Things get done, when you’re willing to pay. You earn money, you spend big… It’s a different frame of mind here. Money doesn’t circulate in Australia because money is much harder to earn.”

Chan is concerned that the criticisms are unfairly damaging the reputation of legitimate Chinese-Australian businesses. “For God’s sake, people bring in honest money to come to Australia, to invest, to provide housing, to bring employment, to stimulate the economy.”

But he said their names were being tarnished.

“Have you heard of any Chinese terrorists? How many percentage of all these people living on government assistance [are Chinese]? Minimum Chinese on social welfare. Minimum. It’s a disgrace.”

Chan says gift giving is a normal part of Chinese business culture. “We’re not penny-pinching people,” he says. “If we can afford to help people, we help people.”

He believes there has been an overreaction to the gifts and donations given to Sam Dastyari and argues donors do not automatically expect anything in return.

“Just because he’s a politician?” he asks. “What if he’s a doctor? I don’t expect him to operate on me for nothing.”

His comments contrast with those from Huang Xiangmo, published recently in an editorial for the Chinese-language Global Times newspaper.

“The Australian Chinese community is inexperienced in using political donations to satisfy political requests,” Huang wrote. “We need to learn… how to have a more efficient combination between political requests and political donations.”

The Australian Financial Review, which first published the translation, later quoted a spokesman for Huang saying he “expected nothing in return for donations”.

Dastyari’s downfall came in having accepted money from Chinese-linked donors and then having been quoted as expressing a different view on China’s role in the South China Sea than that of his party.

“The South China Sea is China’s own affair,” he was quoted as telling Chinese media during a mid-election news conference on June 17. “Australia should remain neutral and respect China on this matter.”

On Tuesday, Dastyari said repeatedly he had either been misquoted or he “misspoke” and that he supported Labor’s policy.

Huang is also the chairman of the Australia–China Relations Institute at the University of Technology Sydney. He donated $1.8 million to establish the centre in 2013.

The institute’s director, former foreign minister Bob Carr, defends Chinese-Australian business leaders against suggestions their motives might be impure.

“I think any attacks on the loyalty to Australia of Australia’s Chinese must be deplored,” Carr told The Saturday Paper from China this week.

Late last month, after an address to the institute by former prime minister Paul Keating, Carr said Australia should not “only see China through a Washington lens”.

“I think a lot of Australians would think in the East China Sea we should be neutral,” he said at the time. “In the South China Sea, we should move with like-minded opinion, not make a flamboyant gesture of running patrols that won’t resolve anything.” 

Carr told The Saturday Paper that by “like-minded” he meant countries such as Singapore, Canada and Britain and the European Union, whose positions were less critical of China than the United States and Japan. But the question of whether foreign and other policy is – or is not – directly influenced by political donations will continue to face scrutiny as parliament resumes.

The 45th parliament’s joint standing committee on electoral matters will be constituted formally this week and is expected to move quickly to establish its routine post-election inquiry.

5 . Spinoff inquiries

With a range of significant issues having emerged from the July 2 poll – including the Australian Electoral Commission’s administration of the election, the use of campaign material and messages purporting to be from Medicare, and the influence of campaign donations – it’s being suggested that separate spinoff inquiries are likely to follow. They are expected to examine the issues separately and in more detail, which will mean another inquiry into electoral funding, five years after the last.

As for Sam Dastyari, he will spend an unspecified time in purgatory on Labor’s backbench. 

Those close to him insist his resignation was his own decision. But Opposition Leader Bill Shorten has now painted a slightly different picture.

“Following Senator Dastyari’s press conference on Tuesday, I spoke to him that evening and I spoke to him a number of times yesterday,” he said. “They were hard conversations.”

Shorten said that after that series of “hard conversations” Dastyari offered his resignation.

On Thursday, a Channel Nine reporter bailed up Dastyari outside his home, and queried again why he asked private companies to pay his bill. “I asked them to pay it because I didn’t want to pay it and frankly that was wrong,” he said. “That’s a mistake. I’ve got to be really honest here. I’m paying a price for a mistake.”

Asked what had been going through his mind at the time, he replied: “Frankly, I think it’s pretty obvious. Not a lot.”

This article was first published in the print edition of The Saturday Paper on September 10, 2016 as "Passing the heat around".

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Karen Middleton is The Saturday Paper’s chief political correspondent.

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