Gated community: property developers and politicians

Research from the Centre for Public Integrity has shown that over the past 20 years, the property and construction sectors disclosed a total of over $54 million in donations to political parties

27 September 2021 | Callum Foote, Michael West Media (Image: APAC Digital)

Despite moves to tackle the toxic influence of property developer donations in NSW and Queensland, the rate of donations made by property developers is increasing, and is increasingly concentrated among a few large players, according to new research from the Centre for Public Integrity (CPI).

This trend is “highly problematic for public trust in the democratic process” according to the CPI. It is commonly thought that less than half of property and other political donations are actually disclosed, so the true figure may be higher than $100m. Some $1.5 billion in payments to political parties over two decades was “undisclosed”.

Further to the rising political payments and the flawed disclosure regime, an investigation by Michael West Media earlier this year found dozens of major corporations are actually members of the major parties and often pay exactly the same membership, be they for gold, platinum or silver membership fees.

In 2019, disclosed donations reached an all-time annual high of $5.6 million in anticipation of the Federal election. Of this, 72% or just over $4 million came from a single source, Sugolena Pty Ltd. Sugolena’s donation was exclusively to the Federal Liberal Party.

That year, Sugolena was the Liberal Party’s second-biggest single donor, behind the party’s fundraising arm The Cormack Foundation.

Out of all property developers in 2019, The Westfield Corporation Limited were runners up having donated $3.7 million. Westfield was followed by Hong Kong Kingson Investment Co. Ltd which donated the third-largest amount at $3.2 million.

Source: Centre for Public Integrity

Westfield’s Australian operations have been repositioned under the ‘Scentre Group’ umbrella. The Scentre Group describes itself as owning the operating “the pre-eminent living centre portfolio in Australia and New Zealand”, comprising 42 Westfield “living centres”.

Hong Kong Investment Co (headquartered in Kowloon) is owned by property tycoon Chau Chak Wing, as is Australia Kingold, the tenth-largest single largest donor in 2019 at $1.5, which describes its business as including real estate, finance, health, education, hospitality and media.

Chau Chak Wing controlled entities, therefore, donated at least $5.2 million in 2019.

Chau Chak Wing, who successfully sued both Fairfax and the ABC over claims he was an agent of Chinese soft power in Australia. Wing has also donated millions to Australian universities, having the Dr Chau Chak Wing building named after him at the University of Technology Sydney, and the Chau Chak Wing Museum at the University of Sydney.

The problem with donations

Political donations are an avenue for undue influence of the political process by wealthy corporate interests. Of reported donations, the Liberal-National party receives almost 2:1 as compared to Labor, according to analysis from The Greens’ Democracy For Sale.

Donations of particular concern, as the CPI note, are from industries or sectors “whose existence depends on the issuing of government permits”. Wealthy players in these industries have billions to gain by influencing individual government decisions.

The property and construction industry is one such problem industry, as it relies on the continual flow of building licences and zoning decisions coming from governments.

Cameron Murray, an economist at the University of Sydney and author of A Game of Mates, says that property developers are after concessions such as “favourable rezoning decisions and to avoid future taxes on their property portfolios.”

According to Murray, all property and construction industry interactions of this sort with the government are conducted with the intention of increasing profits which means to keep property prices as high as possible.

Moreover, due to the involvement of the council, state and federal government on property decisions “property developers are very politically active at all levels. It’s the smart thing for them to be active at all levels with donations being just one way to get involved” says Murray.

Do donations influence politicians?

The CPI describes two ways in which property developer donations may influence politicians, pointing to the High Court decision of McCloy v New South Wales, which upheld the constitutionality of NSW laws imposing caps on political donations, banning donations by property developers and prohibiting indirect campaign contributions.

It’s important to note that not even the plaintiff in the above case denied that donations are used to exert persuasion on politicians, merely that this persuasion did not count as “undue influence”.

First, there’s the explicit “quid pro quo” corruption as occurring where a candidate for office “may be tempted to bargain with a wealthy donor to exercise his or her power in office for the benefit of the donor in return for financial assistance with the election campaign”.

Secondly, donations can buy increased access to politicians, such as the case where Chinese billionaire real estate developer Huang Xiangmo was given a meeting with Bill Shorten in 2015 due to his considerable donations.

Donors can also impose penalties on parties reliant on private campaign funding if the recipient does not govern in the donor’s favour.

This form of corruption is called clientelism, which the High Country considered a “more subtle kind of corruption”, which is harder to prove.

What to do?

The CPI recommends implementing a political donations cap of $2000 per candidate and $5000 per party per annum for a single person or aggregate entity. According to the CPI “Our current system of unlimited donations means that those with the capacity to donate more are given more attention by politicians and political parties than an average constituent” and the proposed amounts are affordable for those on an average wage.

This would also include a provision that would limit membership payments to $1000 per annum, which would avoid corporations having undue influence from buying memberships that cost up to $75,000 per year as revealed by Michael West Media.

The current disclosure threshold for reporting donations is set at $14,000. This permits any entity to donate multiple instalments of $13,999 through federal and state parties without being required to report, effectively permitting unlimited, secret corporate donations.

Moreover, donations made by purchasing expensive tickets to fundraising events, priced between $10,000 and $20,000 per person, are also not categorised as gifts.

Calls for political donation reform have been made for years, backed up by research from numerous independent think tanks, such as the Grattan Institute and the CPI, yet little action has been taken in Canberra to address the toxic effect of money in Australian politics.

Callum Foote a journalist and Revolving Doors editor for Michael West Media. Callum has studied the impact of undue corporate influence over Australian policy decisions and the impact this has on popular interests. This article was first published at Michael West Media