The Sam Dastyari case marks a turning point in the political donations debate. Photo: Wolter Peeters ACRI Chairman Xiangmo Huang with Prime Minister Malcolm Turnbull and David Coleman. Mr Huang, a businessman and philanthropist, has donated large amounts to both political parties. Photo: Dominic Lorrimer
Yuhu Group chief executive Huang Xiangmo and Sam Dastyari at a press conference for the Chinese community in Sydney in June. Photo: Supplied
Dr Zhu with Gillard government foreign minister Bob Carr after being appointed to the Chinese Ministerial Consultative Committee. Photo: TEI
With his long, sticky fingers Senator Sam Dastyari, hotshot of the NSW Labor right machine, this week managed to conflate two of the Australian electorate’s chief concerns, fabricate them into a political weapon and turn it on himself.
The first is growing anger at the propensity of Australian politicians and parties to pocket money from special interests in the form of gifts or donations. The second is the general and growing anxiety about the role of China in the region and its influence on Australian domestic affairs.
Dastyari’s undoing began last week when Fairfax Media revealed that having blown his travel allowance by $1670.82, the young senator contacted a Labor donor to foot his bill: Top Education Institute, a Chinese private higher education provider based in Sydney and run by Australian-Chinese businessman Minshen Zhu.
Dastyari had form. He had previously accepted payment for a legal bill from another prolific political donor, Huang Xiangmo. Worse still, it would surface that back in June he had appeared beside the Chinese property developer pledging support for China’s stance on the South China Sea.
It is worth noting Dastyari had broken no law, no regulation, nor even a norm in Australian politics. Technically he had not even taken a donation, but a gift. He had even properly declared the gift. He was determined to ride out the scandal.
Last Friday though, the Prime Minister, Malcolm Turnbull, piled on, pointing to quotes in Chinese media suggesting that Dastyari had advocated China’s position on the South China Sea dispute, a position contrary not only to Australia’s stance, but that of our key ally, the United States.
Cash for comment, said the PM.
Still Dastyari was determined to stick it out, hence the disastrous press conference he held on Tuesday this week, the performance that finally undid him.
Asked time and again why he had asked a company to pay his bill, he was unable to give an answer. To anyone watching, the reasonable conclusion was that Dastyari did not pay his bill because he did not want to, because he was greedy, and because Australian politicians simply don’t have to pay bills if there is someone else around willing to – even if that person happens to be a friend of a foreign government.
The following day Dastyari resigned from his frontbench positions.
Australia’s political parties are addicted to cash, particularly donations. Over the past five financial years, the major parties – Labor, Liberal, the Nationals and the Greens – have taken in about $887 million, according to Australian Electoral Commission returns, in public funding, donations, membership fees and fundraising efforts. Donations form a significant portion of this pie, but the exact size is obscured by loose disclosure laws and associated fundraising vehicles.
Prime Minister Turnbull now finds himself under increasing pressure to reform donor laws. Speaking from a series of summits in Asia this week, he reiterated his long-standing personal view that donations would “ideally” be limited to individuals on the Australian electoral roll, striking off corporations, unions and foreign nationals.
“I’ve always felt that would be a good measure,” he said.
Whatever his feelings on the matter, so far the PM has taken little action. He has suggested reforms should be considered by the Joint Standing Committee on Electoral Matters, a committee as yet unformed in this Parliament and one that has historically been seen as a paper tiger.
Meanwhile, his ever-enthusiastic predecessor, Tony Abbott, has seized the initiative, calling for sweeping reforms to curb “influence-buying” and “subversion of the system”.
Labor is pushing hard for a ban on foreign donations, and Liberal figures as diverse as Christopher Pyne, Cory Bernardi and Steve Ciobo have thrown their weight behind change in various forms.
Several roadblocks stand in the way of reform, chief among them self-interest (the horse that’s always trying, as Paul Keating once observed). Both Labor and the Coalition rely heavily on corporate cash, and Labor on funds from unions. A Fairfax Media analysis this week showed the major political parties would lose 90 per cent of their high-value donations if donations were limited to individuals on the electoral roll.
Then there is the High Court. The former NSW premier, Barry O’Farrell, (a man brought down by a gift) legislated a comprehensive ban on donations from corporations, unions and other organisations. But the ban was struck down by the High Court following a challenge led by the unions, with the bench ruling that banning certain types of donors was an unjustified burden on political communication.
The case saw Unions NSW and the libertarian Institute of Public Affairs forge an unlikely alliance, and on Friday the IPA railed against Abbott’s prescriptions as an undemocratic, unconstitutional “attack on freedom of speech”.
Critics say any attempt to replicate O’Farrell’s failed reforms nationally would die a similar High Court death, but Adjunct Professor Colleen Lewis of Monash University, who has written a report on the issue, dismisses the concern. “You can just step over the High Court problem,” she says.
Lewis argues that if the size limit on donations was lowered to, say, $1000 or less, you would not have to ban certain types of donors, like developers, because their influence would be no larger than an individual’s.
She does, however, support bans on foreign citizens and entities donating to Australian candidates or parties, which brings us back to Dastyari and China.
This week Dastyari might have felt himself to be at the centre of this story, but in truth he is just a minor cog in a far larger machine of political gift-giving and influence-peddling that China has built to advance its global influence.
Australia’s politicians and political parties took $5.5 million in donations from Chinese-linked firms in the two years to June 2015, according to an ABC analysis of disclosures to the Australian Electoral Commission, and both sides of politics have benefited.
Chief among the donors is property developer Yuhu Group and its chairman Huang Xiangmo.
More than $1 million in donations to both major parties have come from companies and individuals associated with Huang, who uses his position as chair of the Australian Council for the Promotion of Peaceful Reunification of China (ACPPRC) to promote Beijing’s core interests, including lobbying against Tibet and Taiwan independence.
The Bayside Forum, which supports the federal Liberal seat of Goldstein which was held by former trade minister Andrew Robb up until his retirement, received $100,000 from interests linked to Huang, including $50,000 on the day the China-Australia free trade agreement was finalised and announced by Robb and then prime minister Tony Abbott. Robb also endorsed Yuhu’s $2 billion agriculture investment joint venture fund at its launch in September 2014.
And interests linked to Huang donated $280,000 to the Western Australian division of the Liberal Party. Foreign Affairs Minister Julie Bishop, the leading federal member of the party in that state, has been effusive in praise of Huang’s contribution to Australia and helped open the Australia-China Relations Institute (ACRI) at the University of Technology , which was funded by Huang’s $1.8 million donation.
In the end, it was a $5000 payment from Huang to Dastyari to help settle the senator’s legal bills that has claimed a political scalp. Huang was alongside Dastyari as the Labor senator pledged to respect China’s position on the South China Sea during a June federal election campaign press conference.
Even if reforms preventing foreigners from making political donations in Australia were passed, they would have little effect on China’s deployment of soft power on our shores. Many major donors with Chinese government ties, including property and media tycoon Chau Chak Wing, and Top Education’s Minshen Zhu, have long been Australian citizens.
And no tweaking of donations laws would have had an effect on the money Dastyari took, which was a personal gift.
Besides, China has many more weapons in its soft-power arsenal than cash. Chinese government influence can be heard in the voices of Australian business figures who warn that the Australian government’s stance on the South China Sea could damage their business interests in China.
It can be seen in media deals too. Fairfax Media, publisher of The Sydney Morning Herald and The Age, prints and distributes a monthly news liftout from the China Daily.
And separately, the ABC cut its local Chinese language radio service as it sought a semi-commercial deal to operate in China.
The Chinese government has made its presence felt on university campuses across the country with the establishment of Confucius Institutes, which teach language and culture at discounted rates.
It disseminates research via institutions such as ACRI, which Huang himself chairs and personally appointed former foreign minister and NSW premier Bob Carr to be its director.
From that position, Carr has been enthusiastic in championing policy positions that have coincided with Chinese state views. After the Foreign Investment Review Board blocked the sale of Ausgrid to China, for example, Carr condemned the decision across Australian media.
In response, the Treasurer, Scott Morrison, said Carr had not been privy to the national security briefings he had received and was uttering “complete nonsense”.
“Frankly the former foreign minister should know better,” he said.
In a statement this week Carr told Fairfax Media, “We take an unabashedly positive and optimistic view of the Australia-China relationship. Our position is no different from think tanks in Australia that receive American funding and take an optimistic and positive view of America and the US alliance.”
Carr finds himself bound to this story by Dastyari too.
In February 2012, following the sudden resignation of Mark Arbib from the Senate, Dastyari was able to lure Carr out of political retirement with the offer of not just a Senate seat, but the plum foreign affairs portfolio. Dastyari had joined Carr’s staff the day before he stepped down as NSW premier in 2005. Now he was playing kingmaker.
Both Carr and Dastyari, along with Labor frontbencher Chris Bowen, Liberal elder Philip Ruddock and Barry O’Farrell were listed as patrons of the pro-Beijing ACPPRC which Huang chairs. Both Dastyari and Bowen have since been removed from the council’s website.
Writing in a comment piece for the Global Times last month after an ABC investigation detailed millions Chinese-linked interests poured into Liberal and Labor Party coffers, Huang Xiangmo said the scrutiny smacked of “racism” and blurred the lines between Chinese nationals and Australians of Chinese ethnicity. He rejected suggestions his and other donations had the potential to “skew Australia’s democracy”.
One of Australia’s leading China observers is John Fitzgerald, director of Swinburne University’s Program for Asia-Pacific Social Investment and Philanthropy.
He argues that there is nothing particularly nefarious, nor even that surprising, about China’s broad push for influence in Australia. But he is concerned that some institutions and politicians might be naive in their engagement with Chinese actors.
And the stakes are high, he says. In the short term China would like to use its influence in this country to silence us in the South China Sea debate.
In the long run it hopes to sever our alliance with the United States.