What has happened?
There have been several recent decisions in the Land and Environment Court in which companies have been convicted for failing to disclose political donations and gifts when making relevant planning applications.
Section 10.4 of the Environmental Planning and Assessment Act 1979 (EP&A Act) requires a person who makes a “relevant planning applicant” to disclose any “reportable political donations” made within the “relevant period” to anyone by any person with a financial interest in the application.
While the disclosure obligation was introduced to minimise any perception of undue influence, there is considerable uncertainty about its practical application.
What is a “reportable political donation”? Could this include a raffle ticket or an entry fee to an event?
Who is a person who “makes a relevant planning application”? Can this include a contractor or consultant who makes a planning application on behalf of another person?
Who has a financial interest in an application? Can this include donations made by third parties in their personal capacity?
What needs to be disclosed and when?
In Secretary, Department of Planning and Environment v Shoalhaven Starches Pty Ltd, the Land and Environment Court convicted Shoalhaven Starches (a subsidiary of Manildra Group) of 5 offences and imposed a penalty of $107,000 plus $40,000 for the prosecutor’s costs. Importantly, the relevant donations in this case were not made by the company. They were made by a director of the company in his personal capacity. Additionally, the relevant planning applications were modification applications rather than an original development application.
The Shoalhaven Starches case follows an earlier decision of Secretary, Department of Planning and Environment v T W Perram & Partners Pty Limited in which a consultant town planner was found guilty of an offence under section 10.4 of the EP&A Act (then known as section 147). The town planner’s involvement was limited to preparing and lodging a planning application on behalf of its client.
Even some of Australia’s largest and most sophisticated companies have failed to meet their disclosure obligations. In January 2017, AGL Energy and one of its subsidiaries were convicted of 13 offences and fined $124,000.
In 2014, the maximum penalties for offences under section 10.4 of the EP&A Act doubled. The current maximum penalty is $44,000 or 24 months imprisonment or both.
The Department of Planning and Environment has also significantly increased auditing and surveillance of political donations and it is now one of the 5 focus areas of the Department’s compliance team.
Based on our experience, here are some common traps which have led to non-compliances and prosecutions under the EP&A Act:
The definition of “reportable political donation” is broad and includes gifts, entry fees to attend certain fundraising functions as well as annual memberships to political parties.
Political donations may become reportable if separate political donations are made to the same party or elected member within the same financial year which, when combined, amount to $1,000 or more.
A “relevant planning application” is not limited to development applications. It also includes modification applications as well as requests to make an environmental planning instrument or development control plan.
Even after a relevant planning application has been made, there is an ongoing obligation to disclose any further reportable political donations within 7 days after the donation or gift is made until the relevant planning application has been determined.
Reportable political donations made by any person with a “financial interest” in the planning application must be disclosed. This could include donations made by directors of a company in their personal capacity, persons who carry on business together, or related bodies corporate.
Any person who makes planning applications should ensure that they understand and comply with their disclosure obligations under section 10.4 of the EP&A Act.
Organisations should develop and implement a formal Political Donations Policy with defined roles and responsibilities to ensure compliance.
Many large organisations have now simply prohibited political donations by the company (although they would still be required to disclose donations made by any other person with a financial interest in the application).
For further information about reportable political donations and the potential implications for your development please contact Darren Bick, Director, on (02) 8005-1624 or firstname.lastname@example.org.
This article is for reference purposes only and is current at the date of publication. This content does not constitute legal advice and should not be relied on. Legal advice about your specific circumstances should always be obtained.