A peak body for retail investors has called for an end to ASX-listed companies making political donations, saying these payments do not create shareholder value, as major parties ramp up fundraisers while campaigning for the federal election.
The Australian Shareholders’ Association chief executive Rachel Waterhouse said shareholder funds have been wasted on political donations and criticised the current level of disclosure around these payments.
Australian Shareholders Association Rachel Waterhouse has called for an end to ASX-listed companies making political donations.Credit:Twitter
Waterhouse said while some companies disclose donations in annual reports, these often lacked detail and were reported months after the donation was made. She said political donations are “personal decisions” of individual directors and not appropriate for listed companies.
“The overarching comment is we don’t want to see political donations at all. We don’t want to see them because they’re coming out of shareholder funds, mums, dads or any investor funds that are sitting within a company,” she said. “But when they are paid, what we want to see is the financial amount and where it went.”
Waterhouse said listed companies should be forced to explain how political donations aligned with the company’s strategy and where value was created, to satisfy shareholder concerns about wastage, and any political contribution should be listed on the company’s website.
An analysis of the Australian Electoral Commission’s data shows ASX-listed companies across the mining and financial industries are the most generous political donors, with ANZ Bank, Woodside Energy and Macquarie Group each donating more than $230,000 last financial year.
Grattan Institute researcher Kate Griffiths said highly regulated industries are often the most politically engaged because their profits are directly influenced by public policy. Mining companies big donors because their operations relied on support from all levels of government, to gain access to land and infrastructure required to increase production, she said.
“The ones that are under-represented are the ones that are less likely to need government decisions to fall their way,” she said, referencing hospitality, retail and small businesses.
At a federal level, political donations over $14,500 must be disclosed each year. Griffiths said some corporations had been found to make multiple donations of $10,000 to evade these requirements, which kept investors in the dark. She said executives also buy $10,000 tickets to political fundraising events to access decision makers, which are rarely disclosed by companies.
“There wouldn’t be a public record of that, which means then there is no opportunity for shareholders to follow that up and ask questions,” she said. “These are the sorts of situations which could happen relatively easily, within the rules, but outside the ethics of a publicly listed company.”
Grattan Institute chief executive Danielle Wood said corporations defend political donations by explaining the payments are made to both parties with the purpose of supporting the democratic process, but in reality the payments give well-resourced companies access to the lawmaking process.
“Whether that’s a good use of shareholders’ money remains to be seen,” she said. “It may be to the extent there is shareholder value, but it’s the type of value that’s not particularly good from a whole of society perspective, where people are having a louder voice in debates because they have the money to afford to.”
Proxy adviser ISS head of research Vas Kolesnikoff said companies with close relationships to government can create shareholder value, providing the example of Wesfarmers which kept Bunnings stores open during the pandemic.
However, Kolesnikoff said these companies have access to politicians regardless of whether they donate. “The small donations are small – it’s to keep the finger in the pie. But it’s more a governance issue because this is shareholder money.”
Corporate governance expert Helen Bird said political donations are often small and not market sensitive, meaning there was no obligation on ASX-listed companies to disclose payments beyond the AEC requirements.
Bird, a senior lecturer of governance studies at Swinburne Law School, said corporates give money to a range of political bodies, including individual politicians, parties and lobby groups, to “buy favour” within government. “You give money to various lobby groups, they get you a meeting with the minister or relevant body.”
A parliamentary inquiry launched in 2017 made a number of recommendations to reduce the potential for political donations to weigh on government integrity, including reducing the disclosure threshold to $1000, requiring continuous, real-time reporting of donations, introducing a cap on donations and banning foreign donations.
Bird agreed there needs to be more frequent disclosure of donations because delays made it difficult to “connect the dots” between payments and influence. She said the mining industry had for years pursued an aggressive government relations approach to minimise taxation and environmental, social and governance (ESG) regulations.
“What has gone completely under-noticed was the Prime Minister was in Western Australia last week announcing no new charges or taxes on mining companies and a reduction in compliance requirements for carbon emissions,” Bird said. “That’s one where you think – how did that happen? We’ve just agreed to [net zero by] 2050 and already we’re backing away from making changes in regulation.”
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