Phil Hogan (Carlow-Kilkenny, Fine Gael)

I move: "That the Bill be now read a Second Time."

In commending the Electoral (Amendment) (Political Funding) Bill to the House I am asking Dáil Éireann to approve new, thorough and comprehensive restrictions and transparency measures for political funding in the State. I am also seeking approval for the single most significant measure ever brought forward to improve the participation of women in political life. The Bill has been given a thorough and testing examination in the Seanad and I look forward to a comprehensive examination of its provisions by the Members of this House.

The Bill will fundamentally change the way the political system is funded and conducted in Ireland. The role of corporate donations will be curtailed and what role they continue to play will be open to much greater public scrutiny. The Bill will ban all corporate donations above €200, unless the most strict and exacting conditions are met. The amount that can be accepted as a political donation by a political party and an individual politician or candidate is being more than halved. The threshold for the public declaration of donations by parties is being reduced by more than 70%. For politicians and candidates, the declaration threshold is being rounded down and reduced.

All political parties will be required to prepare audited accounts which will be submitted to the Standards in Public Office Commission and published on the Internet. The income and expenditure of parties will be opened up for all to see.

Other measures included in the Bill provide for greater transparency by both donors and those in receipt of political donations. The current system of political funding regulation, with its lack of transparency, is stacked in favour of the donor and the political system and against the ordinary citizen. The donation limits are high - in fact, too high - and we are reducing them. The current system allows corporate and other donors to have a shield of anonymity. This is unhealthy for democracy and the public good. We do not know from where political parties get much of their funding and how it is spent because parties do not have to publish accounts. All of this is going to change. The political funding measures included in the Bill will tip the balance back in favour of the citizen. The Bill will restrict political funding and specifically curtail corporate donations. It will shine a light into the financial affairs of political parties.

The corporate funding of the political system comes at a price above and beyond the value of any one donation. It creates a perception that influence can be bought. It erodes public trust in democracy and politics. In many ways, the price for the failings of the current system has been and continues to be paid.

There has been no lack of advice during the years telling us about the shortcomings of our laws on political funding. Ireland is a member of the Council of Europe Group of States Against Corruption, GRECO. In 2009 this body undertook an evaluation study of Ireland's political system, specifically examining the issue of party funding. Among the recommendations made was that all registered political parties should prepare independently audited accounts that would be made public in a timely and accessible way. It also recommended that consideration be given to lowering the current disclosure threshold for political donations. Similar proposals have been made by the Standards in Public Office Commission. The Bill will directly respond to these recommendations. It will also address recommendations made in the Moriarty tribunal report published in 2011. If many of the problems with political funding have been clear for some time, the one thing lacking has been a willingness to act. This is not the case anymore.

Let me turn to the other significant measure contained in the Bill. Women are and always have been under-represented in politics. Just over 15% of the Members of Dáil Éireann are women. Small and all as this is, it is the highest level in this House in the history of the State. Most will agree that this cannot continue. As legislators, it is our duty to lead and, as Minister, my job to do what is necessary within my brief to help to rectify such a significant failing in our democratic system. That is what we are doing here. The gender balance measures linking the State funding of political parties with candidate selection at general elections represent a targeted initiative to help to redress a profound imbalance.

I look forward to hearing Deputies' views throughout the Second Stage debate. We will have an opportunity to scrutinise each section of the Bill in more detail on Committee Stage.

The Bill will reduce the current limits for the acceptance of political donations and the thresholds for the declaration of these donations. The Electoral Act 1997 is now almost 15 years old and the rules for political donations were incorporated into the Act in 2001. A major revision of the laws on political funding is long overdue. If one thing illustrates this point most, it is the fact that the financial amounts in the existing legislation are given in punts.

Part 1 contains standard provisions of a general and technical nature. Part 2 provides for changes to donation and declaration amounts and introduces new conditions for corporate donations. The maximum amount that can be accepted as a donation by a political party, an accounting unit of a political party or a third party is being reduced to €2,500; the current figure is €6,348.69.

The maximum amount that can be accepted as a political donation by an individual is being reduced from €2,539.48 to €1,000. This donation limit will apply to a Member of either House of the Oireachtas or a Member of the European Parliament, as well as a candidate at a Presidential, Dáil, Seanad or European Parliament election. The €1,000 limit will also apply to local authority members and local election candidates through an equivalent measure in Part 3.

Provision is made for a ban on the acceptance of donations of more than €200 for political purposes from a corporate donor unless the donor has registered with the Standards in Public Office Commission. Such donations must be also accompanied by a statement confirming that the donation has been approved by a general meeting of the members of the body or by its trustees. Allowing corporate donations of up to €200 to be accepted without having to comply with the new requirements is based on practical considerations around implementation. Placing the additional disclosure and approval conditions on relatively small donations of under €200 from businesses or organisations would not be fair or practical. If there were no lower limit, a local business placing a poster in a shop window in support of a candidate, for example, could be regarded as giving a corporate donation by way of a benefit-in-kind. A shop owner who buys a raffle ticket or offers a small spot prize for a local function similarly could be regarded as giving a corporate donation.

An exemption is given from the new registration requirements to a provider of a programme of education and training or a students' union where they make a payment to a student society or club. This will allow colleges or students' unions to continue to provide financial support to student groups that promote political participation, without having to comply with the new corporate donor requirements. Members will agree that these grants to student societies can be hardly regarded as the sort of corporate donations which need to be restricted, and that this exemption does not contradict our objective of enhancing the openness and transparency of political funding in Ireland.

Provision is made for the establishment of a register of corporate donors. This register will be published so that people, especially voters, can know which corporate donors intend to provide funds to political parties, election candidates or elected representatives. The term "corporate donor", as defined in section 5, includes all corporate and unincorporated bodies and trusts. This definition embraces companies, partnerships, trade unions, trusts, co-operatives, societies, building societies, charitable organisations, non-governmental organisations, clubs, associations and any other unincorporated bodies of persons; in other words, all bodies and organisations other than natural persons.

To ensure the measures are as comprehensive as possible, an amendment was made by the Government on Committee Stage in the Seanad to provide that a membership fee paid to a political party will be treated as a donation for the purposes of this legislation. Membership fees paid to political parties are not explicitly mentioned in the Electoral Act 1997. Heretofore, the Standards in Public Office Commission, in applying the provisions of the 1997 Act, has not regarded membership fees as falling within the definition of a donation under the Act. A concern was identified in the drafting of the Bill that this could represent a potential loophole. It could allow corporate-type bodies to provide funding to political parties by way of membership fees. A new category of membership, namely, corporate membership, could be created and the fees paid would be exempt from the donation limits and restrictions and the declaration provisions. It was therefore necessary to take action.

While this will affect corporate-type contributions, however, it should not impact in any way on the individual members of political parties who are a vital part of our democratic system. In bringing forward the provision in this Bill, I wish to make it clear that the objective of the Government is to restrict the influence of corporate donations on politics in Ireland and to enhance the openness and transparency of the system of political funding. The Bill will do that to the maximum extent that is possible and constitutionally permissible. The approach being adopted is consistent with our commitments in the programme for Government.

Some Members on the Opposition benches have already advocated a total ban on corporate donations. I accept that it is the role of the Opposition to suggest that it would do things differently. However, the Deputies on that side of the House will be well aware from having been in Government just over a year ago that such a ban would run the risk of a legal or constitutional challenge. Were such legislation to fail on a legal challenge, we would be back to the drawing board. In fact, we would most likely end up back in the House introducing the measures that are contained in this Bill. It is the duty of the Government to bring forward laws that are robust and that bring a level of legal certainty. That is what we are doing. We are restricting corporate political donations and we are doing it in the most effective way we can.

I have already mentioned the reductions in the value of donations that may be accepted. In addition, the threshold at which donations must be declared by a political party to the Standards in Public Office Commission will fall from €5,078.95 to €1,500. The declaration threshold for a donation received by a candidate or elected representative is reduced from €634.87 to €600. There is provision for a reduction from €5,078.95 to €200 in the threshold at which donations must be reported by companies, trade unions, societies and building societies in their annual reports or returns. Part 2 also provides for a reduction in the threshold for donors other than companies, trade unions, societies and building societies in reporting donations to the Standards in Public Office Commission, from a figure of €5,078.95 to €1,500 for aggregate donations given in the same year.Part 3 provides for the necessary amendments to the Local Elections (Disclosure of Donations and Expenditure) Act 1999 to enable the new requirements on political donations to apply at local elections. All relevant elections, candidates and elected representatives will be therefore covered by the new requirements.

Part 4 provides for all registered political parties to prepare an annual statement of accounts and an auditor's report. These are to be submitted each year to the Standards in Public Office Commission for publication. In the event of non-compliance with these provisions, funding made available to political parties by the State under Part 3 of the Electoral Act 1997 is to be withheld. The format of the accounts will be based on guidelines prepared by the commission. In drafting these guidelines, there will be a consultation period for political parties and others to input their views. The guidelines will be then approved by the Minister and published. Having the accounts prepared in a standard format will enable like-for-like comparisons to be made between parties. This will enhance transparency for the public.

Part 5is entitled "State Funding of Political Parties and Gender Balance". The proportion of men to women in the population of Ireland is approximately 50:50, yet this has never been reflected in Dáil representation. As I mentioned earlier, we now have the highest ever level of women's representation in this House. However, women comprise just more than 15% of the Members of Dáil Éireann. That is a long way from balanced representation and the situation will not change of its own accord unless we make it change. The provisions in Part 5 are designed to do just that and move us towards greater gender equality in elected representation in our national Parliament.

Parties that do not select at least 30% women candidates at the next general election will face losing half of their State funding. This would be for not just one year, but for the lifetime of a Dáil. To put into perspective the potential impact of non-compliance, the total that is available for disbursement to parties in 2012 is €5.456 million. Following the 2011 general election, the four political parties that qualify for funding are Fine Gael, the Labour Party, Fianna Fáil and Sinn Féin. Any party that aspires to receive more than 2% of the vote at the next general election to qualify for State funding will have a very clear incentive to comply with the new requirements.

Part 5 deals with the fund paid to political parties. Currently, the amount available is increased when there is a general increase in Civil Service pay. There is no provision for a decrease to be applied if Civil Service pay is reduced. On Committee Stage in the Seanad the opportunity was taken to introduce a Government amendment to rectify this. This matter was originally raised in an amendment put forward by Deputy Catherine Murphy on Committee Stage in the Dáil during the passage of the Electoral (Amendment) Act 2011 in July 2011. I did not accept the amendment at the time but I undertook to give it further consideration, in consultation with Government colleagues, in the preparation of this Bill. The Government gave the matter consideration and the provision is now part of this Bill. I commend Deputy Murphy on bringing forward this matter.

The effect of the provision will be to enable any future general decreases, as well as increases, in Civil Service pay to be applied to the fund. However, the decreases that have occurred since 2008 would not be retrospectively implemented. While it is right that we are taking the opportunity to make this change, the gender balance provisions are the significant focus of Part 5. The programme for Government contains a commitment that "Public funding for political parties will be tied to the level of participation by women as candidates those parties achieve". The Bill gives effect to this commitment.

I will explain the thinking behind how and why the measures in the Bill were framed in this way. In developing the gender balance provisions we have had regard to experience in other jurisdictions. We have drawn upon models that have succeeded elsewhere, while having particular regard to Ireland's own legal and constitutional framework. The Government is particularly indebted to the work undertaken by the Oireachtas Joint Committee on Justice, Equality, Defence and Women's Rights and its 2009 report, "Women's Participation in Politics". The work of that joint committee has informed the design of the legislation that is now before us. I will quote directly from the summary of the findings at chapter five of the committee's report, which concludes:

It appears that the single most effective reform for women in Ireland would be the introduction of mandatory positive action measures through legislation requiring political parties to adopt gender targets or quotas in their candidate selection process. If such legislation were to be adopted in Ireland, its framing would be critical. In Belgium, for example, under the Smet-Tobback law, a maximum limit is placed on candidates of each gender, i.e. parties are penalised if more than two-thirds of their candidates are of one gender. This may be a better formula than provision for a minimum number of women candidates. A realistic sanction would also have to be imposed where political parties exceed the target prescribed, perhaps based on the French model of financial penalties.

As Deputies can see, a minimum representation of one third women and men was recommended in this report. We are starting with 30% and then moving to 40%. Since details of the Bill were published in June of last year, there has been a significant public debate on the gender balance provisions. In questioning the need for these measures, some have suggested that they may be unconstitutional. While I welcome the debate, I reject those views. To avoid any doubt, I want to state clearly that, in my view, the measures in this Bill are legally and constitutionally sound.

Part 5 will make the funding provided to political parties under the Electoral Act 1997 conditional on achieving a gender balance in the selection of candidates at a general election. Funding to political parties under the 1997 Act is provided by the Oireachtas to political parties under legislation and it is open to the Oireachtas to make the funding subject to conditions. The provision in the Bill is designed as an incentive mechanism to encourage political parties to apply a better gender balance in the selection of candidates. It is a proportionate response to address a significant weakness in Ireland's democratic system.

By contrast with the questioning of the constitutionality of this provision, others have pressed for a similar measure to be put in place for other elections and for local elections in particular. I agree with the principle that is informing this view. We need to encourage more women to stand in local elections and, indeed, in other elections. However, I am not in a position to apply similar gender balance measures to candidate selection at other elections. Funding provided to political parties under the Electoral Act 1997 is linked to performance at general elections. The amount paid is determined based on the percentage vote received at a general election. The reduction in funding paid to political parties that do not meet the new gender balance requirements will therefore be linked to the gender of candidates of political parties at general elections. There is no direct funding mechanism attached to local election candidates or to political parties and groups contesting local elections.

Nevertheless, while the measures will not formally apply at local elections, I expect that, in practice, political parties will act. At a minimum, parties preparing candidates for a general election are likely to select a more balanced ticket for local elections. There is a clear incentive for them to do so now. It can be anticipated that an increase in the number of women candidates at local elections would follow as a consequence of this legislation.

As regards the timing of the coming into effect of the provisions, I believe that the Bill adopts both an ambitious and pragmatic approach. This is particularly so when bearing in mind the baseline from which we are starting. The gender balance figure will increase from 30% to 40%, with a minimum of seven years allowed for this change to come into effect. When we debated the Bill in the Seanad, it was suggested that the 40% provision should come into force after a shorter time period or even from the start. I did not agree with those proposals at the time. I want to explain why and to describe the rationale behind the approach adopted in the Bill.

The starting figure of 30% is ambitious. At the general election held in February 2011, 86 of the 566 candidates who sought election were women, representing 15.19% of the total. When the Bill is passed the intended outcome will be to effectively double that figure to 30% participation within one general election cycle. Section 16 of the Electoral Act 1997 provides that payments made to political parties under the Act are based on the performance of political parties at the "last preceding general election". The change from 30% to 40% therefore has to be made with reference to the holding of a general election, rather than to a fixed time period only. Otherwise there is the potential for a situation to arise whereby both the 30% and the 40% gender balance provision could end up being used as a criterion for payments to political parties arising from the same general election. In the interests of fairness and to ensure compliance with the legislation, the Bill has to be very clear about when the change from 30% to 40% will apply. The formula that is used in the Bill achieves that clarity in a balanced and fair, yet ambitious, way. We also need to allow sufficient time for the measure to bed down and become effective. I would ask that anyone who seeks to criticise the Bill for not going far enough, should bear those points in mind.

I have no doubt that there is a commitment on all sides of this House to the principle of what is in the Bill. There is a balance to be struck, though, between providing leadership by championing a measure that some people may not agree with while at the same time ensuring the legislation we enact can work both in theory and practice. We have to lead but we must bring people with us. Equally, we have to be ambitious and must also be pragmatic. The Bill meets those challenges and achieves the right balance. We are transforming the face of politics for the participation of men and women, and we are aiming to do that in a relatively short period.

How politics is funded is fundamental to the fair and effective operation of our democratic system. In many areas of Irish life we have learned the valuable lesson in recent years that light and limited regulation is likely to have light and limited results. That is why in this Bill we have adopted a detailed and comprehensive approach. The current system is badly in need of reform.

This Bill responds to what the people have been telling us. Each Part of the Bill contains separate provisions that are significant in their own right. However, when taken together, they become greater than the sum of their parts. The combined effect of these measures will be to shift the funding of election campaigns and political activity towards smaller-scale contributions from individuals. In respect of this particular legislation, it is as if, in some respects, we are dealing with two Bills in one. The new gender balance requirements are equally significant in their own right. However, they sit very well with the political funding reforms that we are also introducing in the Bill. Both are about making our democratic system better, stronger and more equal.

I ask Members of the House to give the Bill the consideration it deserves as vital and reforming legislation. I commend the Bill to the House.

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