Is ExO One an Associated Entity?

Author: Max Kaye

As financial disclosure time is upon us the necessary question “Is ExO One an associated entity of The Flux Party?” must be asked. Indeed, the AEC have asked us as much, so I thought I’d take the time to publicly respond.

This is certainly a legitimate question, especially as ExO One used to be named The Flux Startup.

The AEC advises that an “associated entity under the Commonwealth Electoral Act 1918 (s287) means an entity:”

  1. that is controlled by one or more registered political parties; or
  2. that operates wholly or to a significant extent for the benefit of one or more registered political parties; or
  3. that is a financial member of a registered political party; or
  4. on whose behalf another person is a financial member of a registered political party; or
  5. that has voting rights in a registered political party; or
  6. on whose behalf another person has voting rights in a registered political party.

Let’s go through each one and examine whether it applies here, and if not, why not.

1. controlled by [The Flux Party]

ExO One is not controlled by The Flux Party. There is no formal agreement of any kind between the two, and neither constitution mentions the other entity.

Their operations are legally separate, and the only common factor is that Nathan Spataro and Max Kaye are the Leader and Deputy Leader of The Flux Party, and are also join CEOs of ExO One.

2. operates wholly or to a significant extent for the benefit of [The Flux Party]

ExO One does operate for reasons other than those around The Flux Party, so we should look at the meaning of “to a significant extent”. ExO One, being the primary donor to The Flux Party in the FY 15-16, does certainly benefit The Flux Party.

However, ExO One does not exist to a significant extent for the benefit of The Flux Party. The reasons are numerous:

  • ExO One aims to become a provider of Democracy as a Service to Australia and the world. A mission which, if successful, would mean the dissolution of The Flux Party and all other parties in Australia. If the main aim of ExO One implies The Flux Party would cease to exist, it hardly “operates … to a significant extent for the benefit of [The Flux Party]”.
  • ExO One aims to support many parties globally, an Australian federal party just happens to be the first. Thus, over it’s lifetime, a substantial part of ExO One’s operations might be to support various parties globally, but this is not restricted to any one party, or to The Flux Party.
  • ExO One and The Flux Party align heavily on their vision for democracy, however, if this vision were to differ, ExO One would not have any moral qualms about abandoning The Flux Party, and The Flux Party would seek to distance itself from ExO One (presumably). This hypothetical case might arise after Nathan and I have decentralized the leadership (as to not longer be directly involved) in the case of The Flux Party experiencing an ethical or cultural shift.
  • It could be argued that The Flux Party exists more for the benefit of ExO One than the other way around. After all, if The Flux Party is successful in its objectives some provider of Democracy as a Service will likely benefit, however, there is no guarantee that ExO One will be that provider. It is likely as ExO One is currently the only provider (globally) that produces software which fits the requirements of The Flux Party.

Most of these issues arise because the way the Electoral Act is worded is stateless. It talks about entities and their purpose. If, however, it was worded differently it would be possible that ExO One is classified as an associated entity. An example of such wording is “an entity whose operations in the applicable financial year where predominantly to the benefit of one or more registered political parties”. This is because, in the 15-16 financial year, ExO One’s operations for that period of time were to a significant extent to the benefit of The Flux Party. Even this requirement would shortly expire, though: if many parties around the globe began being supported through donations from ExO One (provided those donations aren’t heavily weighted towards the Australian chapter) these new words would fail to qualify ExO One. Even if the act was changed ExO One would out-grow these new definitions before they could take effect. ExO One is simply far more progress-oriented than our aging democratic institutions can handle.

The technology ExO One produces will benefit many more organizations than just The Flux Party, and thus it can never satisfy the clause “an entity that operates to a significant extent for the benefit of [The Flux Party]”. It operates for the benefit of all people, in all nations. Its purpose is to bring about the last democratic revolution, finally solving the last democratic impediments to progress.

3. that is a financial member of a registered political party

There are no financial members of The Flux Party, therefor ExO One is not a financial member. This also covers point 4.

5. that has voting rights in a registered political party

Currently only the leadership has voting rights in The Flux Party. That is, of course, not permanent but an artifact of The Flux Party’s young age. Since ExO One is not part of The Flux Party’s leadership, it does not satisfy this point or point 6.

Conclusion

It is now clear that ExO One satisfies none of the six possible defining features of an associated entity. We’ve also seen the changes that would need to take place before it would. In doing so we’ve laid out the explanation around exactly why ExO One is not an associated entity, setting the groundwork for any future investigation into exactly what the nature of the relationship between ExO One and The Flux Party is.

Final Notes

It is worth noting that the Electoral Act does not list ‘significant extent’ in the list of interpretations.

Also, I am not a lawyer, so this and all legal interpretations should come with a grain of salt.

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