The High Court’s decision to strike down Premier Barry O’Farrell’s political finance reforms comes as no surprise. The writing was on the wall after they received a hostile reception at a hearing in November. What was unexpected was how the court reached this result.
It was argued by Unions NSW that the law breached the implied freedom of political communication in the Australian Constitution. This freedom was first recognised in 1992, when the High Court struck down a law banning electronic advertising during election periods.
Barry O'FarrellCredit: John Veage
The freedom means that laws can only restrict political communication if they are proportionate to achieving a legitimate purpose, such as public safety or preventing corruption. Where no adequate justification exists, laws are struck down as being inconsistent with the Constitution.
The implied freedom appears to have a broad reach, but in fact has been a weak protector of freedom of speech. Repeated attempts to invoke the protection have failed. The High Court has only applied the freedom to strike down two laws in the past 21 years, the first being in 1992, and the second today.
In the Unions NSW case, the High Court declared two sections of the NSW Election Funding, Expenditure and Disclosures Act invalid. Both were inserted in early 2012 after the O’Farrell government gained the support of Greens members in the NSW upper house.
Section 96D made it unlawful for a candidate, party or other body engaged in NSW or local government elections to accept a political donation, unless the donation had been made by a person registered to vote. This banned all political donations by corporations, unions and other organisations.
The High Court held that the implied freedom had been burdened because the law restricted the funds available to parties and candidates to make political communications. It then turned to whether this burden could be justified as a reasonable means of addressing a legitimate purpose. It was here that the provision met its end. In a fatal blow, a NSW submission that the law sought to prevent corruption was rejected.
The High Court held that there was no such purpose to the ban, and thus that it was a burden on political communication without a justification. The court described the purpose of the section as being ‘inexplicable’, and struck it down.
Section 95G(6) was also held invalid. The section restricted the amount that a political party might spend on electioneering. It did so by including within the party’s maximum allowed expenditure any other expenditure made separately by unions (and other organisations) affiliated with the party.
This directly affected the Australian Labor Party. It meant that that the party had its maximum electoral expenditure reduced by whatever was spent by its affiliated unions. The High Court struck down this clause again on the basis that it was not possible to see how the provision furthered an anti-corruption purpose.
The High Court’s decision was emphatic, but also problematic. The laws were constitutionally troubling, and might have been struck down on a different ground.
One member of the court, Justice Patrick Keane, took a different approach. He held the laws invalid because they distorted the flow of political communication by favouring some groups over others. This was a more convincing argument than finding no connection between banning corporate and other donations and political corruption.
In this respect, the High Court decision is strikingly at odds with public debate. It has long been recognised that Australia’s system of financing politics and electioneering is broken, and invites corruption. The demand by candidates and parties for large sums of money leaves them vulnerable to corporate and other donors willing to give money in return for access and influence. The recent, sorry history of NSW politics provides many examples of this.
The High Court majority failed to recognise any link between limits on who can make donations and attempts to clean up the political process. The laws were flawed, but this approach was a weak foundation upon which to rest the outcome of the case.
George Williams is the Anthony Mason Professor of law at the University of New South Wales