High Court strikes down laws prohibiting donations to political parties and spending on election campaigns

Unions NSW v NSW [2013] HCA 58

The High Court held invalid recent changes to the NSW political donations and campaign expenditure laws.  The laws would have prohibited donations to political parties by any person not on the electoral roll, and where an overall cap on campaign spending by political parties otherwise applied, would have deemed expenditure on a campaign by ‘affiliated organisations’ of a political party (eg, unions) as being expenditure by that political party.

Background

The Election Funding, Expenditure and Disclosures Act 1981 (NSW) (the Act) imposes a cap on the amount that any political party, candidate for election, or any other person can spend in “electoral communication expenditure” in the six months leading up to an election.

The Election Funding, Expenditure and Disclosures Amendment Act 2012 (NSW) relevantly inserted ss 95G(6) and 96D into the Act.  Sub-section 95(6) required that, for the purpose of the cap on expenditure otherwise imposed by the Act, the electoral communication expenditure of an “affiliated organisation” of a political party was to be treated as expenditure by that political party.  An affiliated organisation was defined as one that could appoint delegates to the governing body of the political party or participate in the pre-selection of candidates for that party, or both.  Relevantly, this applied only to unions and the Australian Labor Party.  Section 96D provided that only (natural) persons enrolled to vote could make donations to political parties, candidates or third-party campaigners.

The decision

All of the Justices endorsed the two-stage analysis regarding the implied freedom of political communication: ask (1) does a law effectively burden the implied freedom; and (2) if yes, then ask: is the law appropriate and adapted to serve a legitimate end compatible with the constitutionally prescribed system of government?  If no, then the law will be invalid.

Chief Justice French, Hayne, Crennan, Kiefel and Bell JJ, delivering joint reasons, accepted that the Act overall had legitimate anti-corruption purposes.  Their Honours, considered however, that the central issue in this case was whether ss 95G and 96 had the necessary connection to those anti-corruption purposes.

The Honours endorsed the view of Hayne J in Monis v R; Droudis v R (2013) 295 ALR 259 that the process of determining the legitimate end of a law is one of statutory construction, attracting the same principles and subject to the same limitations.

Their Honours held that:

(1)  The terms of s 95G, and context surrounding it, did not reveal any purpose other than to restrict how much total expenditure could occur as between affiliated legal entities, which was not a purpose connected with the anti-corruption purposes of the Act.

(2)  The terms of s 96D, and the context surrounding it, did not reveal any purpose other than to prohibit the making of donations to political actors by those not enrolled to vote (including all incorporated persons).  This was not a purpose connected with the anti-corruption purposes of the Act.

Accordingly, as no other legitimate purpose or end could be discerned by a process of statutory construction, the laws failed at that stage and were invalid.  It was not necessary to consider whether the laws were appropriate and adapted, or proportionate, to any legitimate end – no legitimate end could be identified.

Justice Keane delivered separate reasons that concurred with the plurality in the result, although his Honour preferred an analysis that negatively answered the second question (the laws were not appropriate and adapted) based on the bluntness of the burden imposed on political communication.

Points of interest:

(1) The Court did not address the split that arose in Monis v R; Droudis v R regarding how to assess whether a law is appropriate and adapted to a legitimate end.

(2) A majority view now prevails that “the legitimate end” of a law is determined only by a process of statutory construction.

(3) To the extent that it might ever be relevant, the Court doubted whether a donation to a political actor, of itself, would amount to a political communication.

Impact of the decision

This decision establishes that legislative restrictions on donations to political actors, and restrictions on expenditure for political communication, are unlikely to be valid unless, by a process of statutory construction, a purpose for the law can be discerned that overall serves and not restricts, political communication.

More broadly, the decision indicates that any restriction on a core political activity may be invalid unless a purpose for that restriction can be identified with precision.  To that end, the Court may have invited a challenge to laws that impose overall caps on political donations and spending, and that prohibit donations by certain kinds of individuals and organisations (eg, building developers, and those with gaming, liquor and tobacco interests).

Angel Aleksov – CommBar profile