In Unions NSW v NSW [2013] HCA 58, the High Court unanimously held in a 6:0 judgment that NSW election funding laws are invalid because they breach the implied freedom of political communication in the Commonwealth Constitution. Holding Redlich represented Unions NSW and the five NSW unions that successfully challenged the legislation. The laws, which were introduced by the O'Farrell government and passed by the NSW Parliament in 2012, prohibit political donations by anyone other than an individual on the electoral roll, and aggregate expenditure by affiliates of a political party with the expenditure of that political party for political expenditure cap purposes.
Background
The case concerned the validity of particular provisions of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) (EFED Act) as amended by the Election Funding, Expenditure and Disclosures Amendment Act 2012 (NSW) (Amendment Act). The Amendment Act introduced provisions into the EFED Act that had the effect of:
- prohibiting persons or entities which are not enrolled on the New South Wales electoral roll (such as corporations, unions and community bodies) from making political donations to political parties, groups, candidates, members and third-party campaigners (section 96D); and
- aggregating "electoral communication expenditure" incurred by a political party with any electoral communication expenditure incurred by affiliated organisations of that political party (sections 95F, 95G(6) and 95I).
The Plaintiffs sought declarations that sections 95G(6) and 96D of the EFED Act were invalid because, among other things, they impermissibly burdened the implied freedom of political communication in the Commonwealth Constitution.
Factors to be considered by the Court – the Lange test
All members of the Court accepted that the test to apply to determine the validity of a law in light of the implied freedom of political communication is the 2-step test established in Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 (Lange Test) as modified by Coleman v Power (2004) 220 CLR 1. A law will be invalid under the Lange Test if:
- the law effectively burdens freedom of communication about government or political matters either in its terms, operation or effect; and
- the law is not reasonably appropriate and adapted to serve a legitimate end in a manner which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government.
The validity of section 96D
- Is it an effective burden?
The Court upheld the Plaintiffs' submission that s 96D burdens political communication by limiting the sources of funds otherwise available to political parties, candidates and third-party campaigners to engage in political communication. In the majority judgment delivered by French CJ, Hayne, Crennan, Kiefel and Bell JJ (Majority), their Honours held that s 96D restricts the 'funds available to political parties and candidates to meet the costs of political communication by restricting the source of those funds'. The Majority noted that the public funding provided by the EFED Act was not equivalent to the amount which may be paid by way of electoral communication expenditure under the EFED Act and, as it was not suggested that a party or candidate is likely to spend less than the maximum allowed, the party or candidate would therefore bear the burden of funding the gap ([38]).
- Is the law reasonably and appropriately adapted to achieving a legitimate end?
The Court accepted that the legitimate aim of the EFED Act is to regulate the acceptance and use of political donations in order to address the possibility of undue or corrupt influence being exerted. The State of NSW, however, was not able to explain how the selectively targeted prohibitions effected by s 96D were connected to the purposes of the EFED Act, let alone how they could further them ([54)].
The Majority judgment found that 'it is not evident, even by a process approaching speculation, what s 96D seeks to achieve by effectively preventing all persons not enrolled as electors, and all corporations and other entities, from making political donations' ([56]). Consequently, the Court found that the burden imposed by s 96D on the freedom was not reasonably and appropriately adapted to achieving a legitimate end and was therefore invalid.
The validity of section 95G(6)
- Is it an effective burden?
The State of NSW conceded, which concession the Court accepted, that s 95G(6) burdens the freedom of political communication by restricting the amount that a political party may incur by way of electoral communication expenditure in a relevant period ([61] Majority; [163] (Keane J)).
- Is the law reasonably and appropriately adapted to achieving a legitimate end?
The Majority inferred that the purpose of s 95G(6) was 'to reduce the amount which a political party affiliated with industrial organisations may incur by way of electoral communication expenditure and likewise to limit the amount which may be spent by an affiliated industrial organisation' ([64]). However, their Honours were not satisfied how this purpose could be connected to the wider anti-corruption purposes of the EFED Act, or how those legitimate purposes are furthered by the operation and effect of s 95G(6) and so concluded that the provision lacked a legitimate end and was therefore invalid. Similarly, Justice Keane held that the provision was invalid, finding that the effect of ss 95G(6) and 95G(7) treated certain sources of communication differently, which would distort the free flow of political communication. His Honour concluded that the distortion of political communication could not be regarded as appropriate and adapted to enhance or protect the free flow of political communication ([167]-[168]) within Australia.
The Court unanimously held that sections 95G(6) and 96D of the EFED Act are invalid, and ordered the defendant to pay the plaintiffs' costs.
Holding Redlich and Australian Corporate Lawyers
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