Posted on December 21, 2013 by Megan Hawley

High Court strikes down restrictions on political donations

On 18 December 2013, the High Court declared invalid two provisions of the NSW Election Funding, Expenditure and Disclosures Act 1981 (EFED Act) seeking to limit the making of political donations and electoral communication expenditure. This raises the question of whether the provisions of the Environmental Planning & Assessment Act 1979 (EPA Act) regarding the reporting of political donations could be considered to be at risk .

In Unions NSW v New South Wales [2013] HCA 58, the High Court considered:

  • s96D of the EFED Act which purported to make it unlawful for a political donation to be accepted unless the donor was an individual  enrolled to vote; and
  • s96G(5) of the EFED Act which required election expenditure by a party and an ‘affiliated organisation’ to be considered together for the purposes of the cap on such expenditure in the legislation.

The unions clearly had an interest in having the provisions struck down, as s96D would prevent a union from making a political donation, and also certain unions would be considered under the EFED Act to be an ‘affiliated organisation’ in respect of the Australian Labor party, such that election expenditure by those unions and the Labor Party would be added together for the purposes of determining whether the cap on election expenditure was breached.

The High Court, in a joint judgment, held both provisions to be invalid because they impermissibly burden the implied freedom of communication on governmental and political  matters, contrary to the Commonwealth Constitution.

The Court held that the freedom of communication was burdened by a restriction on who can make political donations, as the funds available to political parties and candidates to meet the costs of political communication is thereby restricted. The freedom is also burdened by adding expenditure by unions to that of the Labor party, as again this restricts the amount that a political party may expend on electoral communication.

Having established that both provisions burdened the freedom of communication, the next question for the Court was whether the provisions were reasonably appropriate and adapted to serve a legitimate statutory purpose which was compatible with the maintenance of the prescribed system of representative government.

In respect of s96D, the High Court found that the only purpose for the provision which could be found from the EFED Act was the purpose of not accepting donations other than from persons enrolled to vote. The Court found that the provision did not further the anti-corruption purposes of the EFED Act.

As there was no discernable legitimate purpose for the provision, it was not possible to determine whether the provision was reasonably appropriate and adapted to serve such a purpose, and as a result the provision was invalid.

Similarly, the Court could not discern how the purpose of s95G(2), which it considered to be reducing the amount that a party affiliated with a union could spend on election communications, furthered the anti-corruption purposes of the EFED Act.

Again, the provision was therefore held to be invalid.

The decision raises the issue of whether the provisions in the Environmental Planning & Assessment Act 1979 regarding reporting of political donations, are valid. This was not an issue in the case.

However, the distinction between the EPA Act provisions and the relevant EFED Act provisions is clear. The EPA Act imposes no restriction on the making of political donations or expenditure on election or political communications. It is simply directed at reporting of donations. The object of the provisions is to minimise the perception of undue influence by ensuring disclosure of donations, so that appropriate decisions can be made about who should determine planning applications (see s147(1) of the EPA Act).

It is difficult to see how the reporting obligations in the EPA Act could restrict the funding available to political parties, and therefore constitute a burden on the freedom of communication on governmental and political matters enshrined by the Constitution.

Even if the provisions of the EPA Act  did have that affect (perhaps by discouraging donations by organisations or individuals wishing to keep their donations anonymous)  it could be argued that the provisions are a reasonable response to concerns about transparency in the decision making process, and that the clear purpose of the provisions is compatible with the maintenance of the system of representative government.

My view is therefore that the reporting obligations in the EPA Act should not be at risk as a result of this decision.