If you’ve ever been to Australia, or are familiar with Australian politics, there is a good chance that you have heard the catch cry of the ‘fair go.’ For our non-Australian audience, this can be roughly translated to ‘equality of opportunity for all Australians’. As we all know, in the United States freedom of speech sits at the apex of the US Constitution. Although they are both admirable values, the circumstances of McCloy v New South Wales[1] tasked the High Court to answer the question: what is the right balance between equality and liberty?

Background

The case involved a challenge to the Election, Funding and Disclosure Act 1981 (NSW) (‘the Act’) by the plaintiff, Jeff McCloy, former Mayor of Newcastle and property developer. The plaintiff had been investigated by the New South Wales Independent Corruption and Crime Commission (ICAC) regarding political donations made to the NSW Liberal Party. These investigations led to the resignation of several of his party colleagues in the area.

The Act prohibits donations by property developers and alcohol and tobacco companies to NSW political parties at a local or state level[2] (’prohibited donations’). It also caps any donations to NSW state politicians at $5,000[3] (‘caps’). The rationale behind these provisions (which were introduced by the former NSW Labor government in the wake of its own corruption scandal) is to provide for equal and access to politicians for everyone, regardless of how deep their pockets.

There is no First Amendment equivalent found in the Australian Constitution. Instead, the plaintiff alleged that the provisions in the Act which prohibited donations and imposed caps were invalid because they impermissibly infringed on the freedom of political communication on government and political matters which has been implied into the Constitution by the High Court (‘the freedom’).

The Test

The majority of the High Court used a 3-stage process[4] to test whether the impugned law infringed the freedom.[5] The test can be summarised as follows:

If a law is shown to burden the freedom in its terms, operation or effect then, to be valid, the law must:

  • be compatible to the maintenance of the constitutionally prescribed system of representative government; and
  • be proportionate (in the sense of being reasonably appropriate and adapted to advance the legitimate object of that law).

The proportionality question involves a consideration of the suitability, necessity andadequacy of balance of the law.

All seven High Court Justices found that the freedom was burdened. However using this test, the majority (French CJ, Kiefel, Bell and Keane JJ in a joint judgment, Gageler J and Gordon J) rejected the plaintiff’s contentions and held that none of the provisions were invalid. Nettle J held that prohibited donations sections were invalid.

A distinctly Australian approach

The majority of the High Court rejected the plaintiff’s attempt to assert an individual, First Amendment-style right. They opined that the plaintiff’s argument “mistakenly equate[d] the freedom under our Constitution with an individual rights such as is conferred by the First Amendment of the United States Constitution, which operates in the field of political donations and is in the nature of both a right of political expression and a right of political association.”[6]

Instead of framing the legitimacy of a law based on individual rights, the High Court followed the egalitarian approach established in the Australian Capital Television Case[7] which struck down legislation that did not give equality of access to television and radio to all candidates of political parties. [8]

It wasn’t open to the plaintiff to seriously argue against the legitimacy the Act, since a challenge to the Act had been previously rejected by the High Court in Unions NSW[9]  where it was found that the Act served a legitimate anti-corruption purpose.

Instead, the plaintiff attempted to draw on United States’ jurisprudence to narrow the meaning of corruption and argue the law was invalid on the compatibility and proportionality grounds. However, in this case the High Court distanced itself from the United States Supreme Court which recently confined the meaning of ‘corruption’ to quid pro quo corruption in the context of political donations. [10]  The High Court did not agree that buying influence through donations did not amount to corruption.[11]

Far from agreeing with the plaintiff, the High Court said that the purpose of the caps on donations imposed by the Act “are not only compatible with the system of representative government; they enhance and preserve it.”[12]

NSW property developers beware

Although other States and Territories have experimented with caps in the past, bans on political donations by property developers are unique to NSW.[13] It does not appear that other Australian jurisdictions are likely to follow NSW and ban donations from property developers in the near future. Such provisions in the Act were made to respond to the incidence of property developers in NSW who sought to influence their self-interest, in the wake of eight adverse ICAC reports concerning land development applications in the last two decades.[14]

Now that the High Court has confirmed the validity of those laws banning property developer donations in NSW, it is likely that they are here to stay. Since the vast majority of planning decisions are made at the local government level, it is expected that the caps on political donations will be expanded down the chain to restrict donations made to local government elections and local government candidates.[15]