Unions NSW v New South Wales [2013] HCA 58 | Case summary

KEANE J. In 2012 amendments were made to the Election Funding, Expenditure and Disclosures Act 1981 (NSW) ("the EFED Act") to impose restrictions on political donations, and limits upon expenditure, in relation to elections to the New South Wales Parliament. In these proceedings, the plaintiffs challenge the validity of: . s 96D, which proscribes political donations to political parties by corporations, industrial associations and individuals who are not on the roll of electors for State, federal or local government elections; and . s 95G(6), which aggregates a political party's expenditure on electoral campaign funding with the expenditure incurred by that party's affiliates for the purposes of determining whether a political party has exceeded the applicable cap on electoral campaign expenditure. Pursuant to s 18 of the Judiciary Act 1903 (Cth), questions as to the validity of these provisions were reserved by order of the Chief Justice for the determination of the Full Court. The material facts are set out in the Special Case agreed by the parties. The plaintiffs submitted that s 96D and s 95G(6) impermissibly burden political communication contrary to the Constitution. For the reasons that follow, that submission should be accepted, and the questions reserved for determination by the Court should be answered accordingly. The plaintiffs also argued that the impugned provisions of the EFED Act infringe a limitation on freedom of political communication implied by the Constitution Act 1902 (NSW), and that they are invalid under s 109 of the Constitution by reason of their inconsistency with electoral laws of the Commonwealth. Because the plaintiffs' principal submission should be accepted, it is unnecessary to deal with these additional arguments. The impugned provisions Sections 96D and 95G(6) are contained in Pt 6 of the EFED Act. Section 83 states that Pt 6 "applies in relation to: (a) State elections and elected members of Parliament, and (b) local government elections and elected members of councils". The provisions of Pt 6 deal with four related topics: the disclosure of political donations and electoral expenditure; the capping of political donations; the proscription of political donations by certain persons; and the capping of expenditure on election campaigns. Some brief reference to the provisions of the EFED Act relating to each of these topics, as well as to the provisions of Pt 5 relating to public funding of State election campaigns, is necessary for an appreciation of the arguments agitated by the parties. Disclosure In Div 2 of Pt 6, s 88(1)(a) provides for disclosure of "political donations received or made, and electoral expenditure incurred, by or on behalf of … a party (whether or not a registered party)". Section 88(1A) provides that disclosure is also required of "electoral communication expenditure incurred by a third‑party campaigner" during the "capped expenditure period" of the electoral cycle (defined by s 95H of the EFED Act), and "political donations received by [a] third‑party campaigner during the relevant disclosure period". The expression "political donation" is defined by s 85 to include "a gift made to or for the benefit of" a party, an elected member, a candidate or a group of candidates; and "[a]n amount paid by a person as a contribution, entry fee or other payment to entitle that or any other person to participate in or otherwise obtain any benefit from a fund‑raising venture or function". Section 85(1)(d) includes within the definition of "political donation": "a gift made to or for the benefit of an entity or other person (not being a party, elected member, group or candidate), the whole or part of which was used or is intended to be used by the entity or person: (i) to enable the entity or person to make, directly or indirectly, a political donation or to incur electoral expenditure, or (ii) to reimburse the entity or person for making, directly or indirectly, a political donation or incurring electoral expenditure." Section 85(3) provides that the term "political donation" includes an "annual or other subscription paid to a party", either by a "member of the party", or by "a person or entity (including an industrial organisation) for affiliation with the party". Section 85(3A)(a) provides that "a disposition of property to a NSW branch of a party from the federal branch of the party" is taken to be a gift for the purposes of s 85. The term "party" is defined by s 4(1) of the EFED Act to mean: "a body or organisation, incorporated or unincorporated, having as one of its objects or activities the promotion of the election to Parliament or a local council of a candidate or candidates endorsed by it or by a body or organisation of which it forms a part." The term "third‑party campaigner" is defined by s 4(1) of the EFED Act to mean: "an entity or other person (not being a registered party, elected member, group or candidate) who incurs electoral communication expenditure during a capped expenditure period … that exceeds $2,000 in total." The term "registered party" is defined by s 4(1) to mean a "party registered ... for the purposes of" the EFED Act. Donations Section 95B(1) provides that it is "unlawful ... for a person to accept a political donation to a party, elected member, group, candidate or third-party campaigner if the donation exceeds the applicable cap on political donations." The proscription in s 95B(1) is directed at the receipt of money for the purposes of electoral campaigns for State Parliament. Section 95B(2) provides that the capping of donations does not apply to political donations "to be paid into (or held as an asset of) an account kept exclusively for the purposes of federal or local government election campaigns." This point is reinforced by s 95AA(2), which provides that a reference in Div 2A "to an election is a reference that relates to a State election"; and a reference "to an elected member, or to a candidate or other person is a reference that relates to a member of [the New South Wales] Parliament or to a candidate or other person in connection with a State election." Section 95A prescribes the applicable caps on political donations. It is sufficient to note that s 95A(1) provides that: "The applicable cap on political donations is as follows: (a) $5,000 for political donations to or for the benefit of a registered party, (b) $2,000 for political donations to or for the benefit of a party that is not a registered party, (c) $2,000 for political donations to or for the benefit of an elected member, (d) $5,000 for political donations to or for the benefit of a group, (e) $2,000 for political donations to or for the benefit of a candidate, (f) $2,000 for political donations to or for the benefit of a third‑party campaigner." Section 95A(4) provides that "a candidate's contribution to finance his or her own election campaign is not a political donation and is not included in the applicable cap on political donations to the candidate." Proscribed political donations Section 96D provides as follows: "(1) It is unlawful for a political donation to a party, elected member, group, candidate or third-party campaigner to be accepted unless the donor is an individual who is enrolled on the roll of electors for State elections, the roll of electors for federal elections or the roll of electors for local government elections. (2) It is unlawful for an individual to make a political donation to a party, elected member, group, candidate or third-party campaigner on behalf of a corporation or other entity. (3) It is unlawful for a corporation or other entity to make a gift to an individual for the purpose of the individual making a political donation to a party, elected member, group, candidate or third-party campaigner. (4) Annual or other subscriptions paid to a party by a person or entity (including an industrial organisation) for affiliation with the party that are, by the operation of section 85(3), taken to be gifts (and political donations to the party) are subject to this section. Accordingly, payment of any such subscription by an industrial organisation or other entity is unlawful under this section. (5) Dispositions of property between branches of parties or between associated parties that are, by the operation of section 85(3A), taken to be gifts (and political donations to the parties) are not subject to this section." It may be noted that, notwithstanding ss 85, 96D(5) and 95AA(2), the proscriptions in sub‑ss (1) to (4) of s 96D apply to donations to political parties which have federal branches. It should also be noted that Div 4A of Pt 6 makes it unlawful for a "prohibited donor" - namely "a property developer", "a tobacco industry business entity", or "a liquor or gambling industry business entity" - to make a political donation. Expenditure Section 95I(1) provides that: "It is unlawful for a party, group, candidate or third-party campaigner to incur electoral communication expenditure for a State election campaign during the capped expenditure period for the election if it exceeds the applicable cap on electoral communication expenditure." Section 87(1) of the EFED Act defines "electoral expenditure" as "expenditure for or in connection with promoting or opposing, directly or indirectly, a party or the election of a candidate or candidates or for the purpose of influencing, directly or indirectly, the voting at an election." Section 87(2) defines "electoral communication expenditure" as "electoral expenditure" of the following kinds: "(a) expenditure on advertisements in radio, television, the Internet, cinemas, newspapers, billboards, posters, brochures, how-to-vote cards and other election material, (b) expenditure on the production and distribution of election material, (c) expenditure on the Internet, telecommunications, stationery and postage, (d) expenditure incurred in employing staff engaged in election campaigns, (e) expenditure incurred for office accommodation for any such staff and candidates (other than for the campaign headquarters of a party or for the electorate office of an elected member), (f) such other expenditure as may be prescribed by the regulations as electoral communication expenditure". It is to be noted that, by virtue of the definitions of "electoral expenditure" and "electoral communication expenditure", the proscription of electoral communication expenditure in excess of the cap is a proscription of expenditure which is directly connected with political communication. Section 95F, together with s 95G, states the applicable caps on electoral communication expenditure for State election campaigns. It is not necessary to set out s 95F in full. It is sufficient to note that: "(2) Parties with Assembly candidates in a general election For a State general election, the applicable cap for a party that endorses candidates for election to the Assembly is $100,000 multiplied by the number of electoral districts in which a candidate is so endorsed. … (6) Party candidates in Assembly general election For a State general election, the applicable cap for a candidate endorsed by a party for election to the Assembly is $100,000. … (10) Third‑party campaigners For a State general election, the applicable cap for a third‑party campaigner is: (a) $1,050,000 if the third‑party campaigner was registered under this Act before the commencement of the capped expenditure period for the election, or (b) $525,000 in any other case. … (12) Additional cap for individual Assembly seats The applicable cap for parties and third‑party campaigners is subject to an additional cap (within the overall applicable cap) in relation to State general elections, or by‑elections in more than one electorate, for electoral communication expenditure incurred substantially for the purposes of the election in a particular electorate, being: (a) in the case of a party - $50,000 in respect of each such electorate, or (b) in the case of a third‑party campaigner - $20,000 in respect of each such electorate. (13) For the purposes of subsection (12), electoral communication expenditure is only incurred for the purposes of the election in a particular electorate if the expenditure is for advertising or other material that: (a) explicitly mentions the name of a candidate in the election in that electorate or the name of the electorate, and (b) is communicated to electors in that electorate, and (c) is not mainly communicated to electors outside that electorate." Sub‑sections (1) and (2) of s 95G provide for the aggregation of electoral communication expenditure by associated political parties, that is to say, parties which: . endorse the same candidate for a State election, or . endorse candidates included in the same group in a periodic Council election, or . form a recognised coalition. Section 95G(6) provides that electoral communication expenditure of political parties and organisations affiliated with them is to be aggregated, thereby limiting the amount of electoral communication expenditure able to be incurred in total by the party and the affiliated organisation. Sub‑sections (6) and (7) of s 95G provide: "(6) Aggregation of expenditure of parties and affiliated organisations Electoral communication expenditure incurred by a party that is of or less than the amount specified in section 95F for the party … is to be treated as expenditure that exceeds the applicable cap if that expenditure and any other electoral communication expenditure by an affiliated organisation of that party exceed the applicable cap so specified for the party. (7) In subsection (6), an affiliated organisation of a party means a body or other organisation, whether incorporated or unincorporated, that is authorised under the rules of that party to appoint delegates to the governing body of that party or to participate in pre-selection of candidates for that party (or both)." Public funding Part 5 of the EFED Act establishes an "Election Campaigns Fund" ("the Fund") to be kept by the Election Funding Authority of New South Wales in respect of State elections. The evident purpose of Pt 5 is to reduce the dependence of political parties on funding from private sources. Section 57 provides for the circumstances in which a party will be eligible to receive a payment in respect of State or local government elections out of the Fund. Eligible parties and candidates are entitled to receive public funding proportionate to their "actual expenditure", which is defined as "the total actual electoral communication expenditure incurred" by a party or candidate. The amounts are as follows: . For an "eligible Assembly party", up to 75% of its electoral communication expenditure cap. . For party candidates for the Assembly, up to 30% of their electoral communication expenditure cap. . For Assembly independent candidates, up to 45% of their electoral communication expenditure cap. The validity of s 96D The plaintiffs' challenge to the validity of s 96D was advanced on two bases: first, that a political donation is itself a form of political communication which may not be prohibited; and secondly, that the prohibition on political donations by individuals who are not on the electoral roll as well as corporations and other entities such as industrial organisations is an impermissible burden upon the freedom of political communication within the federation. Donation as communication The plaintiffs submitted that making a political donation constitutes a political communication on the basis that "actions as well as words can communicate ideas." Decisions of the United States Supreme Court were cited by the plaintiffs to support the propositions that, from the perspective of the donor, a political donation "serves as a general expression of support for the candidate and his views", and from the point of view of the donee, the acceptance of a donation is an expression of the willingness of a candidate to be associated with, and to accept the support of, the donor. Thus, in Colorado Republican Federal Campaign Committee v Federal Election Commission, Thomas J observed: "Whether an individual donates money to a candidate or group who will use it to promote the candidate or whether the individual spends the money to promote the candidate himself, the individual seeks to engage in political expression and to associate with like‑minded persons." In relation to sub‑ss (1), (3) and (4) of s 96D, the plaintiffs relied upon Citizens United v Federal Election Commission to argue that political communications by corporations and industrial organisations should not be treated differently from those of enrolled voters simply because such organisations are not natural persons entitled to vote. This ground of the plaintiffs' challenge to the validity of s 96D should be rejected for reasons which reflect a substantial difference in the constitutional arrangements of the Commonwealth and the United States. The First Amendment to the United States Constitution provides that "Congress shall make no law … abridging the freedom of speech". The First Amendment guarantees a right of free speech. It is a personal right to express one's views on any topic, whether that be to participate in the market place of ideas or to pursue the self‑realisation involved in the free expression of one's views. In light of the decision in Citizens United, it seems that this personal right extends to corporations as well as natural persons. The United States decisions shed little direct light on the path to the resolution of the issues of concern here. That is hardly surprising, given that, as Heydon J noted in Monis v The Queen, "the framers of [the Constitution], after carefully examining the United States Constitution, deliberately decided not to transpose its First Amendment, either in whole or in part." In Australia, the limitation upon governmental power arises from ss 7, 24, 64 and 128 of the Constitution as a matter of necessity to ensure their effective operation. In Lange v Australian Broadcasting Corporation, this Court explained that: "ss 7 and 24 and the related sections of the Constitution necessarily protect that freedom of communication between the people concerning political or government matters which enables the people to exercise a free and informed choice as electors." The text of the relevant sections of the Constitution should be noted to make the point that political communication within the federation is free in order to ensure the political sovereignty of the people of the Commonwealth, who are required to make the political choices necessary for the government of the federation and the alteration of the Constitution itself. Section 7 of the Constitution provides relevantly in relation to the composition of the upper house of the Commonwealth Parliament that: "The Senate shall be composed of senators for each State, directly chosen by the people of the State, voting, until the Parliament otherwise provides, as one electorate." Section 24 provides relevantly in relation to the composition of the lower house that: "The House of Representatives shall be composed of members directly chosen by the people of the Commonwealth". Section 64 provides for the appointment of Ministers of State for the Commonwealth, and relevantly that: "no Minister of State shall hold office for a longer period than three months unless he is or becomes a senator or a member of the House of Representatives." Section 128 provides the sole means of altering the Constitution, and relevantly that: "The proposed law for the alteration [of the Constitution] … shall be submitted in each State and Territory to the electors qualified to vote for the election of members of the House of Representatives." The limitation on governmental power which is indispensable to the effective operation of these provisions of the Constitution does not create a personal right akin to that created by the First Amendment to communicate in any particular way one might choose. In Monis, Crennan, Kiefel and Bell JJ explained: "Sections 7 and 24 of the Constitution do not … confer personal rights on individuals; rather they preclude the curtailment of the protected freedom by the exercise of legislative or executive power." (footnote omitted) The Constitution does not guarantee that those who wish to express their support for a candidate by making a donation may express themselves in that particular way. As Hayne J observed in APLA Ltd v Legal Services Commissioner (NSW): "in deciding whether the freedom has been infringed, the central question is what the impugned law does, not how an individual might want to construct a particular communication". Accordingly, one may say that, if s 96D is not an effective burden on political communication within the federation, the circumstance that it prevents a supporter of a candidate or party from expressing that support by making a political donation will not render it invalid. As Brennan J said in Australian Capital Television Pty Ltd v The Commonwealth ("ACTV"): "[T]he extent of any relevant limitation of legislative power is the scope of the relevant freedom. But, unlike freedoms conferred by a Bill of Rights in the American model, the freedom cannot be understood as a personal right the scope of which must be ascertained in order to discover what is left for legislative regulation". Section 96D leaves open many (and more explicit) ways for support for a candidate or party to be expressed by those minded to do so other than by the making of a donation. Section 96D proscribes the making of donations, not publicising the support which the making of donations might be taken to imply. Viewed from the perspective of the donor, the proscription hardly seems a significant restriction upon the donor's ability to express support for a candidate or political party. But that is not the relevant perspective from which to consider the issue. The constitutionally protected interest is that of the people of the Commonwealth in the free and informed exercise of the political choices required of them by ss 7, 24 and 128 of the Constitution; and the relevant question is whether the flow of pertinent information to and from them might be diminished by a restriction upon the making of political donations. How that question is to be answered does not depend on the proposition that a political donation is a form of political expression by the donor. Disfavoured donations The plaintiffs' challenge to the validity of s 96D on the ground that it proscribes political donations by certain classes of donor requires consideration of two broad and related issues: first, as already noted, whether s 96D impermissibly burdens the freedom of political communication within the federation; and, secondly, whether the provisions of the EFED Act which purport to confine its operation to State and local government elections preserve its proscriptive effect, notwithstanding the freedom of political communication within the federation. This second issue will be referred to as the "quarantine question". As to the first of these issues, the decision of this Court in Lange established the framework for analysis of whether a law of the Commonwealth, a State or a Territory is invalid as impermissibly trenching upon the freedom of communication derived from ss 7, 24, 64 and 128 of the Constitution. This framework was modified in Coleman v Power; but it remains convenient to refer to it as "the Lange test". It was most recently accepted as authoritative in the decisions of this Court in Hogan v Hinch, Wotton v Queensland and Monis. In the present case, no party or intervener sought to call into question the authority of the Lange test. A law will be invalid under the Lange test if: (a) the law effectively burdens freedom of communication about government or political matters either in its terms, operation or effect, and (b) it is not reasonably appropriate and adapted to serve a legitimate end the fulfilment of which is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government and the procedure prescribed by s 128 for submitting a proposed amendment of the Constitution to the informed decision of the people. The arguments of the parties in relation to each limb may conveniently be summarised and considered in turn. An effective burden? The plaintiffs submitted that s 96D effectively burdens political communication by limiting the sources of funds otherwise available to political parties, candidates and third‑party campaigners to engage in political communication and by discriminating between those sources. The plaintiffs noted that the facts agreed in the Special Case establish that the greater part of the donations to the major political parties in the period from 1 July 2008 to 30 June 2011 were not from individuals. The plaintiffs also noted that the provisions for public funding pursuant to Pt 5 of the EFED Act were enacted prior to the introduction of the prohibition in s 96D and so cannot be seen as in some way "offsetting" the reduction in donations in consequence of s 96D. In any event, Pt 5 of the Act provides for only partial reimbursement of electoral communication expenditure. The defendant submitted that s 96D imposes no effective burden on political communication, in that s 96D does not restrict any communication by the entities or persons that it prohibits from making political donations voicing support for, or opposition to, any party or candidate or any of their policies. Ironically, the defendant's submission, echoing the plaintiffs' reliance on the First Amendment, replicates the confusion of a personal right of individual expression with the free flow of political communication within the federation. The question whether political communication is effectively burdened is not answered in the negative by the circumstance that an individual is permitted to "construct a particular communication". The issue is as to the effect of the proscriptions upon the free flow of political communication within the federation. And whether the proscriptions burden that flow is not a complicated question. As to the first limb of the Lange test, in Monis Hayne J said that: "[t]he expression 'effectively burden' means nothing more complicated than that the effect of the law is to prohibit, or put some limitation on, the making or the content of political communications." Given that the evident purpose of s 96D is to limit the funds available to political campaigns, there is an air of unreality about the defendant's contention that s 96D does not burden political communication or that its effect is not substantial. Section 96D proscribes political donations by corporations, entities including industrial associations, and individuals other than enrolled electors. The facts agreed in the Special Case establish the importance of funding from corporations and industrial associations to campaigning. Campaigning is an essential aspect of political communication. Further, the provisions of Pt 5 of the EFED Act in relation to the Fund do not provide for the full reimbursement of the funds devoted to campaigning. No doubt some political communication occurs without the need for payment; but, equally, there can be no doubt that a restriction on the availability of donations will substantially diminish the extent of political communication. That being so, it is necessary, under the Lange framework, to turn to consider whether the burden is "reasonably appropriate and adapted to serve a legitimate end in a manner that is compatible with the maintenance of the constitutionally prescribed system of government and the freedom of political communication which is its indispensable incident." Appropriate means adapted to a legitimate end compatible with the freedom of political communication The defendant submitted that s 96D is part of a regulatory scheme directed to protecting the integrity of the State electoral and governmental system. That end was said to be not only compatible with, but supportive of, representative democracy. In the course of oral argument, counsel for the defendant elaborated upon this submission, arguing that, for the purposes of the second limb of the Lange test, the ends pursued by s 96D were: first, a step towards the absolute prohibition of donations to political parties; and, secondly, the alleviation of concerns as to secret or undue influence by donors over candidates and parties, in that some bodies, by virtue of their character and size, are more likely to present a threat to the integrity of the electoral process than individuals. Further, there is the possibility of the pursuit by corporations and industrial associations of political agenda different from those of their shareholders or members. In this latter regard, the defendant argued that such bodies may make political donations which are inconsistent with the views of significant portions of their membership. It is not to the point, the defendant argued, to question whether the impugned provisions have established "the most desirable or least burdensome regime to carry out the legitimate ends" because, in respect of political judgments of this kind, the legislature enjoys a margin of choice as to how a legitimate end may be achieved. The plaintiffs submitted in relation to sub‑ss (1) and (2) of s 96D that concerns as to secret or undue influence upon candidates and parties afford no rational basis to differentiate between permitted donations and those which are proscribed. In this regard, it was said that there is no reason to think that concerns as to the purchase of secret or undue influence by donations vary depending on whether the donor is an enrolled voter or not. As to sub‑ss (3) and (4) of s 96D, the plaintiffs submitted there are no facts agreed in the Special Case which establish that political donations from corporations or industrial organisations are more likely to represent a threat to the integrity of representative government than donations from other classes of donor. And there is no basis on which judicial notice could be taken of such a fact. The defendant countered that, while the existence of threats to public integrity can be difficult to prove by particular facts, the existence of such threats cannot be doubted. The defendant's contention that s 96D is justified as a step towards a comprehensive prohibition on all political donations must be rejected for reasons which may be stated briefly. One must deal with the law as it is, not as it might be. Either s 96D is justifiable in its own terms or it is not: today's law cannot be justified by the future possibility of proscriptions as yet unwritten. The defendant's second contention must also be rejected, but for reasons which require a more elaborate explanation. It may be said at the outset of this explanation that the application of the second limb of the Lange test is not without its difficulties. These difficulties arise, in part, by reason of the indefinite and highly abstract language in which it is expressed, as is illustrated by the division of opinion on the application of the second limb of the Lange test in Monis. Further, to the extent that the second limb of the Lange test might be seen to contemplate the striking down of one legislative measure because a different, less burdensome, measure might have been available, it would seem to countenance a form of decision‑making having more in common with legislative than judicial power. The language in which the second limb of the Lange test is cast draws upon the language of Marshall CJ in McCulloch v Maryland. There, speaking of the relationship of means to ends required to sustain a legislative choice of means to achieve a given end, Marshall CJ wrote: "Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional." The talismanic language of Marshall CJ must be understood in its context, and particularly in light of the statement which followed four paragraphs later in his Honour's reasons: "[W]here the law is not prohibited, and is really calculated to effect any of the objects entrusted to the government, to undertake here [scil, in this Court] to inquire into the degree of its necessity, would be to pass the line which circumscribes the judicial department, and to tread on legislative ground. This court disclaims all pretensions to such a power." This statement prompts the observation that the second limb of the Lange test is, in contrast to the case with which Marshall CJ was dealing, concerned to determine whether a law is "prohibited": the constitutional guarantee operates as an implied prohibition on the exercise of the law‑making power otherwise available to the State. In addition, it is apparent that Marshall CJ did not countenance a judicial judgment as to the extent to which one measure, rather than another, less drastic measure, may be necessary to pursue the legitimate (and possibly competing) ends of government. A similar perspective is evident in the remarks of Dixon J in Australian Communist Party v The Commonwealth, where his Honour said that, while questions as to the extent and operation of a power to legislate "must be decided by the Court, the reasons why it is exercised, the opinions, the view of facts and the policy upon which its exercise proceeds and the possibility of achieving the same ends by other measures are no concern of the Court." Further, Marshall CJ was addressing the relationship of means to ends in the context of the scope of legislative power conferred on Congress; he was not concerned with the impact of the United States Constitution on the exercise of State legislative power. It might be said that where a State law is impugned, the question for the Court can only be whether the impugned law can reasonably be said to be compatible with the free flow of political communication within the federation. In Coleman v Power, McHugh J, speaking of a State law, said: "Ordinarily … serious interference with … political communication would itself point to the inconsistency of the objective of the law with the system of representative government." It must be acknowledged, however, that no party or intervener advanced an argument to that effect in this case; and so it is the formulation in the second limb of the Lange test which must be applied. In any event, the difficulties which might sometimes attend the application of the second limb of the Lange test do not loom large here. Whether one applies the second limb of the Lange test, or asks whether it can reasonably be said that the impugned law is compatible with the free flow of political communication indispensable to the free and informed choices required of the people of the Commonwealth by the Constitution, the answer would be the same: subject to the quarantine question, the prohibitions in s 96D cannot be sustained. In assessing the strength of the arguments agitated by the parties, the primary consideration must be that the flow of political communication within the federation is required to be kept free in order to preserve the political sovereignty of the people of the Commonwealth. This must be so, both for legislatures which enact measures which affect the flow of political communication within the federation, and for the courts called upon to rule upon the compatibility of those measures with the requirements of the Constitution. In ACTV, Mason CJ said that ultimately: "it is for the Court to determine whether the constitutional guarantee has been infringed in a given case. And the Court must scrutinize with scrupulous care restrictions affecting free communication in the conduct of elections for political office for it is in that area that the guarantee fulfils its primary purpose." (footnote omitted) The caps imposed by ss 95A and 95I are apt to effect a reduction in the quantity of political communication, but it was not suggested that they fell foul of the second limb of the Lange test. In that regard, ss 95A and 95I operate across the board, and while they may limit the influence of donations on candidates and parties, they may reasonably be seen to enhance the prospects of a level electoral playing field. No party or intervener was disposed to deny that these provisions are compatible with the freedom of political communication. They can be seen to be appropriate and adapted to ensure that wealthy donors are not permitted to distort the flow of political communication to and from the people of the Commonwealth. In contrast, s 96D proscribes donations from certain sources but not others. In proscribing some sources of funding for political communication, it thereby favours other sources in terms of the flow of political communication. This discrimination is apt to distort the flow of political communication within the federation. The legislation in question in ACTV was held to be invalid on the basis of the discriminatory character of its proscription of some sources of political communication relating to electoral campaigning. No party or intervener sought to call into question the decision in ACTV. It cannot be doubted that the protection of the integrity of the electoral process from secret or undue influence is a legitimate end the pursuit of which is compatible with the freedom of political communication. In ACTV, Mason CJ said: "the need to raise substantial funds in order to conduct a campaign for election to political office does generate a risk of corruption and undue influence, that in such a campaign the rich have an advantage over the poor and that brief political advertisements may 'trivialize' political debate. ... The enhancement of the political process and the integrity of that process are by no means opposing or conflicting interests". More recently, Campbell and Crilly have written of the difficulty of coming: "to grips with the inequities and distortions of campaign finances, a realm in which there are vast political expenditures provided by individuals, corporations, unions and taxpayers, on a scale which, proportionate to the population's size, is amongst the highest in the world. This not only disregards the ideal of political equality central to democratic values, but also encourages methods of campaigning and propagandising which are rightly seen by their subjects as insultingly uninformative and non-argumentative, a type of political communication which is neither free nor inviting." Section 96D does not aid in the work done by ss 95A and 95I. Rather, it is itself apt to distort the flow of political communication within the federation by disfavouring some sources of political communication and thus necessarily favouring others. In addition, the proscriptions in s 96D do not reflect a calibrated balancing of legitimate ends as contemplated by the second limb of the Lange test. In this latter regard, the proscriptions in s 96D are very broad; they are not calibrated to give effect to the rationale identified by the defendant by criteria adapted to target the vices said to attend the disfavoured sources of political communication. The sources of political communication which are favoured by their omission from the scope of s 96D may well be attended by the same vices as the defendant identified as justifying s 96D. Corporations are familiar and accepted sources and conduits of political information. Their familiarity, variety and ubiquity serve to highlight the unqualified impact of the sweeping proscription in s 96D. In The Constitutional Corporation: Rethinking Corporate Governance, Professor Stephen Bottomley noted that: "The significance of corporations in modern society is not confined to the private business sector. Corporate forms of organisation are now commonplace in the non‑business and non‑profit sectors, including social groups and religious organisations, sports and recreational clubs, educational institutions, professional firms, and welfare organisations. … [C]orporations now feature in all aspects of social, political and economic life - private and public, business and non‑business, large and small enterprise. … [T]he connection between citizens and their national and global communities is increasingly mediated … through the activities of corporations." (footnote omitted) In addition, many corporations are small and closely held and so are not distinguishable from the individuals who stand behind them in terms of their potential for exercising secret or undue influence upon candidates or political parties through donations. There is also no evident basis, in terms of the rationale suggested by the defendant, to differentiate between individuals who are enrolled to vote and those who are not as sources of political communication. To disfavour political communication sourced in funds provided by individuals on the sole ground that they are not on the roll of electors is to fail to appreciate two matters. First, unenrolled individuals may be among the governed whose interests are affected by governmental decisions. Secondly, and more importantly, the freedom of political communication within the federation is not an adjunct of an individual's right to vote, but an assurance that the people of the Commonwealth are to be denied no information which might bear on the political choices required of them. Thus, in ACTV, Mason CJ made the point that the electors, who must make the political choices required by the Constitution, may be assisted by the views of those within the community who are not entitled to vote: "Freedom of communication in relation to public affairs and political discussion cannot be confined to communications between elected representatives and candidates for election on the one hand and the electorate on the other. The efficacy of representative government depends also upon free communication on such matters between all persons, groups and other bodies in the community. That is because individual judgment, whether that of the elector, the representative or the candidate, on so many issues turns upon free public discussion in the media of the views of all interested persons, groups and bodies and on public participation in, and access to, that discussion." This point is relevant to the prohibitions upon political donations by unenrolled individuals, corporations and industrial organisations. The legitimacy of the suppression, complete or partial, of political communication generated from funds provided by such sources must be determined, not by reference to the political agenda of individuals or corporations or the individuals behind the corporate veil or industrial association, but by reference to the indispensable entitlement of the people of the Commonwealth to free access to information which might be pertinent to the exercise of their political sovereignty. In ACTV, Mason CJ described the legislation there held to be invalid as "discriminatory in the respects already mentioned." In that regard, the "respects already mentioned" by his Honour were prohibitions which: "directly exclude potential participants in the electoral process from access to an extremely important mode of communication with the electorate. Actual and potential participants include not only the candidates and established political parties but also the electors, individuals, groups and bodies who wish to present their views to the community." To appreciate the compelling force of that view one need only reflect on the relevance of advocacy by individuals or corporations on behalf of "undocumented immigrants" to the political choices to be made by the electors of the Commonwealth. One need reflect only a little further to appreciate, as well, that advocacy as to the appropriate location of centres for the detention of such immigrants might well be of concern in State or local government elections. This last reflection is relevant as well to the issue whether the provisions of the EFED Act which seek to confine its operation to State or local government elections are effective to preserve s 96D. The quarantine question The defendant argued that ss 83 and 95AA(2) of the EFED Act ensure that s 96D does not restrict political communication protected under the Constitution. The plaintiffs argued that the restrictions on funding political communications in New South Wales elections will affect the flow of information which is indispensable to the making of the free and informed choices required by the Constitution of the people of the Commonwealth. It was observed that, in Australia, the major political parties operate at federal, State, Territory and local government levels, each seeking to further their objects through the election of members to both State and Commonwealth legislatures and local governments. There is ample authority for the plaintiffs' submission. In Stephens v West Australian Newspapers Ltd, Mason CJ, Toohey and Gaudron JJ said that "the freedom of communication implied in the … Constitution extends to public discussion of the performance, conduct and fitness for office of members of a State legislature." In Lange, the Court said: "[T]he discussion of matters at State, Territory or local level might bear on the choice that the people have to make in federal elections or in voting to amend the Constitution, and on their evaluation of the performance of federal Ministers and their departments. The existence of national political parties operating at federal, State, Territory and local government levels, the financial dependence of State, Territory and local governments on federal funding and policies, and the increasing integration of social, economic and political matters in Australia make this conclusion inevitable." And, in Hogan v Hinch, French CJ said: "significant interaction between the different levels of government in Australia … makes it difficult to identify subjects not capable or potentially capable of discussion as matters which are or should be or could be of concern to the national government." The defendant's argument casts ss 83 and 95AA(2) of the EFED Act in the legendary role of King Cnut, who, for all his sovereign power within his realm, could not prevent the flow of the tide into it. Sections 83 and 95AA(2) of the EFED Act confine the operation of s 96D to conduct which occurs in relation to elections to the New South Wales Parliament or local council elections in New South Wales; but they cannot ensure that political communications are of exclusively local significance. Just because a communication occurs in the course of a State or local government election, it does not follow that it might not also be pertinent to the choices required by the Constitution of the people of the Commonwealth. It may be said that it would be difficult, as a matter of drafting, to proscribe only such donations as fund those communications which are not pertinent to those choices; but to say that is merely to acknowledge the unreality of the suggestion that s 96D, even confined by ss 83 and 95AA(2), is not apt to have an adverse effect upon the free flow of political communication within the federation. The famous aphorism of Mr Thomas P (Tip) O'Neill, the Speaker of the United States House of Representatives, that "all politics is local" was a statement of practical politics, not constitutional principle. It may be accepted that not all political communications, however parochial their content may be, are inevitably linked to the political choices to be made by the people of the Commonwealth. As a matter of fact, some political communications will be of exclusively local concern without federal ramifications. A candidate for election to a local council may focus his or her campaign exclusively on local issues. But the proscriptions in s 96D are not targeted at particular communications within a campaign; they are targeted at donations which fund campaigning which is directed at electors who happen to be among the people of the Commonwealth who are required to make the choices contemplated by ss 7, 24 and 128 of the Constitution. When a question arises as to whether legislation trenches upon the freedom of political communication, it is necessary to bear in mind that what is at stake is the political sovereignty of the people of the Commonwealth. It may be said that whether information is pertinent to the exercise of the political choices required of the people of the Commonwealth is a question which only the people of the Commonwealth can answer. But, as a practical legal matter, that question must be answered by this Court. While the Court must accept that "[c]ommunications on political and governmental matters [as] part of the system of representative and responsible government … may be regulated in ways that enhance or protect the communication of those matters", the Court must also ensure that the regulation is compatible with the maintenance of the federation's system of representative and responsible government. Where political and governmental information which flows to and from the electorate in State and local government campaigns (that electorate being part of the people of the Commonwealth) might be pertinent to the political choices required of the people of the Commonwealth, the sources and conduits of that information must be kept open and undistorted. Thus, in Lange, the Court said, speaking particularly of s 128 of the Constitution, that: "by directly involving electors in the States and in certain Territories in the process for amendment of the Constitution, [s 128] necessarily implies a limitation on legislative and executive power to deny the electors access to information that might be relevant to the vote they cast in a referendum to amend the Constitution." (emphasis added) It is telling that neither in the Special Case, nor in the course of argument, was a practical example given of a political communication which might relate exclusively to the election of a candidate to the New South Wales Parliament or to a local government in New South Wales with no bearing upon the political choices required of the people of the Commonwealth by the Constitution. While it is possible to conceive of a campaign for election to a local council where the entire campaign is exclusively focused on matters of parochial interest, s 96D is not confined by ss 83 and 95AA(2) to such campaigns. Rather, it is targeted at the funding of campaigns which might be pertinent to the political choices of the people of the Commonwealth. The validity of s 95G(6) As has been noted, the plaintiffs did not challenge the validity of the caps on political expenditure imposed by s 95I(1); rather they attacked the validity of the aggregating provision in s 95G(6). Once again, it was accepted on all sides that the validity of this provision is to be determined by reference to the application of the Lange test. An effective burden? The plaintiffs submitted that s 95G(6) impermissibly burdens the freedom of political communication (in terms of the first limb of the Lange test) in three ways. First, it limits the amount that a political party and any affiliated organisation may spend on electoral communication expenditure, thereby diminishing the type or amount of political communication in which either may engage. Secondly, the amount an affiliated organisation is permitted to incur on electoral communication expenditure is dependent on the amount spent by the party. If one affiliated organisation wishes to incur electoral communication expenditure, then it will need to limit its own spending to ensure that the spending does not cause the aggregate to exceed the party's cap. Thirdly, s 95G(6) has a chilling effect on incurring electoral communication expenditure because the party's cap and the spending limit of affiliated organisations can only be known at the end of the capped expenditure period. The defendant contended that s 95G(6) does not impose a burden on the freedom of political communication but identifies a particular relationship in respect of which the legislature has determined that the electoral communication expenditure of more than one participant in the electoral process should be aggregated. In terms of the first limb of the Lange test, the defendant's last-mentioned contention makes the point that the extent of political communication is to be restricted on the ground that it is funded by political allies with a given level of formal association. Section 87 of the EFED Act expressly defines electoral communication expenditure in terms of political campaigning. Accordingly, sub‑ss (6) and (7) of s 95G will have the practical effect of reducing the total flow of political communication which would otherwise emanate from a party and its affiliates. It may be accepted that, as the defendant submitted, the aggregation provision amplifies the effect of the caps on electoral expenditure. But to say that is necessarily to recognise a burdening of political communication so far as the first limb of the Lange test is concerned, and to fail to recognise the discriminatory nature of that burden so far as the second limb of the Lange test is concerned. Appropriate means adapted to a legitimate end compatible with the freedom of political communication In relation to whether the aggregation provision is justified under the second limb of the Lange test, the defendant sought to justify s 95G(6) as being appropriate and adapted to preventing the operation of s 95I(1), the validity of which is not contested, being circumvented. The criteria established by s 95G(7) for "affiliated organisations" require formal arrangements between the organisation and the political party with respect to fundamental party processes: the composition of its governing body and the pre‑selection of candidates. Affiliated organisations are, in the defendant's submission, a meaningful and significant part of the political party. It was said to be irrelevant that affiliated organisations may not always agree on all issues with the party leadership. The plaintiffs countered that the ability of an affiliated organisation to appoint delegates to the governing body of a political party, or to participate in the pre‑selection of candidates, is neither the legal nor practical equivalent of control of the political communications emanating from that political party. Further, the ability of an organisation to appoint delegates to the governing body of a political party, or to participate in the pre‑selection of candidates, does not mean there is an identity of opinions or objectives between the party and the affiliate. In addition, the defendant argued that individuals who are members of affiliated organisations are left at liberty to act individually or in concert to make expenditure to communicate politically. That may be so, but to say that is, once again, to view the issue as if it were concerned with the vindication of a personal right of free expression in the individual members of affiliated organisations. In truth, the issue is whether the provision which restricts the free flow of political communication is justifiable in terms of the indispensable need to maintain the free flow of political communication within the federation. Further, to seek to justify the aggregation provision by reference to the possibility that political communication emanating from a political party may not accurately reflect the views of the members of the affiliate once again confuses notions of personal rights of expression of the membership with the interest of the people of the Commonwealth which is protected by the implied freedom. The effect of sub‑ss (6) and (7) of s 95G is that certain sources of political communication are treated differently from others. For example, third‑party campaigners are not subject to the aggregation provisions. The effect of this differential treatment is to distort the free flow of political communication by favouring entities, such as third‑party campaigners, who may support a political party, but whose ties are not such as to make them affiliates under the rules of that party even though they may promulgate precisely the same political messages. Political communication generated by electoral communication expenditure by organisations affiliated with a party is disfavoured relative to political communication by entities which, though actively supportive of, and indeed entirely ad idem with, a given party, are not affiliated with it. To discriminate between sources of political communication in this way, in the sense of the term used by Mason CJ in ACTV and discussed above in relation to s 96D, is to distort the flow of political communication. This distortion of political communication cannot be regarded as appropriate and adapted to enhance or protect the free flow of political communication within the federation. In this regard, s 95G(6) is not calibrated, even in the most general terms, so as to target only sources of political communication affected by factors inimical to the free flow of political communication throughout the Commonwealth. The quarantine question For the reasons set out in relation to s 96D, s 83 does not quarantine the operation of s 95G(6) so as to preserve its effectiveness notwithstanding the implied freedom. Conclusions and orders The questions reserved for determination should be answered as follows:

Is section 96D of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) invalid because it impermissibly burdens the implied freedom of communication on governmental and political matters, contrary to the Commonwealth Constitution? Answer: Yes.
Is section 95G(6) of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) invalid because it impermissibly burdens the implied freedom of communication on governmental and political matters, contrary to the Commonwealth Constitution? Answer: Yes.
Do sections 7A and 7B of the Constitution Act 1902 (NSW) give rise to an entrenched protection of freedom of communication on New South Wales State government and political matters? Answer: Unnecessary to answer.
If so, is section 96D of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) invalid because it impermissibly burdens that freedom, contrary to the New South Wales Constitution? Answer: Unnecessary to answer.
Further, if the answer to question 3 is "yes", is section 95G(6) of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) invalid because it impermissibly burdens that freedom, contrary to the New South Wales Constitution? Answer: Unnecessary to answer.
Is section 96D of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) invalid under section 109 of the Commonwealth Constitution by reason of it being inconsistent with section 327 of the Commonwealth Electoral Act 1918 (Cth)? Answer: Unnecessary to answer.
Is section 96D of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) invalid under section 109 of the Commonwealth Constitution by reason of it being inconsistent with Part XX of the Commonwealth Electoral Act 1918 (Cth)? Answer: Unnecessary to answer.
Is section 96D of the Election Funding, Expenditure and Disclosures Act 1981 (NSW) invalid because it impermissibly burdens a freedom of association provided for in the Commonwealth Constitution? Answer: Unnecessary to answer.
Who should pay the costs of the Special Case? Answer: The defendant.

Unions NSW v New South Wales

At a glance

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Judgment (23 paragraphs)

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Legislation Cited (6)

Cited By (13)