EDELMAN J.
Introduction
Absolute freedom for the pike is death for the minnow. The text and structural design of the Constitution of the Commonwealth of Australia requires a qualified, not an absolute, freedom of political communication. The qualification is that legislative purposes can be pursued even if they burden the freedom of political communication provided that the purposes are legitimate and that the burden is justified. The first limb of that proviso exists because the constitutional freedom of political communication would be stultified by a law that burdens the freedom with the purpose of doing so.
The special case and the detail of the parties to it are set out in the joint judgment. The question at the heart of this case is whether it is legitimate for legislation to have a purpose to ensure a greater freedom of political communication of one group, namely candidates and political parties, over another, namely third-party campaigners. The plaintiffs submit that such a purpose is illegitimate. The defendant submits that such a purpose is legitimate and contemplated by ss 7 and 24 of the Constitution.
Until mid-2018, the Election Funding, Expenditure and Disclosures Act 1981 (NSW) as amended in 2011 ("the Previous Act") fixed caps on State "electoral communication expenditure" for third-party campaigners. Section 95F(10) capped third-party campaigner expenditure at $1,050,000 if the third-party campaigner was registered before the commencement of the capped State expenditure period, or $525,000 if not. That Act did so for purposes including: (i) the reduction of the possibility for, or the perception of, corruption; (ii) ensuring equality of opportunity for participation in the political process; and (iii) avoiding the "drowning out" by third parties of the voices of candidates and parties campaigning for election. Those purposes might arguably have justified a much lower cap on expenditure by registered third-party campaigners of $500,000. Indeed, in the election that followed a few months after the amendments took effect, the largest amount of electoral communication expenditure by a third-party campaigner was $358,000, although this was for a truncated capped State expenditure period.
On 30 May 2018, the Electoral Funding Act 2018 (NSW) was enacted, replacing the Previous Act. It commenced operation on 1 July 2018. The Electoral Funding Act increased the electoral expenditure cap for political parties and candidates. But, in s 29(10), it reduced the cap for third-party campaigners by more than half. The general purposes for the caps remained the same as in the Previous Act. Those general, abstract purposes could easily have been seen as exhausting the purposes of s 29(10) if the Previous Act had never existed. They could also have been seen as the purpose for the reduction in the third-party campaigner cap from the Previous Act if there were any rational link between them and a reduction in the cap. But no such link was asserted in any contextual material. None was a matter of submission. Without any additional purpose the significant change effected by s 29(10) is purposeless or random. An identification of legislative purpose proceeds on the basis that the legislature is a body that acts rationally and not without any rhyme or reason. Here, an additional purpose that explains the reduction in the third-party campaigner cap is revealed by the terms, the context, and the legislative history of s 29(10) and was, unsurprisingly, common ground.
The additional purpose, as described by the 2014 Expert Panel Report, was that "political parties and candidates should have a privileged position in election campaigns" because they are "directly engaged in the electoral [contest], and are the only ones able to form government and be elected to Parliament". In other words, the additional purpose was to ensure that the voice of third-party campaigners was quieter than that of political parties and candidates. This additional purpose is also reflected in s 35 of the Electoral Funding Act, which prevents only third-party campaigners from acting in concert with others to incur electoral expenditure that exceeds the third-party campaigner's cap. There is no similar restriction for candidates or political parties, or even closely associated political parties.
The additional purpose that motivated the introduction of ss 29(10) and 35 of the Electoral Funding Act was to burden the freedom of political communication of third-party campaigners. Such a purpose is incompatible with the maintenance of the constitutionally prescribed system of representative and responsible government. That additional purpose means that both provisions are invalid. It is, therefore, neither necessary nor appropriate to consider whether the lower cap and the "acting in concert" offence could have been justified by other, legitimate, purposes.
The three stages of assessing the implied freedom
The implied freedom of political communication is not absolute. It exists within a Constitution that is based upon, and respects, the existence of laws affecting a multitude of different rights, privileges, powers, and immunities. Laws that have the purpose of enhancing or burdening some other interest are not invalid merely because they have the effect of burdening the freedom of political communication. The three questions set out in the joint judgment in Brown v Tasmania provide a clear and principled way of approaching the issue of whether a law is invalid as contrary to the implied freedom of political communication. Each question must be considered before the next.
As to the first question, since the fundamental basis for the implied freedom is to prevent illegitimate burdens on the freedom of political communication, a precondition to the operation of the implied freedom as a constraint on legislative power is that the law must burden the freedom of political communication. That is why the first question to be asked is whether the law, "in its terms, operation or effect" - or, put another way, "in its legal or practical operation" - burdens the freedom of political communication. This question is not concerned with the extent of the burden.
The point of asking the first question is to ensure that the implication is not applied beyond the circumstances required by its textual and structural foundations in the Constitution. Hence, since the constitutional implication is of a freedom from unjustified legislative burdens on political communication there cannot be a burden if some communication is affected but political communication is not. The meaning of "political", in determining whether a communication is a political communication, is informed by communications necessary for the effective operation of the system of representative and responsible government. It must also be a lawful political communication. There can be no burden upon the freedom of political communication by a law that prohibits acts that are independently unlawful.
It is common ground, and rightly so, that ss 29(10) and 35 of the Electoral Funding Act place a burden upon the freedom of political communication.
The second question only arises if there is a burden upon the freedom of political communication. The second question asks: "is the purpose of the law legitimate, in the sense that it is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government?" The second question exists because a law cannot, compatibly with the constitutional freedom, have a purpose to impose a burden upon the freedom that the Constitution protects. The second question does not involve assessing the appropriateness of the law including the extent to which its effect is to burden the freedom. That is the province of the third question.
The third question can only arise once a legitimate purpose has been identified. It has been expressed in terms that ask: "is the law reasonably appropriate and adapted to advance that legitimate object in a manner that is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government?" The third question is concerned with whether the effect of the law in burdening the freedom is justified by its legitimate purpose or purposes. Because the third question is dependent upon the legitimate purposes, the third question should not be answered without first identifying the legitimate purposes served by the law. And the question of what legislative purposes the law serves "cannot be answered simply by [reliance upon] what may appear to have been legislative purpose" or what one or more parties assert to be the legislative purposes.
For the reasons below, this special case should be resolved at the stage of the second question. The third question therefore does not arise.
The second question: legitimate purpose
The nature of legislative purpose
The statutory purpose, or purposes - since a legislature might have multiple purposes - are the intended aims of the legislature. In some circumstances, such as this case, the identification of legislative purposes may prove elusive and divisive. It is necessary to explain what is involved in the search for legislative purpose.
A search for the purposes or intended aims of the legislature involves a construct used to determine the meaning of the words used by that legislature. It is not a search for subjectively held purposes of any or all of the members of the Parliament that passed the law. Rather, it is a construct that accords with our conventions for understanding language, which are the techniques by which we understand words. The same language techniques require a concurrent consideration of the meaning of words used in their context together with the purpose for which the words are used, in the sense of their intended aim. Hence, purpose must be identified by the same context, and hence the same extrinsic materials, that elucidate the meaning of the words.
Consistently with the concept of intention in law and language generally, an intended purpose of a law is different from its foreseeable consequences or effects. A useful example of the distinction can be seen in a law that places caps on political donations for the purpose of reducing corruption but with the foreseeable effect or consequence of restricting the funds available to political parties and candidates to meet the costs of political communication.
The intended aim of legislation exists at a higher level of generality than the meaning of its words. The meaning of a provision in its context is informed, at a higher level of generality, by the goal or "mischief" to which the law is directed. Identifying that goal, or intended aim, relies upon the same ordinary processes of interpretation, including considering the meanings of statutory words in the provision, meanings of other provisions in the statute, the historical background to the provision, and any apparent social objective.
In circumstances where a statute expressly sets out its own objects or purposes, that express statement will almost always be relevant to identifying the objects and purposes of a particular provision. But a court should not blindly accept that the high-level, abstract purposes of the whole Act must be the exhaustive statement of the purposes of a single provision. A generally stated objects clause that applies to the entirety of a statute will, usually of necessity, be stated at a high level of generality that might not touch upon, or might barely touch upon, some provisions. Nor should a court recognise any presumption or strong inference that objects expressly stated are the exclusive, constitutionally valid purposes of every provision, characterised at the appropriate level of generality. The characterisation of the purpose of a provision at the appropriate level of generality, and the adjudication of its legitimacy, are matters for the courts.
Determining when a legislative purpose is legitimate
The concern of the second question is whether a law, in imposing a burden, has that imposition as one of its purposes. If so, it will be illegitimate. The second question is not concerned with identifying a "reason" why an object or purpose is legitimate. A purpose will always be illegitimate in the "rare" circumstance where it has an aim to impair the freedom of political communication required by representative and responsible government. Since the implied freedom of political communication is a necessary incident of the system of representative and responsible government required by the Constitution, legislation that has an aim, namely a purpose, to burden that freedom could never be compatible with the constitutionally prescribed system of government, which requires the existence of that freedom. If it is no purpose of the law to burden the freedom then for the assessment of infringement of that implied freedom it will be necessary to ask the third question, namely whether the effect of the law, in imposing the burden, is justified by its purpose.
There are some cases where it has been said that the law imposes a burden upon the freedom of political communication but no legislative purpose can be identified separately from the effect of the law. In other words, the law's "purpose is properly described as the prevention of the conduct which it prohibits". In such cases, it has been said that the second question and third question "collapse into one". It is unnecessary in this case to consider whether, or when, the effects of the law, including burdening of political communication, will be treated as its purposes.
A purpose is illegitimate as part of the assessment of consistency with the implied freedom of political communication only where the purpose is to impair the freedom of political communication. Such a conclusion of illegitimacy is not a matter of discretion or of giving latitude to Parliament. It is true that, as the Attorney‑General of the Commonwealth submitted, the Constitution leaves significant room for legislative choice in the design of an electoral system. Parliament has a wide range of choices over matters such as the type of electoral system and manner of voting, the size of any electoral districts, and whether voting is compulsory. However, the broad range of legislative choice exists only for laws that comply with the "bare foundations" of the electoral system required by the Constitution. The Constitution requires laws to comply with those bare foundations. The foundations expressly include the electors' direct choice, and therefore their freedom to choose. Hence, laws requiring voting to be compulsory, or requiring full preferential voting, will be valid only so long as they "preserve[] freedom of choice of possible candidates". The foundations also impliedly include the electors' freedom to receive information on and to comment upon political matters. As Gummow J said in McGinty v Western Australia:
"It is hardly to be expected that the Constitution was framed so as to present an impermanent or incomplete statement of the incidents of responsible government on the footing that the Parliament which would make changes and remedy deficiencies perceived from time to time would be composed other than by the representatives of electors who had been free of legislative impediment in informing themselves and in receiving information and comment upon matters of political interest."
An example of a purpose that is illegitimate, in the context of inconsistency with electors' express freedom to choose rather than the implied freedom of political communication, can be seen in the dissenting decision of Dawson J in Langer v The Commonwealth. In that case, one issue was whether s 329A of the Commonwealth Electoral Act 1918 (Cth) was invalid. Dawson J concluded that s 329A was not within the ambit of Commonwealth legislative power. His Honour held that the purpose of s 329A was to prevent voters from becoming aware of the existence of their right to engage in optional preferential voting. In other words, s 329A had the "intended effect of keeping from voters an alternative method of casting a formal vote which they are entitled to choose". Although this characterisation of the purpose of the law was a dissenting view, its acceptance inevitably led to the conclusion that the law was invalid. A law cannot validly have the purpose of undermining the requirement for choice by the people that is expressly required by the Constitution. The same must be true of a law that has a purpose of undermining the implied freedom of electors to engage in political communication.
A law with the purpose of silencing or preferring political communication is illegitimate
As I have explained, an implied freedom of political communication cannot co-exist with a law that undermines the freedom of political communication with a purpose of doing so. But a law will only have a purpose of burdening the freedom of political communication if that is one of its intended aims. That proscribed purpose will not exist simply because the law is with respect to, or even directed at, political communications as a means to achieve some other purpose.
Nor will a law that has the effect of burdening the freedom of political communication necessarily have that as its purpose even if the effect of burdening the freedom is a necessary step towards or consequence of some other purpose. For instance, a law might aim to increase the overall communicated content of political communication to electors by "silenc[ing] the voices of some in order to hear the voices of the others". On a Rawlsian, egalitarian model, the purpose of increasing communicated content is not a purpose that aims to undermine political communication. Indeed, it is consistent with, and reinforces, political communication with the electorate: it "enables voters to be better informed; no one voice is overwhelmed by another". Even though the effect of such a law would be to burden the freedom of political communication for some, the purpose of the law is consistent with the "great underlying principle" of the Constitution that the rights of individuals are "sufficiently secured by ensuring as far as possible to each a share, and an equal share, in political power". The purpose of the law would be compatible with the system of representative and responsible government provided for in the Constitution.
There is, however, an essential distinction between a law that has the effect of "different treatment" by the quietening or silencing of some, even an effect that is a necessary step to achieving a legitimate purpose, and a law that has a purpose of the same different treatment by the quietening or silencing of some. Many laws have a justified effect of burdening the freedom of political communication but this does not mean that further analysis is needed before concluding that a law that has the purpose of burdening the freedom is illegitimate. In short, it is an error to conflate purpose with effect by reasoning that because an effect of quietening or silencing some might be justified, therefore a purpose of quietening or silencing some can be legitimate.
The defendant, with the support of the Attorney-General of the Commonwealth, met this issue head-on. The defendant submitted that a purpose of different treatment could be legitimate, arguing that "the constitutionally distinct position of candidates legitimises the pursuit of legislative objectives that select candidates and political parties for distinctive treatment relative to others who are not directly engaged in the electoral contest and who cannot be elected to Parliament or form government". That submission cannot be accepted.
In Australian Capital Television Pty Ltd v The Commonwealth, Mason CJ said that one reason why freedom of political communication was indispensable to a system of representative and responsible government was that "[o]nly by exercising that freedom can the citizen criticize government decisions and actions, seek to bring about change, call for action where none has been taken and in this way influence the elected representatives". Similarly, Deane and Toohey JJ said that the implied freedom extends not merely to communications by candidates and political parties but also to "communications from the represented to the representatives and between the represented". A law will have the goal of undermining that freedom if its purpose is to silence the voices of part of the citizenry, not merely as a necessary step towards or consequence of achieving some other purpose, but for the very reason of ensuring that the position of some is suppressed relative to others.
Illegitimate purpose revealed by the meaning of ss 29(10) and 35 and the parties' pleadings
The meaning of ss 29(10) and 35
Sections 29(10) and 35 of the Electoral Funding Act are part of a scheme that regulates the electoral expenditure of political parties, candidates for election, and third-party campaigners. The core of the definition of "electoral expenditure" in s 7(1), subject to exceptions that can be put to one side, encompasses two limbs: first, expenditure "for or in connection with promoting or opposing, directly or indirectly, a party or the election of a candidate or candidates"; secondly, expenditure "for the purpose of influencing, directly or indirectly, the voting at an election".
The relevant provisions in relation to electoral expenditure of third-party campaigners are as follows:
"29 Applicable caps on electoral expenditure for State election campaigns
(1) General
The applicable caps on electoral expenditure for a State election campaign are as provided by this section, as modified by section 30 (Aggregation of applicable caps - State election campaigns).
...
(10) Third-party campaigners
For a State general election, the applicable cap for a third‑party campaigner is:
(a) $500,000 if the third-party campaigner was registered under this Act before the commencement of the capped State expenditure period for the election, or
(b) $250,000 in any other case.
...
35 Limit on electoral expenditure - third-party campaigner acting in concert with others
(1) It is unlawful for a third-party campaigner to act in concert with another person or other persons to incur electoral expenditure in relation to an election campaign during the capped expenditure period for the election that exceeds the applicable cap for the third-party campaigner for the election.
(2) In this section, a person acts in concert with another person if the person acts under an agreement (whether formal or informal) with the other person to campaign with the object, or principal object, of:
(a) having a particular party, elected member or candidate elected, or
(b) opposing the election of a particular party, elected member or candidate."
Section 33(1), read with s 143(1), makes it unlawful for third-party campaigners to exceed the expenditure cap and renders such conduct an offence with a maximum penalty of 400 penalty units or imprisonment for two years or both.
As the defendant submitted, s 35(1) does not prohibit all agreements to incur electoral expenditure that exceeds the third-party campaigner's cap during the capped period of the election. This is because the proscribed sole object, or proscribed principal object, does not include the second limb of the definition of electoral expenditure, namely the object of "influencing, directly or indirectly, the voting at an election". Nevertheless, it is likely that there will be few clear cases where a third-party campaigner could be confident that electoral expenditure is (i) incurred for the purpose of influencing voting at an election, but (ii) outside s 35(1) because it is not incurred with a principal object of supporting or opposing the election of a person or party.
Contrary to the submissions of the defendant, s 35 is not merely a general anti-avoidance provision. The Electoral Funding Act contains a general anti‑avoidance provision in s 144 which includes a prohibition on schemes to circumvent electoral expenditure restrictions. Section 30 is another example of an anti-avoidance provision that strictly proscribes contrivances that would have the effect of circumventing the caps on parties and elected members. For instance, s 30(4) prohibits a party or elected member from incurring electoral expenditure for a State election campaign that exceeds the applicable cap if added to the electoral expenditure of an "associated entity". An associated entity is defined in s 4 as "a corporation or another entity that operates solely for the benefit of one or more registered parties or elected members". Section 30(4) thus prohibits a contrivance by an elected member or registered party to use a corporation that operates solely for its benefit in order to circumvent the cap.
Although s 30 is concerned with avoidance of the capped limit on electoral expenditure, it does not preclude two or more political parties, even if they are very closely aligned, from acting in concert to combine their electoral expenditure caps and thereby exceed their individual caps. It does not preclude two or more individual candidates in different electoral districts in the Legislative Assembly, or candidates in the Legislative Council, from acting in concert to combine their electoral expenditure caps and thereby exceed their individual caps. It does not preclude a party from acting in concert with another party or one or more individual candidates in different electoral districts to combine their electoral expenditure caps and thereby exceed their individual caps.
In contrast, s 35 is a provision that prohibits co-ordination by third parties even where the agreement may not result in a third-party campaigner exceeding its individual expenditure cap. For instance, two third-party campaigners could each use $300,000 of electoral expenditure on an advertising campaign on the same subject matter. But they could not spend $600,000 jointly on exactly the same advertising campaign with the purpose of communicating to the public that they were united in a political message. This restriction in s 35 has different purposes from the prohibition in s 144 upon schemes to circumvent a cap. Section 144 would preclude ten third-party campaigners from developing a scheme to run a $5 million campaign in order to circumvent their legislative caps. In contrast, s 35 precludes co‑ordination that is not a scheme and might have nothing to do with legislative caps. It prohibits the force of some political communications that reveal that a message is being sent by multiple third parties jointly rather than individually. It reveals not merely a purpose to avoid drowning out the voices of parties and candidates for election but also one to quieten the voices of third parties in contrast with parties or candidates for election.
The general and specific purposes of ss 29(10) and 35 and the pleaded purposes
Section 3 of the Electoral Funding Act recites five general objects: (a) to establish a fair and transparent electoral funding, expenditure and disclosure scheme; (b) to facilitate public awareness of political donations; (c) to help prevent corruption and undue influence in the government of the State or in local government; (d) to provide for the effective administration of public funding of elections, recognising the importance of the appropriate use of public revenue for that purpose; and (e) to promote compliance by parties, elected members, candidates, groups, agents, associated entities, third-party campaigners and donors with the requirements of the electoral funding, expenditure and disclosure scheme.
These objects are expressed at a high level of generality. Plainly, they do not exhaust the objects or purposes of every one of the particular provisions of the Electoral Funding Act. In particular, the provisions that impose caps on electoral expenditure were also based on the same purposes as the Previous Act, which the Electoral Funding Act developed and referred to in Sch 2, cl 2 as a defined term (the "former Act"). The purposes of the expenditure caps in the Previous Act included "reducing the advantages of money in dominating political debate", "provid[ing] for a more level playing field for candidates seeking election, as well as for third parties who wish to participate in political debate" and "putting a limit on the political 'arms race', under which those with the most money have the loudest voice and can simply drown out the voices of all others". As explained above, those broadly "anti-drowning out" purposes are legitimate. Indeed the legitimacy of the general purposes of the Previous Act was not doubted when different provisions of the Previous Act were challenged in Unions NSW v New South Wales.
If the Previous Act had never been enacted then it might have been easy to see ss 29(10) and 35 as based only upon the anti-drowning out purposes. But that would be to ignore, as senior counsel for the plaintiffs submitted, that ss 29(10) and 35 were effectively amending provisions. Their purpose must be assessed in light of the fact that there had not been, and has not been, any suggestion, either inside or outside Parliament, that there was any inadequacy in the manner in which the previous caps served their purpose.
The amendments were not the random acts of Parliament, effecting significant change to the legislative provisions for no additional purpose or reason. Instead, the two provisions contained the additional, illegitimate, purpose to quieten the voices of third-party campaigners in contrast with parties or candidates for election. As explained above, that additional purpose is revealed by the meaning and operation of s 35. It is brought into even sharper focus, as explained below, by the legislative history of those provisions. Unsurprisingly, the additional purpose was effectively common ground in the pleadings.
In their statement of claim in this case, the plaintiffs pleaded that one of the purposes of s 29(10), when read with s 33(1) of the Electoral Funding Act, is to "privilege political communication by parties and/or candidates over political communication by third-party campaigners during State general election campaigns". That purpose is additional to the purposes of the Previous Act, which, although treating third-party campaigners differently from parties and candidates, did so for purposes other than privileging parties and candidates.
In its defence, the defendant denied this purpose in the terms in which it had been pleaded by the plaintiffs but asserted that the purposes of imposing lower caps on electoral expenditure by third‑party campaigners included:
"to accord to candidates and political parties - as those who are directly engaged in the electoral contest and the only ones able to be elected to Parliament to represent the people of New South Wales and to form government - the capacity to spend more than third party campaigners who are not so engaged and who are not able to be elected to Parliament".
Although expressed in different words, there is common ground in the pleadings about this additional purpose. It is a purpose of quietening the voices of third-party campaigners relative to political parties or candidates for election.
Illegitimate purpose revealed by the history of ss 29(10) and 35
Apart from being common ground in the pleadings and apparent from the meaning and operation of s 35, the additional, illegitimate purpose served by ss 29(10) and 35 is clear from the historical context in which the provisions were enacted. That historical context includes the Previous Act, the 2014 Expert Panel Report, and a Joint Standing Committee on Electoral Matters report in 2016, to which the Electoral Funding Bill responded.
The Previous Act
As I have mentioned, caps on electoral communication expenditure were first introduced in the Previous Act by amendments which commenced operation on 1 January 2011.
A registered political party endorsing candidates for the Legislative Assembly became subject to a cap of $100,000 multiplied by the number of districts in which a candidate was endorsed, and was subject to an additional cap of $50,000 for expenditure incurred substantially for the purposes of the election in a particular electorate. An endorsed candidate for the Legislative Assembly had a separate cap of $100,000. An independent candidate for the Legislative Assembly and a non‑grouped candidate for the Legislative Council were each capped at $150,000. A party endorsing candidates for the Legislative Council and no more than ten candidates for the Legislative Assembly had a cap of $1,050,000, as did an independent group of candidates for the Legislative Council.
The electoral expenditure cap on third-party campaigners was derived from the cap on expenditure for an independent group of candidates in the Legislative Council. If the third-party campaigner was registered before the commencement of the capped State expenditure period, the cap was $1,050,000. Otherwise it was $525,000. The rationale by which this amount was chosen was that if the cap for third‑party campaigners was substantially less than the cap for independent groups in the Legislative Council then third-party campaigners could conduct the same campaign by running for election to the Legislative Council. An additional cap on third-party campaigners was $20,000 per electorate for electoral communication expenditure incurred substantially for the purposes of the election in that electorate.
The 2011 State election
A general election for the Parliament of New South Wales was held on 26 March 2011. As the expenditure caps had only been inserted into the Previous Act shortly before the 2011 election, the "capped State expenditure period" was a truncated period from 1 January 2011 to the close of polls.
In the capped period, five political parties incurred a total combined electoral communication expenditure of approximately $20 million: the Australian Labor Party (NSW Branch) - $8.79 million; the Liberal Party of Australia NSW Division -$7.24 million; the National Party of Australia (NSW) - $1.75 million; the Greens - $1.35 million; and the Country Labor Party - $500,000.
In contrast with the $20 million incurred by the five political parties, the 43 registered third-party campaigners incurred a total combined electoral communication expenditure of $1.51 million. The highest amount was by the National Roads and Motorists Association Ltd - $358,000; followed by the NSW Business Chamber - $354,000; and Unions NSW - $197,000.
The Expert Panel Report
Following a series of investigations by the Independent Commission Against Corruption into illegal political donations, the New South Wales Government appointed an "Expert Panel" to consider and report on options for long-term reform of political donations in New South Wales. The Panel was chaired by Dr Kerry Schott. The other members were Mr Andrew Tink AM, the former Liberal Shadow Attorney-General, and the Hon John Watkins, the former Labor Deputy Premier.
The Panel delivered its report in December 2014. In relation to the expenditure caps in the Previous Act for political parties and candidates, the Panel concluded that the Election Funding, Expenditure and Disclosures Act "adequately accommodates" the New South Wales electoral system and that "[t]he current caps provide for a fair contest in Legislative Assembly electorates, by seeking to provide equal spending for party and independent candidates". However, the Panel was more sceptical about the caps that applied to third-party campaigners. The Panel said that although third-party campaigners "should be free to participate in election campaigns", this participation should be more restricted than that of individual candidates or political parties. The Panel might be said to have had two reasons for desiring this restriction.
First, the Panel was concerned about an increase in third-party campaigning and the emergence of US-style Political Action Committees. This concern led the Panel to reiterate that third-party campaigners "should not be able to drown out the voices of parties and candidates who are the direct electoral contestants". However, the Panel did not suggest that these concerns, which were also purposes of the Previous Act, required a reduction in the present cap because third-party campaigners were presently drowning out the voices of parties and candidates or because the existing cap was insufficient to guard against potential future increases in third-party campaigns. Nor was it said that a reduction was required for any other arguably legitimate purpose such as preserving public confidence in the conduct of public affairs.
Secondly, the Panel "strongly" agreed that "political parties and candidates should have a privileged position in election campaigns" as they are "directly engaged in the electoral [contest], and are the only ones able to form government and be elected to Parliament". In contrast with this reasoning, the third-party campaigner cap in the Previous Act had been derived from the cap on expenditure for an independent group of candidates in the Legislative Council. Separately from its concern about the voices of candidates or parties being "drowned out" and in contrast with the reasons for the previous cap, the Panel regarded political parties and candidates as deserving of a privileged position, with a danger arising from third-party campaigners running single-issue campaigns that were effective:
"The Panel is concerned about the potential for wealthy protagonists motivated by a particular issue to run effective single-issue campaigns. The potential for these sort of campaigns can be seen federally in the well‑funded campaigns against the mining tax and WorkChoices. In New South Wales, issues such as coal seam gas or electricity privatisation have the potential to unite opposition and motivate wealthy interests. The Panel is concerned that a lack of appropriate third-party regulation would work against reformist governments pursuing difficult and controversial issues in the public interest."
Notably, the Panel did not suggest that the voices of candidates or political parties at previous elections had been drowned out by campaigns against the mining tax, or against WorkChoices, or, most relevantly to New South Wales, in relation to coal seam gas or electricity privatisation. Indeed, as will be explained below, there was no suggestion of any drowning out caused by a co-ordinated campaign, within the existing caps, against privatisation during the subsequent 2015 election period. The concern was simply that, unlike parties or candidates, third-party campaigners should not have a voice that was significant enough to "work against reformist governments". This second concern echoes the language of the proscribed purpose described by Keane J in Unions NSW v New South Wales, which is the partial suppression of political communication "by reference to the political agenda".
The Panel thus concluded that:
"third-party campaigners should have sufficient scope to run campaigns to influence voting at an election - just not to the same extent as parties or candidates. It is therefore fair for parties and candidates to have higher spending caps than third-party campaigners."
The Panel's recommendation (recommendation 31) was to reduce the third-party expenditure cap to $500,000, which "strikes the right balance between the rights of third parties and those of parties and candidates". The Panel said that this was "still well above the approximately $400,000 that the NRMA, the highest spending third party, spent at the 2011 election".
The Panel also said that it would be appropriate to review the level of the third‑party spending caps after the 2015 election. The reason for review after the 2015 election, explained earlier, was that the period of capped electoral expenditure at the 2011 election had been truncated, precluding meaningful assessment of the effectiveness of the expenditure caps. The Panel said that the 2015 election "will be a better test of the level of the caps and the timing of the capped expenditure period".
The Panel also recommended (recommendation 32) the introduction of a provision "to prevent ... third-party campaigners from acting in concert with others to incur electoral expenditure in excess of the caps on third-party expenditure". A legitimate purpose for this "aggregation" provision was to avoid third-party campaigners acting "with a combined expenditure cap that would completely overwhelm parties, candidates and other third parties acting alone". However, the Panel did not explain why the provision should go beyond merely schemes to avoid the cap which, by s 144, apply to all persons or why the anti-aggregation provision should extend significantly further than the much lighter restraints on aggregation by parties or candidates. The obvious inference is that the same reasons for different treatment of third-party campaigners required a different, stricter provision for the "new aggregation provision" that the Panel said should "occur along with" the spending cap reduction.
The 2015 State election
At the general election for the Parliament of New South Wales on 28 March 2015, the electoral communication expenditure by eight political parties during the capped State expenditure period commencing on 1 October 2014 amounted to approximately $21.4 million, and included the following amounts: the Liberal Party of Australia NSW Division - $7.05 million; the Australian Labor Party (NSW Branch) - $6.55 million; the Greens - $2.60 million; the Country Labor Party - $2.53 million; the National Party of Australia (NSW) - $1.88 million; and the Shooters, Fishers and Farmers Party - $717,000.
In the same period 36 registered third-party campaigners incurred a total combined electoral communication expenditure of $5.04 million. Three of the third-party campaigners incurred expenditure significantly in excess of $500,000: the NSW Nurses and Midwives' Association - $908,000; the Electrical Trades Union of Australia NSW - $794,000; and Unions NSW - $720,000. Five union third-party campaigners ran a co-ordinated campaign against privatisation, including electricity privatisation, entitled "NSW Not For Sale". Each participating union incurred less electoral communication expenditure on the co‑ordinated campaign than their individual caps, with a combined total expenditure of approximately $1.1 million.
The Joint Standing Committee reports
The New South Wales Government indicated its support in principle for 49 of 50 of the Panel's recommendations and referred both the Expert Panel Report and the Government's Response to the Joint Standing Committee on Electoral Matters to consider together with the administration of the 2015 New South Wales election. The Committee delivered reports in June 2016 and November 2016. The November 2016 report can be put to one side as it does not discuss matters relevant to this case.
In the June 2016 report, the Joint Standing Committee said that "third‑party campaigners should be able to spend a reasonable amount of money to run their campaign" but it agreed with the Panel that "this should not be to the same extent as candidates and parties". Hence, the Joint Standing Committee supported in principle the Panel's recommendation that the expenditure cap for third-party campaigners be reduced. However, in light of the third-party expenditure in relation to the 2015 election, including by the three unions mentioned who spent considerably more than $500,000, the Committee recommended (recommendation 7) that before decreasing the limit to $500,000, the New South Wales Government should consider whether "there is sufficient evidence that a third-party campaigner could reasonably present its case within this expenditure limit".
The Joint Standing Committee also supported the Panel's recommendation to enact an "acting in concert" offence, and recommended that the offence be enacted without further suggestions (recommendation 1). It supported the Panel's reasoning for recommending the offence be enacted.
The purpose of ss 29(10) and 35 against this history
The Explanatory Note to the Electoral Funding Bill explains that the Bill was prepared in response to the reports discussed above. The caps for parties and candidates for election were substantially increased, consistently with the need acknowledged in the Previous Act, seven years earlier, for the caps to be indexed. The cap for an independent group of candidates in the Legislative Council, upon which the third-party campaigner cap had previously been based, became $1,288,500, increased from $1,050,000. However, the cap for third‑party campaigners was decreased by more than half.
In the second reading speech introducing the Electoral Funding Bill, the Special Minister of State explained the reason for adopting the Expert Panel's recommendation to reduce the cap for third-party campaigners to $500,000. He reiterated that "third party campaigners should have sufficient scope to run campaigns to influence voting at an election - just not to the same extent as parties or candidates". Then, after concerns were raised during the second reading debate about the reduction of the cap, the Minister said that the Bill was adopting "a specific recommendation of an independent panel of experts". He also reiterated the concerns that had been present in the Previous Act about third‑party campaigners "drowning out" candidates and "dominating election campaigns".
The Special Minister of State also explained that the Electoral Funding Bill implemented the recommendation of the Panel that third-party campaigners be prohibited from acting in concert with others to exceed the expenditure cap. In his reply speech, the Minister reiterated that the provision implemented the Panel report and said that "[t]hird-party campaigners should not be permitted to circumvent the expenditure caps by setting up 'front' organisations" and that it "does not prevent third parties with a common interest from campaigning on the same issue". However, as I have explained, the provision goes further than this and imposes significant constraints on third-party campaigners that are not imposed upon parties or candidates. The close association in the Panel report between this provision and the spending cap reduction invites the inference that the additional purposes for each measure were common.
Conclusion
The Electoral Funding Act increased the cap of $1,050,000 for an independent group of candidates for the Legislative Council to $1,288,500. But, instead of making the same indexed increase to the previously identical cap for third-party campaigners, the cap for those third parties was decreased by more than half. The new cap for registered third-party campaigners was $500,000. At the same time a new "acting in concert" offence was created for third-party campaigners only. At the stage of assessing the legitimacy of purpose, the purpose of one cannot be assessed independently of the purpose of the other.
The Electoral Funding Act preserved the "key pillars" of the Previous Act. But in replacing the Previous Act with a "new, modernised Act" it implemented an additional purpose. The large reduction of the cap for third-party campaigners and the associated introduction of an "acting in concert" offence were not irrational or random decisions but were the product of a considered legislative decision to adopt a purpose to privilege political parties and candidates. As senior counsel for the plaintiffs submitted, it was clear "what this law is doing" but one simply does not "know why it is doing that other than to shut down that protected speech". That submission should be accepted.
The only rational explanation for the reduction in the cap for third-party campaigners and the introduction of the "acting in concert" offence is that in implementing the recommendations and reasoning of the Expert Panel Report, the Parliament of New South Wales acted with the additional purpose, not merely the effect, of quietening the voices of third-party campaigners relative to political parties and candidates. That purpose, which was effectively, and properly, common ground between the plaintiffs and the defendant in this case, cannot co‑exist with the implied freedom of political communication.
The answers to the questions in the special case should be as follows:
Question 1: Is section 29(10) of the Electoral Funding Act 2018 (NSW) invalid because it impermissibly burdens the implied freedom of communication on governmental and political matters, contrary to the Commonwealth Constitution?
Answer: Yes.
Question 2: Is section 35 of the Electoral Funding Act 2018 (NSW) invalid (in whole or in part and, if in part, to what extent), because it impermissibly burdens the implied freedom of communication on governmental and political matters, contrary to the Commonwealth Constitution?
Answer: Yes, in its entirety.
Question 3: Who should pay the costs of the special case?
Answer: The defendant.