High Court holds that lower caps on third party electoral expenditure breach the implied freedom of political communication

Unions NSW v New South Wales [2019] HCA 1 (29 January 2019)

Summary

The High Court of Australia unanimously held that a NSW law that imposed a lower cap on the allowable electoral expenditure for third party campaigners compared with expenditure allowed for political parties and candidates was unconstitutional, as it impermissibly burdened the implied freedom of political communication.

Facts

The Electoral Funding Act 2018 (NSW) (EF Act) imposed caps on the value of political donations to, and expenditure on political campaigns by, political parties, candidates, elected members and others, including third party campaigners. Put simply, third party campaigners are individuals and organisations that incur expenditure for the dominant purpose of promoting or opposing candidates or political parties or otherwise influencing voting in an election, but who are not themselves formally associated with a political party or candidate.  

The EF Act replaced the former Electoral Funding, Expenditure and Disclosures Act 1981 (NSW) (EFED Act) and retained most of its structure, however it made a sharp reduction in the amount of electoral expenditure that could be incurred by third party campaigners, down from $1,050,000 to $500,000 (subsection 29(10)). It also prohibited third party campaigners from acting in concert with others to exceed the applicable cap (section 35). In practice the amendments, introduced by the NSW Liberal Government, significantly limited the amount unions could spend during the State election.

A collection of trade union bodies, all but one of whom were registered third party campaigners, brought a case against the New South Wales government, alleging that sections 29(10) and 35 of the EF Act were invalid because they imposed impermissible burdens on the implied freedom of political communication. They alleged:

(a)   that the purpose of section 29(10) was not legitimate because it was discriminatory in its aim to privilege the voices of political parties in State election campaigns over the voices of persons or groups who do not stand candidates, by preventing third party campaigners from spending on an equal basis to parties or groups of independent candidates; and in the alternative,

(b)   that assuming the purpose is legitimate, section 29(10) is nonetheless invalid as it is not justified, that is it is not reasonably appropriate and adapted or proportionate in the means chosen to advance that purpose.

The plaintiffs submitted that NSW had not provided any evidence that halving the expenditure cap for third party campaigners in the EF Act was necessary. Prior to its introduction, a NSW Government Expert Panel had suggested third party campaigners should not be able to drown out the voices of parties and candidates and that political parties and candidates should have a privileged position in election campaigns because they are directly engaged in the contest and are the only ones able to form government. It recommended that the spending cap be halved to $500,000, but also that the amount be checked against actual spending on the 2015 election. The NSW Government referred the Expert Panel Report to the Joint Standing Committee on Electoral Matters (JSCEM) for review. The JSCEM recommended that before cutting the cap on third party campaigners that the NSW Government consider whether there was sufficient evidence that a third party campaigner could present its case within that expenditure limit. The High Court was not presented with any evidence that such a consideration had taken place.

Decision

The High Court unanimously held that subsection 29(10) of the EF Act was invalid as it impermissibly burdened the implied freedom of political communication. Given this, it followed that there was no cap on which section 35 of the EF Act could operate.

Chief Justice Kiefel, and Justices Bell and Keane assumed that the purposes of the capping provisions, which were to ensure that wealthy voices could not drown out the voices of others, i.e. to create a “level playing field” between political actors, were legitimate. Their Honours referred to McCloy, in which it was held that such purposes “not only do not impede the system of representative government provided for by the Constitution; they enhance it.” ([31])

However their Honours found that NSW had not justified how halving the cap on third party campaigners was necessary to prevent the drowning out of voices other than third parties. Although parliament does not ordinarily need to provide evidence for the legislation it passes, if the law burdens the implied freedom then it must be justified. In this case, no basis was provided in the Expert Panel report for halving the figure of allowable third party expenses, nor was the figure checked against actual expenditure at the 2015 election. Nor had any inquiry been made as to what amount is necessary to allow third party campaigners reasonably to communicate their message.

Justice Gageler found that the purpose of privileging the voices of some over others can be permissible insofar as it is fair to restrict voices that may otherwise dominate the debate and to make room for all to be heard. He found that the “functional distinction between a political party which aims to form government and a third party campaigner justifies a substantial variation between the amount of the cap imposed on the electoral expenditure of that political party and the amount of the cap imposed on the electoral expenditure of a third party campaigner.” ([90]) This, he said, was necessary to prevent political parties from being overwhelmed by targeted campaigns by any number of third parties.

However, Justice Gageler found that it was not possible to conclude that the $500,000 cap on electoral expenditure of third parties was justified because it was not clear on the evidence before the court that the cap is sufficient to allow a third party campaigner to reasonably present its case to voters. The JSCEM had recognized that there was an unanswered question of fact whether $500,000 would be sufficient and the special case before the court did not contain material in support of its sufficiency.

Justice Nettle also found that the purpose of preventing voices being drowned out is legitimate and focused on whether the means chosen to achieve it are appropriate and adapted to that purpose. He used the test of whether the EF Act is suitable, necessary, and if so adequate in its balance. He accepted the plaintiffs’ argument that the Government had not provided any demonstration of why it was necessary to cut the expenditure cap in half, and that the reduction was an unjustified burden on the implied freedom.

Justice Gordon similarly found that even if the expenditure cap on third parties were rationally connected to legitimate purposes, the Court is unable to assess whether the level of expenditure cap is reasonably appropriate and adapted, as the NSW government had not provided sufficient justification in the material in the special case.

Justice Edelman, on the other hand, found that in the NSW government had an additional illegitimate purpose in enacting the cap on third party campaigners, namely quietening the voices of third party campaigners relative to political parties and candidates. He found that such a purpose cannot co-exist with the implied freedom of political communication.

The decision is available here.

Emily Howie is the Director of Legal Advocacy, Human Rights Law Centre.