Case Summary and Outcome

High Court unanimously held that Sections 96D and 95G(6) the EFED Act were invalid because they impermissibly burdened Australia’s implied freedom to political communication, and did not further the EFED’s Act purported purpose of lessening corruption. The impugned provisions of New South Wales’ Election Funding, Expenditure and Disclosures Act of 1981 (“EFED Act”) required political donors to enroll on an electoral roll, and capped aggregated donations by some organizations affiliated with political parties. The provisions, in effect, limited political donors to those who are registered to vote and prohibited donations from corporations or other entities that are not eligible to vote.

Facts

The Election Funding, Expenditure and Disclosures Act 1981 (“the EFED Act”) enacted in the state of New South Wales (NSW, “the state”), Australia, contained a variety of provisions concerning campaign donations and elections law. Part 6, Division 4, Section 96D of the EFED Act (“Section 96D”) made it unlawful for a political entity to accept a political donation except when the donor is enrolled on the roll of electors for a local, state, or federal election. In effect, it limited political donors to those who are registered to vote and prohibited donations from corporations or other entities that are not eligible to vote.

A second provision, Section 95G(6), limited the amount that a party and its affiliates can spend on political donations. For evaluating the amount spent on political donations, Section 95G(6) aggregated all the donations made by entities subject to its restrictions. EFED Act Section 95B(2) provided an exception under which a person could accept a donation exceeding the applicable caps when the donation was for federal or local campaigns. New South Wales included the exception because the state has more power to regulate statewide campaigns than national or local campaigns.

A group of organizations and individuals including Unions NSW (collectively “Unions NSW”) which intended to make political donations to the Australian Labor Party and other organizations brought suit against the state of New South Wales.

Unions NSW claimed that Sections 96D and 95(G)6 of the EFED Act violated the implied freedom of communication on governmental and political matters (the “freedom of political communication”). Unions NSW also argued that provisions of the EFED Act violated the NSW Constitutional Act of 1902 and Australian electoral laws. This was a special case brought before the High Court of Australia.

Decision Overview

The Court began by analyzing the freedom of political communication itself. For one, the freedom of political communication applies at the state level, not just to the commonwealth government of Australia. The Court also stressed that a piece of legislation is not invalid merely because it restricts the freedom of political expression. To be invalid, a law must so burden “the freedom that it may be taken to affect the system of government for which the Constitution provides and which depends for its existence upon the freedom.” (at 7) The freedom of political communication protects the free flow of information and is essential to a representative government. It is not a personal right, but a restriction on legislative power.

The Court then analyzed if Section 96D burdens the freedom of political communication in its “terms, operation or effect.” (at 13) Because Section 96D restricts the sources of funds available for political communication, politicians or the parties themselves may be forced to fund the gap, burdening the freedom to make those communications. When a law burdens a freedom, the state can validate the infringement through the Lange test, from the case Lange v. Australian Broadcasting Corp. To be in accordance with the Constitution and thus valid, the Lange test requires that the challenged provision reasonably serves a legitimate end, and that a reasonable alternative does not exist. While the state argued that the purpose of Section 96D was to fight corruption, the Court found that the section acted as a general prohibition on a type of political donation, and that it was insufficiently connected to its alleged purpose. Furthermore, there was nothing else in the EFED Act that alluded to Section 96D that could be used to establish a connection between the provision and limiting corruption. Because Section 96D was found to be not reasonably connected to a legitimate purpose, the section was invalid.

Turning to Section 95G(3), the state conceded that the provision infringed on the freedom of political communication, but argued that the burden was justified by the anti-corruption purposes of the EFED Act. Once again, the Court examined whether the provision served the purported purpose. The Court could not determine how the fund cap in Section 95G(3) was connected to the supposed anti-corruption purpose of the EFED Act. Accordingly, Section 95G(3) was also invalid.

Summarily, New South Wales failed to show Sections 96D and 95G(6) were necessary to advance the EFED Act’s supposed purpose of fighting corruption. For this reason, the High Court unanimously held that Sections 96D and 95G(6) were contrary to the Constitution and thus invalid. The Court found it unnecessary to review the provisions related to the NSW Constitutional Act of 1902 and Australian electoral law, and only addressed the issues related to the freedom of political communication.