Political donations restrictions ruled to be unconstitutional

Today the High Court delivered judgment in Unions NSW v State of New South Wales [2013] HCA 58 in which the Court unanimously held that reforms to the Election Funding, Expenditure and Disclosures Act 1981 (NSW) introduced by the O’Farrell government are invalid because they impermissibly burden the implied freedom of communication on governmental and political matters, contrary to the Commonwealth Constitution.

Section 96D of the Act purported to prohibit the making of a political donation to a political party, elected member, group, candidate or third-party campaigner, unless the donor was an individual enrolled on the electoral roll for State, federal or local government elections.  The Act also purported to cap the total expenditure that political parties, candidates and third-party campaigners could incur for political advertising and related election material.  For the purposes of this cap, section 95G(6) of the Act aggregated the amount spent on electoral communication by a political party and by any “affiliated organization” of that party, ie a body or organization “that is authorized 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)”.

The High Court unanimously held that sections 96D and 95G(6) burdened the implied freedom of communication on governmental and political matters. Although the implied freedom of political communication arises by way of implication from the system of representative and responsible government provided for by the Commonwealth Constitution, nonetheless the freedom also applied to restrictions on political communication arising in the course of a State election. This was because there is an overlap in the discussion of political and governmental matters at a State and federal level and that it may be difficult to separate those kinds of issues.  The Court accepted that the Act had general anti-corruption purposes.  However, the Court was not satisfied that the impugned provisions were sufficiently directed towards those anti-corruption purposes.