Common(wealth) Knowledge #38: Unions 3, New South Wales 0

A revisit of the definition of protected speech in Australia.

The New South Wales election is just over a month ahead. And, just as I predicted, the implied freedom of political communication has once again been hauled before the High Court of Australia, with provisions of the State’s electoral legislation that regulate campaign funding and donations in question. So, for the second time in as many weeks, let’s once again revisit the definition of protected speech in Australia.

Every election season, campaign funding and donations inevitably become contentious topics. For some, private campaign contributions are seen as a way for lobbyists to keep their preferred politicians, usually the major parties, in power. Others argue that the government has no right to regulate private campaign contributions, often bringing up freedom of speech and laissez-faire economics. In addition, there are groups who seek to make private contributions as transparent as possible, and some who believe that the government should give funding to parties based on their performance in past elections.

In this situation, it is the freedom of speech argument that is relevant, or to use its Australian name, the ‘implied freedom of political communication.’ Freedom of expression and speech about all things relating to politics and government are considered to be essential to the Australian democratic model. In the words of Senator-turned-High Court Justice Lionel Murphy in Ansett Transport Industries (Operations) v Commonwealth (1977), “elections … require freedom of movement, speech, and other communication … freedoms so elementary that it was not necessary to mention them in the Constitution.”

Unions NSW has the honour of being the first organisation to successfully challenge electoral laws for violating the implied freedom of political communication. In Unions NSW v New South Wales (2013) (‘Unions [No 1]’), the High Court invalidated laws that imposed an ‘expenditure cap’ on election spending for some organisations, like unions.

The High Court agreed that this was wrong. According to the majority judgment, at paragraph [30], the implied freedom “is not simply a two-way affair between electors and government or candidates.” Those “entities have a legitimate interest in governmental action and the direction of policy,” and so the lower cap imposed on those organisations should be removed. In addition, this burden on the implied freedom wasn’t outweighed by the need to limit corruption, the supposed purpose of the cap, because it didn’t actually achieve that purpose.

In 2019, a second successful challenge was brought against new donation restrictions in ordinary elections in Unions NSW v New South Wales (2019) (‘Unions [No 2]’). And Unions NSW now has a hat trick, with a third victory here, in Unions NSW v New South Wales [2023] (‘Unions [No 3]’).

This time, Unions NSW was challenging Section 29(11) of the Electoral Funding Act 2018 (NSW). Under that sub-section, ‘third-party campaigners,’ defined by Section 4 of the Act as being people and entities who are not candidates or parties, but incur ‘electoral expenditure’ by spending money during the election campaign, cannot spend more than $20,000 at a by-election. Unions NSW falls under this definition.

Section 29(11) deals with by-elections, and says that no third-party campaigner can spend over $20,000 in a by-election during the ‘capped period.’ The capped period is effectively the duration of the election, from when it is first called and the writs issued to hold the election until its end.

Unions NSW, the State government, and the Commonwealth government, who had intervened in the case to support the State government, all agreed that the cap burdened the implied freedom of political communication. This meant that the New South Wales government would have to justify why the implied freedom was limited, under the test outlined in McCloy v New South Wales (2015), another case involving New South Wales’ electoral legislation.

The judgment was a short one. During the case, the State government decided to accept the argument that the provision was invalid. But, because the State government didn’t talk about repealing or amending the provision, the High Court decided it was necessary to rule that it was invalid. Most of the court’s time was spent explaining that they didn’t have the jurisdiction to consider whether Section 35, which involved third parties working together to get around the cap, and had already been repealed by the time the case was heard.

In Unions [No 1], the High Court held that there wasn’t a legitimate purpose for the limitations. In Unions [No 2], most judges concluded that it failed the third and final stage of McCloy, as the government had not provided proof that placing a lower cap of $500,000 on third-party campaigners than the cap on parties and candidates was necessary. They could not prove that they had considered whether there were any alternatives that would achieve the same objectives contained in Section 3 of the Act but would not burden the implied freedom as much.

In Unions [No 2], it was said at [15] that “the capping of both political donations and electoral expenditure restricts the ability of a person or body to communicate with others.” Unions [No 3] reinforces this, and demonstrates what has been described as a shift away from American-style free speech, a shift that started in McCloy and continued in Unions [No 2]. Instead, the implied freedom is more like ‘political equality,’ with all people and entities having an ‘equality of opportunity’ to participate in Australian democracy.

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Sources:

Ansett Transport Industries (Operations) Pty Ltd v Commonwealth (1977) 139 CLR 54; [1977] HCA 71.

Electoral Funding Act 2018 (NSW).

McCloy v New South Wales (2015) 257 CLR 178; [2015] HCA 34.

Unions NSW v New South Wales (2013) 252 CLR 530; [2013] HCA 58.

Unions NSW v New South Wales (2019) 264 CLR 595; [2019] HCA 1.

Unions NSW v New South Wales [2023] HCA 4.

Elijah Granet’s ‘Better AustLII’