There are a number of case summaries that have been
written on the High Court’s most recent implied freedom of political
communication case, McCloy v New South
Wales [2015] HCA 34 (“McCloy”). This
case summary is different in that it is designed for law students and junior
lawyers and the content is intended to assist in assignments and exams.
Background
Jeff McCloy, the former Lord Mayor of Newcastle and
current property developer challenged the validity of several parts of the Election Funding, Expenditure and
Disclosures Act 1981 (NSW) (EFED Act) on the basis that the laws
impermissibly burden the implied freedom of communication of political and
government matters. As you are probably aware, McCloy was before ICAC earlier
in 2015 regarding political donations made far in excess of the cap. The
following parts of the EFED Act were challenged:
1. Division
2A of Part 6 which creates a general cap of $5,000 (increased annually in line
with the equation in Schedule 1)) for political donations to a registered party
or candidate for State elections;
2. Division
4A of Part 6 which prohibits political donations being made by property
developers, tobacco industry businesses and liquor and gambling industry
businesses ; and
3. Section
96E which prohibits certain indirect campaign contributions including provision
of office accommodation, vehicles, computers and other equipment for no or
inadequate consideration for use substantially for election campaign purposes.
New South Wales was joined as defendant by the
Commonwealth, Western Australia, Queensland, South Australia and Victoria.
The Lange test – a reminder
A two-step test for determining whether a law is
invalid due to the constitutional freedom of political communication was
developed in Lange v ABC (1997) 189
CLR 520 (“Lange”)):
Step
1 – Does the law effectively burden political communication in its legal or
practical operation?
Step
2 – Is the law reasonably appropriate and adapted to serve a legitimate end in
a manner which is compatible with the system of representative and responsible
government established by the Constitution?
How did McCloy build on the Lange test?
At issue in McCloy
was the nature of Step 2 of the Lange
test. The majority adopted a proportionality approach which neither Gageler
J, Gordon J or Nettle J agreed with.
Lange remains
the authority for the test for the constitutional implied freedom. McCloy adds to Lange by clarifying the steps to take when deciding whether the
measure is “reasonably appropriate and adapted” to achieve a legitimate end
([70]). In McCloy, the majority
refers to this as the “proportionality test” and specifies three elements that must
be established before the proportionality test is satisfied – suitable,
necessary and adequate in its balance.
What was the
outcome in McCloy?
The outcome (6:1 - French CJ, Kiefel, Bell and
Keane JJ, Gageler J, and Gordon J : Nettle J) was that none of the EFED Act laws
challenged exceeded the implied freedom of political communication derived from
ss.7, 24, 64 and 128 of the Constitution. However, while the majority in their joint
judgment (French CJ, Kiefel J, Bell J and Keane J) came to this conclusion
through the proportionality approach, Gageler J applied Lange in its classic sense and rejected the majority’s
proportionality approach, while Gordon J rejected the “balancing” aspect of the
majority’s proportionality approach. Nettle J found the laws prohibiting
donations from building developers were invalid, as they discriminated particularly
against this group, and the justification was not sufficient to warrant this
discrimination. Nettle J found it was unnecessary to decide on the
proportionality point. The outcome on the proportionality point was 4:3 (French
CJ, Kiefel, Bell and Keane JJ : Gageler J, Gordon J and Nettle J).
What you
need to know – the three question test from the joint judgment
The joint judgment commences at paragraph 2 by
reiterating that the Constitutional implied freedom of political communication
is not an absolute freedom, but a qualified freedom that is implied in order to
ensure the people of the Commonwealth may “exercise a free and informed choice
as electors” (Lange). Relying on Lange as modified in Coleman v Power (2004) 220 CLR 1, and
adding a proportionality analysis to the second limb of Lange, the High Court succinctly set out the three questions to
answer when determining if a law exceeds the implied freedom of political
communication on governmental and political matters. I have converted this information
into a flow chart:
*"Compatability test"
The compatability test requires firstly that the
following be identified:
1. The
purpose of the law; and
2. The
means adopted to carry out the purpose of the law.
Both (1) and (2) must be “compatible with the
constitutionally prescribed system in the sense that they do not adversely upon
the functioning of the system of representative government”. The compatability
test is a rule derived from the Constitution itself ([68]).
#“Proportionality
test”
The High Court majority added a proportionality test
to the second limb of Lange. All
three elements must be satisfied before proportionality can be said to exist:
1. Suitable
– “having a rational connection to the purpose of the provision”.
If the measure cannot contribute to the realisation
of the statute’s legitimate purpose, it cannot be said to be reasonable ([80]).
The majority indicate this is consistent with both Lange and Unions NSW v New
South Wales (2013) 252 CLR 530 (“Unions
NSW”).
2. Necessary
– “there is no obvious and compelling alternative, reasonably practicable means
of achieving the same purpose which has a less restrictive effect on this
freedom”.
This inquiry is to whether there is other, equally
as effective means of achieving the legislative object which have a less
restrictive effect on the freedom. These alternative means must be obvious and
compelling. The majority indicate this is consistent with the approach taken in
Lange and Unions NSW ([81]).
3. Adequate
in its balance – requires the judge to make a value judgment “describing the
balance between the importance of the purpose served by the restrictive measure
and the extent of the restriction it imposes on the freedom”.
The High Court said analysing the balance between
the purpose and the extent of the restriction logically inheres in the Lange test, although this is the first
time the High Court has “fleshed out” that this requirement is a necessary part
of the second limb of the Lange test ([86]).
In the balancing aspect of the proportionality test the positive effect of
realising the law’s proper purpose must be balanced with the negative effect of
limiting the constitutional freedom. The greater the restriction on the
freedom, the more important the public interest purpose of the legislation must
be for the law to be proportionate or balanced ([87]).
Applying the
test to the provisions of the EFED Act – the joint judgment
Question 1 –
does the law effectively burden the freedom?
In Unions NSW
a case concerning the operation of Part 6 of the EFED Act, the High Court
identified the burden as a restriction on the source of the funds available to
political parties to meet the costs of political communication, as even with
the public funding provided for in Part 5, a party or candidate will have to
fund any shortfall. In McCloy, the
majority identified this as the relevant burden. McCloy’s lawyers made an
additional submission that the EFED Act prevents donors from making substantial
political donations in order to build and assert political power. The High
Court rejected this submission, as the ability to make substantial donations is
not part of the implied freedom. Guaranteeing the ability of a few to make
large political donations goes against the underlying principle of ensuring
individuals have an equal share in political power ([28]).
Once the Plaintiff has established the law burdens
the freedom, the burden then shifts to the Defendant to justify that burden by
answering “Question 2” and “Question 3”.
Question 2 –
is the compatibility test satisfied? Is the purpose and means compatible with
the system of representative government provided for in the Constitution?
Div 2A Part 6
The purpose of Div 2A was identified as preventing
and reducing the amount of corruption and undue influence in the government of
the State, as well as to overcome perceptions of corruption and undue
influence. The means to achieving this purpose in Div2A is to set a general cap
on political donations. Capping political donations is consistent with
representative government, as it helps to ensure equality of opportunity to
participate in the political process and that one voice does not drown out
others ([43] to [47]).
Section 96E
As s.96E is effectively an anti-avoidance provision
which attempts to prevent donors getting around the general cap in on political
donations in Div 2A, the validity of s.96E depends on that of Div 2A. As Div 2A
passes the compatability test, so does s.96E.
Div 4A Part 6
Div4A prohibits property developers from making
political donations. McCloy submitted that there is nothing special about
property developers that make them more likely to make corrupt payments than
other entities ([48]). The High Court accepted New South Wales submission that
property developers can be distinguished from other participants due to their
dependence on decisions of government in matters such as land zoning and
development approvals. The purpose of Div 4A in reducing the risk of undue or
corrupt influence in planning decisions where the risk is greater than in other
areas of official decision making is legitimate, as are the means adopted to
achieve the purpose ([53]).
Question 3 –
is the proportionality test satisfied? Is the law suitable, necessary and
adapted?
The majority found the proportionality test was
satisfied for all the provisions of the EFED Act in dispute. The effect of the
laws on the freedom is indirect. The negative effect of reducing funds
available to election campaigns and restricting communication by political parties
and candidates to the public needs to be balanced with the public interest in
removing the risk and perception of corruption. The majority concluded the
restriction on the freedom is more than balanced by the benefits sought to be
achieved in removing the risk and perception of corruption ([93]).
Gageler J’s
judgment
Gageler J dissented from the majority in his
characterisation of the second part of the Lange
test, rejecting the need for a proportionality test and highlighting two main
problems with the majority’s proportionality approach:
1. One
size does not fit all, and the standardised criteria in the proportionality
approach will not fit all cases ([142]); and
2. Requiring
a law to be “adequate in its balance” is not sufficiently focused on the
reasons for the Constitutional freedom. Equating “strict proportionality with
“specific balancing” has always been a controversial approach ([146]).
Gageler J’s formulation of the second stage of the Lange test is that there must be an
explanation and a justification. First, the imposition of the restriction on
political communication must be explained
by the law’s object. Second, the restriction on political communication
that is imposed by the law must be justified
by the law’s reasonable pursuit of the identified legitimate end.
Nettle J’s
judgment
Nettle J neither agreed nor disagreed with the
majority’s strict proportionality analysis, as “for present purposes...it is unnecessary
to delve into strict proportionality” ([222]). While Nettle J held the donation
caps and restrictions on indirect contributions passed the two step Lange test were valid, Nettle J departed
from the majority and held the laws prohibiting donations from property
developers to be invalid. This was because Div 4A of Part 6 discriminates
against a particular segment of the community, requiring strong justification,
which was not present ([257]).
Gordon J’s
judgment
Gordon J agreed with the majority on the outcome,
however decided it was not necessary to limit the way in which a court can be
satisfied of the second limb of Lange. Gordon
J held that a court may consider
whether there are more compelling, reasonably practicable ways of achieving the
same end, but this will not always be necessary and there are many ways in
which a court could approach the second limb of Lange, and the second limb should not require a set sequence of steps. Gordon Jdirectly rejected that
“balancing” is a part of the second limb of Lange
“as there are no criteria or rules by which a “balance” can be struck
between means and ends” ([336]).
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