FactCheck Q&A: would the Constitution need to be changed to ban political donations from unions?

Labor senator Doug Cameron, speaking on Q&A. Q&A

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Excerpt from Q&A, September 12, 2016.

DOUG CAMERON: … The High Court has made a decision that the unions are entitled to fund parties and so are business. So there’s a High Court decision. You need to change the Constitution to go down the path you’ve been talking about… – Labor Senator Doug Cameron, speaking with the editor of Spectator Australia, Rowan Dean and presenter Tony Jones on the ABC’s Q&A program, September 12, 2016.

When a fellow Q&A panellist proposed a ban on unions donating to political parties, Labor senator Doug Cameron told Q&A that you’d need to change the Australian Constitution to go down that path.

Is that true?

Checking the source

When asked for a source to support his statement, a spokesman for Doug Cameron referred The Conversation to the case of Unions NSW and Others v State of New South Wales (2013), which examined the question of union donations to political parties.

You can read the full response here.

What has the High Court has said about political donations?

In the last four years, the High Court has decided two important cases about regulation of political donations in Australia. But it hasn’t gone so far as to say that unions and business are “entitled” to fund political parties.

Further, it has very carefully distinguished the Australian position from that of the United States, where the 2010 Citizens United v Federal Election Commission Supreme Court decision held that “artificial entities” such as corporations and unions have a right to make political donations.

In Australia, the constitutional position is a little more complex.

The first case: Unions NSW v New South Wales

In the first case, Unions NSW v New South Wales, the Court struck down two provisions of the New South Wales Election Funding, Expenditure and Disclosures Act 1981 (the “EFED Act”).

First, the Court struck down section 96D, which restricted political donations to people on the federal, state or local electoral roll. The effect of section 96D had been to prevent donations from artificial entities such as corporations and unions, and from non-citizens.

Section 96D of the Election Funding, Expenditure and Disclosures Act 1981 No 78. Election Funding, Expenditure and Disclosures Act 1981 No 78

The Court decided that this provision restricted the ability of political parties, candidates and third party campaigners to access funding to engage in political communication. Importantly, this was very different from the decision in the US’ Citizens United case, which focused on the right to free speech of the artificial entities (meaning corporations, unions and other such bodies).

The Australian High Court was also unconvinced that the parliament had a good reason to restrict donations only to those on the electoral roll. The Court said there was no evidence before it that non-voters were likely to have a more corrupting influence on the electoral system than voters.

The restriction that the Court considered was not limited to large or multi-national corporations, or foreign donors. So it is not clear whether restrictions targeting these groups would be upheld by the Court if there was evidence to suggest they have a particular corrupting influence.

Second, the Court struck down section 95G, which aggregated the amount of money spent by political parties and “affiliated organisations” for the purposes of the political campaign expenditure caps.

“Affiliated organisations” was defined to mean bodies or organisations authorised under the rules of the political party to appoint delegates to the governing body of the party or participate in pre-selection of candidates, or both.

The combined effect of the provision and the definition meant political expenditures by unions were included in the expenditures caps of the Labor Party.

Again, the Court struck down this section because it was not convinced there was a legitimate reason for singling out union expenditure on political campaigns.

The second case: McCloy v New South Wales

The principles that emerged in the Unions NSW decision were reaffirmed in the second case: McCloy v New South Wales. In this case, a majority of the High Court upheld two parts of the New South Wales Election Funding, Expenditure and Disclosures Act 1981.

First, the Court upheld Part 6, Division 2A, which in effect, put in place a system of donation “caps” across all donors. The Court was satisfied that this was a proportionate response to the aim of addressing corruption and undue influence in government, and promoting the actual and perceived integrity of the electoral system.

Second, the Court upheld Part 6, Division 4A, which prevented certain “prohibited donors” – including property developers, tobacco industry entities and gambling industry entities – from making political donations.

In the case itself, the Court only had to consider the question of banning donations from property developers. A majority again accepted that this restriction was a proportionate response to the threat of corruption and undue influence. They were able to point to evidence – contained in eight adverse reports of the NSW Independent Commission Against Corruption – that demonstrated property developers posed a particular risk of corruption.

So, would Australia need to change the Constitution to ban political donations from unions and business?

Following the Unions NSW decision, an Australian parliament could not place a targeted ban on political donations from unions. However, that is not the same as saying, as Doug Cameron did, that the High Court has said unions and business are “entitled” to fund parties.

Two key principles emerge from the cases that must inform future regulation of political donations:

  1. Generally applicable electoral funding restrictions, which don’t single out groups such as unions or artificial entities, are likely to be constitutional. They’re likely to be seen by the Court as a proportionate response to addressing concerns over corruption and undue influence in government.

  2. Electoral funding restrictions that apply in a discriminatory way against particular groups will only be constitutionally acceptable if there is sufficient and robust evidence that these groups pose a particular threat to the integrity and perceived integrity of the electoral system.

It is difficult to say whether, in a future case, sufficient evidence can be produced to satisfy the Court that groups such as big business or foreign donors pose a specific and high risk to the integrity of the electoral process.

Verdict

Doug Cameron got it right insofar as an Australian parliament could not place a targeted ban on political donations from unions. The High Court would likely consider such a move unconstitutional. Legislation that targets donations and expenditure of unions and artificial entitles including corporations, has been struck down by the Court.

However, he was incorrect to say that unions and businesses are “entitled” to make political donations. The High Court has not prevented future regulation of political donations and expenditures from unions and business. For example, union and business donations could be regulated through generally applicable funding restrictions.

Any future legislation regulating political donations and spending from these groups will have to be considered against the two key principles that emerge from the recent High Court decisions. – Gabrielle Appleby


Review

Doug Cameron was broadly right in what he said, in that the High Court has struck down laws that attempted to ban unions and businesses from making political donations. Technically, if one wants to quibble about words, a union is not constitutionally “entitled” to donate, as the constitutionally implied freedom of political communication is not a personal right or entitlement. Instead, it is a limitation on the Commonwealth’s legislative power.

So if one was aiming for lawyerly precision (which probably few lawyers could achieve in an interview on live television anyway) it would have been more accurate to say that the High Court has struck down as invalid a law implementing a blanket ban on unions, businesses and others not on the electoral roll from making political donations.

It is also true, as noted by the FactCheck author, that the High Court has since accepted that in some instances categories of donors (such as property developers) may be banned from making political donations – such as when there is evidence of a serious risk of corruption.

That means it is possible that in the future, a law directed at preventing corruption could have the effect of preventing a union from making a political donation. But that could only happen if the law in question met the complex proportionality tests laid down by the High Court and was backed up by strong evidence. It is unlikely that it could apply on a blanket basis.

Equally, all political donations could be regulated by general laws, such as placing reasonable caps upon donations. It seems a bit rough, however, to expect anyone to have to explain those qualifications in a sentence on Q&A. – Anne Twomey


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