Democracy is not a spectator sport: more on campaign finance and public health

Picture1Mike Daubes tie 2

In October 2015, at the Oceania Tobacco Control Conference, Professor Mike Daube, one of Australia’s best-known public health advocates, gave the closing address.

He wore a tie given to him some years ago by an American colleague.  It read: “Democracy is not a spectator sport”.

On the back were the words: “Made exclusively for Philip Morris”.

The tie had been sent to all member of Congress.


A seat at the table

Like other business groups, tobacco companies want to be “part of the process”, to have a seat at the table.  In the words of the CEO of one Australian tobacco company:

“The purpose [of political donations by tobacco companies] is to make sure the democratic process is working and to get access, so we can have a seat at the table…. I think it’s really important that people fund democratic parties so that they can exist. Otherwise they cease to exist, they take the money from the public purse.  I think it’s a really strong part of democracy that political parties are allowed to raise funding from their constituency…the only caveat I would make to that is it has to be absolutely transparent.”

RM: But is that what a political donation buys?

“…you know, you get to [go to a lunch where a Minister is speaking] and you get to have a chat with him and say, ‘how are you?’ And you get to know the people and the players in the market; otherwise you never have any human contact, [which makes it] incredibly hard to be part of the process.”

In Australia, the High Court has ruled that freedom of political communication on matters of politics and government is implied by the Australian Constitution and is “an indispensable incident of the system of representative government for which the Constitution provides”.

But should this freedom translate into a right for tobacco, alcohol, gambling, and other corporations to make large donations to political parties in order to strengthen alliances and to influence political and policy processes?

If the capacity to make political donations acts as a social lubricant which facilitates access and relationship building, where should the line be drawn in denying access to certain industries?

As noted in a previous post, in McCloy v New South Wales [2015] HCA 34 (7 October 2015), the High Court considered the constitutional validity of provisions of the Election Funding, Expenditure and Disclosures Act 1981 (NSW), which impose caps on political donations and electoral communications expenditures.

The same Act prohibits property developers, tobacco industry business entities, and liquor or gambling industry business entities from making political donations at all.

In McCloy, a property developer argued that the freedom to “build and assert political power”, by making substantial political donations with the intention of achieving access to politicians, was an aspect of the implied freedom of political and government communication.

The plaintiff argued that as a result, the caps on political donations imposed by the Election Funding, Expenditure and Disclosures Act 1981 (NSW) (ss 95A-95B) were inconsistent with the Constitution and therefore invalid.

This post briefly summarises key aspects of the reasoning adopted by French CJ, Kiefel, Bell and Keane JJ, who joined in the majority judgment.


Freedom of political and government communication in Australia

In an earlier case which had considered a different section of NSW’s Election Funding Act, five Justices of the High Court reaffirmed that, unlike the First Amendment to the United States Constitution, the implied freedom of political communication is not a personal right which restricts legislative power in accordance with the measure of a constitutionally protected individual freedom of persons to express themselves.

In Unions NSW the High Court accepted that the freedom of political communication protects the discussion of political and government matters at federal, state and local levels (Unions NSW [25]).

In McCloy, the majority summarised the approach that the Court takes when it considers the validity of legislation – in this case NSW’s Election Funding Act.

The first question is to consider whether the specific provision in dispute “effectively burdens the freedom of political communication either in its terms, operation or effect” (Unions NSW [35]).

The High Court accepted that irrespective of the legitimacy of the purpose of the Election Funding Act, the provisions in dispute did effectively burden the implied freedom of communication because they reduced the funding available to political parties and candidates (Unions NSW [38]; McCloy [30]).

Given this conclusion, the next question was whether the provisions of the Act that were in dispute were proportionate or served a legitimate purpose in a way that was compatible with the system of representative government prescribed in the Constitution ([Unions NSW [44]).

Identifying whether legislative provisions serve a legitimate purpose requires the court to identify the statutory purpose(s) that the relevant provisions seek to achieve (McCloy [31]).


Caps on political donations

The majority accepted that the caps on political donations were intended to prevent corruption and undue influence within the government of the state.  They were also directed to overcoming perceptions of corruption and undue influence, which could in turn undermine public confidence in government (McCloy [33]-[34]).

The majority accepted that large political donations by wealthy donors may dominate the flow of political communication, drowning out other voices and undermining “equality of opportunity to participate in the exercise of political sovereignty” (McCloy [45]).  In their majority judgment, French CJ, and Kiefel, Bell and Keane JJ pointed out that the capping of political donations was not only compatible with the system of representative government established by Australia’s constitution, but preserved and enhanced it [47].

Mike Daubes tie 2


Prohibited political donors

The Election Funding Act also prohibited donations by property developers, tobacco, alcohol and gambling business entities.

Pointing to no fewer than 8 reports about corruption in the planning process published by the NSW Independent Commission Against Corruption (ICAC) and other bodies, the majority accepted that planning decisions may involve the risk of undue or corrupt influence that is “greater than in other areas of official decision-making”.

The prohibition on donations from property developers was upheld as being directed to a legitimate purpose.

The majority went on to consider whether there were “alternative, reasonably practical means” of achieving the legitimate purpose of reducing the risk of corruption and undue influence, by means other than the capping provisions and the prohibited donor provisions.  This step is required because any restriction of the implied freedom of political communication must be justified (McCloy [68]).

The majority Justices emphasised that considering “alternative means” does not mean that the Court will substitute its own judgment for the political judgment of Parliament (McCloy [58]).  Rather, the court considers proportionality by considering:

  • whether there is a “rational connection between the provision in question and the statute’s legitimate purpose” (McCloy [80]);
  • whether there are “other, equally effective, means of achieving the legislative object which have a less restrictive effect on the freedom” [81], and thirdly
  • whether the effect of the legislative provision on the freedom is “undue”.

This third step necessarily involves a value judgment: the court must weigh the “public importance of the purpose sought to be achieved” [86]. The greater the restriction on the implied freedom of political communication, the “more important the public interest purpose of the legislation must be [in order] for the law to be proportionate” [87].

In this case, the majority recognised the public interest in removing both the risk of corruption, and perceptions of corruption.

On the other hand, the caps on political donations, and the prohibitions on political donations by certain entities did not prevent people from seeking access to politicians or from communicating with others about matters of politics and government.  For these reasons, the majority upheld the constitutional validity of the “capping” and “prohibited donor” provisions in the Election Funding Act.

This bodes well for any potential challenge to legislation prohibiting donations from alcohol, tobacco and gambling business entities.


In summary

The Unions NSW and McCloy cases confirm that the power that companies and business associations might seek to exercise over the political process in Australia is not unchecked.

Corporations do not have rights of commercial speech that are protected by the Constitution.  The Australian Constitution protects freedom of political communication, but it does not protect the specific commercial interests of particular companies in having their voices heard, including through advertising.

Secondly, neither corporations nor individuals have personal rights “to communicate” about regulatory matters relating to their business in the sense that legislation infringing those rights will be invalidated.  Rather, the question will be whether legislation enacted by Parliament is invalid because it “effectively burdens the freedom of political communication either in its terms, operation or effect” (Unions NSW [35]).  Even when it does, such legislation will be upheld when it is proportionate or serves a legitimate purpose such that it is compatible with the system of representative government prescribed in the Constitution ([Unions NSW [44]).

Are you interested in studying health law?  Sydney Law School offers a Graduate Diploma and a Masters degree in health law that is open to qualified applicants.  For further details, click here, and here.





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